<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------
FORM 10-Q
-------------------------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 for the quarterly period ended September 30, 1998.
or
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period from to .
Commission file number 1-14595
-------------------------
FOX ENTERTAINMENT GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 95-4577574
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1211 AVENUE OF THE AMERICAS, NEW YORK, NY 10036
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (212) 852-7111
-------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
--- ---
As of December 22, 1998, 124,800,000 shares of Class A Common Stock, par
value $.01 per share, and 547,500,000 shares of Class B Common Stock, par value
$.01 per share, were outstanding.
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<PAGE>
FOX ENTERTAINMENT GROUP, INC.
FORM 10-Q
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
Part I. Financial Information
<S> <C> <C>
Item 1. Financial Statements.............................................. 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 7
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds......................... 12
Signature........................................................................ 14
Exhibit Index.................................................................... 15
</TABLE>
<PAGE>
FOX ENTERTAINMENT GROUP, INC.
INDEX TO UNAUDITED COMBINED CONDENSED FINANCIAL STATEMENTS
PART 1
<TABLE>
<CAPTION>
ITEM 1 - FINANCIAL STATEMENTS
<S> <C>
Combined Condensed Balance Sheets at June 30, 1998 and
September 30, 1998 (unaudited) 2
Unaudited Combined Condensed Statements of Operations for the three months ended
September 30, 1997 and 1998 3
Unaudited Combined Condensed Statements of Cash Flows for the three months ended
September 30, 1997 and 1998 4
Notes to the Unaudited Combined Condensed Financial Statements 5
</TABLE>
1
<PAGE>
FOX ENTERTAINMENT GROUP, INC
COMBINED CONDENSED BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
June 30, September 30,
1998 1998
----------- -------------
<S> <C> <C>
(unaudited)
ASSETS
Cash and cash equivalents $ 101 $ 177
Accounts receivable, net 1,949 1,994
Filmed entertainment and television programming costs, net 2,071 2,414
Investments in equity affiliates 791 794
Property and equipment, net 1,111 1,155
Intangible assets, net 5,941 5,912
Other assets and investments 666 692
------------- -------------
Total assets $12,630 $13,138
============= =============
LIABILITIES
Accounts payable and accrued liabilities $ 1,613 $ 1,708
Participations, residuals and royalties payable 1,153 1,040
Television programming rights payable 513 651
Deferred revenue 238 279
Borrowings 375 369
Deferred income taxes 874 897
Other liabilities 221 244
------------- -------------
4,987 5,188
Due to intercompany affiliates 3,702 3,952
------------- -------------
Total liabilities 8,689 9,140
------------- -------------
SHAREHOLDERS' EQUITY
Preferred stock 1 1
Common stock - -
Paid-in capital 3,132 3,132
Retained earnings and other comprehensive income 808 865
------------- -------------
Total shareholders' equity 3,941 3,998
------------- -------------
Total liabilities and shareholders' equity $12,630 $ 13,138
============= =============
</TABLE>
The accompanying notes are an integral part of these combined condensed
financial statements
2
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FOX ENTERTAINMENT GROUP, INC.
UNAUDITED COMBINED CONDENSED STATEMENTS OF OPERATIONS
(in millions except per share amounts)
<TABLE>
<CAPTION>
For the three months ended
September 30,
--------------------------
1997 1998
--------- ---------
<S> <C> <C>
Revenue $ 1,478 $ 1,802
Expenses:
Operating 1,117 1,344
Selling, general and administrative 182 185
Depreciation and amortization 56 71
--------- ---------
Operating income 123 202
--------- ---------
Other income (expense):
Intercompany interest expense, net (35) (47)
External interest expense, net (20) (18)
Equity losses of affiliates (18) (42)
--------- ---------
Income before income taxes 50 95
Income tax expense on a stand-alone basis (22) (38)
--------- ---------
Net income $ 28 $ 57
========= =========
Basic and diluted earnings per share $0.05 $0.10
========== =========
Basic and diluted weighted average number of common equivalent
shares outstanding (in millions) 548 548
========= =========
</TABLE>
The accompanying notes are an integral part of these combined condensed
financial statements
3
<PAGE>
FOX ENTERTAINMENT GROUP, INC.
UNAUDITED COMBINED CONDENSED STATEMENTS OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
For the three months ended
September 30,
----------------------------
1997 1998
----------------------------
<S> <C> <C>
Operating Activities
Net income $ 28 $ 57
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 56 71
Equity in losses of affiliates 18 42
Change in operating assets and liabilities:
Accounts receivable and other assets (227) (80)
Filmed entertainment and television programming costs (106) (305)
Accounts payable and accrued liabilities 230 337
Participations, residuals and royalties payable 59 (151)
----------------------------
Net cash provided by (used in) operating activities 58 (29)
----------------------------
Investing Activities
Purchases of property and equipment (89) (68)
Investments in equity affiliates (9) (46)
Other investments (6) (7)
----------------------------
Net cash used in investing activities (103) (121)
----------------------------
Financing Activities
Borrowings 98 78
Repayment of borrowings (52) (84)
Advances from affiliates, net 42 232
----------------------------
Net cash provided by financing activities 88 226
----------------------------
Net increase in cash and cash equivalents 43 76
Cash and cash equivalents, beginning of period 256 101
----------------------------
Cash and cash equivalents, end of period $ 299 $ 177
============================
</TABLE>
The accompanying notes are an integral part of these combined condensed
financial statements
4
<PAGE>
FOX ENTERTAINMENT GROUP, INC.
NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
Prior to the transaction referred to in Note 3, The News Corporation Limited
("News Corporation") will effect a reorganization (the "Reorganization") by
contributing to the Fox Entertainment Group, Inc. (the "Company") at book value
certain of its assets and subsidiaries engaged in the production and
distribution of feature films and television programming. Included in this
contribution will be Twentieth Century Fox Film Corporation, which was acquired
by News Corporation in 1985, News Corporation's interest in Fox Family
Worldwide, Inc. and Fox/Liberty Networks, LLC, International Sports Programming
Partners, Fox/Liberty Ventures, LLC and other cable network programming and
related interests. During the period covered by these financial statements these
businesses were under common control as an integral part of News Corporation's
overall operations. These Combined Financial Statements have been prepared from
News Corporation's historical accounting records and present all of the
operations of the businesses that will be owned and operated by the Company
after the Reorganization as if the Company had been a separate entity for all
periods presented.
The financial information included herein may not necessarily reflect the
consolidated results of operations, financial position, changes in shareholders'
equity and cash flows of the Company in the future or what they would have been
had it been a separate, stand-alone entity during the periods presented.
The accompanying unaudited condensed combined financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been reflected in these condensed
combined financial statements. Operating results for the three month period
ended September 30, 1998 are not necessarily indicative of the results that may
be expected for the year ending June 30, 1999.
These interim condensed combined financial statements and notes thereto should
be read in conjunction with the audited combined financial statements and notes
thereto included in the Company's Registration Statement on Form S-1 (File No.
333-61515) as declared effective by the Securities and Exchange Commission on
November 9, 1998.
The preparation of combined 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 at the
date of the condensed combined financial statements and the reported amounts of
revenues and expenses during the reporting period. Because of the use of
estimates inherent in the financial reporting process, actual results could
differ from those estimates.
NOTE 2 - GUARANTEES OF NEWS CORPORATION DEBT
News Corporation and certain of its subsidiaries, including the Company and
certain subsidiaries of the Company (collectively, the "Fox Guarantors") are
guarantors of various debt obligations of News Corporation and certain of its
subsidiaries. The principal amount of indebtedness outstanding under such debt
instruments at September 30, 1998 was approximately $9.3 billion, which amount
includes approximately $1 billion of obligations under Exchangeable Trust
Originated Preferred Securities SM due 2016. The debt instruments limit the
ability of News Corporation and the Fox Guarantors to subject their properties
to liens, and certain of the debt instruments impose limitations on the ability
of News Corporation and its subsidiaries, including the Fox Guarantors, to incur
indebtedness in certain circumstances. Such debt instruments mature at various
times between 1999 and 2096, with a weighted average maturity of over 20 years.
Additional subsidiaries of the Company may from time to time be required to
become guarantors of certain debt obligations.
5
<PAGE>
FOX ENTERTAINMENT GROUP, INC.
NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS
In the case of any event of default under such debt obligations the Fox
Guarantors will be directly liable to the creditors or debtholders. News
Corporation has agreed to indemnify the Fox Guarantors from and against any
obligations they may incur by reason of their guarantees of such debt
obligations.
NOTE 3 - SUBSEQUENT EVENTS
In November 1998, the Company consummated an initial public offering through the
issuance of 124,800,000 shares of Class A Common Stock. The newly issued shares
of Class A Common Stock represent approximately 18.6% of the Company's
outstanding common stock. The net proceeds from the public offering were
approximately $2.7 billion and have been used to reduce intercompany
indebtedness. Prior to the initial public offering, the Company effected a
Reorganization and a recapitalization that gave effect to the following
transactions: (i) the elimination of certain outstanding intercompany debt as of
September 30, 1998 against Paid-in capital, (ii) the concurrent payment of
dividends to a subsidiary of News Corporation such that after (i) and (ii) $4.5
billion of intercompany debt is outstanding, (iii) the authorization of the new
Class A and Class B Common Stock and the conversion of the Company's outstanding
common stock into 547,500,000 shares of Class B Common Stock, and (iv) the
adjustment to increase the interest rate from 5% to 8% under the terms of the
$4.5 billion of intercompany indebtedness after the Reorganization. For the
three months ended September 30, 1998, after giving effect to the initial public
offering, Reorganization and recapitalization, the pro forma net income and
earnings per share would have been $63 million and $0.09, respectively, as a
result of a decrease in intercompany interest expense of $10 million and an
increase in income taxes of $4 million.
In November 1998, for purposes of governing certain on-going relationships
between the Company and News Corporation and to facilitate the Reorganization,
the Company and News Corporation entered into a Master Intercompany Agreement
which includes various agreements relating to cash management and financing,
executive officer services, the provision of services of certain Company
employees to News Corporation and its subsidiaries, facility arrangements,
employee matters, insurance, services, trademarks, indemnities by the Company
and News Corporation and also entered into a Tax Sharing Agreement. These
agreements were negotiated in the context of a parent-subsidiary relationship
and therefore are not the result of arm's length negotiations between
independent parties. There can be no assurance, therefore, that each of such
agreements, or the transactions provided for therein, or any amendments thereof,
will be effected on terms at least as favorable to the Company as could have
been obtained from unaffiliated third parties.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This filing contains statements that constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. The words
"expect," "estimate," "anticipate," "predict," "believe" and similar expressions
and variations thereof are intended to identify forward-looking statements.
These statements appear in a number of places in this filing and include
statements regarding the intent, belief or current expectations of the Fox
Entertainment Group, Inc. ("Company"), its directors or its officers with
respect to, among other things, trends affecting the Company's financial
condition or results of operations. The readers of this filing are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in this filing, including, without
limitation, those risks and uncertainties discussed under the headings "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," in the Company's Registration Statement Form S-1 as
declared effective by the Securities and Exchange Commission on November 9,
1998, as well as the information set forth below. The Company does not
ordinarily make projections of its future operating results and undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Readers should
carefully review the risk factors referred to above and the other documents
filed by the Company with the Securities and Exchange Commission. This section
should be read in conjunction with the unaudited consolidated condensed
financial statements of the Company and related notes set forth elsewhere
herein.
