<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
----------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
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 1-14599
----------------
INFINITY BROADCASTING CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-4030071
- -------------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
40 WEST 57TH STREET, NEW YORK, NY 10019
--------------------------------------------------
(Address of principal executive offices, zip code)
(212) 314-9200
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No
AT JULY 31, 1999, 149,983,000 SHARES OF CLASS A COMMON STOCK AND 700,000,000
SHARES OF CLASS B COMMON STOCK WERE OUTSTANDING.
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<PAGE> 2
INFINITY BROADCASTING CORPORATION
INDEX
---------------------------------
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Statement of Earnings 3
Condensed Consolidated Balance Sheet 4
Condensed Consolidated Statement of Cash Flows 5
Notes to the Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 19
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFINITY BROADCASTING CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
--------------------------------------------
(unaudited, in thousands except per-share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------------------------------
1999 1998 1999 1998
============================================================================================================================
<S> <C> <C> <C> <C>
Total revenues $ 681,957 $ 521,928 $ 1,220,584 $ 897,045
Less agency commissions (84,684) (66,164) (149,576) (111,673)
- ----------------------------------------------------------------------------------------------------------------------------
Net revenues 597,273 455,764 1,071,008 785,372
- ----------------------------------------------------------------------------------------------------------------------------
Operating expenses excluding depreciation and amortization 327,575 253,509 626,149 465,776
Depreciation and amortization 73,928 56,926 146,538 105,939
Corporate expenses 4,615 4,421 9,620 8,870
- ----------------------------------------------------------------------------------------------------------------------------
Total operating expenses 406,118 314,856 782,307 580,585
- ----------------------------------------------------------------------------------------------------------------------------
Operating earnings 191,155 140,908 288,701 204,787
Interest expense, net 79 (4,760) (2,123) (4,760)
Other income (expense), net (41) 637 (133) 613
- ----------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and minority interest 191,193 136,785 286,445 200,640
Income taxes (91,586) (69,694) (139,213) (102,229)
Minority interest in (income) loss of consolidated subsidiaries 21 (214) 56 (92)
- ----------------------------------------------------------------------------------------------------------------------------
Net earnings $ 99,628 $ 66,877 $ 147,288 $ 98,319
============================================================================================================================
Basic and diluted earnings per common share $ 0.12 $ 0.10 $ 0.17 $ 0.14
============================================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
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<PAGE> 4
INFINITY BROADCASTING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
(in thousands except share and per-share amounts)
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1999 1998
========================================================================================================================
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 535,211 $ 497,701
Receivables (net of allowance for doubtful accounts of
$34,645 and $27,463, respectively) 469,230 460,966
Prepaid and other current assets 56,559 39,206
Deferred tax assets 29,527 19,641
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 1,090,527 1,017,514
Property and equipment, net 249,929 236,584
Goodwill, net 5,365,519 5,426,627
FCC licenses, net 3,694,669 3,683,988
Transit franchise agreements, net 241,505 248,555
Other assets 149,933 184,975
- ------------------------------------------------------------------------------------------------------------------------
Total assets $10,792,082 $10,798,243
========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current maturities of long-term debt $ 74,445 $ 647
Accounts payable and accrued expenses 221,071 176,430
Accrued compensation 44,705 39,750
Accrued interest 7,433 12,113
Accrued income taxes 36,583 3,000
- ------------------------------------------------------------------------------------------------------------------------
Total current liabilities 384,237 231,940
Long-term debt 262,897 523,960
Deferred taxes 1,148,962 1,156,244
Other noncurrent liabilities 39,430 28,072
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,835,526 1,940,216
- ------------------------------------------------------------------------------------------------------------------------
Contingent liabilities and commitments
- ------------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, par value $0.01 (50,000,000 shares authorized, none issued) -- --
Class A common stock, par value $0.01 (2,000,000,000 shares
authorized, 155,250,000 shares issued) 1,553 1,553
Class B common stock, par value $0.01 (2,000,000,000 shares
authorized, 700,000,000 shares issued) 7,000 7,000
Capital in excess of par value 8,805,448 8,805,448
Common stock held in treasury, at cost (48,759) --
Accumulated earnings 191,314 44,026
- ------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 8,956,556 8,858,027
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $10,792,082 $10,798,243
========================================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
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<PAGE> 5
INFINITY BROADCASTING CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
(unaudited, in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999 1998
======================================================================================================================
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 147,288 $ 98,319
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 146,538 105,939
Deferred taxes 2,607 (3,812)
Other noncash items (3,296) --
Changes in assets and liabilities, net of acquisitions and dispositions
(Increase) decrease in accounts receivable (8,264) 5,937
(Increase) decrease in other assets (19,714) (10,203)
Increase (decrease) in accounts payable and accrued expenses 29,246 13,897
Increase (decrease) in accrued interest (4,680) 1,045
Increase (decrease) in accrued income taxes 33,583 --
Increase (decrease) in other liabilities (4,468) (8,410)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 318,840 202,712
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from dispositions 58,750 11,831
Business acquisitions (101,422) (1,393,326)
Capital expenditures (19,561) (10,987)
- ----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (62,233) (1,392,482)
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Receipts from CBS, net -- 1,777,215
Purchase of treasury stock (34,366) --
Repayment of debt (184,731) (566,576)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities (219,097) 1,210,639
- ----------------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 37,510 20,869
Cash and cash equivalents at beginning of period 497,701 22,522
- ----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 535,211 $ 43,391
======================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 20,744 $ 3,715
Income taxes $ 103,114 $ 106,041
======================================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
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<PAGE> 6
INFINITY BROADCASTING CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------
1. GENERAL
The condensed consolidated financial statements include the accounts of Infinity
Broadcasting Corporation and its subsidiary companies (together, the Company or
Infinity) after elimination of intercompany accounts and transactions. When
reading the financial information contained in this Quarterly Report, reference
should be made to the consolidated financial statements, schedule, and notes
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999. Certain previously reported amounts have been
reclassified to conform to the 1999 presentation.
The Company was incorporated in September 1998 to own and operate the radio and
outdoor advertising business of CBS Corporation (CBS). In December 1998, CBS
contributed to the Company, at book value, its radio and outdoor advertising
properties.
On May 27, 1999, the Company entered into an agreement to acquire Outdoor
Systems, Inc. (Outdoor Systems) for approximately $8.7 billion which includes
the assumption of $1.8 billion of Outdoor Systems debt. The terms of the
agreement call for each Outdoor Systems common share to be exchanged for 1.25
shares of Infinity Class A common stock. Outdoor Systems is the largest
out-of-home advertising company in North America, operating bulletin, poster,
mall and transit advertising display faces in the United States, Canada, and
Mexico. The consummation of the merger is subject to certain conditions,
including approval by Outdoor Systems and Infinity shareholders and review of
certain regulatory bodies. In connection with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 filing, the Company has received a second request for
information from the Department of Justice, to which it is responding. The
Company believes that the transaction will close in the fourth quarter of 1999.
The condensed consolidated financial statements have been prepared assuming that
the Company existed as a stand-alone entity during all periods presented. Any
acquisitions by CBS during these periods have been presented as the Company's
transactions, and any consideration to effect these acquisitions has been
treated as a capital contribution by CBS to the Company. These acquisitions
include (a) the radio operations of CBS Inc. in November 1995, (b) Infinity
Media Corporation (formerly Infinity Broadcasting Corporation) and subsidiaries,
which includes TDI Worldwide, Inc. (TDI), (collectively, Old Infinity), on
December 31, 1996, and (c) the radio operations of CBS Radio, Inc. and
subsidiaries (formerly American Radio Systems Corporation) (American Radio) in
June 1998. The operating results for the acquired entities have been included in
the Company's Condensed Consolidated Statement of Earnings from their respective
dates of acquisition. See note 2 to the condensed consolidated financial
statements.
Certain prior period financial information included herein may not necessarily
reflect what the consolidated results of operations, financial position, changes
in stockholders' equity and cash flows of the Company would have been had the
Company been a separate, stand-alone entity during those prior periods
presented.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. On an ongoing basis,
management reviews its estimates, including those related to intangible assets,
program rights, contracts, allowance for doubtful accounts, income taxes and
litigation, based on currently available information. Changes in facts and
circumstances may result in revised estimates. In the opinion of management, the
condensed consolidated financial statements include all material adjustments
necessary to present fairly the Company's financial position, results of
operations, and cash flows. Such adjustments are of a normal recurring nature.
The results for this interim period are not necessarily indicative of results
for the entire year or any other interim period.
-6-
<PAGE> 7
2. ACQUISITIONS
In June 1998, the Company acquired the radio broadcasting operations of American
Radio for $1.4 billion in cash plus the assumption of debt with a fair value of
approximately $1.3 billion. The acquisition was accounted for under the purchase
method. The excess consideration paid over the estimated fair value of net
assets acquired totaling approximately $0.8 billion was recorded as goodwill and
is being amortized on a straight-line basis over 40 years.
The following unaudited pro forma information combines the consolidated results
of operations of the Company with those of American Radio as if the American
Radio acquisition occurred on January 1, 1998. The pro forma results give effect
to certain purchase accounting adjustments, including additional depreciation
expense resulting from a step-up in the basis of fixed assets, additional
amortization expense from goodwill and other identifiable intangible assets,
increased interest expense from acquisition debt and related income tax effects.
PRO FORMA RESULTS
<TABLE>
<CAPTION>
(unaudited, in thousands except per-share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------------------------------------------
1999 1998 1999 1998
===============================================================================================================================
<S> <C> <C> <C> <C>
Net revenues $597,273 $534,439 $1,071,008 $952,747
Net earnings 99,628 66,941 147,288 91,703
Net earnings per common share - basic and diluted $ 0.12 $ 0.10 $ 0.17 $ 0.13
===============================================================================================================================
</TABLE>
This pro forma financial information is presented for comparative purposes only
and is not necessarily indicative of the operating results that actually would
have occurred had the American Radio acquisition been consummated on January 1,
1998. In addition, these results are not intended to be a projection of future
results and do not reflect any synergies that might be achieved from combined
operations.
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
(in thousands)
(UNAUDITED)
JUNE 30, DECEMBER 31,
1999 1998
=================================================================================================================
<S> <C> <C>
Accounts payable $ 52,916 $ 41,685
Accrued transit franchise payments 28,151 25,562
Other 140,004 109,183
- -----------------------------------------------------------------------------------------------------------------
Total accounts payable and accrued expenses $ 221,071 $ 176,430
=================================================================================================================
</TABLE>
4. RELATED PARTY TRANSACTIONS
In connection with the formation and capitalization of the Company discussed in
note 1, the Company entered into an intercompany agreement with CBS. The Company
utilizes certain executive and other services provided by CBS or its
subsidiaries. Certain officers of CBS serve as officers of the Company.
Additional services provided by CBS include, among others, certain financial and
administrative services. For the three months and six months ended June 30,
1999, allocated expenses in the approximate amounts of $1.8 million and $3.5
million, respectively, were included in the Condensed Consolidated Statement of
Earnings of the Company. During the same periods in 1998, allocated expenses
totaled $1.1 million and $3.0 million, respectively.
The Company owns a minority equity interest in Westwood One, Inc. (Westwood
One). Most of the Company's stations are affiliated with Westwood One, and
Westwood One distributes nationally certain of the Company's network
programming. In connection with these arrangements, the Company receives
affiliation fees as well as programming cost reimbursements and in certain
instances shares in revenue from the sale of the Company's programming. In
addition, certain officers of the Company serve as officers of Westwood One for
which the Company receives a management fee. For the three months and six months
ended June 30, 1999, revenue and
-7-
<PAGE> 8
expense reimbursements from these arrangements recorded by the Company totaled
approximately $16 million and $32 million, respectively. During the same periods
in 1998, these amounts were $13 million and $31 million, respectively.
5. EARNINGS PER COMMON SHARE
The Company adopted SFAS No. 128 "Earnings per Share" which requires the
disclosure of basic and diluted earnings per share and related computations as
follows:
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
(unaudited, in thousands except per-share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------------------------------
1999 1998 1999 1998
==================================================================================================================
<S> <C> <C> <C> <C>
Net earnings applicable to common stock $ 99,628 $ 66,877 $ 147,288 $ 98,319
- ------------------------------------------------------------------------------------------------------------------
Average shares outstanding - basic 854,794 700,000 854,990 700,000
Diluted effect of stock option plans 144 -- 72 --
- ------------------------------------------------------------------------------------------------------------------
Average shares outstanding - diluted 854,938 700,000 855,062 700,000
- ------------------------------------------------------------------------------------------------------------------
Basic and diluted earnings per common share $ 0.12 $ 0.10 $ 0.17 $ 0.14
==================================================================================================================
</TABLE>
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Infinity Broadcasting Corporation (Infinity or the Company) was formed in
September 1998 as a wholly owned subsidiary of CBS Corporation (CBS) to own and
operate its radio and outdoor advertising segment. The radio broadcasting
properties and TDI Worldwide, Inc. (TDI), one of the largest outdoor advertising
companies in the United States, comprise the Company's out-of-home media
business focusing on providing advertising to targeted demographic audiences
outside the consumer's home.
In December 1998, the Company completed an initial public offering of
155,250,000 shares of its Class A common stock, generating net proceeds of $3.0
billion. Following the stock offering, CBS owned 81.8% of the Company's equity
and 95.8% of the voting power.
On May 27, 1999, the Company entered into an agreement to acquire Outdoor
Systems, Inc. (Outdoor Systems) for approximately $8.7 billion which includes
the assumption of $1.8 billion of Outdoor Systems debt. The terms of the
agreement call for each Outdoor Systems common share to be exchanged for 1.25
shares of Infinity Class A common stock. Outdoor Systems is the largest
out-of-home advertising company in North America, operating bulletin, poster,
mall and transit advertising display faces in the United States, Canada, and
Mexico. The consummation of the merger is subject to certain conditions,
including approval by Outdoor Systems and Infinity shareholders and review of
certain regulatory bodies. In connection with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 filing, the Company has received a second request for
information from the Department of Justice, to which it is responding. The
Company believes that the transaction will close in the fourth quarter of 1999.
The condensed consolidated financial statements have been prepared assuming that
the Company existed as a stand-alone entity during all periods presented. Any
acquisitions of radio or outdoor advertising properties by CBS during these
periods have been presented as the Company's transactions, and any consideration
to effect these acquisitions has been treated as a capital contribution by CBS
to the Company. These acquisitions include (a) the November 1995 acquisition of
the radio operations of CBS Inc. for $1.2 billion of cash, (b) the December 31,
1996 acquisition of Infinity Media Corporation (formerly known as Infinity
Broadcasting Corporation) and subsidiaries, which includes TDI (collectively,
Old Infinity), for $4.7 billion, consisting of $3.8 billion of CBS's common
stock and $0.9 billion of debt that was repaid immediately prior to the
acquisition, and (c) the June 1998 acquisition of the radio operations of CBS
Radio, Inc. and subsidiaries (formerly American Radio Systems Corporation)
(American Radio) for $1.4 billion of cash plus the assumption of debt with a
fair value of approximately $1.3 billion. See note 2 to the condensed
consolidated financial statements.
