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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-11106
PRIMEDIA INC.
(FORMERLY K-III COMMUNICATIONS CORPORATION)
(Exact name of registrant as specified in its charter)
(SEE TABLE OF ADDITIONAL REGISTRANTS)
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DELAWARE 13-3647573
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
745 FIFTH AVENUE, NEW YORK, NEW YORK 10151
(Address of principal executive offices) (Zip Code)
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(212) 745-0100
(Registrant's telephone number, including area code)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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COMMON STOCK, PAR VALUE $.01 PER SHARE......................... NEW YORK STOCK EXCHANGE
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes__X__ No____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the common equity of PRIMEDIA Inc.
("PRIMEDIA") which is held by non-affiliates of PRIMEDIA at February 19, 1998
was approximately $275 million.
As of February 19, 1998, 129,120,309 shares of PRIMEDIA's Common Stock were
outstanding.
The following documents are incorporated into this Form 10-K by reference:
PRIMEDIA's notice of annual meeting and proxy statement for its 1998 annual
meeting of shareholders into Part III hereof.
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TABLE OF ADDITIONAL REGISTRANTS
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STATE OR OTHER PRIMARY STANDARD I.R.S.
EXACT NAME OF JURISDICTION OF INDUSTRIAL EMPLOYER
REGISTRANT AS SPECIFIED INCORPORATION OR CLASSIFICATION IDENTIFICATION
IN ITS CHARTER ORGANIZATION CODE NUMBER NUMBER
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The Apartment Guide of Nashville, Inc........................ Tennessee 2741 62-1224076
Argus Publishers Corporation................................. California 2721 95-2219151
American Heat Video Productions, Inc. ....................... Missouri 8299 43-1418177
ASTN, Inc. .................................................. Delaware 8299 75-2590386
A WEP Company................................................ California 2721 95-4129732
Bacon's Information, Inc. ................................... Delaware 7389 36-4011543
Bankers Consulting Company................................... Missouri 8299 43-1771756
Bowhunter Magazine, Inc. .................................... Pennsylvania 2721 23-2667502
Canoe & Kayak, Inc. ......................................... Delaware 2721 41-1895510
Cardinal Business Media, Inc. ............................... Delaware 2721 23-2695564
Cardinal Business Media Holdings, Inc. ...................... Delaware 2721 23-2695951
Channel One Communications Corp. ............................ Delaware 4833 13-3783278
Climbing, Inc. .............................................. Delaware 2721 41-1885204
Cover Concepts Marketing Services, LLC....................... Delaware 7319 04-3370389
Cowles Business Media, Inc. ................................. Connecticut 2721 06-0935977
Cowles Enthusiast Media, Inc. ............................... Pennsylvania 2721 23-1577768
Cowles History Group, Inc. .................................. Virginia 2721 54-1606227
Cowles/Simba Information, Inc. .............................. Connecticut 2721 06-1281600
CSK Publishing Company Incorporated.......................... Delaware 2721 13-3023395
Cumberland Publishing, Inc. ................................. Maryland 2721 52-1758147
DRF Finance, Inc. ........................................... Delaware 2721 13-3616341
Daily Racing Form, Inc. ..................................... Delaware 2721 13-3616342
Data Book, Inc. ............................................. Georgia 2741 58-1482678
The Electronics Source Book, Inc. ........................... Delaware 2741 36-0645610
Excellence in Training Corporation........................... Delaware 8299 75-2532442
Films for the Humanities & Sciences, Inc. ................... Delaware 7812 13-1932571
Funk & Wagnalls Yearbook Corp. .............................. Delaware 2731 13-3603787
Gareth Stevens, Inc. ........................................ Wisconsin 2731 39-1462742
GO LO Entertainment, Inc. ................................... California 7389 95-4307031
Guinn Communications, Inc. .................................. Tennessee 2741 62-1486552
Haas Publishing Companies, Inc. ............................. Delaware 2741 58-1858150