Prior to the initial public offering of Class A Common Stock of the Company,
News Corporation effected a Reorganization by contributing to the Company, at
book value, certain of its subsidiaries engaged in the production and
distribution of feature films and television programming. The Combined Financial
Statements of the Company, which are discussed below, reflect the historical
results of operations, financial position and cash flows of the Company's wholly
owned subsidiaries prior to the Reorganization combined with the historical
financial information of the businesses to be contributed to the Company from
News Corporation as part of the Reorganization. Management believes the
assumptions underlying the Company's Combined Financial Statements to be
reasonable. The combined financial information included herein is not
necessarily indicative of the consolidated results of operations, financial
position and cash flows of the Company had the Reorganization occurred as of the
beginning of the periods presented, and had the Company operated as a separate,
stand-alone entity during these periods. The combined financial information
included herein does not reflect the changes that will occur in the funding and
operations of the Company as a result of the Reorganization, recapitalization
and the initial public offering.
7
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1997 VS. THREE MONTHS
ENDED SEPTEMBER 30, 1998
The following table sets forth the Company's operating results, by segment, for
the three months ended September 30, 1997 as compared to the three months ended
September 30, 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
September 30,
------------
1997 1998 CHANGE
---- ---- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Revenues:
Filmed Entertainment................................................ $ 803 $1,062 $259
Television Broadcasting and Related Businesses...................... 661 713 52
Cable Network Programming........................................... 14 27 13
------ ------ ----
Total Revenues........................................................ $1,478 $1,802 $324
====== ====== ====
Operating Income (Loss):
Filmed Entertainment................................................ $ 50 $ 125 $ 75
Television Broadcasting and Related Businesses...................... 111 108 (3)
Cable Network Programming........................................... (38) (31) 7
------ ------ ----
Total Operating Income................................................ 123 202 79
Intercompany interest expense, net.................................... (35) (47) (12)
External interest expense, net........................................ (20) (18) 2
Equity losses of affiliates........................................... (18) (42) (24)
------ ------ ----
Income before income taxes............................................ 50 95 45
Income tax expense on a stand-alone basis............................. (22) (38) (16)
------ ------ ----
Net Income............................................................ $ 28 $ 57 $ 29
====== ====== ====
OTHER DATA:
Operating Income (Loss) Before Depreciation and Amortization:
Filmed Entertainment................................................ $ 57 $ 134 $ 77
Television Broadcasting and Related Businesses...................... 151 157 6
Cable Network Programming........................................... (29) (18) 11
------ ------ ----
Total Operating Income Before
Depreciation and Amortization (1)...................... $ 179 $ 273 $ 94
====== ====== ====
</TABLE>
(1) Operating Income Before Depreciation and Amortization is defined as
operating income (loss) before depreciation and amortization. Operating
Income Before Depreciation and Amortization is presented supplementally as
management believes it allows for the most appropriate measure for
evaluating operating performance. The Company believes Operating Income
Before Depreciation and Amortization is a standard measure commonly reported
and widely used by analysts, investors and others associated with the media
and entertainment industry. Operating Income Before Depreciation and
Amortization eliminates the uneven effect across business segments of
considerable amounts of depreciation and amortization primarily resulting
from the value of intangible assets acquired in business combinations
accounted for by the purchase method of accounting. While many in the
financial community consider Operating Income Before Depreciation and
Amortization to be an important measure of comparative operating
performance, it should be considered in addition to, but not as a substitute
for, operating income, net income, cash flow and other measures of financial
performance prepared in accordance with GAAP which are presented in the
Company's Registration Statement Form S-1 as declared effective by the
Securities and Exchange Commission on November 9, 1998.
Additionally, the Company's calculation of Operating Income Before
Depreciation and Amortization may be different than the calculation used by
other companies and therefore, comparability may be affected.
Filmed Entertainment. For the first quarter of fiscal 1999, revenues increased
32%, operating income increased 150% and operating income before depreciation
and amortization increased 135% versus the corresponding period of the preceding
fiscal year. Twentieth Century Fox Film captured the largest share of the U.S.
summer box office receipts with the release of several successful pictures,
including The X-Files, Dr. Dolittle, Ever After and There's Something About
Mary, which has generated box office receipts of approximately $170 million
domestically to date. Also included in the first quarter of fiscal 1999 were a
portion of the domestic video sales of Titanic, which has already achieved
record video sales. Subsequent periods will include the international video
release of Titanic as well as the worldwide video releases of this past summer's
theatrical hits.
8
<PAGE>
Television Broadcasting and Related Businesses. For the first quarter of fiscal
1999, revenues increased 8% above levels for the corresponding period of the
preceding fiscal year, while operating income decreased by 3% and operating
income before depreciation and amortization increased by 4%. The results of the
Fox Television Stations declined slightly from the corresponding period in of
the preceding fiscal year reflecting softness in the U.S. television advertising
market due in part to significantly reduced General Motors advertising as a
result of its prolonged labor strike. The resumption of historical automotive
advertising levels this fall, in conjunction with the November elections, raised
October and November pacings above year ago levels. The Company reported
improved results from the corresponding period in the preceding fiscal year,
primarily due to higher pricing reflecting the prior season's ratings momentum.
These results were partially offset by the weak performance of several new Fall
1998 series.
Cable Network Programming. Fox News Channel reported a first quarter revenue
increase of 93%, an 18% reduction in operating losses and a 38% reduction in
operating losses before depreciation and amortization compared to the
corresponding period of the preceding fiscal year. Fox News Channel continues to
expand its distribution and is currently in 36 million homes, an increase of
over 50% since the end of the first quarter of fiscal 1998. Consistent with this
subscriber increase, combined advertising and affiliate revenues almost doubled,
while total operating costs remained constant.
Equity Losses of Affiliates. In the first quarter of fiscal 1999, equity losses
of affiliates increased to $42 million from $18 million in the corresponding
period of the preceding fiscal year. These increased losses are primarily due to
higher interest expense and amortization related to the acquisition of
International Family Entertainment by Fox Family Worldwide, which was completed
in September 1997, and the acquisition of a 40% interest in Rainbow Media's
regional sports networks and certain other businesses by Fox/Liberty Networks in
December 1997.
Interest Expense. Results for the first quarter of fiscal 1999 also reflect
increases in intercompany interest expense, primarily due to higher average debt
balances from the corresponding period of the preceding fiscal year.
Income Tax Expense on a Stand-alone Basis. The Company has not provided for or
paid current income taxes due to its net taxable losses. Deferred income tax
expense on a stand-alone basis represents the federal, state and foreign taxes
on earnings before income taxes. The effective income tax rate for the three
months ended September 30, 1998 was 40% compared with 44% in the corresponding
period of the preceding fiscal year. The lower effective tax rate resulted from
the relationship of non-deductible items to lower taxable income in the
corresponding period of the preceding fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows used in operating activities during the three months ended
September 30, 1998 were $29 million as compared to $58 million provided by
operating activities in the corresponding period of the preceding fiscal year.
The decrease was primarily attributable to increased payments for filmed
entertainment and television programming costs and participations, residuals and
royalties.
Net cash flows used in investing activities were $103 million and $121 million
during the three months ended September 30, 1997 and 1998, respectively. The
increase was primarily attributable to investments in equity affiliates which
reflects additional funding of Fox/Liberty Networks and Fox Family Worldwide
offset by a $21 million decrease in capital expenditures.
Financing activities primarily reflect advances received from News Corporation.
In November 1998, the Company consummated an initial public offering through the
issuance of 124,800,000 shares of Class A Common Stock. The newly issued shares
of Class A Common Stock represent approximately 18.6% of the Company's
outstanding common stock. The net proceeds from the initial public offering
were approximately $2.7 billion and were used to reduce intercompany
indebtedness. Prior to the initial public offering, the Company effected a
Reorganization and a recapitalization that gave effect to the following
transactions: (i) the elimination of certain outstanding intercompany debt as of
September 30, 1998 against Paid-in capital, (ii) the concurrent payment of
dividends to a subsidiary of News Corporation such that after (i) and (ii) $4.5
billion of intercompany debt is outstanding, (iii) the authorization of the new
Class A and Class B Common Stock and the conversion of the Company's outstanding
common stock into 547,500,000 shares of Class B Common Stock, and (iv) the
adjustment to increase the interest rate from 5% to 8% under the terms of the
$4.5 billion of intercompany indebtness after the Reorganization. For the three
months ended September 30, 1998, after giving effect to the initial public
offering, Reorganization and recapitalization, the pro forma net income and
earnings per share would have been $63 million and $0.09, respectively, as a
result of a decrease in intercompany interest expense of $10 million and an
increase in income taxes of $4 million.
In November 1998, for purposes of governing certain on-going relationships
between the Company and News Corporation and to facilitate the Reorganization,
the Company and News Corporation entered into a Master Intercompany Agreement
which includes various agreements relating to cash management and financing,
executive officer services, the provision of services of certain Company
employees to News Corporation and its subsidiaries, facility arrangements,
employee matters, insurance, services, trademarks, indemnities by the Company
and News Corporation and also entered into a Tax Sharing Agreement. These
agreements were negotiated in the context of a parent-subsidiary relationship
and therefore are not the result of arm's length negotiations between
independent parties. There can be no assurance, therefore, that each of such
agreements, or the transactions provided for therein, or any amendments thereof,
will be effected on terms at least as favorable to the Company as could have
been obtained from unaffiliated third parties.
News Corporation and certain of its subsidiaries, including the Company and
certain subsidiaries of the Company (collectively, the "Fox Guarantors") are
guarantors of various debt obligations of News Corporation and certain of its
subsidiaries. The principal amount of indebtness outstanding under such debt
instruments at September 30, 1998 was approximately $9.3 billion, which amount
includes approximately $1 billion of obligations under Exchangeable Trust
Originated Preferred Securities (SM) due 2016. The debt instruments limit the
ability of News Corporation and the Fox Guarantors to subject their properties
to liens, and certain of the debt instruments impose limitations on the ability
of News Corporation and its subsidiaries, including the Fox Guarantors, to incur
indebtness in certain circumstances. Such debt instruments mature at various
times between 1999 and 2096, with a weighted average maturity of over 20 years.
Additional subsidiaries of the Company may from time to time be required to
become guarantors of certain debt obligations.
In the case of any event of default under such debt obligations the Fox
Guarantors will be directly liable to the creditors or debtholders. News
Corporation has agreed to indemnify the Fox Guarantors from and against any
obligations the may incur by reason of their guarantees of such debt
obligations.
YEAR 2000
The following disclosure is a Year 2000 readiness disclosure statement pursuant
to the Year 2000 Readiness and Disclosure Act.
9
<PAGE>
The Company is currently working to resolve the potential impact of the Year
2000 on the processing of date-sensitive information by its computerized
information systems. The Year 2000 problem is the result of computer programs
being written using two digits (rather than four) to define the applicable year.
Certain programs may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in miscalculations or system failures.
The Company has been focused on the Year 2000 issue for several years since its
normal capital spending plan requires it to ensure that significant investments
in technology in the periods prior to December 31, 1999, would be for systems
which would be operational after December 31, 1999. As a result of its
assessment and capital planning, no acceleration of material planned systems
replacements were made due to Year 2000 issues.
Between now and January 1, 2000, the Company will proceed through its various
phases of assessment, strategy, detailed planning, implementation, testing and
management. The Company expects to be fully Year 2000 compliant with respect to
all significant business systems during the first half of calendar 1999.
The Company has in place a Year 2000 program in each of its operating divisions.
These programs, which are executed by project teams, do not rely to a
significant degree on outside consultants. The objectives of these Year 2000
programs are to determine and assess the risks of the Year 2000 issue and to
plan and institute mitigating actions to minimize those risks to acceptable
levels.
The Company's standard for compliance requires that for a computer system or a
business process to be Year 2000 compliant, it must be designed to be used prior
to, on and after January 1, 2000. Such systems or processes must be able to
operate without error in dates and date-related data, including without
limitation, calculating, comparing, indexing and sequencing prior to, on and
after January 1, 2000.