The Condensed Consolidated Statement of Earnings and Condensed Consolidated
Statement of Cash Flows for the three and six months ended June 30, 1998 are not
necessarily indicative of the results of operations and cash flows that would
have resulted had the Company actually operated as a separate, stand-alone
entity.
RESULTS OF OPERATIONS
USE OF EBITDA
Management believes that earnings before interest, taxes, minority interest,
depreciation and amortization (EBITDA) is an appropriate measure for evaluating
the operating performance of the Company's business. EBITDA eliminates the
effect of depreciation and amortization of tangible and intangible assets, most
of which were acquired in acquisitions accounted for under the purchase method
of accounting, including CBS Inc.'s radio operations, Old Infinity and American
Radio. The exclusion of amortization expense eliminates variations in results
among stations or other entities caused by the timing of acquisitions. More
recent acquisitions reflect higher amortization expense due to increasing prices
associated with out-of-home properties. However, EBITDA should be considered in
addition to, not as a substitute for, operating earnings, net earnings, cash
flows and other measures of financial performance reported in accordance with
generally accepted accounting principles. As EBITDA is not a measure of
-9-
<PAGE> 10
performance calculated in accordance with generally accepted accounting
principles, this measure may not be comparable to similarly titled measures
employed by other companies.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1998
Certain discussions below provide a comparison of actual results with pro forma
results. For the three months ended June 30, 1999 and 1998 comparisons, pro
forma results were determined as if the acquisition of American Radio and
related divestitures and exchanges had occurred on January 1, 1998.
Net revenues for the three months ended June 30, 1999 were $597 million compared
to $456 million for the three months ended June 30, 1998, an increase of
approximately 31%. Driving this increase was the continued strong performance of
the stations, strong growth in outdoor advertising and the inclusion of the
operations of American Radio in the Company's results subsequent to its June
1998 acquisition. On a pro forma basis, net revenues for the three months ended
June 30, 1999 compared to the three months ended June 30, 1998 increased
approximately 15%.
Operating expenses excluding depreciation and amortization expense for the three
months ended June 30, 1999 were $328 million compared to $254 million for the
three months ended June 30, 1998, an increase of approximately 29%. Operating
expenses did not increase in the same proportion as the increase in revenues
because a substantial portion of the Company's costs are fixed. On a pro forma
basis, operating expenses for the three months ended June 30, 1999 compared to
the three months ended June 30, 1998 increased approximately 12%. Depreciation
and amortization expense for the three months ended June 30, 1999 was $74
million compared to $57 million for the three months ended June 30, 1998, an
increase of approximately 30%. The increase primarily represents additional
depreciation and amortization expense resulting from the June 1998 acquisition
of American Radio.
Operating earnings for the three months ended June 30, 1999 were $191 million
compared to $141 million for the three months ended June 30, 1998, an increase
of approximately 36%. This increase was primarily attributable to the higher
revenues and to the June 1998 acquisition of American Radio. On a pro forma
basis, operating earnings for the three months ended June 30, 1999 compared to
the three months ended June 30, 1998 increased approximately 29%.
EBITDA for the three months ended June 30, 1999 was $265 million compared to
$198 million for the three months ended June 30, 1998, an increase of
approximately 34%. On a pro forma basis, EBITDA for the three months ended June
30, 1999 compared to the three months ended June 30, 1998 increased
approximately 20%.
Income taxes for the three months ended June 30, 1999 were $92 million compared
to $70 million for the three months ended June 30, 1998. The effective tax rate
was 48% for the three months ended June 30, 1999 compared to 51% for the three
months ended June 30, 1998. The Company's effective tax rate exceeds the federal
statutory rate primarily because of the non-deductible goodwill amortization
resulting from recent business acquisitions. The decrease in the effective tax
rate is due to the Company's higher operating earnings.
Net earnings for the three months ended June 30, 1999 totaled $100 million
compared to $67 million for the three months ended June 30, 1998, an increase of
49%.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1998
Certain discussions below provide a comparison of actual results with pro forma
results. For the six months ended June 30, 1999 and 1998 comparisons, pro forma
results were determined as if the acquisition of American Radio and related
divestitures and exchanges had occurred on January 1, 1998.
Net revenues for the six months ended June 30, 1999 were $1,071 million compared
to $785 million for the six months ended June 30, 1998, an increase of
approximately 36%. Driving this increase was the continued strong performance of
the stations, strong growth in outdoor advertising and the inclusion of the
operations of American Radio in the Company's results subsequent to its June
1998 acquisition. On a pro forma basis, net revenues for the six months ended
June 30, 1999 compared to the six months ended June 30, 1998 increased
approximately 15%.
-10-
<PAGE> 11
Operating expenses excluding depreciation and amortization expense for the six
months ended June 30, 1999 were $626 million compared to $466 million for the
six months ended June 30, 1998, an increase of approximately 34%. Operating
expenses did not increase in the same proportion as the increase in revenues
because a substantial portion of the Company's costs are fixed. On a pro forma
basis, operating expenses for the six months ended June 30, 1999 compared to the
six months ended June 30, 1998 increased approximately 11%. Depreciation and
amortization expense for the six months ended June 30, 1999 was $147 million
compared to $106 million for the six months ended June 30, 1998, an increase of
approximately 38%. The increase primarily represents additional depreciation and
amortization expense resulting from the June 1998 acquisition of American Radio.
Operating earnings for the six months ended June 30, 1999 were $289 million
compared to $205 million for the six months ended June 30, 1998, an increase of
approximately 41%. This increase was primarily attributable to the higher
revenues and to the June 1998 acquisition of American Radio. On a pro forma
basis, operating earnings for the six months ended June 30, 1999 compared to the
six months ended June 30, 1998 increased approximately 37%.
EBITDA for the six months ended June 30, 1999 was $435 million compared to $311
million for the six months ended June 30, 1998, an increase of approximately
40%. On a pro forma basis, EBITDA for the six months ended June 30, 1999
compared to the six months ended June 30, 1998 increased approximately 23%.
Income taxes for the six months ended June 30, 1999 were $139 million compared
to $102 million for the six months ended June 30, 1998. The effective tax rate
was 49% for the six months ended June 30, 1999 compared to 51% for the six
months ended June 30, 1998. The Company's effective tax rate exceeds the federal
statutory rate primarily because of the non-deductible goodwill amortization
resulting from recent business acquisitions. The decrease in the effective tax
rate is due to the Company's higher operating earnings.
Net earnings for the six months ended June 30, 1999 totaled $147 million
compared to $98 million for the six months ended June 30, 1998, an increase of
approximately 50%.
SEASONALITY
Seasonal revenue fluctuations are common in the out-of-home media industry. The
Company's revenue is typically lowest in the first quarter and highest in the
second and fourth quarters.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations generate cash substantially in excess of that required
for recurring operations and capital expenditures. At June 30, 1999, the
Company's cash and cash equivalents totaling $535 million exceeded its total
debt of $337 million by $198 million. Management expects that because of the
Company's strong cash position, it will have sufficient liquidity to meet its
future business needs. Sources of liquidity generally available to the Company
include cash from operations, cash and cash equivalents, borrowings, and
issuances of equity securities.
Operating Activities
The Company's operating activities provided $319 million of cash during the
first six months of 1999 compared to $203 million during the first six months of
1998. The increase relates primarily to the improved operating results during
the first and second quarters of 1999. Subsequent to the Company's initial
public offering in December 1998, income taxes are paid pursuant to the terms of
the tax sharing agreement between the Company and CBS.
Investing Activities
The Company's investing activities used cash of $62 million during the first six
months of 1999 compared to $1,392 million during the first six months of 1998.
Cash used during the first six months of 1999 related primarily to the net
impact of acquisitions, dispositions, and capital expenditures. In June of 1998,
the Corporation completed the acquisition of the radio broadcasting operations
of American Radio for $1.4 billion in cash plus the assumption of debt with fair
value of approximately $1.3 billion.
-11-
<PAGE> 12
On April 30, 1999, the Company acquired two radio stations in Tampa, Florida and
one in Cleveland, Ohio from Clear Channel Communications for $123 million in
cash. These acquisitions were funded by a combination of cash on hand and cash
held in acquisition trust.
The Company's capital expenditures totaled $20 million for the first six months
of 1999 compared to $11 million for the first six months of 1998. The Company's
business does not require substantial investment of capital. The increase in
capital expenditures during the first six months of 1999 was due primarily to
the incremental expenditures incurred on the American Radio stations, which were
acquired in June 1998.
Financing Activities
Cash used for financing activities totaled $219 million during the first six
months of 1999 compared to $1,211 million provided during the first six months
of 1998. Cash used for financing activities during the first six months of 1999
related to the Company's repayment of outstanding debt and the purchase of
treasury stock. Cash provided by financing activities during the first six
months of 1998 reflects net contributions from CBS for the American Radio
acquisition offset by cash earnings generated by the Company.
On June 17, 1999, the Company announced that its board of directors had
authorized the purchase of up to $500 million of its class A common stock. As of
July 31, 1999, 5.3 million shares were repurchased at a cost of approximately
$148 million.
The Company has the ability to borrow up to $1.0 billion under CBS's revolving
credit agreement, which expires on August 29, 2001. No borrowings were
outstanding under this facility at June 30, 1999.
The Company does not anticipate paying any dividends on its common stock in the
near term.
YEAR 2000
The Year 2000 issue is the result of the development of computer programs and
computer chips using two digits rather than four digits to define the applicable
year. Computer programs and/or equipment with time-sensitive software or
computer chips may recognize the date using "00" as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculations causing
disruptions to business operations.
To address the Year 2000 issue, the Company has undertaken efforts to identify,
modify or replace, and test systems that may not be Year 2000 compliant. The
Company estimates its cost to achieve Year 2000 compliance to be approximately
$5 million, of which $4 million has been incurred to date. CBS has incurred
additional costs of approximately $2 million on behalf of the Company to ensure
compliance of the management information systems infrastructure. Approximately
60% of the total expenditures relate to replacement of existing systems. The
Company is funding these costs through its cash flows from operations. Such
costs are expensed as incurred.
The Company's centrally managed critical systems are currently Year 2000
compliant or will be replaced by Year 2000 compliant applications by the end of
the third quarter of 1999. A significant portion of the Year 2000 work for radio
systems has been performed or is underway. The Company has implemented Year 2000
procedures and guidelines for individual radio stations, and most high-risk
radio assets have been remediated and tested. The Company expects to test all
radio systems and believes it will be Year 2000 compliant by the end of the
third quarter of 1999.
The Year 2000 effort also includes communication with all significant third
party suppliers and customers to determine the extent to which the Company's
systems are vulnerable to those parties' failure to reach Year 2000 compliance.
There can be no guarantee that the Company's third party suppliers or customers
will be Year 2000 compliant on a timely basis and that failure to achieve
compliance would not have a material adverse impact on the Company's business
operations.
Although the Company believes that it will complete its Year 2000 effort and
will be compliant on time, there can be no assurances that this will occur. The
Company has developed initial contingency plans to ensure continued
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<PAGE> 13
business operations in case of Year 2000 related disruptions. These plans will
be finalized by the end of the third quarter of 1999.
The Company believes that it is difficult to fully assess the risks of the Year
2000 problem due to numerous uncertainties surrounding the issue. Management
believes that primary risks are external to the Company and relate to the Year
2000 readiness of its suppliers and customers. The inability of the Company or
its suppliers and customers to adequately address the Year 2000 issues on a
timely basis could result in a material financial risk, including loss of
revenue, substantial unanticipated costs and service interruptions. Accordingly,
the Company has been, and will continue to, devote the resources it concludes
are appropriate to address all significant Year 2000 issues in a timely manner.
REGULATORY MATTERS
CBS has received, in the past, numerous permanent and temporary waivers to
permit ownership of a television station and numerous radio stations in the same
market. The temporary waivers were subject to the outcome of pending rulemaking
proceedings focusing upon the possible relaxation of the Federal Communications
Commission (FCC) rule restricting common ownership in the same market of radio
and television stations (the "one-to-a-market" rule).
Recently, the FCC issued its Report and Order with respect to this pending
rulemaking. The Order would amend the radio/television cross-ownership rule to
allow a single party to own in a market (a) up to two television stations (if
permitted by the FCC's television duopoly rule) and up to six radio stations or
(b) one television station and seven radio stations, in both instances under
certain circumstances.
Under the Report and Order, CBS is to submit within sixty days a showing as to
its compliance or non-compliance with the revised rule in those markets where it
currently has temporary waivers. CBS anticipates being able to demonstrate
compliance in all markets other than Los Angeles, Chicago, Baltimore, and
Dallas-Fort Worth, each of which has eight radio stations. As to those four
markets, the Report and Order provides that the FCC will continue the temporary
waivers until 2004, at which time the FCC will review its radio/television
cross-ownership rule, and CBS will have an opportunity to demonstrate that its
continued ownership of an eighth radio station in these markets would serve the
public interest.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including "Management's Discussion and
Analysis of Financial Condition and Results of Operations," contains both
historical and forward-looking statements. All statements other than statements
of historical fact are, or may be deemed to be, forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are not based on historical facts but rather reflect
the Company's current expectations concerning future results and events. The
words "believes," "expects," "intends," "plans," "anticipates," "likely,"
"will," and similar expressions identify such forward-looking statements. These
forward-looking statements are subject to risks, uncertainties, and other
factors, some of which are beyond the Company's control, that could cause actual
results to differ materially from those forecast or anticipated in such
forward-looking statements.
Such risks, uncertainties, and factors include, but are not limited to, the
impact of changes in national, regional and local economics; successful
integration of any acquired properties; the Company's ability to develop and/or
acquire radio on-air talent and programming and to attract and retain
advertisers; the impact of significant competition from other radio stations and
programming alternatives such as broadcast television, newspapers, magazines,
cable television, the Internet, direct mail, and the impact of new technologies;
changes in FCC regulations; increased governmental regulation of the location,
size or content of outdoor advertising; and such other competitive and business
risks as from time to time may be detailed in the Company's Securities and
Exchange Commission reports.
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<PAGE> 14
Readers are cautioned not to place undue reliance on these forward-looking
statements which reflect management's view only as of the date of this Report on
Form 10-Q. The forward-looking statements included in this document are made
only as of the date of this document and the Company does not have any
obligation under Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, to publicly
update any forward-looking statements to reflect subsequent events or
circumstances.
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<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings arising in the ordinary
course of business. In the opinion of management of the Company, however, there
are no legal proceedings pending against the Company likely to have a material
adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders of the Company was held on May 4,
1999.
(b) The following matters were submitted to a vote of the shareholders at
the annual meeting with the following results:
(i) In connection with the election of two directors, the
following votes were cast for or withheld from the following
candidates:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
George H. Conrades 3,634,076,749 66,096
Farid Suleman 3,634,063,610 79,235
</TABLE>
The terms of office of the following directors continued after
the annual meeting:
Richard R. Pivirotto
Jeffrey Sherman
Paula Stern
Mel Karmazin
Robert D. Walter
(ii) A management proposal regarding the election of KPMG LLP as
independent auditors: 3,634,054,798 votes were cast for;
60,733 against; and 27,314 abstentions were recorded in
connection with the adoption of this proposal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
3. CERTIFICATE OF INCORPORATION AND BY-LAWS.
3.1 Restated Certificate of Incorporation of the Company as of December 14,
1998.