Health & Sciences Network, Inc. ............................. California 8299 95-3654568
Horse & Rider, Inc. ......................................... California 2721 33-0480523
Intermodal Publishing Company, Ltd. ......................... New York 2721 13-2633752
IDTN Leasing Corporation..................................... Delaware 8299 13-3414420
Industrial Training Systems Corporation...................... New Jersey 8299 22-2070040
IntelliChoice, Inc. ......................................... California 2721 77-0168905
Intertec Market Reports, Inc. ............................... Delaware 2721 36-1534790
Intertec Presentations, Inc. ................................ Colorado 2721 84-0840004
Intertec Publishing Corporation.............................. Delaware 2721 48-1071277
K-III HPC, Inc. ............................................. Delaware 6719 58-2105885
K-III Prime Corporation...................................... Delaware 6719 13-3631019
Kitplanes Acquisition Company................................ Delaware 2721 95-4617433
Law Enforcement Television Network, Inc. .................... Texas 8299 75-2257839
Lifetime Learning Systems, Inc. ............................. Delaware 2741 13-3783276
Little Rock Apartment Guide, Inc. ........................... Arkansas 2741 74-2298918
Lockert Jackson & Associates, Inc. .......................... Washington 8299 91-1395126
Low Rider Publishing Group, Inc.............................. California 2721 95-4307029
McMullen Argus Publishing, Inc. ............................. California 2721 95-2663753
Memphis Apartment Guide, Inc. ............................... Tennessee 2741 62-0964956
Musical America Publishing, Inc. ............................ Delaware 2721 13-2782528
Nelson Information, Inc. .................................... Delaware 2741 13-3740812
Pictorial, Inc. ............................................. Indiana 2731 35-1616640
Plaza Communications, Inc. .................................. California 2721 95-3053189
PRIMEDIA Holdings III Inc. .................................. Delaware 6719 13-3617238
PRIMEDIA Information Inc. ................................... Delaware 2721 13-3555670
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STATE OR OTHER PRIMARY STANDARD I.R.S.
EXACT NAME OF JURISDICTION OF INDUSTRIAL EMPLOYER
REGISTRANT AS SPECIFIED INCORPORATION OR CLASSIFICATION IDENTIFICATION
IN ITS CHARTER ORGANIZATION CODE NUMBER NUMBER
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PRIMEDIA Magazines Inc. ..................................... Delaware 2721 13-3616344
PRIMEDIA Magazines Finance Inc. ............................. Delaware 2721 13-3616343
PRIMEDIA Reference Inc. ..................................... Delaware 2731 13-3603781
PRIMEDIA Special Interest Publications Inc. ................. Delaware 2721 52-1654079
PRIMEDIA Workplace Learning, Inc. ........................... Texas 8299 75-2110878
QWIZ, Inc. .................................................. Delaware 7372 58-2302364
R.E.R. Publishing Corporation................................ New York 2721 13-3090623
RetailVision, Inc. .......................................... Delaware 2721 03-0339898
Southwest Art, Inc. ......................................... Delaware 2721 76-0233343
Straight Down, Inc........................................... California 2721 95-3824415
Symbol of Excellence Publishers, Inc. ....................... Alabama 2721 63-0845698
Tel-A-Train, Inc............................................. Delaware 8299 75-2532446
The Virtual Flyshop, Inc. ................................... Colorado 2721 84-1318377
TI-IN Acquisition Corporation................................ Texas 8299 75-2478738
Vegetarian Times, Inc. ...................................... Illinois 2721 36-3636836
Weekly Reader Corporation.................................... Delaware 2721 13-3603780
Westcott Communications Michigan, Inc. ...................... Michigan 8299 38-2955660
Westcott ECI, Inc. .......................................... Texas 8299 75-2475419
Western Empire Publications, Inc. ........................... Delaware 2721 95-3363328
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The address, including zip code, and telephone number, including area code,
of each additional registrant's principal executive office is 745 Fifth Avenue,
New York, New York 10151 (212-745-0100).