The Company's Year 2000 project teams are focusing on the following major areas:
Core Computer Systems. Information technology systems account for much of the
Year 2000 work and include all computer systems and technology managed by the
Company. All core systems have been assessed, plans are in place and work is
being undertaken to test and implement changes where required. No major
remediation has been identified. In Filmed Entertainment, in-house systems play
a limited role in the development and distribution of product. In Television and
Cable Network Programming, the core systems relate to the broadcasting of
programming and the placement of advertising, with respect to both of which the
Company relies on standard package systems developed by vendors whose products
are widely used in the industry. Information Technology vendors and suppliers
have been contacted as to their Year 2000 compliance and their responses have
been factored into the Company's plans.
Equipment and Facilities. An inventory of all critical broadcast equipment,
office equipment and building infrastructure has been completed for all major
sites including the Company's Los Angeles lot and television stations.
Customers and Vendors. The Company is communicating with its significant
customers and vendors to understand their Year 2000 issues and how they might
prepare themselves to manage those issues as they relate to the Company. To
date, no significant customers or vendors have informed the Company that a
material Year 2000 issue exists which will have a material effect on the
Company.
The Company will continually review its progress against its Year 2000 plans and
conclude on the appropriate and feasible contingency plans to reduce its
exposure to Year 2000 related issues.
Based on the Company's current assessment, the costs of addressing potential
problems are not currently expected to have a material adverse impact on the
Company's financial position, results of operations or cash flows in future
periods. However, if the Company, its customers or vendors identify Year 2000
issues in the future and are unable to resolve such issues in a timely manner,
it could result in a material financial risk. Accordingly, the Company plans to
devote the necessary resources to resolve all significant Year 2000 issues in a
timely manner.
The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third-party modification plans
and other factors. However, there can be no guarantee that these estimates will
be achieved, or that there will not be a delay in, or increased costs associated
with, the implementation of the Company's Year 2000 compliance project. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, timely responses to and
corrections by third parties and suppliers, the ability to implement interfaces
between the new
10
<PAGE>
systems and the systems not being replaced, and similar uncertainties. Due to
the general uncertainty inherent in the Year 2000 readiness of third parties and
the interconnection of national and international businesses, the Company cannot
ensure that its ability to timely and cost effectively resolve problems
associated with the Year 2000 issue will not affect its operations and business,
or expose it to third-party liability.
ITEM III. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
11
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Part II. Other Information
Item 1. Legal Proceedings.
Not Applicable
Item 2. Changes in Securities and Use of Proceeds.
On November 9, 1998, the Securities and Exchange Commission (the
"Commission") declared effective the Company's Registration Statement on
Form S-1 (File No. 333-61515) (the "Initial Registration Statement") relating to
the offering by the Company of up to 97,500,000 shares of the Company's Class A
Common Stock, par value $.01 per share (the "Class A Common Stock"). On November
10, 1998, the Company filed a Registration Statement pursuant to Rule 462(b) of
the Securities Exchange Act of 1933, as amended, (File No. 333-67099) (the
"Abbreviated Registration Statement"), which was effective upon filing with the
Commission and registered an additional 27,300,000 shares of Class A Common
Stock. The Initial Registration Statement, together with the Abbreviated
Registration Statement, relate to the offering by the Company of an aggregate of
124,800,000 shares of Class A Common Stock, of which 106,808,000 shares were
offered for sale initially in the United States and Canada by the U.S.
Underwriters (the "U.S. Offering") and 18,720,000 shares were offered for sale
initially outside the United States and Canada by the International Managers
(the "International Offering," and, together with the U.S. Offering, the
"Offerings").
In the U.S. Offering, Merrill Lynch & Co.; Allen & Company
Incorporated; Goldman, Sachs & Co.; Morgan Stanley Dean Witter; Bear, Stearns &
Co. Inc.; Donaldson, Lufkin & Jenrette; J.P. Morgan & Co.; NationsBanc
Montgomery Securities LLC; and Salomon Smith Barney acted as representatives of
the U.S. Underwriters. In the International Offering, Merrill Lynch
International; Allen & Company Incorporated; Goldman Sachs International; Morgan
Stanley Dean Witter; Bear, Stearns International Limited; Donaldson, Lufkin &
Jenrette; J.P. Morgan Securities Ltd.; NationsBanc Montgomery Securities LLC;
and Salomon Smith Barney International acted as the International Managers.
The Offerings commenced on November 10, 1998, and the Company's Class
A Common Stock began trading on the New York Stock Exchange on November 11,
1998, under the symbol "FOX". The Offerings consisted of an aggregate of
124,800,000 shares of Class A Common Stock issued at $22.50 per share. The net
proceeds from the Offerings, after deducting the underwriting discounts and
other expenses payable by the Company, were approximately $2.7 billion.
Prior to the consummation of the Offerings, News Corporation and its
subsidiaries eliminated certain of the intercompany borrowings owed by the
Company, and the Company issued notes (the "Intercompany Notes") to a subsidiary
of News Corporation in an aggregate amount of $4.5 billion, representing the
remaining intercompany borrowings and payment of dividends by a subsidiary of
the Company to a subsidiary of News Corporation. The Intercompany Notes
constitute unsecured, general obligations of the Company and mature on
12
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June 30, 2003. The Intercompany Notes bear interest at a rate equal to the
average cost of long-term debt of News Corporation (currently approximately 8%
per annum), adjusted annually and payable quarterly. The Company used the entire
net proceeds of the Offerings to repay a portion of the indebtedness owed by the
Company to News Corporation and certain of its subsidiaries under the
Intercompany Notes. Immediately following consummation of the Offerings and the
application of the net proceeds therefrom, the aggregate amount outstanding
under the Intercompany Notes was approximately $1.8 billion.
News Corporation indirectly owns all issued and outstanding shares of
the Company's Class B Common Stock, par value $.01 per share, which, after the
consummation of the Offerings, represented approximately 81.4% of the equity and
97.8% of the voting power of the Company.
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
The exhibit index filed with the Form 10-Q follows on page 15.
13
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 22, 1998 FOX ENTERTAINMENT GROUP, INC.
/s/ Arthur M. Siskind
By: ______________________________
Name: Arthur M. Siskind
Title: Senior Executive Vice President
14
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Exhibit Index
Exhibit
Number Description
3.1 Restated Certificate of Incorporation of Fox Entertainment Group, Inc.
3.2 By-Laws of Fox Entertainment Group, Inc.
15
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EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
FOX ENTERTAINMENT GROUP, INC.
The name of the corporation (which is hereinafter referred to as the
"Corporation") is "Fox Entertainment Group, Inc."
The original Certificate of Incorporation (the "Certificate of
Incorporation") was filed with the Secretary of State of the State of Delaware
on May 7, 1985, under the name "Twentieth Holdings Corporation." Such
Certificate of Incorporation was amended on November 14, 1985 and August 11,
1998.
This Restated Certificate of Incorporation, which restates, integrates
and amends the Certificate of Incorporation has been duly adopted in accordance
with Sections 103, 242 and 245 of the General Corporation Law of the State of
Delaware. The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:
ARTICLE I
The name of this corporation (hereinafter called the "Corporation") is:
FOX ENTERTAINMENT GROUP, INC.
ARTICLE II
The purpose or purposes of this Corporation shall be to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "DGCL").
ARTICLE III
The name and address of the Corporation's registered agent in the State
of Delaware is Corporation Service Company, 1013 Centre Road, in the City of
Wilmington, County of New Castle, Delaware 19805.
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ARTICLE IV
CAPITAL STOCK
SECTION 1. AUTHORIZED STOCK; NO PRE-EMPTIVE RIGHTS.
The maximum number of shares of capital stock which this Corporation
shall have authority to issue is one billion seven hundred fifty million
(1,750,000,000) consisting of one billion (1,000,000,000) shares of class A
common stock, $.01 par value per share (the "Class A Common Stock"), six hundred
fifty million (650,000,000) shares of class B common stock, $.01 par value per
share (the "Class B Common Stock") and one hundred million (100,000,000) shares
of preferred stock, $.01 par value per share (the "Preferred Stock"). The Class
A Common Stock and the Class B Common Stock are hereinafter referred to
collectively as the "Common Stock."
The holders of shares of capital stock now or hereafter outstanding
shall have no pre-emptive right to purchase or have offered to them for purchase
any shares of Preferred Stock, Common Stock or other equity securities issued or
to be issued by the Corporation. The powers, preferences and rights and the
qualifications, limitations and restrictions in respect of the shares of each
class are set forth in the following sections.
SECTION 2. PREFERRED STOCK.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby expressly authorized, by resolution or
resolutions, to provide for the issuance of up to 100,000,000 shares of
Preferred Stock in one or more series and, by filing a certificate pursuant to
the DGCL (hereinafter referred to as a "Preferred Stock Designation"), to
establish from time to time the number of shares constituting each such series
and the designation of such series, the voting powers (if any) of the shares of
such series, and the relative rights, powers, privileges, preferences and
limitations of the shares of such series.
Shares of Preferred Stock, regardless of series, that are converted
into other securities or other consideration shall be retired and canceled and
the Corporation shall take all such actions as are necessary to cause such
shares to have the status of authorized but unissued shares of Preferred Stock,
without designation as to series.
SECTION 3. COMMON STOCK.
A. VOTING RIGHTS.
Subject to applicable law and the rights of any outstanding series of
Preferred Stock to vote as a separate class or series, the shares of Class A
Common Stock and Class B Common Stock shall vote together as a single class and
shall have the following voting rights: (i) each share of Class A Common Stock
shall entitle the holder thereof to one (1) vote upon all matters upon which
stockholders shall have the right to vote; and (ii) each share of Class B Common
Stock shall entitle the holder thereof to ten (10) votes upon all matters upon
which stockholders shall have the right to
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vote, subject to Section 3.E.8. of this Article IV. The authorized number of
shares of Class A Common Stock may be increased or decreased (but not below the
number of shares thereof then outstanding or reserved for issuance upon
conversion of the Class B Common Stock or any other class or series of
outstanding stock) by the affirmative vote of the holders of Common Stock
entitled to cast a majority of the total votes entitled to be cast by the
holders of the Common Stock, voting as a single class, without a separate class
vote of the holders of the Class A Common Stock.
The Corporation may, as a condition to counting the votes cast by any
holder of shares of Class B Common Stock, require proof as set forth in Section
3.E.8 of this Article IV that the shares of Class B Common Stock held by such
holder have not been converted into shares of Class A Common Stock.
B. DIVIDENDS AND DISTRIBUTIONS.
Subject to the preferential and other dividend rights of any
outstanding series of Preferred Stock, holders of Class A Common Stock and Class
B Common Stock shall be entitled to such dividends and other distributions in
cash, stock or property of the Corporation as may be declared thereon by the
Board of Directors from time to time out of assets or funds of the Corporation
legally available therefor. No dividend or other distribution may be declared or
paid on any share of Class A Common Stock unless a like dividend or other
distribution is simultaneously declared or paid, as the case may be, on each
share of Class B Common Stock, nor shall any dividend or other distribution be
declared or paid on any share of Class B Common Stock unless a like dividend or
other distribution is simultaneously declared or paid, as the case may be, on
each share of Class A Common Stock, in each case without preference or priority
of any kind; provided, however, that all dividends and distributions on the
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Class A Common Stock and Class B Common Stock payable in shares of Common Stock
of the Corporation shall be made in shares of Class A Common Stock and Class B
Common Stock, respectively. In no event will shares of either class of Common
Stock be split, divided or combined unless the outstanding shares of the other
class of Common Stock shall be proportionately split, divided or combined.