3.2 Restated By-Laws of the Company as of December 14, 1998.
10. MATERIAL CONTRACTS.
10.1 Stock and Asset Transfer Agreement, dated December 2, 1998, between CBS
Broadcasting Inc. and the Company is incorporated by reference to
Exhibit 10.1 to the Company's Registration Statement No. 333-63727 on
Form S-1, Amendment No. 4, filed with the Securities and Exchange
Commission on December 4, 1998.
10.2 Stock and Transfer Agreement, dated December 3, 1998, between CBS
Corporation and the Company is incorporated by reference to Exhibit
10.2 to the Company's Registration Statement No. 333-63727 on Form S-1,
Amendment No. 4, filed with the Securities and Exchange Commission on
December 4, 1998.
10.3 Intercompany Agreement between CBS Corporation and the Company is
incorporated by reference to Exhibit 10(x) to the report on Form 10-K
of CBS Corporation for the year ended December 31, 1998.
10.4 Tax Sharing Agreement between CBS Corporation and the Company is
incorporated by reference to Exhibit 10(y) to the report on Form 10-K
of CBS Corporation for the year ended December 31, 1998.
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<PAGE> 16
10.5 $4.0 billion Credit Agreement among CBS Corporation, the Lenders
parties thereto, Nationsbank, N.A. and the Toronto-Dominion Bank, as
Syndication Agents, The Chase Manhattan Bank as Documentation Agent,
and Morgan Guaranty Trust Company of New York, as Administrative Agent,
dated August 29, 1996, is incorporated herein by reference to Exhibit
10(1) to the report on Form 10-Q of CBS Corporation for the quarter
ended September 30, 1996.
10.6 First Amendment, dated January 29, 1997, to the CBS Corporation Credit
Agreement, dated August 29, 1996, among CBS Corporation, the Lenders
parties thereto, Nationsbank, N.A. and The Toronto-Dominion Bank as
Syndication Agents, The Chase Manhattan bank as Documentation Agent,
and Morgan Guaranty Trust Company of New York as Administrative Agent,
is incorporated herein by reference to Exhibit 10(p) to the report on
Form 10-Q of CBS Corporation for the quarter ended March 31, 1997.
10.7 Second Amendment, dated March 21, 1997, to the CBS Corporation Credit
Agreement, dated August 29, 1996, as amended by the First Amendment
thereto dated January 29, 1997, among CBS Corporation, the Subsidiary
Borrowers parties thereto, the Lenders parties thereto, Nationsbank,
N.A. and The Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank As Documentation Agent, and Morgan Guaranty Trust
Company of New York as Administrative Agent, is incorporated herein by
reference to Exhibit 10(q) to the report on Form 10-Q of CBS
Corporation for the quarter ended March 31, 1997.
10.8 Third Amendment, dated March 3, 1998, to the CBS Corporation Credit
Agreement, dated August 29, 1996, as amended by the First Amendment
thereto dated January 29, 1997, as amended by the Second Amendment
thereto dated March 21, 1997 among CBS Corporation, the Subsidiary
Borrowers parties thereto, the Lenders parties thereto, Nationsbank,
N.A. and The Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty Trust
Company of New York as Administrative Agent, is incorporated herein by
reference to Exhibit 10(x) to the report on Form 10-Q of CBS
Corporation for the quarter ended March 31, 1998.
10.9 Fourth Amendment, dated February 26, 1999, to the CBS Corporation
Credit Agreement, dated August 29, 1996, as amended by the First,
Second, and Third Amendments, dated January 29, 1997, March 21, 1997
and March 3, 1999, respectively, among CBS Corporation, the Subsidiary
Borrowers parties thereto, the Lenders parties thereto, Nationsbank,
N.A. and The Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty Trust
Company of New York as Administrative Agent.
10.10 Management Agreement, dated March 30, 1999, between the Company and
Westwood One, Inc., is incorporated herein by reference to
Exhibit 10.17 to the report on Form 8-K of Westwood One, Inc., filed
with the Securities and Exchange Commission on June 4, 1999.
10.11 Amended and Restated Representation Agreement, dated March 30, 1999,
between the Company and Westwood One, Inc., is incorporated herein by
reference to Exhibit 10.18 to the report on Form 8-K of Westwood One,
Inc., filed with the Securities and Exchange Commission on June 4,
1999.
10.12* Employment Agreement, entered into on June 20, 1996 and effective
December 1996, between CBS Corporation and Mel Karmazin, is
incorporated herein by reference to Exhibit 10(s) to the report on Form
10-Q of CBS Corporation for the quarter ended March 31, 1997.
10.13* Employment Agreement entered into on May 22, 1996, effective November
28, 1995 and amended January 29, 1997, between CBS Broadcasting Inc.
and Daniel Mason, is incorporated by reference to Exhibit 10.13 to the
Company's Registration Statement No. 333-63727 on Form S-1, Amendment
No. 4, filed with the Securities and Exchange Commission on December 4,
1998.
10.14* Restated Employment Agreement, dated December 1, 1998, between
TDI Worldwide, Inc. and William Apfelbaum, is incorporated by reference
to Exhibit 10.14 to the Company's Registration Statement No. 333-63727
on Form S-1, Amendment No. 4, filed with the Securities and Exchange
Commission on December 4, 1998.
10.15* The CBS Corporation 1991 Long-Term Incentive Plan, as amended to
January 28, 1998, is incorporated herein by reference to Exhibit 10(g)
to the report on Form 10-K of CBS Corporation for the year ended
December 31, 1997.
10.16* The CBS Corporation 1993 Long-Term Incentive Plan, as amended to
January 28, 1998, is incorporated herein by reference to Exhibit 10(b)
to the report on Form 10-K of CBS Corporation for the year ended
December 31, 1997.
10.17* 1998 Long-Term Incentive Plan of the Company is incorporated by
reference to Exhibit 10.17 to the Company's Registration Statement No.
333-63727 on Form S-1, Amendment No. 4, filed with the Securities and
Exchange Commission on December 4, 1998.
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<PAGE> 17
10.18* Executive Annual Incentive Plan of the Company is incorporated by
reference to Exhibit 10.18 to the Company's Registration Statement No.
333-63727 on Form S-1, Amendment No. 4, filed with the Securities and
Exchange Commission on December 4, 1998.
10.19* The CBS Corporation Annual Performance Plan, as amended to November 1,
1996, is incorporated herein by reference to Exhibit 10(a) to the
report Form 10-Q of CBS Corporation for the quarter ended September 30,
1996.
10.20* The Westinghouse Executive Pension Plan, as amended to August 19, 1998,
is incorporated herein by reference to Exhibit 10(g) to the report on
Form 10-K of CBS Corporation for the year ended December 31, 1998.
10.21* The CBS Corporation 1998 Executive Annual Incentive Plan is
incorporated herein by reference to Exhibit A to the Proxy Statement of
CBS Corporation filed March 25, 1998.
10.22 Form of Trademark License Agreement between CBS Worldwide Inc. and the
Company is incorporated by reference to Exhibit 10.24 to the Company's
Registration Statement No. 333-63727 on Form S-1, Amendment No. 4,
filed with the Securities and Exchange Commission on December 4, 1998.
10.23 Form of Trademark License Agreement between CBS Broadcasting Inc. and
the Company is incorporated by reference to Exhibit 10.25 to the
Company's Registration Statement No. 333-63727 on Form S-1, Amendment
No. 4, filed with the Securities and Exchange Commission on December 4,
1998.
10.24 Form of Trademark License Agreement between CBS Corporation and the
Company is incorporated by reference to Exhibit 10.26 to the Company's
Registration Statement No. 333-63727 on Form S-1, Amendment No. 4,
filed with the Securities and Exchange Commission on December 4, 1998.
10.25* The Infinity Broadcasting Corporation Stock Plan for Directors is
incorporated by reference to Exhibit 10.25 to Form 10-K for the year
ended December 31, 1998.
10.26 Agreement and Plan of Merger, dated May 27, 1999, among the Company,
Burma Acquisition Corp. and Outdoor Systems, Inc., is incorporated
herein by reference to Exhibit 99.1 to the report on Form 8-K of
Outdoor Systems, Inc., filed with the Securities and Exchange
Commission on June 3, 1999.
10.27 Amendment No.1, dated June 16, 1999, to the Agreement and Plan of
Merger, dated May 27, 1999, among the Company, Burma Acquisition
Corp. and Outdoor Systems, Inc., is incorporated herein by reference to
Exhibit 99.2 to the Company's report on Form 8-K, filed with the
Securities and Exchange Commission on June 25, 1999.
10.28 Stockholders Agreement, dated May 27, 1999, among the Company,
William S. Levine, Arturo R. Moreno, Carole D. Moreno, Levine
Investments Limited Partnership and BRN Properties Limited Partnership,
is incorporated herein by reference to Exhibit 99.2 to the report on
Form 8-K of Outdoor Systems, Inc., filed with the Securities and
Exchange Commission on June 3, 1999.
10.29 Voting Agreement, dated May 27, 1999, between CBS Broadcasting Inc. and
Outdoor Systems, Inc., is incorporated herein by reference to
Exhibit 99.3 to the report on Form 8-K of Outdoor Systems, Inc., filed
with the Securities and Exchange Commission on June 3, 1999.
27. FINANCIAL DATA SCHEDULE.
27.1 Financial Data Schedule.
- ----------
* Identifies management contract or compensatory plan or arrangement.
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<PAGE> 18
B) REPORTS ON FORM 8-K
A Current Report on Form 8-K (Items 5 and 7), filed with the Securities and
Exchange Commission on June 4, 1999, filing a press release announcing that the
Company had entered into a definitive merger agreement with Outdoor Systems,
Inc.
A Current Report on Form 8-K (Items 5 and 7), filed with the Securities and
Exchange Commission on June 25, 1999, announcing that the Company had entered
into an amendment to the definitive merger agreement with Outdoor Systems, Inc.
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<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 16th day of August 1999.
INFINITY BROADCASTING CORPORATION
By: /s/ FARID SULEMAN
----------------------------------
Farid Suleman
Executive Vice President, Chief
Financial Officer and Treasurer
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<PAGE> 1
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
INFINITY BROADCASTING CORPORATION
----------
Infinity Broadcasting Corporation, a corporation organized and
existing under the laws of the State of Delaware, for the purpose of amending
and restating its Certificate of Incorporation, does hereby certify as follows:
FIRST: The name of the corporation is Infinity Broadcasting
Corporation, and the name under which the corporation was originally
incorporated was Infinity Media Corporation. The original Certificate of
Incorporation (the "Original Certificate") was filed with the Secretary of State
of the State of Delaware on September 15, 1998, pursuant to and by virtue of the
General Corporation Law of the State of Delaware.
SECOND: Effective immediately upon the filing of this Restated
Certificate of Incorporation in the office of the Secretary of State of the
State of Delaware (the "Effective Time"), each share of previously existing
common stock, par value $1.00 per share, issued and outstanding or held in
treasury shall be and hereby is converted into and reclassified as
642,201.8348624 shares of Class B Common Stock, par value $.01 per share.
Certificates which prior to the Effective Time represented shares of common
stock shall, at the Effective Time, be hereby canceled and upon presentation of
the canceled certificates to Infinity Broadcasting Corporation, the holders
thereof shall be entitled to receive certificate(s) representing the shares of
Class B Common Stock into which such canceled shares have been converted.
THIRD: This Restated Certificate of Incorporation, having been
duly adopted in accordance with the provisions of Sections 228, 242 and 245 of
the General Corporation Law of the State of Delaware by the unanimous written
consent of the Board of Directors and the written consent of the stockholders of
Infinity Broadcasting Corporation, restates and integrates and
<PAGE> 2
further amends the provisions of the Original Certificate. As so restated and
integrated and further amended, the Restated Certificate of Incorporation
(hereinafter, the "Certificate of Incorporation") reads as follows:
ARTICLE FIRST
NAME OF CORPORATION
The name of the corporation is Infinity Broadcasting
Corporation (the "Corporation").
ARTICLE SECOND
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the
State of Delaware is The Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name of the registered agent
of the Corporation at such address is The Corporation Trust Company.
ARTICLE THIRD
PURPOSE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE FOURTH
CAPITAL STOCK
A. The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 4,050,000,000 shares
consisting of: (1) 2,000,000,000 shares of Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), (2) 2,000,000,000 shares of Class B
Common Stock, par value $.01 per share (the "Class B Common Stock" and, together
with the Class A Common Stock, the "Common Stock") and (3) 50,000,000 shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock"). The number of
<PAGE> 3
3
authorized shares of Class A Common Stock, Class B Common Stock or Preferred
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 series of Preferred Stock) by the affirmative vote of a majority of
the combined voting power of the outstanding shares of capital stock of the
Corporation entitled to vote thereon, voting as a single class irrespective of
the provisions of Section 242(b)(2) of the General Corporation Law of the State
of Delaware (or any successor provision thereto). This paragraph A of Article
FOURTH shall not in any way limit the provisions of Section 242(b)(1) of the
General Corporation Law of the State of Delaware other than with respect to the
elimination of any class vote that would otherwise be required pursuant to
Section 242(b)(2).
B. The Board of Directors shall have the full authority
permitted by law, at any time and from time to time, to provide for the issuance
of shares of Preferred Stock in one or more series and to determine by
resolution or resolutions the following provisions, designations, powers,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations or restrictions, of the shares of any such
series of Preferred Stock:
(1) the designation of such series (which may be by
distinguishing number, letter or title), the number of shares to
constitute such series (which number the Board of Directors may
thereafter increase or decrease (but not below the number of shares
thereof then outstanding or reserved for issuance upon conversion of
the Class B Common Stock or any series of Preferred Stock)) and the
stated or liquidation value thereof, if different from the par value
thereof;
(2) whether the shares of such series shall have voting rights
in addition to any voting rights provided by law, and, if so, the terms
of such voting rights, which may be full or limited;
(3) the dividends, if any, payable on such series, whether any
such dividends shall be cumulative and, if so, from what dates, the
conditions and dates upon which such dividends shall be payable, the
preference or relation which such dividends shall bear to the dividends
payable on any shares of any other class of capital stock or any other
series of Preferred Stock;
<PAGE> 4
4
(4) whether the shares of such series shall be subject to
redemption at the election of the Corporation or the holders of such
series, or upon the occurrence of a specified event and, if so, the
times, prices and other terms and conditions of such redemption,
including the manner of selecting shares for redemption if less than
all shares are to be redeemed and the securities or other property
payable upon any such redemption, if any;
(5) the amount or amounts payable on, if any, and the
preferences, if any, of shares of such series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of, or upon any distribution of the assets of, the Corporation;
(6) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to
the purchase or redemption of the shares of such series for retirement
or other corporate purposes and the terms and provisions relative to
the operation thereof;
(7) whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class of capital stock
or any other series of Preferred Stock or any other securities (whether
or not issued by the Corporation) and, if so, the price or prices or
the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of conversion or
exchange;
(8) the limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payment of
dividends or the making of other distributions on, or upon the
purchase, redemption or other acquisition by the Corporation of, the
Common Stock or shares of any other class of capital stock or any other
series of Preferred Stock;
<PAGE> 5
5
(9) the conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or upon the issuance of any
additional stock, including additional shares of any other series of
Preferred Stock or of any other class of capital stock;
(10) the ranking (be it pari passu, junior or senior) of each
series vis-a-vis any other class of capital stock or series of
Preferred Stock as to the payment of dividends, the distribution of
assets and all other matters; and
(11) any other powers, preferences and relative,
participating, optional or other special rights, and any
qualifications, limitations or restrictions of such series of Preferred
Stock, insofar as they are not inconsistent with the provisions of this
Certificate of Incorporation, to the full extent permitted in
accordance with the General Corporation Law of the State of Delaware.