The financial statements of the guarantor subsidiaries are omitted because
PRIMEDIA believes the separate financial statements would not be material to the
shareholders and potential investors. The total assets, revenues, income or
equity of non-guarantor subsidiaries, both individually and on a combined basis
are inconsequential in relation to the total assets, revenues, income or equity
of PRIMEDIA. All of the equity securities of each of the additional registrants
set forth in the table above are owned, either directly or indirectly, by
PRIMEDIA, and there has been no default during the preceding 36 calendar months
with respect to any indebtedness or material long-term leases of PRIMEDIA or any
of the additional registrants.
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PRIMEDIA INC.
ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1997
CROSS REFERENCE SHEET FOR
PARTS I, II, III AND IV
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PART I
Item 1. Business...................................................................................... 1
Item 2. Properties.................................................................................... 10
Item 3. Legal Proceedings............................................................................. 10
Item 4. Submission of Matters to a Vote of Security Holders........................................... 10
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters......................... 11
Item 6. Selected Financial Data....................................................................... 12
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 14
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.................................... 25
Item 8. Financial Statements and Supplementary Data................................................... 26
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......... 61
PART III -- Omitted, except Item 10 as to Executive Officers is included as part of Part I
Item 1........................................................................................ 61
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............................... 61
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PART I
ITEM 1. BUSINESS.
GENERAL
PRIMEDIA Inc. (which together with its subsidiaries (and its predecessors)
is herein referred to as either "PRIMEDIA" or the "Company" unless the context
implies otherwise) is the authoritative source of specialized information for
highly targeted audiences in the education, business and special interest
consumer markets. Most of the Company's products have leadership positions in
the specialty niche markets in which such products compete: specialty magazines
(E.G., SEVENTEEN, AMERICAN BABY, SOAP OPERA DIGEST, TRUCKIN', SEW NEWS and
TELEPHONY); education (E.G., CHANNEL ONE NETWORK, WEEKLY READER and PRIMEDIA
Workplace Learning); and information (E.G., APARTMENT GUIDES, WARD'S, THE WORLD
ALMANAC and BACON'S).
The Company has achieved substantial revenue growth through the development
of its franchises, combined with its operating expertise and a successful
acquisition strategy. For the period starting in 1993 through 1997, sales have
grown at a compound annual rate of 15% to $1,488 million. Operating loss in 1997
was $20.8 million compared to $7.7 million in 1993 (after deductions for
amortization and depreciation of $184.2 million in 1997 and $143.3 million in
1993).
GROWTH STRATEGY
PRIMEDIA's strategy is to address growing needs in today's information
economy. Technology has created a flood of information. Consequently, management
believes the key role of the media is shifting from making information broadly
available across all audiences to sifting out and qualifying information for the
benefit of specific audiences. The Company's products are authoritative
information sources meeting customers' particular needs in the most beneficial
formats--print, electronic, and multimedia. Its pursuit of this strategy in its
targeted markets has enabled PRIMEDIA to achieve an average market share across
all products of 60%, with 80% ranking number one or two in their markets.
PRIMEDIA provides authoritative information in six areas that show superior
growth: specialty consumer magazines and technical and trade magazines in the
specialty magazine segment; classroom learning and workplace learning in the
education segment; and consumer and business information products in the
information segment. In each of these six areas, the Company offers
authoritative information products that have a branded presence and leading
market positions.
The Company is taking advantage of fundamental growth trends in these six
markets. The Company's specialty magazines take advantage of trends in the
specialty consumer market where advertising growth has outpaced general interest
magazine, broadcast television, radio and newspaper advertising growth since
1989. In classroom and workplace learning, PRIMEDIA is building on rising
elementary and secondary school enrollments, increased spending on supplementary
educational materials and the rapid growth in outsourced workplace education.
The Company's consumer and business information products are capitalizing on the
trend towards targeted marketing and away from general interest sources such as
newspapers and the increased spending by businesses for information.