In the event of a transaction as a result of which the shares of Class
A Common Stock are converted into or exchanged for one or more other securities,
cash or other property (a "Class A Conversion Event"), then from and after such
Class A Conversion Event, a holder of Class B Common Stock shall be entitled to
receive, upon the conversion of such Class B Common Stock pursuant to Section
3.E. of this Article IV, the amount of such securities, cash and other property
that such holder would have received if the conversion of such Class B Common
Stock had occurred immediately prior to the record date (or if there is no
record date, the effective date) of the Class A Conversion Event and if the
securities, cash or other property that the Class A Common Stock may be
converted into or exchanged for in a Class A Conversion Event is dependant upon
the holder of the Class A Common Stock making an election, the holder of the
Class A Common Stock had failed to make an election. This paragraph shall be
applicable in the same manner to all successive conversions or exchanges of
securities issued pursuant to any Class A Conversion Event. No adjustments in
respect of dividends shall be made upon the conversion of any share of Class B
Common Stock; provided, however, that if a share shall be converted after the
-------- -------
record date for the payment of a dividend or other distribution on shares of
Class B Common Stock but before such
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payment, then the record holder of such share at the close of business on such
record date shall be entitled to receive the dividend or other distribution
payable on such share of Class B Common Stock on the payment date
notwithstanding the conversion thereof.
C. OPTIONS, RIGHTS OR WARRANTS.
Subject to Section 3.B. of this Article IV, the Corporation shall not,
and shall not be entitled to, issue additional shares of Class B Common Stock,
or issue options, rights or warrants to subscribe for or purchase additional
shares of Class B Common Stock, except that the Corporation may make a pro rata
offer to all holders of Common Stock of rights to subscribe for additional
shares of the class of Common Stock held by them. The Corporation may make
offerings of options, rights or warrants to subscribe for or purchase shares of
any class or classes of capital stock (other than Class B Common Stock) to all
holders of Class A Common Stock or Class B Common Stock if an identical offering
is made simultaneously to all the holders of the other class of Common Stock.
All offerings of options, rights or warrants shall offer the respective holders
of Class A Common Stock and Class B Common Stock the right to subscribe or
purchase at the same consideration per share.
D. MERGER OR CONSOLIDATION.
In the event of a merger or consolidation of the Corporation with or
into another entity (whether or not the Corporation is the surviving entity),
the holders of each share of Class A Common Stock and Class B Common Stock shall
be entitled to receive the same per share consideration as the per share
consideration, if any, received by the holders of each share of the other class
of Common Stock; provided that, if such consideration shall consist in any part
--------
of voting securities (or of options, rights or warrants to purchase, or of
securities convertible into or exchangeable for, voting securities), then the
Corporation may provide in the applicable merger or such other agreement for the
holders of shares of Class B Common Stock to receive, on a per share basis,
voting securities with ten (10) times the number of votes per share as those
voting securities to be received by the holders of shares of Class A Common
Stock (or options, rights or warrants to purchase, or securities convertible
into or exchangeable for, voting securities with ten (10) times the number of
votes per share as those voting securities issuable upon exercise of the
options, rights or warrants to be received by the holders of the shares of Class
A Common Stock, or into which the convertible or exchangeable securities to be
received by the holders of the shares of Class A Common Stock may be converted
or exchanged).
E. CONVERSION OF CLASS B COMMON STOCK.
1. VOLUNTARY CONVERSION.
Each share of Class B Common Stock shall be convertible, at
the option of its record holder, into one validly issued, fully paid
and non-assessable share of Class A Common Stock at any time.
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2. VOLUNTARY CONVERSION PROCEDURE.
At the time of a voluntary conversion, the record holder of
shares of Class B Common Stock shall deliver to the principal office of
the Corporation or any transfer agent for shares of the Class A Common
Stock (i) the certificate or certificates representing the shares of
Class B Common Stock to be converted, duly endorsed in blank or
accompanied by proper instruments of transfer, and (ii) written notice
to the Corporation stating that the record holder elects to convert
such share or shares and stating the name or names and denominations in
which the certificate or certificates representing the shares of Class
A Common Stock issuable upon the conversion are to be issued and
including instructions for the delivery thereof. Conversion shall be
deemed to have been effected at the time when delivery is made to the
principal office of the Corporation or the office of any transfer agent
for shares of Class A Common Stock of such written notice and the
certificate or certificates representing the shares of Class B Common
Stock to be converted, and as of such time, each Person (as hereinafter
defined) named in such written notice as the Person to whom a
certificate representing shares of Class A Common Stock is to be issued
shall be deemed to be the holder of record of the number of shares of
Class A Common Stock to be evidenced by that certificate. Upon such
delivery, the Corporation or its transfer agent shall promptly issue
and deliver a certificate or certificates representing the number of
shares of Class A Common Stock to which such record holder is entitled
by reason of such conversion, and shall cause such shares of Class A
Common Stock to be registered in the name of the record holder.
3. AUTOMATIC CONVERSION.
(a) Subject to Section 3.E.3.(b) of this Article IV, in the
event of any Transfer (as hereinafter defined) of any share of Class B
Common Stock to any Person other than a Permitted Transferee (as
hereinafter defined), such share of Class B Common Stock shall
automatically, without any further action, convert into one share of
Class A Common Stock.
(b) Notwithstanding anything to the contrary set forth in this
Article IV, Section 3, a holder of shares of Class B Common Stock may
pledge such holder's shares of Class B Common Stock to a financial
institution pursuant to a bona fide pledge of such shares of Class B
Common Stock as collateral security for any indebtedness or other
obligation of any Person (the "Pledged Stock") due to the pledgee or
its nominee; provided, however, that (i) such shares shall not be voted
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by or registered in the name of the pledgee and shall remain subject to
the provisions of this Article IV, Section 3.E. and (ii) upon any
foreclosure, realization or other similar action by the pledgee, such
Pledged Stock shall automatically convert into shares of Class A Common
Stock on a share for share basis unless all right, title and interest
in such Pledged Stock shall be Transferred concurrently by the pledgee
or its nominee or the purchaser in such foreclosure to a Permitted
Transferee.
(c) The foregoing automatic conversion events described in
this Article IV, Section 3.E.3 shall be referred to hereinafter as an
"Event of Automatic Conversion." The determination of whether an Event
of Automatic Conversion shall have occurred will be
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made by the Board of Directors or a duly authorized committee thereof
in accordance with Article IV, Section 3.E.8 below.
4. AUTOMATIC CONVERSION PROCEDURE.
Any conversion pursuant to an Event of Automatic Conversion
shall be deemed to have been effected at the time the Event of
Automatic Conversion occurred (the "Conversion Time"). At the
Conversion Time, the certificate or certificates that represented
immediately prior thereto the shares of Class B Common Stock which were
so converted (the "Converted Class B Common Stock") shall,
automatically and without further action, represent the same number of
shares of Class A Common Stock. Holders of Converted Class B Common
Stock shall deliver their certificates, duly endorsed in blank or
accompanied by proper instruments of transfer, to the principal office
of the Corporation or the office of any transfer agent for shares of
the Class A Common Stock, together with a written notice setting out
the name or names (with addresses) and denominations in which the
certificate or certificates representing such shares of Class A Common
Stock are to be issued and including instructions for delivery thereof.
Upon such delivery, the Corporation or its transfer agent shall
promptly issue and deliver at such stated address to such holder of
shares of Class A Common Stock a certificate or certificates
representing the number of shares of Class A Common Stock to which such
holder is entitled by reason of such conversion, and shall cause such
shares of Class A Common Stock to be registered in the name of such
holder. The Person entitled to receive the shares of Class A Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Class A Common Stock at and as
of the Conversion Time, and the rights of such Person as a holder of
shares of Class B Common Stock that have been converted shall cease and
terminate at and as of the Conversion Time, in each case without regard
to any failure by such holder to deliver the certificates or the notice
required by this Section.
5. UNCONVERTED SHARES.
In the event of the conversion of less than all the shares of
Class B Common Stock evidenced by a certificate surrendered to the
Corporation in accordance with the procedures of this Section 3.E., the
Corporation shall execute and deliver to, or upon the written order of,
the holder of such unconverted shares, without charge to such holder, a
new certificate evidencing the number of shares of Class B Common Stock
not converted.
6. RETIRED SHARES.
Shares of Class B Common Stock that are converted into shares
of Class A Common Stock as provided herein shall be retired and
canceled and the Corporation shall take all such actions as are
necessary to cause such shares to have the status of authorized but
unissued shares of Class B Common Stock.
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7. RESERVATION.
The Corporation shall at all times reserve and keep available,
out of its authorized and unissued shares of Class A Common Stock, for
the purposes of effecting conversions, such number of duly authorized
shares of Class A Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding shares of Class B Common
Stock. All the shares of Class A Common Stock so issuable shall, when
so issued, be duly and validly issued, fully paid and non-assessable,
and free from liens and charges with respect to such issuance.
8. DETERMINATION OF VOTING RIGHTS AND EVENT OF AUTOMATIC CONVERSION.
The Board of Directors of the Corporation or a duly authorized
committee thereof shall have the power to determine, in good faith
after reasonable inquiry, whether an Event of Automatic Conversion has
occurred with respect to any share of Class B Common Stock. A
determination by the Board of Directors of the Corporation or such
committee that an Event of Automatic Conversion has occurred shall be
conclusive. As a condition to counting the votes cast by any holder of
shares of Class B Common Stock at any annual or special meeting of
stockholders, or in connection with any written consent of
stockholders, or as a condition to registration of transfer of shares
of Class B Common Stock, or for any other purpose, the Board of
Directors or a duly authorized committee thereof, in its discretion,
may require the holder of such shares to furnish such affidavits or
other proof as the Board of Directors or such committee deems necessary
or advisable to determine whether an Event of Automatic Conversion
shall have occurred. If the Board of Directors or such committee shall
determine that a holder has substantially failed to comply promptly
with any request by the Board of Directors or such committee for such
proof, the shares held by such holder shall be entitled to one (1) vote
per share until such time as the Board of Directors or such committee
shall determine that such holder has complied with such request. The
Board of Directors or a duly authorized committee thereof may exercise
the authority granted by this Article IV, Section 3.E.8 through duly
authorized officers or agents of the Corporation.
9. DEFINITIONS.
For purposes of this Article IV, Section E:
(a) Beneficial Owner.
----------------
A Person shall be deemed the "Beneficial Owner" of, and to
"Beneficially Own" and to have "Beneficial Ownership" of, any
share (i) which such Person has the power to vote or dispose,
or to direct the voting or disposition of, directly or
indirectly, through any agreement, arrangement or
understanding (written or oral), or (ii) which such Person has
the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (written or oral), or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise.
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(b) Nominee.
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The term "Nominee" shall mean a Person that is acting as a
bona fide nominee for the registration of record ownership of
securities Beneficially Owned by another Person.
(c) Permitted Transferee.
--------------------
The term "Permitted Transferee" shall mean The News
Corporation Limited, a South Australia corporation ("News
Corporation"), its direct and indirect subsidiaries; any
Person in which News Corporation or any successor thereof
Beneficially Owns, directly or indirectly, at least 50% of the
equity or the voting securities thereof; and any successor of
any of the foregoing.
(d) Person.
------
The term "Person" means any natural person, corporation,
association, partnership, limited liability company,
organization, business, government or political subdivision
thereof or governmental agency.
(e) Transfer.
--------
The term "Transfer" shall mean any sale, transfer (including a
transfer made in whole or in part without consideration as a
gift), exchange, assignment, pledge, encumbrance, alienation
or any other disposition or hypothecation of record ownership
or of Beneficial Ownership of any share, whether by operation
of law or otherwise; provided, however, that (i) a pledge of
any share made in accordance with the provisions of Article
IV, Section 3.E.3.(b). and (ii) a grant of a revocable proxy,
written consent or other authorization with respect to any
share to a Person designated by the Board of Directors or
management of the Corporation who is soliciting proxies on
behalf of the Corporation shall not be considered a
"Transfer"; and provided, further, that in the case of any
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transferee of record ownership that is a Nominee, such
Transfer of record ownership shall be deemed to be made to the
Person or Persons for whom such Nominee is acting.