C. The powers, preferences and relative, participating,
optional or other special rights, if any, of each series of Preferred Stock, and
the qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series of Preferred Stock at any time outstanding.
All shares of any one series of Preferred Stock shall be identical in all
respects with all other shares of such series, except that shares of any one
series issued at different times may differ as to the dates from which dividends
thereon shall be cumulative.
D. Subject to the other provisions of this Article FOURTH and
actions taken by the Board of Directors pursuant to this Article FOURTH:
(1) The holders of shares of Class A Common Stock and Class B
Common Stock shall be entitled to receive such dividends or other
distributions payable in cash, capital stock or otherwise, when, as and
if declared by the Board of Directors at any time or from time to time,
out of funds legally available for the payment thereof, and shall share
equally on a per share basis in all such dividends or other
distributions. 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
<PAGE> 6
6
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 if a dividend or other
distribution payable in shares of any class of Common Stock or in
rights, options, warrants or other securities convertible into or
exchangeable or exercisable for shares of Common Stock shall be
declared with respect to the Common Stock, the dividend or other
distribution payable to holders of Class A Common Stock shall be
payable in shares of Class A Common Stock or in rights, options,
warrants or other securities convertible into or exchangeable or
exercisable for shares of Class A Common Stock, as the case may be, and
the dividend or other distribution payable to holders of Class B Common
Stock shall be payable in shares of Class B Common Stock or in rights,
options, warrants or other securities convertible into or exchangeable
or exercisable for shares of Class B Common Stock, as the case may be.
Neither the shares of Class A Common Stock nor the shares of Class B
Common Stock may be reclassified, subdivided or combined unless such
reclassification, subdivision or combination occurs simultaneously and
in the same proportion for each class of Common Stock.
(2) The voting power of the Corporation shall be exclusively
vested in the Common Stock.
(3) Holders of Preferred Stock and holders of Common Stock
shall not have any preemptive, preferential or other right to subscribe
for or purchase or acquire any shares of any class or series of capital
stock or any other securities of the Corporation, whether now or
hereafter authorized, and whether or not convertible into, or
evidencing or carrying the right to purchase, shares of any class or
series of capital stock or any other securities now or hereafter
authorized, and whether the same shall be issued for cash, services or
property, or by way of dividend or otherwise, other than such right, if
any, as the Board of Directors in its discretion from time to time may
determine. If the Board of Directors shall offer to the holders of the
Preferred Stock or the holders of the Common Stock, or any of them, any
such shares or other securities of the
<PAGE> 7
7
Corporation, such offer shall not in any way constitute a waiver or
release of the right of the Board of Directors subsequently to dispose
of other portions of said shares or securities without so offering the
same to said holders.
(4) The shares of Preferred Stock may be issued for such
consideration and for such corporate purposes as the Board of Directors
may from time to time determine.
(5) The powers, preferences and relative, participating,
optional or other special rights, if any, and any qualifications,
limitations or restrictions with respect to Class A Common Stock and
Class B Common Stock shall be in all respects identical, except as
otherwise required by law or expressly provided in this Certificate of
Incorporation.
(6) With respect to all matters upon which holders of Common
Stock are entitled to vote or to which holders of Common Stock are
entitled to give consent, except as may be provided in this Certificate
of Incorporation or by applicable law, every holder of Class A Common
Stock shall be entitled to cast thereon one vote in person or by proxy
for each share of Class A Common Stock standing in such holder's name
on the transfer books of the Corporation, and every holder of Class B
Common Stock shall be entitled to cast thereon five votes in person or
by proxy for each share of Class B Common Stock standing in such
holder's name on the transfer books of the Corporation. Except as
otherwise required by law or as otherwise provided in this Certificate
of Incorporation, the holders of Class A Common Stock and Class B
Common Stock shall vote together as a single class, subject to any
voting rights which may be granted to holders of any outstanding
Preferred Stock, on all matters submitted to a vote of stockholders of
the Corporation. Holders of shares of Class A Common Stock and Class B
Common Stock are not entitled to cumulate their votes in the election
of directors.
E. (1) Prior to the date on which shares of Class B Common
Stock are transferred to stockholders of CBS Parent (as defined) in a Tax-Free
Spin-Off (as defined in paragraph E(2) of this Article FOURTH), each share of
Class B Common Stock is convertible while held by CBS (as defined in paragraph A
of Article SEVENTH), at the option of the holder thereof and in the
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8
manner described below, into one share of Class A Common Stock, subject to
adjustment as provided in paragraph E(1)(b) of this Article FOURTH and subject
to the conditions and limitations described below:
(a) In order to voluntarily convert shares of Class B Common
Stock into shares of Class A Common Stock pursuant to this paragraph
E(1) of Article FOURTH, the holder thereof shall deliver to the office
of the Secretary of the Corporation (or at such additional place or
places as may from time to time be designated by the Secretary of the
Corporation) (the "Office of the Corporation") (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, if required by paragraph E(9) of this Article FOURTH,
by any required tax transfer stamps and (ii) written notice (the
"Conversion Notice") to the Corporation that such holder elects to
convert such shares of Class B Common Stock into shares of Class A
Common Stock and stating the name and address in which each certificate
representing shares of Class A Common Stock issued upon such conversion
is to be issued. To the extent permitted by law, such voluntary
conversion shall be deemed to have been effected at the close of
business on the date when such delivery is made to the Office of the
Corporation of the certificate representing the shares to be converted
together with the Conversion Notice, and the person exercising such
voluntary conversion shall be treated for all purposes as the holder of
the number of shares of Class A Common Stock issuable upon such
voluntary conversion at such time; provided, however, that, subject to
paragraph E(6) of this Article FOURTH, such holder shall be entitled to
receive, when paid, any dividends or other distributions declared on
Class B Common Stock with a record date preceding the time of such
voluntary conversion and unpaid as of the time of such voluntary
conversion. Following a voluntary conversion, the Corporation shall
promptly issue and deliver, or cause to be issued and delivered, a
certificate or certificates representing the number of fully paid and
nonassessable shares of Class A Common Stock into which the shares of
Class B Common Stock formerly represented by such certificate has been
converted at the address set forth in the Conversion Notice.
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(b) If there occurs any capital reorganization or any
reclassification of the capital stock of the Corporation (other than a
reclassification, subdivision or combination described in paragraph
D(1) of this Article FOURTH or pursuant to a merger, consolidation or
other restructuring referred to in paragraph F of this Article FOURTH),
each share of Class B Common Stock shall thereafter be convertible
into, in lieu of one share of Class A Common Stock, the same kind and
amount of securities or other assets, or both, that were issuable or
distributable to the holders of shares of the outstanding Class A
Common Stock upon such reorganization or reclassification with respect
to that number of shares of Class A Common Stock into which such share
of Class B Common Stock would have been converted had such share of
Class B Common Stock been converted into Class A Common Stock
immediately prior to such reorganization or reclassification.
"CBS Parent" shall mean CBS Corporation, a Pennsylvania
corporation, or, if CBS Corporation is then a wholly owned subsidiary of another
entity, "CBS Parent" shall mean such parent entity, in either case together with
any successor by way of merger, consolidation, division (if permitted by law) or
sale of all or substantially all assets.
(2) Prior to a Tax-Free Spin-Off, except as otherwise provided
in this paragraph E(2) of Article FOURTH, upon the sale or other transfer
(whether by merger, operation of law or otherwise) by a stockholder of the
Corporation of shares of Class B Common Stock such that any person or persons,
other than CBS, shall have beneficial ownership thereof, including pursuant to
any private placement or public sale of such shares (including a public offering
registered under the Securities Act of 1933, as amended, and/or a sale pursuant
to Rule 144 or Rule 144A under the Securities Act of 1933, as amended, or any
similar rule then in force), such shares shall automatically convert into an
equal number of shares of Class A Common Stock without any further action on the
part of the Corporation or any other person, and the certificates representing
such shares of Class B Common Stock shall thereafter be deemed to represent
shares of Class A Common Stock. For purposes of this paragraph E of Article
FOURTH, (i) "beneficial ownership" with respect to shares of Class B Common
Stock shall mean control, directly or indirectly, through
<PAGE> 10
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record ownership or any contract, arrangement, understanding, relationship or
otherwise, of the voting power (which includes the power to vote or to direct
the voting of such shares, except where such power arises solely from a
revocable proxy or consent given in response to a proxy or consent solicitation)
of such Class B Common Stock, (ii) a "person" shall mean a corporation, trust,
limited liability company, association, partnership, joint venture,
organization, business, individual, government (or subdivision thereof),
governmental agency or other legal entity and (iii) the term "transfer" shall
not include a bona fide unforeclosed pledge of shares of Class B Common Stock.
Notwithstanding the foregoing, shares of Class B Common Stock
(A) shall not convert into shares of Class A Common Stock in any transfer of
Class B Common Stock beneficially owned by CBS Parent to stockholders of CBS
Parent in a transaction intended to be tax free under Section 355 of the
Internal Revenue Code (or any successor provision) (such a transfer, a "Tax-Free
Spin-Off") and (B) shall no longer be convertible into shares of Class A Common
Stock following a Tax-Free Spin-Off. For purposes of this paragraph E of Article
FOURTH, a Tax-Free Spin-Off shall be deemed to have occurred at the time shares
are first transferred to stockholders of CBS Parent following receipt of an
affidavit described in paragraph E(4) of this Article FOURTH.
Immediately upon any automatic conversion of shares of Class B
Common Stock into shares of Class A Common Stock pursuant to this Article
FOURTH, the rights of the holders of such converted shares of Class B Common
Stock as such shall cease and such holders shall be treated for all purposes as
having become the holders of the shares of Class A Common Stock issuable upon
such conversion; provided, however, that, subject to paragraph E(6) of this
Article FOURTH, such holders shall be entitled to receive, when paid, any
dividends or other distributions declared on Class B Common Stock with a record
date preceding the time of such automatic conversion and unpaid as of the time
of such automatic conversion.
As promptly as practicable on or after the date of any
conversion of shares of Class B Common Stock into shares of Class A Common Stock
pursuant to this Article FOURTH, upon the delivery to the Corporation of a
certificate formerly representing shares of Class B Common Stock, the
Corporation shall issue and deliver or cause to be delivered, to or upon the
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written order of the holder of the surrendered certificate formerly representing
shares of Class B Common Stock, a certificate or certificates representing the
number of fully paid and nonassessable shares of Class A Common Stock into which
the shares of Class B Common Stock formerly represented by such certificate have
been converted in accordance herewith.
(3) Prior to a Tax-Free Spin-Off, holders of shares of Class B
Common Stock may (A) sell or otherwise dispose of or transfer any or all of such
shares held by them, respectively, only in connection with a transfer which
meets the qualifications of paragraph E(4) of this Article FOURTH, and under no
other circumstances, or (B) convert any or all of such shares into shares of
Class A Common Stock, as provided in paragraph E(1) of this Article FOURTH, for
the purpose of effecting the sale or disposition of such shares of Class A
Common Stock to any person. Prior to a Tax-Free Spin-Off, no person other than
CBS, or transferees or successive transferees who receive shares of Class B
Common Stock in connection with a transfer which meets the qualifications set
forth in paragraph E(4) of this Article FOURTH, shall by virtue of the
acquisition of a certificate for shares of Class B Common Stock have the status
of an owner or holder of shares of Class B Common Stock or be recognized as such
by the Corporation or be otherwise entitled to enjoy for such person's own
benefit the special rights and powers of a holder of shares of Class B Common
Stock.
(4) Prior to a Tax-Free Spin-Off, shares of Class B Common
Stock shall be transferred on the books of the Corporation, and a new
certificate or certificates issued therefor, upon presentation for transfer at
the Office of the Corporation of the certificate for such shares, in proper form
for transfer and accompanied by all requisite stock transfer tax stamps, only if
such certificate when so presented shall also be accompanied by any one of the
following:
(a) an affidavit from CBS Parent stating that such certificate
is being presented to effect a transfer by one CBS Party (as defined in
paragraph A of Article SEVENTH) of such shares to another CBS Party; or
(b) an affidavit from CBS Parent stating that such certificate
is being presented to effect a transfer of shares beneficially owned by
CBS Parent to the stockholders of CBS Parent in connection with a
Tax-Free Spin-Off.
<PAGE> 12
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Each affidavit of CBS Parent furnished pursuant to paragraph
E(4) of this Article FOURTH shall be verified by an officer of CBS Parent as of
a date not earlier than five days prior to the date of delivery thereof.
If a holder of shares of Class B Common Stock shall present a
certificate for such shares, endorsed by said holder for transfer or accompanied
by an instrument of transfer signed by said holder, to a person who receives
such shares in connection with a transfer which does not meet the qualifications
set forth in paragraph E(4) of this Article FOURTH, then such shares shall
automatically convert into an equal number of shares of Class A Common Stock in
accordance with paragraph E(2) of this Article FOURTH.
If the Board of Directors (or any committee of the Board of
Directors, or any officer of the Corporation, designated for such purpose by the
Board of Directors) shall determine, upon the basis of facts not disclosed in
any affidavit or other document accompanying the certificate for shares of Class
B Common Stock when presented for transfer, that such shares of Class B Common
Stock have been registered in violation of the provisions of paragraph E(4) of
this Article FOURTH, or shall determine that a person is enjoying for such
person's own benefit the special rights and powers of shares of Class B Common
Stock in violation of such provisions, then the Corporation shall take such
action at law or in equity as is appropriate under the circumstances. A bona
fide unforeclosed pledge of shares of Class B Common Stock shall not be deemed
to violate such provisions.
(5) Prior to the occurrence of a Tax-Free Spin-Off, each
certificate for shares of Class B Common Stock shall bear a legend on the face
thereof reading as follows:
"The shares of Class B Common Stock represented by this
certificate may not be transferred to any person in connection with a
transfer that does not meet the qualifications set forth in paragraph
E(4) of Article FOURTH of the Restated Certificate of Incorporation, as
amended, of this corporation. Any person who receives such shares in
connection with a transfer which does not meet the
<PAGE> 13
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qualifications prescribed by paragraph E(4) of Article FOURTH is not
entitled to own or to be registered as the holder of such shares of
Class B Common Stock, and such shares of Class B Common Stock shall
automatically convert into an equal number of shares of Class A Common
Stock. Each holder of this certificate, by accepting the same, accepts
and agrees to all of the foregoing."