10. STOCK LEGEND.
The Corporation shall include a legend on the certificates
representing shares of Class B Common Stock stating that such shares
are subject to automatic conversion in certain circumstances as set
forth in this Article IV, Section 3.E.
11. TAXES.
The issuance of a certificate representing shares of Class A
Common Stock issued upon conversion of shares of Class B Common Stock
shall be made without charge to the
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holder of such shares for any stamp or other similar tax in respect of
such issuance. However, if any such certificate is to be issued in a
name other than that of the record holder of the shares of Class B
Common Stock converted, the Person or Persons requesting the issuance
thereof shall pay to the Corporation the amount of any tax which may be
payable in respect of any Transfer involved in such issuance or shall
establish to the satisfaction of the Corporation that such tax has been
paid or is not required to be paid.
F. LIQUIDATION.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, after distribution in full of the preferential
and/or other amounts to be distributed to the holders of shares of any
outstanding series of Preferred Stock, the holders of shares of Class A Stock
and Class B Common Stock shall be entitled to receive all of the remaining
assets of the Corporation available for distribution to its stockholders,
ratably in proportion to the number of shares of Common Stock held by them. In
any such distribution, shares of Class A Common Stock and Class B Common Stock
shall be treated equally on a per share basis.
ARTICLE V
PURCHASE OF SHARES BY CORPORATION
The Corporation may purchase any shares of outstanding capital stock of
the Corporation or the right to purchase any such shares of capital stock from
any holder thereof on terms and conditions established by the Board of Directors
or a duly authorized committee thereof.
ARTICLE VI
BOARD OF DIRECTORS
SECTION 1. NUMBER AND TERMS.
Except as otherwise fixed by or pursuant to the provisions of this
Restated Certificate of Incorporation relating to the rights of the holders of
any class or series of Preferred Stock, the number of directors of the
Corporation shall be determined by resolution adopted by a majority of the
entire Board of Directors, but the number shall not be less than three. The term
of each director of the Corporation shall expire at the next annual meeting of
stockholders following such director's election and until such director's
successor shall have been elected and qualified. Except with respect to any
directors elected by the holders of any class or series of Preferred Stock
pursuant to the terms of this Restated Certificate of Incorporation, at each
annual meeting of the stockholders of the Corporation, the date of which shall
be fixed by or in the manner provided in the By-laws of the Corporation, the
successors of the directors whose term expires at that meeting shall be elected
to hold office for a term expiring at the next succeeding annual meeting of
stockholders. No decrease in the number of directors shall shorten the term of
any incumbent director. Unless and
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except to the extent that the By-laws of the Corporation shall so require, the
election of directors need not be by written ballot.
SECTION 2. VACANCIES.
Except as otherwise provided for or fixed by or pursuant to the
provisions of this Restated Certificate of Incorporation relating to the rights
of the holders of any series of Preferred Stock, any vacancy on the Board of
Directors of the Corporation resulting from death, resignation, removal or other
cause and any newly created directorship resulting from any increase in the
authorized number of directors between meetings of stockholders shall be filled
only by the affirmative vote of (i) a majority of all the directors then in
office, even though less than a quorum, or (ii) a duly appointed committee of
the Board of Directors, but in any event not by the stockholders. Any director
so chosen shall hold office for the remainder of the full term of the class of
directors in which the vacancy occurred or the new directorship was created and
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal from office in accordance with this Restated
Certificate of Incorporation or any applicable law or pursuant to an order of a
court. If there are no directors in office, then an election of directors may be
held in the manner provided by applicable law.
SECTION 3. NOTICE.
Advance notice of nominations for the election of directors and
business to be transacted at any stockholders meeting shall be given in the
manner and to the extent provided in the By-laws of the Corporation.
SECTION 4. REMOVAL.
Except as otherwise provided for or fixed by or pursuant to the
provisions of this Restated Certificate of Incorporation relating to the rights
of the holders of any series of Preferred Stock, any director may be removed
from office with or without cause but only by the affirmative vote of the
holders of a majority of the combined voting power of the then outstanding
shares of stock of the Corporation entitled to vote for the election of
directors, voting together as a single class.
ARTICLE VII
STOCKHOLDER ACTION; NO CUMULATIVE VOTING
SECTION 1. MEETINGS.
Subject to the rights of the holders of any outstanding series of
Preferred Stock, special meetings of stockholders of the Corporation may be
called only by the Board of Directors by the Chairman of the Board or the Vice
Chairman of the Board of the Corporation. Notwithstanding the foregoing,
whenever the holders of any one or more outstanding series of Preferred Stock
shall have the right, voting separately by class or series, as applicable, to
elect directors at an annual or special
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meeting of stockholders, the calling of special meetings of the holders of such
class or series shall be governed by the terms of the applicable resolution or
resolutions of the Board of Directors establishing such series of Preferred
Stock pursuant to Article IV of this Restated Certificate of Incorporation.
ARTICLE VIII
BY-LAWS
The Board of Directors shall have the power to adopt, alter, amend or
repeal the By-laws of the Corporation. The stockholders of the Corporation may
adopt, amend or repeal the By-laws of the Corporation but only by the
affirmative vote of holders of at least a majority of the combined voting power
of the then outstanding shares of capital stock of all classes and series of the
Corporation entitled to vote generally on matters requiring the approval of
stockholders, voting together as a single class.
ARTICLE IX
AMENDMENTS
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Restated
Certificate of Incorporation, and any other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed by law; and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Restated Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
the right reserved in this Article IX.
ARTICLE X
INDEMNIFICATION; LIMITATION OF LIABILITY.
SECTION 1. INDEMNIFICATION.
A. Each person who was or is made a party to or is threatened to be
made a party to or is otherwise involved in any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director of the
Corporation or any of its direct or indirect subsidiaries or is or was serving
at the request of the Corporation as a director of any other corporation or of a
partnership, limited liability company, joint venture, trust, or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or in any other capacity while
serving as a director, shall be indemnified and
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held harmless by the Corporation to the fullest extent authorized by the DGCL,
as the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all expense, liability, and loss (including attorneys' fees, judgments, fines,
excise or other taxes assessed with respect to an employee benefit plan,
penalties, and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith, and such indemnification shall continue
as to an indemnitee who has ceased to be a director and shall inure to the
benefit of the indemnitee's heirs, executors, and administrators; provided,
however, that, except as provided in Paragraph B of this Section 1 with respect
to proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
B. The right to indemnification conferred in Paragraph A of this
Section 1 shall include the right to be paid by the Corporation the expenses
incurred in defending any proceeding for which such right to indemnification is
applicable in advance of its final disposition (hereinafter an "advancement of
expenses"); provided, however, that, if the DGCL requires, an advancement of
-------- -------
expenses incurred by an indemnitee in his or her capacity as a director (and not
in any other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section 1 or otherwise.
C. The rights to indemnification and to the advancement of expenses
conferred in Paragraphs A and B of this Section 1 shall be contract rights. If a
claim under Paragraph A or B of this Section 1 is not paid in full by the
Corporation within 60 days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be 20 days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by an indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that the indemnitee has not met any applicable standard for
indemnification set forth in the DGCL, and (ii) any suit by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon a final adjudication
that the indemnitee has not met any applicable standard for indemnification set
forth in the DGCL. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable
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standard of conduct, shall create a presumption that the indemnitee has not met
the applicable standard of conduct or, in the case of such a suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Section 1 or otherwise, shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Section 1 shall not be exclusive of any right which any person
may have or hereafter acquire under any statute, this certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors, or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust, or other enterprise
against any expense, liability, or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability, or loss
under the DGCL.
F. The Corporation's obligation, if any, to indemnify any person who
was or is serving as a director of any direct or indirect subsidiary of the
Corporation or, at the request of the Corporation, of any other corporation or
of a partnership, joint venture, trust, or other enterprise shall be reduced by
any amount such person may collect as indemnification from such other
corporation, partnership, joint venture, trust or other enterprise.
G. Any repeal or modification of the foregoing provisions of this
Section 1 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.
H. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant indemnification rights and rights to the
advancement of expenses to any officer, employee or agent of the Corporation to
the fullest extent of the provision of this Article with respect to the
indemnification and advancement of expenses to directors.
SECTION 2. LIMITED LIABILITY.
No director of the Corporation shall be liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision does not eliminate the liability of the
director (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 Title B of the Delaware Code, or (iv) for any transaction from
which the director derived an improper personal benefit. For purposes of the
prior sentence, the term "damages" shall, to the extent permitted by law,
include without limitation, any judgment, fine amount paid in settlement,
penalty, punitive damages, excise or other tax assessed with respect to an
employee benefit plan, or expense of any nature (including, without limitation,
counsel fees and disbursements). Each person who serves as a
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director of the Corporation while this Section 2 is in effect shall be deemed to
be doing so in reliance on the provisions of this Section 2, and neither the
amendment or repeal of this Section 2, nor the adoption of any provision of this
Restated Certificate of Incorporation inconsistent with this Section 2, shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for, arising out of, based upon, or in connection
with any acts or omissions of such director occurring prior to such amendment,
repeal, or adoption of an inconsistent provision. The provisions of this Section
2 are cumulative and shall be in addition to and independent of any and all
other limitations on or eliminations of the liabilities of directors of the
Corporation, as such, whether such limitation or eliminations arise under or are
created by any law, rule, regulation, by-law, agreement, vote of stockholders or
disinterested directors, or otherwise.
ARTICLE XI
MISCELLANEOUS
SECTION 1. SECTION 203 OF THE DGCL
The Company hereby elects that it shall not be subject to Section 203
of the DGCL or any successor provision.
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IN WITNESS WHEREOF, Fox Entertainment Group, Inc. has caused this
Restated Certificate of Incorporation to be signed by its Senior Executive Vice
President this 6th day of November, 1998.
Fox Entertainment Group, Inc.
By: /s/ Arthur M. Siskind
---------------------
Name: Arthur M. Siskind
Title: Senior Executive Vice President
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EXHIBIT 3.2
Dated: November 6, 1998
FOX ENTERTAINMENT GROUP, INC.
(HEREINAFTER CALLED THE "CORPORATION")
AMENDED BY-LAWS
ARTICLE I - STOCKHOLDERS
------------------------
Section 1. Annual Meeting.
---------- ----------------
The Annual Meeting of the stockholders for the purpose of electing
Directors and for the transaction of such other business as may properly come
before the meeting in accordance with these By-laws, shall be held at such
place, on such date, and at such time as may be fixed by the Board of Directors
(hereinafter the "Board") and stated in the notice of meeting.
(a) Nominations of persons for election to the Board and the proposal of
business to be transacted by the stockholders may be made at an Annual Meeting
of stockholders (a) pursuant to the Corporation's notice with respect to such
meeting, (b) by or at the direction of the Board or (c) by any stockholder of
record of the Corporation who was a stockholder of record at the time of the
giving of the notice provided for in the following paragraph, who is entitled to
vote at the meeting and who has complied with the notice procedures set forth in
this section.