Upon and after the transfer of shares in a Tax-Free Spin-Off,
such shares shall no longer be required to bear the legend set forth above in
this paragraph E(5) of Article FOURTH (the "Transfer Legend"). After such
transfer of shares in a Tax-Free Spin-Off, upon the delivery to the Corporation
of certificates representing shares of Class B Common Stock that bear the
Transfer Legend, the Corporation shall issue and deliver, or cause to be
delivered, to or upon the written order of the holder of the surrendered
certificates, a certificate or certificates identical in all material respects
to such surrendered certificates except that the new certificate or certificates
will not contain the Transfer Legend.
(6) If (i) any dividend or other distribution has been
declared with respect to shares of Class B Common Stock which will be converted
into shares of Class A Common Stock pursuant to the provisions of this paragraph
E of Article FOURTH, (ii) the record date or payment date therefor will be
subsequent to such conversion and (iii) such dividend or other distribution was
declared prior to such conversion, then such dividend or other distribution
shall be deemed to have been declared, and shall be payable, with respect to the
shares of Class A Common Stock into which such shares of Class B Common Stock
shall have been converted (without duplication), and any such dividend or other
distribution which shall have been declared on such shares payable in shares of
Class B Common Stock or rights, options, warrants or other securities
convertible into or exchangeable or exercisable for shares of Class B Common
Stock, shall be deemed to have been declared, and shall be payable, in
corresponding shares of Class A Common Stock or rights, options, warrants or
other securities convertible into or exchangeable or exercisable for shares of
Class A Common Stock, as the case may be.
(7) The Corporation shall not reissue or resell any shares of
Class B Common Stock which shall have been converted into shares of Class A
Common Stock pursuant to or as permitted
<PAGE> 14
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by the provisions of this paragraph E of Article FOURTH, or any shares of Class
B Common Stock which shall have been acquired by the Corporation in any other
manner. The Corporation shall, from time to time, as determined by the Board of
Directors, take such appropriate action as may be necessary to retire such
shares and to reduce the authorized amount of Class B Common Stock accordingly.
The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of Class
A Common Stock and its issued Class A Common Stock held in its treasury, solely
for the purpose of effecting any conversion of Class B Common Stock pursuant to
this Article FOURTH, the full number of shares of Class A Common Stock then
issuable or deliverable upon any such conversion of all of the then outstanding
shares of Class B Common Stock. All shares of Class A Common Stock issued upon
any conversion of Class B Common Stock pursuant to this Article FOURTH shall be
duly and validly issued, fully paid and nonassessable. The Corporation shall
take all such actions as it deems necessary or appropriate to ensure that all
such shares of Class A Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any securities
exchange upon which shares of Class A Common Stock may be listed.
(8) In connection with any transfer or conversion of any
capital stock of the Corporation pursuant to or as permitted by the provisions
of this paragraph E of Article FOURTH, or in connection with the making of any
determination referred to in this paragraph E of Article FOURTH:
(a) the Corporation shall be under no obligation to make any
investigation of facts unless an officer, employee or agent of the
Corporation responsible for making such transfer or determination or
issuing Class A Common Stock pursuant to such conversion has
substantial reason to believe, or unless the Board of Directors (or a
committee of the Board of Directors designated for the purpose)
determines that there is substantial reason to believe, that any
affidavit or other document is incomplete or incorrect in a material
respect or that an investigation would disclose facts indicating that
such conversion was in violation of paragraph E(4) of this Article
FOURTH, in either of which events the Corporation shall (i) make or
<PAGE> 15
15
cause to be made such investigation as it may deem necessary or
desirable in the circumstances and (ii) have a reasonable time to
complete such investigation; and
(b) neither the Corporation nor any director, officer,
employee or agent of the Corporation shall be liable in any manner for
any action taken or omitted to be taken in good faith.
(9) The Corporation shall pay any and all documentary, stamp
or similar issue or transfer taxes payable in respect of the issue or delivery
of shares of Class A Common Stock upon any conversion of shares of Class B
Common Stock pursuant hereto; provided, however, that the Corporation shall not
be required to pay any tax which may be payable in respect of any registration
of transfer involved in the issue or delivery of shares of Class A Common Stock
in a name other than that of the registered holder of the shares of Class B
Common Stock to be converted, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of any such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.
F. In the event of a merger, consolidation or other
restructuring of the Corporation with or into one or more entities (whether or
not the Corporation is the surviving entity), the holders of Class A Common
Stock and Class B Common Stock shall be entitled to receive the same per share
consideration; provided, however, that, prior to a Tax-Free Spin-Off, if such
consideration includes voting securities (or rights, options, warrants or other
securities convertible into or exchangeable or exercisable for voting
securities), the Corporation shall, to the maximum extent practicable, provide
that the voting securities distributed or distributable to holders of Class B
Common Stock entitle such holders to five times the number of votes per share or
other applicable unit as the voting securities issued or issuable to the holders
of Class A Common Stock.
G. Except as otherwise provided in paragraph D(1) of this
Article FOURTH, the Corporation shall not be entitled to issue additional shares
of Class B Common Stock, or issue rights, options, warrants or other securities
convertible into or exchangeable or exercisable for shares of Class B Common
Stock,
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except that the Corporation may make an offer to all holders of Common
Stock of rights to purchase additional shares of the class of Common Stock
already held by such holders; provided, however, that the holders of each share
of Class A Common Stock and Class B Common Stock shall be entitled to purchase
the same number of additional shares or rights, options, warrants or other
securities convertible into or exchangeable or exercisable for additional
shares, and on the same terms, as the holders of each share of such other class
of capital stock. Class A Common Stock and Class B Common Stock will be treated
equally with respect to any offer made by the Corporation to holders of Common
Stock of rights, options, warrants or other securities convertible into or
exchangeable or exercisable for shares of any other capital stock of the
Corporation.
H. In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, and subject
to the rights of the holders of any series of Preferred Stock, the net assets of
the Corporation available for distribution to stockholders of the Corporation
shall be distributed pro rata to the holders of Common Stock in accordance with
their respective rights and interests and shares of Class B Common Stock shall
rank pari passu with shares of Class A Common Stock as to such distribution. For
purposes of this paragraph H of Article FOURTH, the voluntary sale, conveyance,
lease, exchange or transfer (for cash, shares of capital stock, securities or
other consideration) of all or substantially all the assets of the Corporation
or a consolidation, merger or other restructuring of the Corporation with or
into one or more other corporations or other entities (whether or not the
Corporation is the corporation surviving such consolidation, merger or other
restructuring) shall not be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation.
<PAGE> 17
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ARTICLE FIFTH
BOARD OF DIRECTORS
A. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, the
number of directors of the Corporation shall initially be fixed at six and may
be increased or decreased from time to time pursuant to a resolution adopted by
the affirmative vote of a majority of the directors then in office, though less
than a quorum of the Board of Directors, but the number of directors shall not
be less than three nor more than 24. If the number of directors is changed
pursuant to this paragraph A of Article FIFTH, any newly created directorships
or any decreases in directorships shall be so apportioned among the classes so
as to make all classes as nearly equal as practicable; provided, however, that
no decrease in the number of directors shall shorten the term of any incumbent
director.
B. Unless and except to the extent that the By-laws so
require, the election of directors of the Corporation need not be by written
ballot.
C. The directors, other than those who may be elected by the
holders of any series of Preferred Stock under specified circumstances, shall be
divided into three classes, each initially consisting of two directors. One
class of directors initially consisting of two directors shall be initially
elected for a term expiring at the annual meeting of stockholders to be held in
1999, another class initially consisting of two directors shall be initially
elected for a term expiring at the annual meeting of stockholders to be held in
2000, and another class initially consisting of two directors shall be initially
elected for a term expiring at the annual meeting of stockholders to be held in
2001. Members of each class shall hold office until their respective successors
are duly elected and qualified. At each annual meeting of the stockholders of
the Corporation commencing with the 1999 annual meeting, directors, other than
those who may be elected by the holders of any series of Preferred Stock under
specified circumstances, shall be elected to succeed those directors whose terms
then expire by a plurality of all votes cast at such meeting by holders of the
outstanding shares of capital stock of the Corporation entitled to vote in the
election of such directors, voting as a single class, to hold office for a term
expiring at the third succeeding annual meeting of stockholders after their
election, with each director to hold office until his or her successor shall
have been duly elected and qualified.
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D. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of directors or other cause, may be
filled only by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board of Directors, or by a sole remaining
director, and directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such director's successor shall have
been duly elected and qualified.
E. Subject to the rights of the holders of any series of
Preferred Stock to elect and remove additional directors under specified
circumstances, any director may be removed from office at any time, but only for
cause and by the affirmative vote of at least 80 percent of the combined voting
power of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors, voting as a single class, and
subject to any further restrictions on such removal, not inconsistent with this
Article FIFTH, as may be contained in the By-laws. Cause for removal shall be
deemed to exist only if the director whose removal is proposed (i) has been
convicted in a court of competent jurisdiction of a felony, and such conduct or
conviction results in material and demonstrable injury to the Corporation, (ii)
has been adjudged by a court of competent jurisdiction to be mentally
incompetent or (iii) has been adjudged by a court of competent jurisdiction to
be liable for fraudulent or dishonest conduct, or gross abuse of authority or
discretion, resulting in material and demonstrable injury to the Corporation,
and, in each case, such conviction or adjudication has become final and
nonappealable. A director may not be removed by the stockholders at a meeting
unless the notice of the meeting states that the purpose, or one of the
purposes, of the meeting is removal of the director.
F. A stockholder may raise business or make nominations for
the election of directors at a stockholders' meeting only by complying with all
of the provisions of the By-laws specifying the manner and extent to which
advance notice shall be given of and any other procedures regarding (i) the
submission of proposals to be considered at any meeting of stockholders or (ii)
nominations for the election of directors to be held at any such meeting.
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ARTICLE SIXTH
CERTAIN MATTERS RELATING TO STOCKHOLDER ACTIONS
A. Any action required or permitted to be taken by the
stockholders of the Corporation shall be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders; provided, however, that this
Paragraph A of Article SIXTH shall be of no force and effect, and stockholders
shall be permitted to act by written consent, for so long as CBS shall
beneficially own Common Stock representing at least a majority of the combined
voting power of the outstanding shares of Common Stock of the Corporation.
B. Special meetings of stockholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution approved by a
majority of the total number of directors specified pursuant to paragraph A of
Article FIFTH of this Certificate of Incorporation which the Corporation would
have if there were no vacancies (the "Entire Board of Directors"); provided,
however, that if the holders of any series of Preferred Stock issued by the
Corporation shall have the right, voting separately by series, as applicable, to
elect additional directors at an annual or special meeting of stockholders, the
calling of special meetings of the holders of shares of such series shall be
governed by the terms of the applicable resolution or resolutions of the Board
of Directors adopted with respect to such series pursuant to Article FOURTH of
this Certificate of Incorporation.
ARTICLE SEVENTH
CONDUCT OF CERTAIN AFFAIRS OF THE CORPORATION
A. For purposes of this Certificate of Incorporation, "CBS"
shall mean CBS Parent, any person or entity with a controlling interest in CBS
Parent, and all corporations, partnerships, joint ventures, associations and
other entities (each a "Subsidiary Entity") in which CBS Parent beneficially
owns, directly or indirectly, 50 percent or more of the outstanding voting
stock, voting power or similar voting interests ("Voting Interest"), but shall
not include the
<PAGE> 20
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Corporation or any Subsidiary Entity in which the Corporation beneficially owns,
directly or indirectly, 50 percent or more of the outstanding Voting Interest.
CBS Parent and each other entity constituting part of CBS are referred to in
this Certificate of Incorporation as "CBS Parties". The Corporation and each
Subsidiary Entity of the Corporation are referred to in this Certificate of
Incorporation as "Corporation Parties".
B. In anticipation that:
(1) the Corporation will cease to be a wholly owned subsidiary
of CBS but that certain CBS Parties will remain, for some period of
time, stockholders of the Corporation;
(2) the Corporation Parties and CBS may engage in the same or
similar activities or lines of business and may have an interest in the
same or similar areas of corporate opportunities;
(3) there will be benefits to be derived by the Corporation
through continued contractual, corporate and business relations with
CBS (including the service of directors, officers or employees of CBS
Parties as directors, officers or employees of Corporation Parties);
and
(4) there will be benefits in providing guidelines for
directors, officers and employees of CBS Parties and of Corporation
Parties with respect to the allocation of corporate opportunities and
other matters;
the provisions of this Article SEVENTH are set forth to regulate, define and
guide the conduct of certain affairs of the Corporation Parties as they may
involve CBS Parties and the CBS Parties' respective officers, directors, agents
and employees, and the powers, rights, duties and liabilities of the Corporation
Parties and the Corporation Parties' respective officers, directors, employees
and stockholders in connection therewith.
C. Except as CBS Parent may otherwise agree in writing, CBS
shall have the right to, and shall have no duty not to, (i) engage in the same
or similar business activities or lines of business as the Corporation Parties,
(ii) do business with any potential or actual customer or supplier of the
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Corporation Parties or (iii) employ or otherwise engage, or solicit for such
purpose, any officer, director or employee of the Corporation Parties. Neither
CBS nor any officer, employee or director of any CBS Party (except as provided
in paragraph D of this Article SEVENTH) shall be liable to the Corporation
Parties or their stockholders for breach of any fiduciary or other duty that
such person or entity may have by reason of any activities set forth in the
preceding sentence. In the event that CBS acquires knowledge of a potential
transaction or matter that may be a corporate opportunity for both CBS and the
Corporation Parties, CBS shall have no duty to communicate or present such
corporate opportunity to the Corporation Parties and shall not be liable to the
Corporation Parties or their stockholders for breach of any fiduciary or other
duty that CBS may have as a stockholder of the Corporation or otherwise by
reason of the fact that CBS pursues or acquires such corporate opportunity for
itself, directs such corporate opportunity to another person or entity or does
not present such corporate opportunity to the Corporation Parties.
D. In the event that a director, officer or employee of a
Corporation Party who is also a director, officer or employee of a CBS Party
acquires knowledge of a potential transaction or matter that may be a corporate
opportunity for both a Corporation Party and CBS, such director, officer or
employee of the Corporation Party (i) shall have fully satisfied and fulfilled
any fiduciary or other duties such person may have to the Corporation Parties
and their stockholders with respect to such corporate opportunity, (ii) shall
not be liable to the Corporation Parties or their stockholders for breach of any
fiduciary or other duty by reason of the fact that CBS pursues or acquires such
corporate opportunity for itself or directs such corporate opportunity to
another person or entity or does not communicate information regarding such
corporate opportunity to the Corporation Parties, (iii) shall be deemed to have
acted in good faith and in a manner such person reasonably believes to be in and
not opposed to the best interests of the Corporation Parties and (iv) shall be
deemed not to have breached any duty of loyalty or other duty such person may
have to the Corporation Parties or their stockholders and not to have derived an
improper benefit therefrom, if such director, officer or employee acts in a
manner consistent with the following policy:
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(1) a corporate opportunity offered to any person who is a
director but not an officer or employee of a Corporation Party and who
is also an officer or employee (whether or not a director) of a CBS
Party shall belong to CBS, unless such opportunity is expressly offered
to such person primarily in his or her capacity as a director of the
Corporation Party, in which case such opportunity shall belong to the
Corporation Party;
(2) a corporate opportunity offered to any person who is an
officer or employee (whether or not a director) of a Corporation Party
and who is also a director but not an officer or employee of a CBS
Party shall belong to the Corporation Party, unless such opportunity is
expressly offered to such person primarily in his or her capacity as a
director of a CBS Party, in which case such opportunity shall belong to
CBS; and
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(3) a corporate opportunity offered to any other person who is
(i) either an officer or employee of a Corporation Party and either an
officer or employee of a CBS Party or (ii) a director of both a
Corporation Party and a CBS Party shall belong to CBS, unless such
opportunity is expressly offered to such person primarily in his or her
capacity as an officer, employee or director of the Corporation Party,
in which case such opportunity shall belong to the Corporation Party.
E. Any corporate opportunity that belongs to CBS or to a
Corporation Party pursuant to the foregoing policy shall not be pursued by the
other, or directed by the other to another person or entity, unless and until
CBS or the Corporation Party, as the case may be, determines not to pursue such
opportunity. Notwithstanding the preceding sentence, if the party to whom the
corporate opportunity belongs does not within a reasonable period of time begin
to pursue, or thereafter continue to pursue, such opportunity diligently and in
good faith, the other party may then pursue such opportunity or direct it to
another person or entity.
F. For purposes of this Article SEVENTH, "corporate
opportunities" shall consist of business opportunities which (i) a Corporation
Party is financially able to undertake, (ii) are, by their nature, in the line
or lines of the Corporation Party's business and are of practical and material
advantage to it, and (iii) are ones in which the Corporation Party has an
interest or reasonable expectancy. "Corporate opportunities" shall not include,
and neither CBS nor any of its directors, officers or employees shall be liable
to the Corporation Parties or their stockholders by reason of, any transaction
in which a Corporation Party or CBS is permitted to participate pursuant to (a)
any agreement between one or more Corporation Parties and one or more CBS
Parties in effect as of the time any equity security of the Corporation is first
held of record by any person or entity other than CBS, as such agreement may be
amended thereafter with the approval of a majority of Disinterested Directors
(as defined), or (b) any subsequent agreement between one or more Corporation
Parties and one or more CBS Parties approved by a majority of Disinterested
Directors, it being acknowledged that the rights of the Corporation Parties
under any such agreement shall be deemed to be contractual rights and shall not
be corporate opportunities of the Corporation Parties for any purpose; PROVIDED,
HOWEVER, that no presumption or implication as to corporate opportunities
relating to any transaction not explicitly covered by such an agreement shall
arise from the existence or absence of any such agreement.
<PAGE> 24
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"Disinterested Directors" shall mean the directors of the
Corporation who are not (i) officers or employees of either a Corporation Party
or a CBS Party or (ii) directors of a CBS Party.
G. Any person or entity purchasing or otherwise acquiring any
interest in any shares of capital stock of the Corporation shall be deemed to
have notice of and have consented to the provisions of this Article SEVENTH.
H. If any contract, agreement, arrangement or transaction
between one or more Corporation Parties and one or more CBS Parties involves a
corporate opportunity and is approved in accordance with the General Corporation
Law of the State of Delaware, CBS and its officers, directors and employees
shall also, for the purposes of this Article SEVENTH and the other provisions of
this Certificate of Incorporation, be deemed to (i) have fully satisfied and
fulfilled any fiduciary or other duties such person or entity may have to the
Corporation Parties and their stockholders with respect to such corporate
opportunity, (ii) not be liable to the Corporation Parties or their stockholders
for breach of any fiduciary or other duty by reason of the fact that CBS pursues
or acquires such corporate opportunity for itself or directs such corporate
opportunity to another person or entity or does not communicate information
regarding such corporate opportunity to the Corporation Parties, (iii) have
acted in good faith and in a manner such person or entity reasonably believes to
be in and not opposed to the best interests of the Corporation Parties and (iv)
not to have breached any duty of loyalty or other duty of such person or entity
to the Corporation Parties or their stockholders and not to have derived an
improper benefit therefrom. Any such contract, agreement, arrangement or
transaction involving a corporate opportunity not so approved shall not by
reason thereof result in any breach of any fiduciary or other duty, but shall be
governed by the other provisions of this Article SEVENTH, this Certificate of
Incorporation, the By-laws, the General Corporation Law of the State of Delaware
and other applicable law.
I. For purposes of this Article SEVENTH, a director of the
Corporation who is Chairperson or Vice Chairperson of the Board of Directors or
a committee thereof shall not be deemed to be an officer of the Corporation by
reason of holding such position (regardless of whether such
<PAGE> 25
25
position is deemed an office of the Corporation under the By-laws), unless such
person is a full-time employee of the Corporation.
J. Any conduct by CBS Parties or any of their respective
officers, directors, agents and employees in connection with the affairs of the
Corporation Parties that does not follow the guidelines set forth in this
Article SEVENTH shall not by reason thereof void the transaction or make it
voidable or be deemed a breach of any fiduciary or other duty to the Corporation
Parties but shall be governed by the other provisions of this Certificate of
Incorporation, the By-laws, the General Corporation Law of the state of Delaware
and other applicable law.
K. Notwithstanding anything in this Certificate of
Incorporation to the contrary, the foregoing provisions of this Article SEVENTH
shall expire on the first day on which CBS does not own beneficially Common
Stock representing at least 20 percent of the combined voting power of the
outstanding shares of Common Stock of the Corporation and no person who is a
director or officer of the Corporation is also a director or officer of a CBS
Party. Neither the alteration, amendment or repeal of this Article SEVENTH nor
the adoption of any provision inconsistent with this Article SEVENTH shall
eliminate or reduce the effect of this Article SEVENTH in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article
SEVENTH, would accrue or arise, prior to such alteration, amendment, repeal or
adoption.
ARTICLE EIGHTH
AMENDMENTS
A. The Corporation reserves the right to adopt, repeal, alter
or amend any provision of this Certificate of Incorporation, in the manner now
or hereafter prescribed by the laws of the State of Delaware and this
Certificate of Incorporation, and all rights, preferences and privileges
conferred on stockholders, directors, officers, employees, agents and other
persons in this Certificate of Incorporation, if any, are granted subject to
this reservation.
<PAGE> 26
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B. In addition to any requirements of law and any other
provisions of this Certificate of Incorporation (and notwithstanding the fact
that a lesser percentage may be specified by law or this Certificate of
Incorporation), the affirmative vote of 80 percent or more of the combined
voting power of the outstanding shares of capital stock of the Corporation
entitled to vote thereon, voting as a single class, shall be required to alter,
amend or repeal, or to adopt any provision of this Certificate of Incorporation
(whether directly or indirectly through any merger of the Corporation with any
other entity) which is inconsistent with, any provision of Articles FIFTH,
SIXTH, SEVENTH, NINTH, TENTH and ELEVENTH hereof or this Article EIGHTH.
C. Except where the Board of Directors is permitted by law or
by this Certificate of Incorporation to act without any action by the
stockholders and except as otherwise provided by law or as otherwise provided in
this Certificate of Incorporation, and subject to any voting rights granted to
holders of any outstanding shares of Preferred Stock, provisions of this
Certificate of Incorporation shall not be adopted, repealed, altered or amended,
in whole or in part, without the affirmative vote of a majority of the combined
voting power of the outstanding shares of capital stock of the Corporation
entitled to vote thereon, voting as a single class; provided, however, that with
respect to any proposed amendment of this Certificate of Incorporation which
would alter or change the powers, preferences and relative, participating,
optional or other special rights of the shares of Class A Common Stock or Class
B Common Stock so as to affect them adversely, the approval of a majority of the
combined voting power of the outstanding shares of capital stock of the
Corporation entitled to be voted by the holders of all of the shares so affected
by the proposed amendment, voting separately as a class, shall be obtained in
addition to the affirmative vote of a majority of the combined voting power of
the outstanding shares of capital stock of the Corporation entitled to vote
thereon, voting as a single class, as hereinbefore provided. Any increase or
decrease (but not below the number of shares thereof then outstanding or
reserved for issuance upon conversion of the Class B Common Stock or any series
of Preferred Stock) in the authorized number of shares of any class or classes
of capital stock of the Corporation or creation, authorization or issuance of
any rights, options, warrants or other securities convertible into or
exchangeable or
<PAGE> 27
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exercisable for shares of any such class or classes of capital stock shall be
deemed not to affect adversely the powers, preferences or special rights of the
shares of Class A Common Stock or Class B Common Stock.
D. In addition to any requirements of law and any other
provisions of this Certificate of Incorporation (and notwithstanding the fact
that a lesser percentage may be specified by law or this Certificate of
Incorporation), the affirmative vote of 80 percent or more of the combined
voting power of the outstanding shares of capital stock of the Corporation
entitled to vote thereon, voting as a single class, shall be required to adopt,
repeal, alter or amend any provision of the By-laws; provided, however, that (i)
this Article EIGHTH shall not limit the authority granted to the Board of
Directors pursuant to Article ELEVENTH and (ii) if a majority of the Entire
Board of Directors has first recommended the adoption, repeal, alteration or
amendment for approval by the stockholders, the By-laws may be adopted,
repealed, altered or amended by the approval of a majority of the votes cast by
holders of the outstanding shares of capital stock of the Corporation entitled
to vote thereon, voting as a single class.
ARTICLE NINTH
LIMITATION ON DIRECTOR LIABILITY
A. To the fullest extent permitted by the General Corporation
Law of the State of Delaware as it now exists and as it may hereafter be
amended, no director shall be personally liable to the Corporation or any of its
stockholders for monetary damages for breach of any fiduciary or other duty as a
director.
B. The rights and authority conferred in this Article NINTH
shall not be exclusive of any other right which any person may otherwise have or
hereafter acquire.
C. Neither the amendment, alteration or repeal of this Article
NINTH, nor the adoption of any provision inconsistent with this Article TENTH,
shall adversely affect any right or protection of a director of the Corporation
existing at the time of such amendment, alteration or repeal with respect to
acts or omissions occurring prior to such amendment, alteration, repeal or
adoption.
<PAGE> 28
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ARTICLE TENTH
INDEMNIFICATION
Each person who is or was a director or officer of the
Corporation shall be indemnified by the Corporation to the fullest extent
permitted from time to time by the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended (but, if permitted by
applicable law, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment) or any
other applicable laws as presently or hereafter in effect. The Corporation may,
by action of the Board of Directors, provide indemnification to employees and
agents (other than a director or officer) of the Corporation, to directors,
officers, employees or agents of a subsidiary, and to each person serving as a
director, officer, partner, member, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, at the request of the Corporation, with the same scope and effect as
the foregoing indemnification of directors and officers of the Corporation. The
Corporation shall be required to indemnify any person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board of Directors or is
a proceeding to enforce such person's claim to indemnification pursuant to the
rights granted by this Certificate of Incorporation or otherwise by the
Corporation. Without limiting the generality or the effect of the foregoing, the
Corporation may enter into one or more agreements with any person which provide
for indemnification greater or different than that provided in this Article
TENTH. Any amendment or repeal of this Article TENTH shall not adversely affect
any right or protection existing hereunder in respect of any act or omission
occurring prior to such amendment or repeal.
<PAGE> 29
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ARTICLE ELEVENTH
AMENDMENTS TO BY-LAWS BY THE BOARD OF DIRECTORS
In furtherance of, and not in limitation of, the powers
conferred by law, the Board of Directors is expressly authorized and empowered
to:
(1) adopt any By-laws a majority of the Entire Board of
Directors may deem necessary or desirable in connection with the
conduct of the affairs of the Corporation, including provisions
governing the conduct of, and the matters which may properly be brought
before, meetings of the stockholders and provisions specifying the
manner and extent to which advance notice shall be given of and any
other procedures regarding (i) the submission of proposals to be
considered at any such meeting or (ii) nominations for the election of
directors to be held at any such meeting; and
(2) repeal, alter or amend the By-laws by the affirmative vote
of a majority of the Entire Board of Directors.
ARTICLE TWELFTH
FOREIGN OWNERSHIP RESTRICTIONS
The following provisions are included for the purpose of
ensuring that ownership of the Corporation remains with United States persons or
entities, to the extent required by the Communications Act of 1934 and the rules
and regulations promulgated thereunder, as the same may be amended from time to
time:
A. If the Corporation is a direct licensee of a broadcast
station, the Corporation shall not issue to "Aliens" (which term shall include
(i) a person who is a citizen of a country other than the United States; (ii)
any entity organized under the laws of a government other than the government of
the United States or any state, territory, or possession of the United States;
(iii) a government other than the government of the United States or of any
state, territory, or possession of the United States; and (iv) a representative
of, or an individual or entity controlled by, any of the foregoing), either
individually or in the aggregate, in excess of 20 percent of the total number of
shares of capital stock of the Corporation outstanding at any time and shall
seek not to permit the transfer on the books of the Corporation of any capital
stock to any Alien
<PAGE> 30
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that would result in the total number of shares of such capital stock held by
Aliens exceeding such 20 percent limit. If the Corporation is not a direct
licensee of a broadcast station but directly or indirectly controls such a
licensee, the foregoing limit shall be 25 percent. In the event that the FCC
amends the foregoing limits, such amended limits shall apply to this paragraph A
of Article TWELFTH.
B. If the Corporation is a direct licensee of a broadcast
station, no Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 20 percent of (i) the total number of shares of capital stock
of the Corporation outstanding and entitled to vote at any time and from time to
time, or (ii) the total voting power of all shares of capital stock of the
Corporation outstanding and entitled to vote at any time and from time to time.
If the Corporation is not a direct licensee of a broadcast station but directly
or indirectly controls such licensee, the foregoing limit shall be 25 percent.
In the event that the FCC amends the foregoing limits, such amended limits shall
apply to this paragraph B of Article TWELFTH.
C. Without limiting the generality of the foregoing and
notwithstanding any other provision of these Articles of Incorporation to the
contrary, any shares of capital stock of the Corporation determined by the Board
of Directors to be owned by an Alien or Aliens shall always be subject to
redemption by the Corporation by action of the Board of Directors or any other
applicable provision of law, to the extent necessary in the judgment of the
Board of Directors to comply with the Alien ownership restrictions described in
this Article TWELFTH. The terms, conditions and procedures of such redemption
shall be as follows:
(1) the redemption price of the shares to be redeemed pursuant
to this Article TWELFTH shall be equal to the fair market value of the
shares to be redeemed, as determined by the Board of Directors in good
faith;
(2) the redemption price of such shares may be paid in cash,
securities or any combination thereof as determined by the Board of
Directors;
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(3) if the aggregate redemption price for all of the
Alien-owned shares to be redeemed exceeds $5 million in the aggregate
during any one-year period consisting of any 12 consecutive calendar
months, then the Corporation may elect to pay the balance of any
redemption price after the Corporation has paid $5 million in any such
period in installments not to exceed $5 million per year in the
aggregate, with interest payable semiannually at a rate equal to the
six-month LIBOR rate for such six-month period from time to time as
determined by the Board of Directors in good faith;
(4) if less than all the shares held by Aliens are to be
redeemed, the shares to be redeemed shall be selected in any manner
determined by the Board of Directors to be fair and equitable;
(5) at least 10 days' prior written notice of the redemption,
which notice shall specify the date the redemption is to be effective
(the "Redemption Date"), shall be given to the holders of the shares
selected to be redeemed (unless waived in writing by any such holder);
provided that the Redemption Date may be the date on which written
notice shall be given to holders if the cash or securities necessary to
effect the redemption shall have been deposited in trust for the
benefit of such holders and such cash and securities are subject to
immediate withdrawal by them upon surrender of the stock certificates
for their shares to be redeemed duly endorsed in blank or accompanied
by duly executed proper instruments of transfer;
(6) without limiting any of the rights or remedies set forth
in this Article TWELFTH, from and after the Redemption Date, the shares
to be redeemed shall cease to be regarded as outstanding and any and
all rights of the holders in respect of the shares to be redeemed or
attaching to such shares of whatever nature (including any rights to
vote or participate in dividends declared on capital stock of the same
class or series as such shares, excepting only payment of dividends
declared prior to the Redemption Date for which the record date
precedes the Redemption Date) shall cease and terminate, and the
holders thereof thereafter shall be entitled only to receive the cash
or securities payable upon redemption; and
(7) such other terms and conditions as the Board of Directors
shall determine.