(b) For nominations or other business to be properly brought before an
Annual Meeting by a stockholder pursuant to clause (c) of the foregoing
paragraph, (1) the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation; (2) such business must be a proper matter
for stockholder action under the General Corporation
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Law of the State of Delaware; (3) if the stockholder, or the beneficial owner on
whose behalf any such proposal or nomination is made, has provided the
Corporation with a Solicitation Notice, as that term is defined in subclause
(c)(iii) of this paragraph, such stockholder or beneficial owner must, in the
case of a proposal, have delivered a proxy statement and form of proxy to
holders of at least the percentage of the Corporation's voting shares required
under applicable law to carry any such proposal, or, in the case of a nomination
or nominations, have delivered a proxy statement and form of proxy to holders of
a percentage of the Corporation's voting shares reasonably believed by such
stockholder or beneficial holder to be sufficient to elect the nominee or
nominees proposed to be nominated by such stockholder, and must, in either case,
have included in such materials the Solicitation Notice; and (4) if no
Solicitation Notice relating thereto has been timely provided pursuant to this
section, the stockholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have
required the delivery of such a Solicitation Notice under this section. To be
timely, a stockholder's notice shall be delivered to the Secretary of the
Corporation at the principal executive offices of the Corporation not less than
45 or more than 75 days prior to the first anniversary (the "Anniversary") of
the date on which the Corporation first mailed its proxy materials for the
preceding year's Annual Meeting of stockholders; provided, however, that if the
date of the Annual Meeting is advanced more than 30 days prior to or delayed by
more than 30 days after the anniversary of the preceding year's Annual Meeting,
notice by the stockholder to be timely must be so delivered not later than the
close of business on the later of (i) the 90/th/ day prior to such Annual
Meeting or (ii) the 10/th/ day following the day on which public announcement
of the date of such meeting is first made. Such stockholder's notice shall set
forth
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(a) as to each person whom the stockholder proposes to nominate for election or
reelection as a Director all information relating to such person as would be
required to be disclosed in solicitations of proxies for the election of such
nominees as directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and such person's written consent
to serve as a director if elected; (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of such
business, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; (c) as to the stockholder giving
the notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner, (ii) the class and number
of shares of the Corporation that are owned beneficially and of record by such
stockholder and such beneficial owner, and (iii) whether either such stockholder
or beneficial owner intends to deliver a proxy statement and form of proxy to
holders of, in the case of a proposal, at least the percentage of the
Corporation's voting shares required under applicable law to carry the proposal
or, in the case of a nomination or nominations, a sufficient number of holders
of the Corporation's voting shares to elect such nominee or nominees (an
affirmative statement of such intent, a "Solicitation Notice").
Notwithstanding anything in the second sentence of the preceding paragraph
of this Section (b) to the contrary, in the event that the number of directors
to be elected to the Board is increased and there is no public announcement
naming all of the nominees for director or specifying the size of the increased
Board made by the Corporation at least 55 days prior to the Anniversary, a
stockholder's notice required by this By-law shall also be considered timely,
but
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only with respect to nominees for any new positions created by such increase, if
it shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 10/th/ day following the
day on which such public announcement is first made by the Corporation. Only
persons nominated in accordance with the procedures set forth in this Section
(b) shall be eligible to serve as directors and only such business shall be
conducted at an Annual Meeting of stockholders as shall have been brought before
the meeting in accordance with the procedures set forth in this Section (b).
The chair of the meeting shall have the power and the duty to determine whether
a nomination or any business proposed to be brought before the meeting has been
made in accordance with the procedures set forth in these By-laws and, if any
proposed nomination or business is not in compliance with these By-laws, to
declare that such defective proposed business or nomination shall not be
presented for stockholder action at the meeting and shall be disregarded.
Nominations of persons for election to the Board may be made at a special
meeting of stockholders at which directors are to be elected (a) by or at the
direction of the Board or (b) by any stockholder of record of the Corporation
who is a stockholder of record at the time of giving of notice provided for in
this paragraph, who shall be entitled to vote at the meeting and who complies
with the notice procedures set forth in this Section (b). Nominations by
stockholders of persons for election to the Board may be made at such a special
meeting of stockholders if the stockholder's notice required by the first
paragraph of this Section (b) shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the later of the 90th day prior to such special meeting or the 10th
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board to be elected at
such
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meeting.
For purposes of this section, "public announcement" shall mean disclosure
in a press release reported by the Dow Jones News Service, Associated Press or a
comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
Notwithstanding the foregoing provisions of this Section (b), a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to matters set forth in this
Section (b). Nothing in this Section (b) shall be deemed to affect any rights
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
Section 2. Special Meetings; Notice.
---------- -------------------------
Special meetings of the stockholders, other than those required by statute,
may be called at any time by the Board pursuant to a resolution approved by a
majority of the Board or by the Chairman or a Vice Chairman. No other person or
persons may call special meetings of stockholders except as provided in the
Certificate of Incorporation. Notice of every special meeting, stating the
place, date and time of the meeting and the purpose or purposes for which such
meeting is called shall be given by mailing, postage prepaid, not less than 10
nor more than 60 days before the date on which the meeting is to be held, a copy
of such notice addressed to each stockholder of the Corporation entitled to vote
at such meeting at his address as recorded on the books of the Corporation.
Only such business as is stated in the notice may be acted upon thereat. The
foregoing notwithstanding, unless otherwise provided in the Certificate of
Incorporation, whenever the holders of any one or more outstanding series of
Preferred Stock
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shall have the right, voting separately by class or by series, as applicable, to
elect directors at any Annual Meeting or special meeting of stockholders, the
calling of special meetings of the holders of such class or series shall be
governed by the terms of the applicable resolution or resolutions of the Board
establishing such series of preferred stock pursuant to the Certificate of
Incorporation. The Board may postpone or reschedule any previously scheduled
special meeting.
Nominations of persons for election to the Board may be made at a special
meeting of stockholders at which Directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board, or (b)
by any stockholder of record of the Corporation who is a stockholder of record
at the time of the giving of notice provided for in Section1(b) of this ARTICLE
I entitled to vote at the meeting who complies with the notice provisions set
forth in Section1(b) of this ARTICLE I.
Section 3. Notice of Meetings.
---------- -------------------
Except as otherwise provided herein or required by applicable law (meaning,
here and hereinafter, as required from time to time by the Delaware General
Corporation Law) or the Certificate of Incorporation, written notice of the
place, date, and time of all meetings of the stockholders and the purpose or
purposes for which such meeting is called shall be given by mailing, postage
prepaid, a copy of such notice addressed to each stockholder of the Corporation
entitled to vote at such meeting at his address as recorded on the books of the
Corporation, not less than 10 nor more than 60 days before the date on which the
meeting is to be held.
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned
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meeting is more than 30 days after the date for which the meeting was originally
noticed, or if a new record date is fixed for the adjourned meeting, written
notice of the place, date and time of the adjourned meeting shall be given in
conformity herewith. At any adjourned meeting, any business may be transacted
which might have been transacted at the original meeting.
Section 4. Quorum.
---------- -------
At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or
represented by proxy, shall constitute a quorum for all purposes, unless or
except to the extent that the presence of a larger number may be required by law
or by the Certificate of Incorporation. Where a separate vote by a class or
classes is required by law or by the Certificate of Incorporation, a majority of
the shares of such class or classes present in person or represented by proxy
shall constitute a quorum entitled to take action with respect to that vote on
that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting
may adjourn the meeting from time to time, without notice other than by
announcement to the meeting, to another date, place and time until a quorum
shall be present.
Section 5. Organization.
---------- -------------
The Chairman of the Board of the Corporation, or, in his or her absence,
such person as the Board may have designated or, in the absence of such a
person, such person as may be chosen by the holders of a majority of the shares
entitled to vote who are present, in person or represented by proxy, shall call
to order any meeting of the stockholders and act as chairman of the meeting.
The Secretary of the Corporation, or if he or she is not present, any Assistant
Secretary, or in the absence of any Assistant Secretary of the Corporation, any
person the
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chairman of the meeting appoints shall act as the Secretary of the meeting.
Section 6. Place of Meetings.
---------- ------------------
Meetings of the stockholders for the election of Directors or for any other
purpose shall be held at such time and place, either within or without the State
of Delaware, as shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 7. Conduct of Business.
---------- --------------------
The date and time of the opening and closing of the polls for each matter
upon which the stockholders will vote at the meeting shall be announced at the
meeting. The Board may adopt by resolution such rules and regulations for the
conduct of meetings as it shall deem appropriate. Except to the extent
inconsistent with such rules and regulations as adopted by the Board, the
chairman of any meeting shall have the right and authority to prescribe such
rules, regulations and procedures and to do all such acts as, in the judgment of
the chairman, are appropriate for the proper conduct of the meeting. Such
rules, regulations or procedures, whether adopted by the Board or prescribed by
the chairman of the meeting, may include, without limitation, the following: (i)
the establishment of an agenda or order of business at the meeting; (ii) rules
and procedures for maintaining order at the meeting and the safety of those
present; (iii) limitations on attendance at or participation in the meeting to
stockholders of record of the Corporation, their duly authorized and constituted
proxies or such other persons as the chairman of the meeting shall determine;
(iv) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (v) limitations on the time allotted to questions or
comments by participants. Unless and to the extent determined by the Board or
the chairman of the meeting,
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meetings of stockholders shall not be required to be held in accordance with the
rules of parliamentary procedure.
Section 8. Proxies and Voting.
---------- -------------------
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing or by a
transmission permitted by law filed in accordance with the procedure established
for the meeting. Unless otherwise provided in the Certificate of Incorporation,
each stockholder represented at a meeting of stockholders shall be entitled to
cast one vote for each share of capital stock entitled to vote thereat held by
such stockholder. If the Certificate of Incorporation provides for the issuance
of any class or series of stock which is convertible into any other class or
series of stock, as a condition to counting the votes cast by any holder of
shares at any annual or special meeting of stockholders, the Board or a duly
authorized committee thereof, in its discretion, may require the holder of any
shares to furnish such affidavits or other proof as the Board or such committee
deems necessary and advisable to determine whether such shares have been
converted pursuant to the terms governing the issuance and conversion of such
shares in the Certificate of Incorporation. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or transmission
created pursuant to this paragraph may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.
All voting, except as may be required by law, including voting for the
election of Directors may be by a voice vote; provided, however, that upon
demand therefor by a
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stockholder entitled to vote or by his or her proxy, or upon resolution by the
Board in its discretion or by action of the chairman of the meeting, in his or
her discretion, a stock vote may be taken. Every stock vote shall be taken by
written ballots, each of which shall state the name of the stockholder or proxy
voting and such other information as may be required under the procedure
established for the meeting.
Unless otherwise specified by the Certificate of Incorporation or these By-
laws, (i) at all meetings of stockholders for the election of Directors, a
plurality of the votes cast shall be sufficient to elect, and (ii) any other
question brought before any meeting of stockholders shall be determined by the
votes cast affirmatively or negatively by the holders of a majority of the stock
represented and entitled to vote thereon.
Section 9. Stock List.
---------- -----------
The officer of the Corporation who has charge of the stock ledger of the
Corporation shall prepare and make, at least 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.
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
10 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.
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The stock ledger of the Corporation shall be the only evidence as to who are the
stockholders entitled to examine the stock, the list required by this Section 9
of this ARTICLE I or the books of the Corporation, or to vote in person or by
proxy at any meeting of stockholders.
Section 10. Inspection of Elections.
----------- ------------------------
Before any meeting of stockholders, the Board shall appoint one or more
inspectors to act at the meeting and make a written report thereof. The Board
may designate one or more persons as alternate inspectors to replace any
inspector who fails to act. If no inspector or alternate is able to act at a
meeting of stockholders, the person presiding at the meeting shall appoint one
or more inspectors to act at the meeting. Each inspector, before entering upon
the discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability.
The inspectors shall, in accordance with these By-laws and the Certificate
of Incorporation, ascertain the number of shares outstanding and the voting
power of each, determine the shares represented at the meeting and the validity
of proxies and ballots, count all votes and ballots, determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination made by the inspectors, and certify their determination of the
number of shares represented at the meeting and their count of all votes and
ballots.
The inspectors may appoint or retain other persons or entities to assist
the inspectors in the performance of their duties. In determining the validity
and counting of proxies and ballots, the inspectors shall act in accordance with
applicable law.
ARTICLE II - BOARD OF DIRECTORS
-------------------------------
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Section 1. Number, Election and Term of Directors.