D. The Board of Directors shall have all powers necessary to
implement the provisions of this Article TWELFTH.
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IN WITNESS WHEREOF, Infinity Broadcasting Corporation has
caused this Restated Certificate of Incorporation to be executed by the
following authorized officer of said corporation on this 14th day of December,
1998.
INFINITY BROADCASTING CORPORATION,
by /s/ Mel Karmazin
----------------------------
Name: Mel Karmazin
Title: Chairman, President and
Chief Executive Officer
<PAGE> 1
Exhibit 3.2
RESTATED BY-LAWS
of
INFINITY BROADCASTING CORPORATION
(the "Corporation")
As Amended Effective December 14, 1998
ARTICLE 1
MEETINGS OF STOCKHOLDERS
SECTION 1.01. ANNUAL MEETINGS. The annual meeting of the
stockholders of the Corporation shall be held on such date and at such time as
the Board of Directors of the Corporation (the "Board of Directors") may
designate and on any subsequent day or days to which such meeting may be
adjourned, for the purpose of electing directors and for the transaction of such
other business as may properly come before the meeting.
SECTION 1.02. SPECIAL MEETINGS. Unless otherwise prescribed by
law or by the Restated Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation"), special meetings of stockholders,
for any purpose or purposes, may be called at any time only by the Board of
Directors in the manner set forth in the Certificate of Incorporation, and shall
be held on such date and at such time as the Board of Directors may designate
and on any subsequent day or days to which such meeting may be adjourned.
SECTION 1.03. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(a) Annual Meetings of Stockholders.
(i) Subject to the rights of the holders of any series of
Preferred Stock pursuant to the Certificate of Incorporation to elect additional
directors under specified circumstances, nominations of persons for election to
the Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (A) pursuant to
the Corporation's notice of meeting delivered at the direction of the Board of
Directors pursuant to Section 1.06 of these By-laws, (B) otherwise by or at the
direction of the Board of Directors or (C) by any stockholder of the Corporation
who is entitled to vote at the meeting, who complied with the procedures set
forth in clauses (ii) and (iii) of this Section 1.03(a) and who was a
stockholder of record at the time the notice required by such procedures is
delivered to the Secretary of the Corporation and at the time of the meeting.
(ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (C) of paragraph
(a)(i) of this Section 1.03, the
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stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation and, in the case of business other than nominations, such other
business must otherwise be a proper matter for stockholder action. To be timely,
a stockholder's notice must be delivered to the Secretary at the principal
executive offices of the Corporation not less than 90 days nor more than 120
days prior to the first anniversary of the preceding year's annual meeting;
provided, however, that, with respect to the annual meeting to be held in 1999
and in the event that the date of the annual meeting is advanced by more than 30
days, or delayed by more than 90 days, from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 120th day
prior to such annual meeting and not later than the close of business on the
later of the ninetieth day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made. In no event shall the public announcement of an adjournment or
postponement of an annual meeting commence a new time period for the giving of a
stockholder's notice as described in this Section 1.03(a). Such stockholder's
notice shall set forth (A) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 14a-11 thereunder, including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected; (B) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, 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; and (C) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (1) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner, (2) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner and (3) a representation that the stockholder intends to remain
a stockholder entitled to vote at the meeting and to appear in person at the
meeting to make the nomination or propose such business.
(iii) Notwithstanding anything in the second sentence of
clause (ii) of this Section 1.03(a) to the contrary, in the event that the
number of directors to be elected to the Board of Directors is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the Corporation
at least 100 days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 1.03 shall also be
considered timely, but 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 tenth calendar day following the day on which such public
announcement is first made by the Corporation.
(b) Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting delivered at the direction of the Board of
Directors pursuant to Section 1.06 of these By-laws.
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(c) General.
(i) Subject to the rights of the holders of any series of
Preferred Stock pursuant to the Certificate of Incorporation to elect additional
directors under specified circumstances, only persons who are nominated in
accordance with the procedures set forth in this Section 1.03 shall be eligible
to be elected as directors at a meeting of stockholders and only such business
shall be conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in this Section
1.03. Except as otherwise provided by law, the Certificate of Incorporation or
these By-laws, the Chairperson of the Board of Directors shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Section 1.03 and, if any proposed nomination or business is not in
compliance with this Section 1.03, to declare that such defective proposal or
nomination shall be disregarded.
(ii) For purposes of this Section 1.03, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or 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.
(iii) Notwithstanding the foregoing provisions of this Section
1.03, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 1.03. Nothing in this Section 1.03 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 1.04. PLACE OF MEETINGS. Meetings of the stockholders,
annual or special, shall be held at such place, either within or without the
State of Delaware, as shall be designated from time to time by the Board of
Directors or the Chairperson of the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof or, if not so
designated, at the registered office of the Corporation in the State of
Delaware.
SECTION 1.05. INSPECTORS OF ELECTION; OPENING AND CLOSING THE
POLLS. (a) In advance of any meeting of stockholders, the Board of Directors
shall appoint one or three inspectors (the "Inspectors"), which Inspector or
Inspectors may not be directors, officers or employees of the Corporation, to
act at such meeting or at any adjournment or adjournments thereof and make a
written report thereof. The Corporation may designate one or more persons as
alternate Inspectors to replace any Inspector who fails to act. If such
Inspectors are not so appointed or fail or refuse to act, the chairperson of any
such meeting shall make such appointments. If there are three Inspectors, the
decision, act or certificate of two Inspectors shall be effective in all
respects as the decision, act or certificate of all. Each Inspector, before
entering upon the discharge of the duties of Inspector, shall take and sign an
oath faithfully to execute the duties of Inspector with strict impartiality and
according to the best of such Inspector's ability. The Inspectors shall have the
duties prescribed by the General Corporation Law of the State of Delaware.
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(b) The Chairperson of the Board of Directors shall fix and
announce at the meeting the date and time of the opening and the closing of the
polls for each matter upon which the stockholders will vote at the meeting.
SECTION 1.06. NOTICES. Whenever written notice is required by
law, the Certificate of Incorporation, or these By-laws, to be given to any
stockholder, such notice shall be given which shall state the place, date and
hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Such written notice shall be given to
each stockholder entitled to vote at such meeting not less than 10 nor more than
60 days before the date of the meeting. If mailed, notice is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the records of the
Corporation. Written notice may also be given personally or by fax.
The notice of any meeting of the stockholders may be
accompanied by a form of proxy approved by the Board of Directors in favor of
such person or persons as the Board of Directors may select.
SECTION 1.07. WAIVERS OF NOTICE. Whenever any notice is
required by law, the Certificate of Incorporation or these By-laws, to be given
to any stockholder, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. Attendance of a stockholder in person or by proxy
at a meeting shall constitute a waiver of notice to such stockholder of such
meeting, except when such stockholder attends the meeting for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened.
SECTION 1.08. MEETING BY MEANS OF CONFERENCE TELEPHONE. Unless
otherwise provided by the Certificate of Incorporation or these By-laws, any
stockholder may participate in a meeting of the stockholders by means of a
conference telephone or similar communications equipment that enables all
persons participating in the meeting to hear each other, and participation in a
meeting pursuant to this Section 1.08 will constitute presence in person at such
meeting.
SECTION 1.09. QUORUM. Except as otherwise provided by law or
by the Certificate of Incorporation, or by these By-laws, a majority of the
combined voting power of the outstanding shares of capital stock of the
Corporation entitled to vote generally in an election of directors, present in
person or represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except that where a separate vote
by a class or classes or series is required, a majority of the combined voting
power of the outstanding shares of such class or classes or series, present in
person or represented by proxy, shall constitute a quorum entitled to take
action with respect to that vote on that matter. The stockholders present in
person or by proxy at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of shares with enough voting
power to leave less than a quorum. If a meeting cannot be organized because of
lack of a quorum, those present may, except as otherwise provided by law,
adjourn the meeting to such time and place as they may determine.
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SECTION 1.10. ADJOURNMENT. Any meeting of stockholders may be
adjourned from time to time, without notice other than the announcement of the
time and place thereof at the meeting at which such adjournment is taken, and at
any such adjourned meeting at which a quorum shall be present any action may be
taken that could have been taken at the meeting originally called. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder entitled to vote at the meeting.
SECTION 1.11. PROXIES AND VOTING. Each stockholder entitled
to vote at a meeting of stockholders may vote in person or may authorize another
person or persons to act for such stockholder by proxy, but no proxy shall be
voted on or acted upon after three years from its date, unless such proxy
provides for a longer period. The Board of Directors, in its discretion, or the
officer of the Corporation presiding at a meeting of stockholders, in such
officer's discretion, may require that any votes cast at such meeting be cast by
written ballot. Except as otherwise required by law, the Certificate of
Incorporation or these By-laws, the approval of a majority of the votes cast by
holders of the outstanding shares of capital stock of the Corporation entitled
to vote on the subject matter, voting as a single class, shall be sufficient for
the transaction of business with respect to such matter at any meeting at which
a quorum is present.
ARTICLE 2
OFFICES
SECTION 2.01. DELAWARE OFFICE. The Corporation will have a
registered office in the State of Delaware which will be located in the City of
Wilmington, County of New Castle.
SECTION 2.02. OTHER OFFICES. The Corporation may have such
other offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.
ARTICLE 3
LIST OF STOCKHOLDERS ENTITLED TO VOTE
SECTION 3.01. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The
officer of the Corporation who has charge of the stock ledger of the Corporation
shall prepare and make, 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.
5
<PAGE> 6
SECTION 3.02. STOCK LEDGER. The stock ledger of the
Corporation will constitute the list required by Section 3.01 and will be the
only evidence as to who are the stockholders entitled to examine the stock
ledger or to vote in person or by proxy at any meeting of stockholders.
ARTICLE 4
BOARD OF DIRECTORS--POWERS AND DUTIES
SECTION 4.01. BOARD OF DIRECTORS. The business, affairs and
property of the Corporation shall be managed by or under the direction of the
Board of Directors, which, except as otherwise provided by law or the
Certificate of Incorporation, shall exercise all the powers of the Corporation.
SECTION 4.02. NUMBER, TENURE AND QUALIFICATIONS. Subject to
the rights of the holders of any series of Preferred Stock pursuant to the
Certificate of Incorporation to elect additional directors under specified
circumstances, the number of directors shall be fixed from time to time as set
forth in the Certificate of Incorporation. The directors, other than those who
may be elected by the holders of any series of Preferred Stock pursuant to the
Certificate of Incorporation, shall be divided into such classes and hold office
for such terms as set forth in, and may be removed only in accordance with, the
Certificate of Incorporation.
SECTION 4.03. RESIGNATIONS. Any director may resign at any
time. Such resignation shall be made in writing, and shall take effect at the
time specified therein, and if no time be specified, at the time of its receipt
by the Chairperson of the Board of Directors, the President or the Secretary.
The acceptance of a resignation shall not be necessary to make it effective.
SECTION 4.04. COMPENSATION. Each director shall be entitled to
receive from the Corporation such annual and other fees and compensation as the
Board of Directors shall from time to time determine and to be reimbursed for
such director's reasonable expenses in connection with attendance at meetings.
Nothing herein contained shall preclude any director from serving the
Corporation or its subsidiaries in any other capacity and receiving compensation
therefor.
ARTICLE 5
MEETINGS OF DIRECTORS
SECTION 5.01. REGULAR MEETINGS. Regular meetings of the Board
of Directors shall be held without notice at such place or places, either within
or without the state of Delaware, at such hour and on such day as may be fixed
by resolution of the Board of Directors.
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<PAGE> 7
The Board of Directors shall meet for organization at its
first regular meeting after the annual meeting of stockholders or at a special
meeting of the Board of Directors called after the annual meeting of
stockholders and prior to said first regular meeting.
SECTION 5.02. SPECIAL MEETINGS. Special meetings of the Board
of Directors shall be held, whenever called by the Chairperson of the Board of
Directors or by any three or more directors or by resolution adopted by the
Board of Directors, at such place or places either within or without the State
of Delaware as may be stated in the notice of the meeting.
SECTION 5.03. NOTICE. Notice of the time and place of all
special meetings of the Board of Directors, and notice of any change in the time
or place of holding the regular meetings of the Board of Directors, shall be
given to each director at least one day before the day of the meeting (i) in
person or by telephone, (ii) by telegraph, cable, fax, e-mail or any other type
of electronic communication, (iii) by express mail or courier service, charges
prepaid or (iv) by first-class mail, postage prepaid, sent, in the case of (ii),
(iii) or (iv) above, to the number or address supplied by the director to the
Corporation for the purpose of notice; PROVIDED, HOWEVER, that notice of any
meeting need not be given to any director if waived by such director in writing,
whether before or after the time stated therein, or if such director shall be
present at the beginning of such meeting and does not object at the beginning of
the meeting to the transaction of business because the meeting was not lawfully
called or convened. If the notice is sent by one of the methods set forth in (i)
above, it will be deemed to have been given to the director when communicated;
if the notice is sent by one of the methods set forth in (ii) above it will be
deemed to have been given to the director when dispatched; if the notice is sent
by one of the methods set forth in (iii) above, it will be deemed to have been
given on the day delivery is guaranteed by the courier service or express mail;
and if the notice is sent by first-class mail ((iv) above), it will be deemed to
have been given on the third day after dispatch.
In the absence of any resolution of the Board of Directors or
any committee governing rules of procedure to the contrary, notice of meetings
of any committee referred to or provided for in these By-laws shall follow the
same procedures as those set forth in these By-laws for meetings of the Board of
Directors.
SECTION 5.04. QUORUM; VOTING. Except as otherwise provided by
law or in these By-laws, a majority of the directors of the Corporation then in
office (but in no event less than one-third of the total number of directors
specified pursuant to paragraph A of Article FIFTH of the Certificate of
Incorporation which the Corporation would have if there were no vacancies (the
"Entire Board of Directors")) will constitute a quorum for the transaction of
business by the Board of Directors; but a lesser number may adjourn from day to
day until a quorum is present. Except as otherwise provided by law, in the
Certificate of Incorporation or in these By-laws, all questions shall be decided
by the vote of a majority of the directors present at any meeting at which there
is a quorum.