---------- ---------------------------------------
The property and business of the Corporation shall be managed by or under
the direction of the Board. Except as otherwise fixed by or pursuant to the
provisions of the Certificate of Incorporation relating to the rights of the
holders of any class or series of preferred stock, the number of Directors of
the corporation shall be determined by resolution adopted by a majority of the
entire Board, but the number shall not be less than 3 and not more than 25.
Directors need not be stockholders. Directors shall (except as hereinafter
provided for the filling of vacancies) be elected by the holders of the shares
of stock entitled to vote thereon, by a plurality vote thereof, at the Annual
Meeting of stockholders. The term of each Director of the Corporation shall
expire at the next Annual Meeting of stockholders following such Director's
election and until such Director's successor shall have been elected and
qualified. Except with respect to any Directors elected by the holders of any
class or series of preferred stock pursuant to the terms of the Certificate of
Incorporation, at each Annual Meeting of the stockholders of the Corporation,
the successors of the Directors shall be elected to hold office for a term
expiring at the next succeeding Annual Meeting of stockholders. The Board may
at any time by amendment of the By-laws increase or decrease the number of
Directors of the Corporation; provided, that the term of a Director shall not be
affected by any decrease in the number of Directors so made by the Board.
Section 2. Newly Created Directorships and Vacancies.
---------- ------------------------------------------
Subject to applicable law and except as otherwise provided for or fixed by
or pursuant to the Certificate of Incorporation relating to the rights of the
holders of any series of preferred stock with respect to such series of
preferred stock, and unless the Board otherwise
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determines, newly created Directorships resulting from any increase in the
authorized number of Directors or any vacancies on the Board resulting from
death, resignation, retirement, disqualification, removal from office or other
cause between meetings of stockholders shall be filled only by the affirmative
vote of a majority of all of the Directors then in office, even though less than
a quorum, or a duly appointed committee of the Board of Directors, but in any
event not by the stockholders. Directors so chosen shall hold office until such
Director's successor shall have been duly elected and qualified or until his
earlier death, resignation or removal from office in accordance with the
Certificate of Incorporation, these By-laws, or any applicable law or pursuant
to an order of a court. No decrease in the number of authorized Directors
constituting the entire Board shall shorten the term of any incumbent Director.
The powers of Directors to fill vacancies in the Board are subject, in case the
remaining Directors shall constitute less than a majority of the entire Board,
to the rights of stockholders as provided in the Certificate of Incorporation or
as provided by law.
Section 3. Regular Meetings.
---------- -----------------
A meeting of the Board shall be held after the Annual Meeting of the
stockholders and regular meetings of the Board shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board and publicized among all Directors. Meetings may be
held either within or without the State of Delaware. A notice of each regular
meeting shall not be required.
Section 4. Special Meetings.
---------- -----------------
Special meetings of the Board may be called by the Chairman of the Board,
by the Vice Chairman, by the President or by two or more Directors then in
office and shall be held at
-13-
<PAGE>
such place, on such date, and at such time as they or he or she shall fix.
Meetings may be held either within or without the State of Delaware. Notice
thereof, stating the place, date and time of each such special meeting shall be
given each Director by whom it is not waived by mailing written notice not less
than four days before the meeting or personally by telephone, or telegraph or
telex, facsimile transmission of notice, or by similar means of communication
not less than 12 hours before the meeting or on such shorter notice as the
person or persons calling the meeting may deem necessary and appropriate under
the circumstances. Unless otherwise indicated in the notice thereof, any and
all business may be transacted at a special meeting.
Section 5. Quorum.
---------- -------
Except as may be otherwise provided by law, the Certificate of
Incorporation or these By-laws, at all meetings of the Board, a majority of the
entire Board shall constitute a quorum for the transaction of business. 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. 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 6. Participation in Meetings by Conference Telephone.
---------- --------------------------------------------------
Members of the Board, or of any committee thereof, may participate in a
meeting of such Board or 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 shall constitute presence in
person at such meeting.
Section 7. Conduct of Business.
---------- --------------------
At any meeting of the Board, business shall be transacted in such order and
-14-
<PAGE>
manner as the Board may from time to time determine, and all matters shall be
determined by the vote of a majority of the Directors present, except as
otherwise provided herein or required by law. The Board may take action without
a meeting if all members thereof consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board.
Section 8. Powers.
---------- -------
The business of the Corporation shall be managed by or under the direction
of the Board 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 of the Corporation, including, without limiting the
generality of the foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or privileges on
such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as it may
determine, of written obligations of every kind, negotiable or non-negotiable,
secured or unsecured, and to do all things necessary in connection therewith;
(4) To remove any officer of the Corporation with or without cause, and
from time to time to devolve the powers and duties of any officer upon any other
person for the time being;
(5) To confer upon any officer of the Corporation the power to appoint,
remove and suspend subordinate officers, employees and agents;
(6) To adopt from time to time such stock option, stock purchase,
-15-
<PAGE>
bonus or other compensation plans for Directors, officers, employees and agents
of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and other
benefit plans for Directors, officers, employees and agents of the Corporation
and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent with these By-
laws, for the management of the Corporation's business and affairs.
Section 9. Compensation of Directors.
---------- --------------------------
Unless otherwise restricted by the Certificate of Incorporation, the Board
shall have the authority to fix the compensation of the Directors. The
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board and may be paid a fixed sum for attendance at each meeting of the
Board or paid a stated salary or paid other compensation 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.
Section 10. Removal.
----------- --------
Except as otherwise provided by the Certificate of Incorporation, any
Director may be removed from office with or without cause but only by the
affirmative vote of the holders of a majority of the combined voting power of
the then outstanding shares of stock of the Corporation entitled to vote for the
election of directors, voting together as a single class.
ARTICLE III - COMMITTEES
------------------------
-16-
<PAGE>
Section 1. Committees of the Board.
---------- ------------------------
The Board, by a vote of a majority of the entire Board then in office, may
from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a Director or Directors to serve as the member or members, designating, if
it desires, other Directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any committee and any alternate member in his
or her place, the member or members of the committee present at the meeting and
not disqualified from voting, whether or not he or she or they constitute a
quorum, may by unanimous vote appoint another member of the Board to act at the
meeting in the place of the absent or disqualified member.
Section 2. Conduct of Business.
---------- --------------------
Any committee, to the extent allowed by law and provided in the resolution
establishing such committee, shall have and may exercise all the duly delegated
powers and authority of the Board in the management of the business and affairs
of the Corporation. The Board shall have the power to prescribe the manner in
which proceedings of any such committee shall be conducted. In the absence of
any such prescription, such committee shall have the power to prescribe the
manner in which its proceedings shall have the power to prescribe the manner in
which its proceedings shall be conducted. Unless the Board or such committee
shall otherwise provide, regular and special meetings and other actions of any
such committee shall be governed by the provisions of ARTICLE II applicable to
meetings and actions of the Board. Each committee shall keep regular minutes
and report to the Board when required.
-17-
<PAGE>
ARTICLE IV - OFFICERS
---------------------
Section 1. General.
---------- --------
The officers of the Corporation shall be elected by the Board and shall be
a Chairman of the Board (who must be a Director), a President, a Secretary and a
Treasurer. The Board, in its sole discretion, may also choose one or more
Senior Executive Vice Presidents, Senior Vice Presidents, Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Certificate of Incorporation or these By-laws. The Board may, from time to
time, delegate the powers or duties of any officer to any other officers or
agents, notwithstanding any contrary provision hereof.
Section 2. Election.
---------- ---------
The Board at its first meeting held after each Annual Meeting of
stockholders shall elect the officers of the Corporation 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 solely by the Board, which determination
may be by resolution of the Board or in any By-law provisions duly adopted or
approved by the Board; and all officers of the Corporation shall hold office
until their successors are chosen and qualified, or until their earlier
resignation or removal. The salaries of the officers elected by the Board shall
be fixed from time to time by the Board or by such officers as may be designated
by resolution of the Board. Any officer elected by the Board may be removed at
any time by the Board with or without cause. Only the Board may fill any
vacancy occurring in any office of the Corporation.
-18-
<PAGE>
Section 3. Chairman of the Board.
---------- ----------------------
The Chairman of the Board shall be the Chief Executive Officer of the
Corporation, shall preside at all meetings of the Board and of stockholders
(unless the Board designates another person) and shall, subject to the
provisions of the By-laws and the control of the Board, have general and active
management, direction, and supervision over the business of the Corporation and
over its officers. He or she shall perform all duties incident to the office of
Chief Executive and such other duties as from time to time may be assigned to
him or her by the Board. He or she shall have the right to delegate any of his
or her powers to any other officer or employee.
Section 4. Vice Chairman of the Board.
---------- ---------------------------
The Vice Chairman shall report and be responsible to the Chairman of
the Board. The Vice Chairman shall have such powers and perform such duties as
from time to time may be assigned or delegated to him or her by the Board or are
incident to the office of Vice Chairman. During the absence, disability, or at
the request of the Chairman of the Board, the Vice Chairman shall perform the
duties and exercise the powers of the Chairman of the Board. In the absence or
disability of both the Vice Chairman and the Chairman of the Board, the
President or another person designated by the Board shall perform the duties and
exercise the powers of the Vice Chairman, and unless otherwise determined by the
Board, the duties and powers of the Chairman.
Section 5. President.
---------- ----------
-19-
<PAGE>
The President shall report and be responsible to the Chairman of the
Board. The President shall be the Chief Operating Officer of the Corporation
and shall have such powers and perform such duties as from time to time may be
assigned or delegated to him or her by the Board or are incident to the office
of President. During the absence or disability of the Vice Chairman, or at
the request of the Chairman of the Board, the President shall perform the duties
and exercise the powers of the Vice Chairman of the Board. During the absence
or disability of the Chairman of the Board and the Vice Chairman, or at the
request of the Chairman of the Board, the President shall perform the duties and
exercise the powers of the Vice Chairman and the Chairman of the Board. In the
absence or disability of the President, the person designated by the Board
shall perform the duties and exercise the powers of the President, and unless
otherwise determined by the Board, the duties and powers of the Vice Chairman.
Section 6. Senior Executive Vice Presidents.
---------- ---------------------------------
The Senior Executive Vice Presidents shall have such powers and
perform such duties as from time to time may be prescribed for them respectively
by the Board or are incident to the office of Senior Executive Vice President.
Section 7. Senior Vice Presidents.
----------- -----------------------
The Senior Vice Presidents shall have such powers and perform such
duties as from time to time may be prescribed for them respectively by the Board
or are incident to the office of Senior Vice President.
Section 8. Vice Presidents.
---------- ----------------
The Vice Presidents shall have such powers and perform such duties as
from time to time may be prescribed for them respectively by the Board or are
incident to the office of Vice
-20-
<PAGE>
President.
Section 9. Secretary.
---------- ----------
The Secretary shall keep or cause to be kept, at the principal
executive office of the Corporation or such other place as the Board may order,
a book of minutes of all meetings of stockholders, the Board and its committees,
with the time and place of holding, whether regular or special, and if special,
how authorized, the notice thereof given, the names of those present at Board
and committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof. The Secretary shall keep,
or cause to be kept, a copy of the By-laws of the Corporation at the principal
executive office of the Corporation or such other place as the Board may order.
The Secretary shall keep, or cause to be kept, at the principal
executive office of the Corporation or at the office of the Corporation's
transfer agent or registrar, if one be appointed, a stock register, or a
duplicate stock register, showing the names of the stockholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders, and of the Board and any committees thereof required by
these By-laws or by law to be given, shall keep the seal of the Corporation in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the Board.
Section 10. Treasurer.
----------- ----------
The Treasurer shall have custody of the corporate funds and securities
of the
-21-
<PAGE>
Corporation and shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
Corporation, and shall send or cause to be sent to the stockholders of the
Corporation such financial statements and reports as are required by law or
these By-laws to be sent to them.