SECTION 5.05. ACTIONS BY CONSENT WITHOUT MEETING. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board of Directors or such committee thereof, as the case may be, consent
thereto in writing, and such writing or writings are filed with the minutes of
proceedings of the Board of Directors or such committee.
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<PAGE> 8
SECTION 5.06. MEETING BY MEANS OF CONFERENCE TELEPHONE. All or
any number less than all of the directors may participate in a meeting of the
Board of Directors or of a committee of the Board of Directors by conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 5.06 will constitute presence in person at such
meeting.
ARTICLE 6
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 6.01. COMMITTEES. There shall be a Compensation
Committee and an Audit Committee. Each of the Audit Committee and the
Compensation Committee shall perform such functions and exercise such powers as
may be delegated to it from time to time by the Board of Directors.
The Board of Directors may from time to time appoint such
further standing or special committees as it may deem in the best interest of
the Corporation, but no such committee shall have any powers except such as are
expressly conferred upon it by the Board of Directors. With respect to each such
committee, the Board of Directors shall, by one or more resolutions adopted by a
majority of the Entire Board of Directors, determine the duties and
responsibilities, determine the number of members, appoint the members and the
committee chair and fill each vacancy occurring in the membership; provided,
however, that the Board of Directors may, by one or more resolutions adopted by
a majority of the Entire Board of Directors, allow the member or members present
at any committee meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, to unanimously appoint another member of
the board of directors to act at the meeting in the place of any absent or
disqualified member. The Board of Directors may designate one or more directors
as alternate members of any committee. Each committee referred to in this
Article 6 shall act only as a committee, and the individual members shall have
no power as such.
The Board of Directors may abolish any committee established
by or pursuant to this Article 6 as it may deem advisable. 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 such member or members constitute a
quorum, may by unanimous vote appoint another member of the Board of Directors
to act at the meeting in the place of the absent or disqualified member.
Each committee referred to or provided for in this Article 6
shall have authority, except as may otherwise be required by law or by
resolution of the Board of Directors, to fix its own rules of procedure and to
meet where and as provided by such rules; provided that a committee chair shall
always have the authority to call a meeting of the committee. The presence at
any meeting of any such committee of a majority of the members in office (but in
no event less than one-third of the total number of members which the committee
would have if there were no vacancies), including alternate members thereof,
shall be necessary to constitute a
8
<PAGE> 9
quorum for the transaction of business and in every case the affirmative vote of
a majority of such members present at any meeting shall be necessary for the
adoption of any resolution of such committee. All action taken at each committee
meeting shall be recorded in minutes of the meeting.
ARTICLE 7
CONTRIBUTIONS
SECTION 7.01. CONTRIBUTIONS. The Board of Directors shall have
the power, at any time and from time to time, to make, or authorize the making
of, contributions and donations for the public welfare or for religious,
charitable, scientific or educational purposes.
ARTICLE 8
ELECTION AND TERM OF
CHAIRPERSON OF THE BOARD OF DIRECTORS AND OFFICERS
SECTION 8.01. ELECTION. The Board of Directors shall elect a
Chairperson of the Board of Directors (who must be a director and who may, but
need not, be designated an officer of the Corporation), a President or a Chief
Executive Officer or both, a Secretary and a Treasurer. There may also be one or
more Vice Chairpersons (each of whom must be a director), a Chief Financial
Officer, one or more Vice Presidents, one or more assistant secretaries and
treasurers and such other officers and assistant officers as the Board of
Directors may deem appropriate. The Board of Directors may assign any of the
officers such further designations or alternate titles as it considers
desirable. The Board of Directors shall elect all officers, except assistant
officers, which shall be appointed by the Chief Executive Officer or by the
officer to which they are an assistant. Any number of offices may be held by the
same person, unless otherwise prohibited by law, the Certificate of
Incorporation or these By-laws.
SECTION 8.02. TERM. The term of office for all officers shall
be until the organization meeting of the Board of Directors following the next
annual meeting of stockholders and until their respective successors are elected
and qualified, or until their earlier death, resignation or removal. The
Chairperson of the Board of Directors or any officer may be removed from office,
either with or without cause, at any time by the affirmative vote of a majority
of the members of the Board of Directors then in office. A vacancy in any office
arising from any cause may be filled for the unexpired term by the Board of
Directors.
ARTICLE 9
OFFICERS
SECTION 9.01. CHAIRPERSON OF THE BOARD OF DIRECTORS. The
Chairperson of the Board of Directors shall preside at all meetings of the Board
of Directors at which he or she is
9
<PAGE> 10
present and shall call meetings of the Board of Directors and committee meetings
when he or she deems them necessary. Unless otherwise precluded from doing so by
these By-laws, the Chairperson of the Board of Directors may be a member of any
committees of the Board of Directors. He or she shall act as chairperson at all
meetings of the stockholders at which he or she is present unless he or she
elects that the Chief Executive Officer or a Vice Chairperson, if any, shall so
preside. The Chairperson of the Board of Directors may be designated by the
Board of Directors as an officer of the Corporation and may be elected by the
Board of Directors as the Chief Executive Officer. The Chairperson of the Board
of Directors shall perform all duties as may be assigned to him or her by the
Board of Directors.
In the absence of the Chairperson of the Board of Directors,
the Vice Chairperson so designated for such function, if any, or, if none, the
President or, if none, the Chief Executive Officer, shall perform the duties and
have the powers of the Chairperson of the Board of Directors, as determined by
the Board of Directors. The Vice Chairperson of the Board of Directors, if one
shall be appointed, or the Vice Chairpersons, if there shall be more than one,
shall otherwise perform such duties and may exercise such other powers as from
time to time may be assigned by these By-laws, the Board of Directors or the
Chairperson of the Board of Directors.
SECTION 9.02. PRESIDENT; CHIEF EXECUTIVE OFFICER. The
President shall have such powers and duties as may, from time to time, be
prescribed by the Board of Directors or the Chairperson of the Board of
Directors. Unless the Board of Directors shall otherwise direct, the President
shall be the Chief Executive Officer of the Corporation.
The Chief Executive Officer shall have general charge of the
affairs of the Corporation, subject to the control of the Board of Directors. He
or she may appoint all officers and employees of the Corporation for whose
election no other provision is made in these By-laws and may discharge or remove
any officer or employee, subject to action thereon by the Board of Directors as
required by these By-laws. The Chief Executive Officer shall be the officer
through whom the Board of Directors delegates authority to corporate management,
and shall be responsible to see that all orders and resolutions of the Board of
Directors are carried into effect by the proper officers or other persons. The
Chief Executive Officer shall also perform all duties as may be assigned to him
or her by the Board of Directors.
SECTION 9.03. SECRETARY. The Secretary shall (i) attend
meetings of the directors and the stockholders of the Corporation, (ii) record
all the proceedings of such meetings in suitable books and (iii) send out all
notices of meetings as required by law or by these By-laws. In case of his or
her absence or refusal or neglect so to perform the foregoing duties, any such
notice may be given by any person thereunto directed by the Chairperson of the
Board of Directors or the directors upon whose request the meeting is called as
provided in these By-laws. He or she shall, in general, perform all duties
incident to the office of the Secretary and perform such other duties as may be
assigned to him or her by the Board of Directors, the Chairperson of the Board
of Directors or the President.
SECTION 9.04. TREASURER. The Treasurer shall have custody of,
and shall manage and invest, all moneys and securities of the Corporation, and
shall have such powers and duties as generally pertain to the office of
Treasurer.
10
<PAGE> 11
To the extent not invested, the Treasurer shall deposit all
moneys in such banks or other places of deposit as the Board of Directors may
from time to time designate or as may be designated by the Treasurer or by any
officer or officers of the Corporation so authorized by resolution of the Board
of Directors. Unless otherwise provided by the Board of Directors, all checks,
drafts, notes and other orders for the payment of money from a disbursing
account shall be signed by the Treasurer or such person or persons as may be
designated by name by the Treasurer in writing. The Treasurer's signature and,
if authorized by the Treasurer in writing, the signature of such person or
persons as may be designated by the Treasurer as provided above, to a check,
draft, note or other order for the payment of money from a disbursing account
may be by facsimile or other means. Procedures for withdrawal of moneys from
accounts other than disbursing accounts shall be established from time to time
by the Treasurer.
The Treasurer shall have such other powers and perform such
other duties as may be assigned by the Board of Directors. The Chief Financial
Officer of the Corporation, if any, shall have all of the powers granted to the
Treasurer under these By-laws, including the power to sign any check, draft,
note or other order for the payment of money from a disbursing account,
including by facsimile signature or other means.
SECTION 9.05. ASSISTANT SECRETARY, ASSISTANT TREASURER AND
OTHER OFFICERS. In the event of the absence or inability to serve of the
Secretary, or as delegated by the Secretary, an assistant secretary shall
perform all the duties of the Secretary; and in the event of the absence or
inability to serve of the Treasurer, or as delegated by the Treasurer, an
assistant treasurer shall perform all the duties of the Treasurer.
The powers and duties of other officers of the Corporation
shall be such as may, from time to time, be prescribed by the Board of
Directors, the Chairperson of the Board of Directors, the President or the Chief
Executive Officer.
In case of the absence of any officer of the Corporation, or
for any other reason that the Board of Directors may deem sufficient, the Board
of Directors, or in the absence of action by the Board of Directors, the Chief
Executive Officer, or in his or her absence, the President, or in his or her
absence, the Chairperson of the Board of Directors, may delegate for the time
being the powers and duties of any officer to any other officer or to any
director.
ARTICLE 10
CERTIFICATES OF STOCK
SECTION 10.01. CERTIFICATE. Every holder of capital stock in
the Corporation shall be entitled to have a certificate signed by or in the name
of the Corporation (a) by the Chairperson or any Vice Chairperson of the Board
of Directors or the President or any Vice President and (b) by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Corporation, certifying the number of shares owned by such holder in the
Corporation.
11
<PAGE> 12
SECTION 10.02. SIGNATURES. Any or all the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such individual were such officer, transfer agent or registrar at the date
of issue.
ARTICLE 11
TRANSFERS OF STOCK
SECTION 11.01. TRANSFERS OF STOCK. Subject to any restrictions
imposed on the transfer or ownership of the Corporation's capital stock by
applicable law or by the Certificate of Incorporation, capital stock of the
Corporation shall be transferable in the manner prescribed in these By-laws.
Transfers of shares of capital stock of the Corporation shall be made on the
books of the Corporation by the holder thereof or his or her legal
representative, acting by his or her attorney-in-fact duly authorized by written
power of attorney filed with the Secretary of the Corporation, or with one of
its transfer agents, and on surrender for cancelation of the certificate or
certificates for such shares. Except as otherwise provided in these By-laws or
in the Certificate of Incorporation, the person in whose name shares of capital
stock stand on the books of the Corporation shall be deemed the owner thereof
for all purposes as regards the Corporation. The Corporation may have one or
more transfer offices or agencies and/or registrars for the transfer and/or
registration of shares of capital stock of the Corporation.
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 12
MISCELLANEOUS PROVISIONS
SECTION 12.01. FISCAL YEAR. The fiscal year of the Corporation
shall be the calendar year, or such other period as may be adopted by resolution
of the Board of Directors.
SECTION 12.02. CORPORATE SEAL. The Corporation shall have a
corporate seal, which shall have inscribed thereon the name of the Corporation,
the year of its organization and the words "Corporate Seal, Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.
SECTION 12.03. AMENDMENTS. These By-laws may be repealed,
altered or amended, or new By-laws may be adopted, only as set forth in the
Certificate of Incorporation.
These By-laws are subject to any requirements of law, any
provisions of the Certificate of Incorporation and any terms of any series of
Preferred Stock.
12
<PAGE> 13
SECTION 12.04. Indemnification and Insurance. (a) Each person
who was or is made a party or is threatened to be made a party to or is involved
in any manner in any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or officer of the Corporation or a director or elected officer of a
Subsidiary (as defined in paragraph (f) of this Section 12.04), shall be
indemnified and held harmless by the Corporation to the fullest extent permitted
from time to time by the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended (but, if permitted by applicable law, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment) or any other
applicable laws as presently or hereafter in effect, and such indemnification
shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors or is a proceeding to enforce such person's claim to
indemnification pursuant to the rights granted by this By-law. The Corporation
shall pay the expenses incurred by such person in defending any such proceeding
in advance of its final disposition upon receipt (unless the Corporation upon
authorization of the Board of Directors waives such requirement to the extent
permitted by applicable law) of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation as authorized in this By-law or
otherwise.
(b) The indemnification and the advancement of expenses
incurred in defending a proceeding prior to its final disposition provided by,
or granted pursuant to, this By-law shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, other provision of these By-laws, agreement,
vote of stockholders or Disinterested Directors (as defined in paragraph (f) of
this Section 12.04) or otherwise. No repeal, modification or amendment of, or
adoption of any provision inconsistent with, this Section 12.04, nor to the
fullest extent permitted by applicable law, any modification of law, shall
adversely affect any right or protection of any person granted pursuant hereto
existing at, or with respect to any events that occurred prior to, the time of
such repeal, amendment, adoption or modification.
(c) The Corporation may maintain insurance, at its expense, to
protect itself and any person who is or was a director, officer, partner,
member, employee or agent of the Corporation or a Subsidiary or of another
corporation, partnership, limited liability company, 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 General Corporation Law of the State of Delaware.
(d) The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and rights to be
paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any person
13
<PAGE> 14
who is or was an employee or agent (other than a director or officer) of the
Corporation or a Subsidiary and to any person who is or was serving at the
request of the Corporation or a Subsidiary as a director, officer, partner,
member, employee or agent of another corporation, partnership, limited liability
company, joint venture, trust or other enterprise, including service with
respect to employee benefit plans maintained or sponsored by the Corporation or
a Subsidiary, to the fullest extent of the provisions of this By-law with
respect to the indemnification and advancement of expenses of directors and
officers of the Corporation.
(e) If any provision or provisions of this Section 12.04 shall
be held to be invalid, illegal or unenforceable for any reason whatsoever: (1)
the validity, legality and enforceability of the remaining provisions of this
Section 12.04 (including, without limitation, each portion of any paragraph or
clause of this Section 12.04 containing any such provision held to be invalid,
illegal or unenforceable, that is not itself held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (2) to
the fullest extent possible, the provisions of this By-law (including, without
limitation, each such portion of any paragraph of this Section 12.04 containing
any such provision held to be invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
(f) For purposes of this Section 12.04:
(1) "Disinterested Director" means a director of the
Corporation who is not and was not a party to the proceeding or matter
in respect of which indemnification is sought by the claimant.
(2) "Subsidiary" means a corporation or limited liability
company, a majority of the capital stock of which is owned directly or
indirectly by the Corporation, other than directors' qualifying shares.
(g) Any notice, request, or other communication required or
permitted to be given to the Corporation under this By-law shall be in writing
and either delivered in person or sent by telecopy, telex, telegram, overnight
mail or courier service, or certified or registered mail, postage prepaid,
return receipt requested, to the Secretary of the Corporation and shall be
effective only upon receipt by the Secretary.
SECTION 12.05. CONFIDENTIALITY IN VOTING. Stockholders shall
be provided permanent confidentiality in all voting, except as necessary to meet
applicable legal requirements.
14
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