The Treasurer shall deposit all monies and valuables in the name and
to the credit of the Corporation with such depositaries as may be designated by
the Board. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board, shall render to the President and the Board, whenever they
request it, an account of all transactions and of the financial condition of the
Corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board.
Section 11. Other Officers.
----------- ---------------
Such other officers or assistant officers as the Board may designate
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board. The Board may delegate to any other officer of
the Corporation the power to choose such other officers and to prescribe their
respective duties and powers.
Section 12. Execution of Contracts and Other Documents.
----------- -------------------------------------------
Each officer of the Corporation may execute, affix the corporate seal
and/or deliver, in the name and on behalf of the Corporation, deeds, mortgages,
notes, bonds, contracts, agreements, powers of attorney, guarantees,
settlements, releases, evidences of indebtedness, conveyances, or any other
document or instrument which is authorized by the Board or is required to be
executed in the ordinary course of business of the Corporation, except in cases
where the execution, affixation of the corporate seal and/or delivery thereof
shall be expressly
-22-
<PAGE>
and exclusively delegated by the Board to some other officer or agent of the
Corporation.
Section 13. Action with Respect to Securities of Other Corporations.
----------- --------------------------------------------------------
Powers of attorney, proxies, waivers of notice of meeting, consents
and other instruments relating to securities owned by the Corporation may be
executed in the name of and on behalf of the Corporation by the Chairman of the
Board or the President or any other officer or officers authorized by the Board,
the Chairman of the Board or the President, and any such officer may, in the
name of and on behalf of the Corporation, vote, represent and exercise on behalf
of the Corporation all rights incident to any and all shares of any other
corporation and take all such action as any such officer may deem advisable to
vote in person or by proxy at any meeting of security holders of any corporation
in which the Corporation may own securities and at any such meeting shall
possess and may exercise any and all rights and power incident to the ownership
of such securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board may, by resolution from time to
time, confer like powers upon any other person or persons.
ARTICLE V - STOCK
-----------------
Section 1. Certificates of Stock.
---------- ----------------------
Each stockholder shall be entitled to a certificate certifying the
number of shares owned by him or her and signed in the name of the Corporation
(i) by the Chairman or Vice Chairman of the Board, the President or any
Executive Vice President, Senior Vice President or Vice President and (ii) by
the Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer. Where a certificate is countersigned by (i) a transfer agent or (ii)
a registrar, any other signature on the certificate may be a facsimile. In case
any officer, transfer agent or registrar
-23-
<PAGE>
whose signature appears on the 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 or she were such officer,
transfer agent or registrar at the date of issue.
Section 2. Transfers of Stock.
---------- -------------------
Transfers of shares of capital stock of the Corporation shall be made
only on the stock record of the Corporation by the holder of record thereof or
by his, her or its attorney thereunto authorized by the 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. Registration of transfer of any shares shall be subject to applicable
provisions of the Certificate of Incorporation and applicable law with respect
to the transfer of such shares. 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 3. Record Date.
---------- ------------
(a) 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 dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
any other lawful action, the Board may fix, in advance, a record date in respect
of such meeting, which record date shall not be more than 60 nor less than 10
days before the date of such meeting; provided, however, that if no record date
is fixed by the Board, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice
-24-
<PAGE>
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, and, for determining
stockholders entitled to receive payment of any dividend or other distribution
or allotment of rights or to exercise any rights of change, conversion or
exchange of stock or for any other purpose, the record date shall be at the
close of business on the day on which the Board adopts a resolution relating
thereto. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
(b) Notwithstanding Section 3(a) of ARTICLE V of these By-laws,
the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting shall be as fixed by the Board or
as otherwise established under this Section 3(b). Any person seeking to have the
stockholders authorize or take corporate action by written consent without a
meeting shall, by written notice addressed to the Secretary and delivered to the
Corporation, request that a record date be fixed for such purpose. The Board may
fix a record date for such purpose, which shall be no more than 10 days after
the date upon which the resolution fixing the record date is adopted by the
Board and shall not precede the date such resolution is adopted. If the Board
fails within 10 days after the Corporation receives such notice to fix a record
date for such purpose, the record date shall be the day on which the first
written consent is delivered to the Corporation in the manner described in
Section 3(c) below unless prior action by the Board is required under the
General Corporation Law of the State of Delaware, in which event the record date
shall be at the close of business on the day on which the Board adopts the
resolution taking such prior action.
-25-
<PAGE>
(c) Every written consent purporting to take or authorizing
the taking of corporate action and/or revocations (each such written consent and
related revocation is referred to in this Section 3(c) of ARTICLE V of the By-
laws as a "Consent") shall bear the date of signature of each stockholder who
signs the Consent, and no Consent shall be effective to take the corporate
action referred to therein unless, within 60 days of the earliest dated Consent
delivered in the manner required by this Section 3(c), Consents signed by a
sufficient number of stockholders to take such action are so delivered to the
Corporation. A Consent shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery to the
Corporation's registered office to its principal place of business or to such
officer or agent shall be made by hand or by certified or registered mail,
return receipt requested. In the event of the delivery to the Corporation of a
Consent, the Secretary of the Corporation shall provide for the safe-keeping of
such consent and shall promptly conduct such ministerial review of the
sufficiency of the Consents and of the validity of the action to be taken by
stockholder consent as he or she deems necessary or appropriate, including,
without limitation, whether the holders of a number of shares having the
requisite voting power to authorize or take the action specified in the Consent
have given consent; provided, however, that if the corporate action to which the
Consent relates is the removal or replacement of one or more members of the
Board, the Secretary or the Corporation shall promptly designate two persons who
shall not be members of the Board, to serve as inspectors with respect to such
Consent and such inspectors shall discharge the functions of the Secretary of
the Corporation under this Section 3(c). If the Certificate of Incorporation
provides
-26-
<PAGE>
for the issuance of any class or series of stock which is convertible into any
other class or series of stock, as a condition to counting the votes cast by any
holder of shares at any annual or special meeting of stockholders, or in
connection with any Consent of stockholders, the Board or a duly authorized
committee thereof, in its discretion, may require the holder of any shares to
furnish such affidavits or other proof as the Board or such committee deems
necessary and advisable to determine whether such shares have been converted
pursuant to the terms governing the issuance and conversion of such shares in
the Certificate of Incorporation. If after such investigation the Secretary or
the inspectors (as the case may be) shall determine that the Consent is valid
and that the action therein specified has been validly authorized, that fact
shall forthwith be certified on the records of the Corporation kept for the
purpose of recording the proceedings of meetings of stockholders, and the
Consent shall be filed in such records, at which time the Consent shall become
effective as stockholder action. In conducting the investigation required by
this Section 3(c), the Secretary or the inspectors (as the case may be) may, at
the expense of the Corporation, retain special legal counsel and any other
necessary or appropriate professional advisors, and such other personnel as they
may reasonably deem necessary or appropriate to assist them, and shall be fully
protected in relying in good faith upon the opinion of such counsel or advisors.
Section 4. Lost, Stolen or Destroyed 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
-27-
<PAGE>
destroyed certificate, or his or her legal representative, to advertise the same
in such manner as the Board 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.
Section 5. Regulations.
---------- ------------
The issue, transfer, conversion and registration of certificates of
stock shall be governed by such other regulations as the Board may establish.
Section 6. Record 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 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 law.
ARTICLE VI - NOTICES
--------------------
Section 1. Notices.
---------- --------
Whenever written notice is required by law, the Certificate of
Incorporation or these By-laws, except as otherwise specifically provided herein
or required by law, all notices required to be given to any stockholder,
Director, officer, employee or agent shall be in writing and may in every
instance be effectively given by hand delivery to the recipient thereof, by
depositing such notice in the mails, postage paid, recognized overnight delivery
service or by
-28-
<PAGE>
sending such notice by facsimile, receipt acknowledged, or by prepaid telegram
or mailgram. Any such notice shall be addressed to such stockholder, director,
officer, employee or agent at his or her last known address as the same appears
on the books of the Corporation. The time when such notice is received, if hand
delivered, or dispatched, if delivered through the mails or by telegram or
facsimile shall be the time of the giving of the notice.
Section 2. Waivers.
---------- --------
A written waiver of any notice, signed by a stockholder, Director,
officer, employee or agent, whether before or after the time of the event for
which notice is to be given, shall be deemed equivalent to the notice required
to be given to such stockholder, director, officer, employee or agent. Neither
the business nor the purpose of any meeting need be specified in such a waiver.
Attendance at any meeting shall constitute waiver of notice of such meeting
except attendance for the sole purpose of objecting to the timeliness of notice.
ARTICLE VII - MISCELLANEOUS
---------------------------
Section 1. Facsimile Signatures.
---------- ---------------------
In addition to the provisions for use of facsimile signatures
elsewhere specifically authorized in these By-laws, facsimile signatures of any
officer or officers of the Corporation may be used whenever and as authorized by
the Board or a committee thereof.
Section 2. Corporate Seal.
---------- ---------------
The Board may provide a suitable seal, containing the name of the
Corporation, which seal shall be in the charge of the Secretary. If and when so
directed by the Board or a committee thereof, duplicates of the seal may be kept
and used by the Treasurer or by an
-29-
<PAGE>
Assistant Secretary or Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records.
---------- -----------------------------------------
Each Director, each member of any committee designated by the Board,
and each officer of the Corporation shall, in the performance of his or her
duties, be fully protected in relying in good faith upon the books of account or
other records of the Corporation and upon such information, opinions, reports or
statements presented to the Corporation by any of its officers or employees, or
committees of the Board so designated, or by any other person as to matters
which such Director or committee member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
Section 4. Fiscal Year.
---------- ------------
The fiscal year of the Corporation shall be as fixed by the Board.
Section 5. Time Periods.
---------- -------------
In applying any provision of these By-laws which requires that an act
be done or not be done a specified number of days prior to an event or that an
act be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
Section 6. Disbursements.
---------- --------------
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
may from time to time designate.
-30-
<PAGE>
ARTICLE VIII - AMENDMENTS
-------------------------
In furtherance and not in limitation of the powers conferred by law,
the Board is expressly authorized to adopt, alter, amend or repeal these By-laws
subject to the power of the holders of capital stock of the Corporation to
adopt, alter, amend or repeal the By-laws; provided, however, that, with respect
to the powers of holders of capital stock to adopt, alter, amend or repeal By-
laws of the Corporation, notwithstanding any other provision of these By-laws or
any provision of law which might otherwise permit a lesser vote or no vote, but
in addition to any affirmative vote of the holders of any particular class or
series of the capital stock of the Corporation required by law, the Certificate
of Incorporation or these By-laws, the affirmative vote of the holders of at
least a majority of the voting power of all of the then-outstanding shares
entitled to vote generally on matters requiring approval of stock holders,
voting together as a single class, shall be required to adopt, alter, amend or
repeal any provision of these By-laws.
-31-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SECHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FOX
ENTERTAINMENT GROUP, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 177
<SECURITIES> 0
<RECEIVABLES> 1994
<ALLOWANCES> 0
<INVENTORY> 2414
<CURRENT-ASSETS> 7398
<PP&E> 1155
<DEPRECIATION> 0
<TOTAL-ASSETS> 13138
<CURRENT-LIABILITIES> 9140
<BONDS> 0
0
1
<COMMON> 0
<OTHER-SE> 3997
<TOTAL-LIABILITY-AND-EQUITY> 13138
<SALES> 0
<TOTAL-REVENUES> 1802
<CGS> 0
<TOTAL-COSTS> 1600
<OTHER-EXPENSES> 42
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65
<INCOME-PRETAX> 95
<INCOME-TAX> 38
<INCOME-CONTINUING> 57
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