The Company seeks to maximize its operating performance by capitalizing on
its leading position in each of these growing markets. Each of PRIMEDIA's six
growth vehicles has opportunities for expansion through both internal organic
development and product line acquisitions. Organic growth results from both
market expansion and product innovation in conventional and new media formats.
Growth through product line acquisition is made possible by the constant
availability of leading brands for sale in niche markets in PRIMEDIA's six
growth areas. To support this aspect of growth, the Company has successfully
developed a selective and disciplined process of identifying, evaluating and
integrating acquired companies. The primary source of funds for these product
line acquisitions is the cash generated by the Company's operations, which by
their nature have high operating margins and low capital requirements. Net
capital expenditures were approximately $31.1 million, $28.8 million and $23.4
million, or 2.1%, 2.1% and 2.2% of sales, in 1997, 1996 and 1995, respectively.
Additionally, cash available for reinvestment is
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amplified because the Company pays virtually no income taxes largely as a result
of having structured most of its acquisitions to create tax-deductible
amortization of intangible assets which results in net operating losses.
The Company has focused on the areas of its business that have the greatest
potential for strong organic growth and growth through product line
acquisitions. Those growth vehicles by segment are: specialty
magazines--specialty consumer magazines and technical and trade magazines;
education-- classroom learning and workplace learning; and information--consumer
information and business information.
On November 18, 1997, the Company changed its name to PRIMEDIA Inc. to
better reflect the "prime" positioning the Company has in six areas of
specialized "media." On November 18, 1997, the Company's New York Stock Exchange
symbol was changed from KCC to PRM.
Refer to Item 7 for a description of segment sales and income.
SPECIALTY MAGAZINES
The specialty magazines segment consists of specialty consumer magazines and
technical and trade magazines. In 1997, 60% of its 67 specialty consumer
magazines and nearly 50% of its 65 technical and trade magazines, were number
one in their respective markets. According to the WALL STREET JOURNAL, PRIMEDIA
is the largest magazine publisher in the United States of America by ad page
count. Some of the Company's specialty consumer magazines include SOAP OPERA
DIGEST, SEVENTEEN, NEW YORK, CHICAGO, TRUCKIN' and SEW NEWS; leading technical
and trade publications include TELEPHONY, FLEET OWNER and AMERICAN PRINTER.
SPECIALTY CONSUMER MAGAZINES
The Company's specialty consumer magazines include SOAP OPERA DIGEST, MODERN
BRIDE, SEVENTEEN, AMERICAN BABY, over 36 automotive titles, and 13 local bridal
as well as sewing, crafts and other titles. The principal sources for specialty
consumer magazines' sales are advertising and circulation. In the year ended
December 31, 1997, approximately 54% of the specialty consumer magazines' sales
were from advertising, 42% were from circulation and 4% were from other sources.
SOAP OPERA DIGEST and SOAP OPERA WEEKLY are the leading publications
covering soap operas aired on network television. SOAP OPERA DIGEST was a
bi-weekly publication through 1996. In the spring of 1997, SOAP OPERA DIGEST
became a weekly publication with an average circulation of 1.1 million per week.
SOAP OPERA WEEKLY had an average 1997 circulation of 465,000. Both publications
are distributed mainly at supermarket, convenience store and drugstore checkout
counters with SOAP OPERA DIGEST also having a significant subscriber base. They
compete for circulation on the basis of editorial content and quality against
such publications as SOAP OPERA NEWS and SOAP OPERA MAGAZINE, both of which have
substantially lower circulation.
SEVENTEEN is the leading young women's fashion and beauty magazine based on
both circulation and advertising pages, with fashion, boys, beauty, talent and
lifestyle editorial targeted to girls aged 12 to 19. SEVENTEEN's monthly rate
base is 2.3 million; it is the largest circulation teen and fashion and beauty
magazine in the United States. Its principal competitor is YM. SEVENTEEN
competes for circulation based on the nature and quality of its editorial.
AMERICAN BABY, a baby care publication distributed monthly to approximately
1.7 million expectant and new parents, contains articles on all aspects of
pregnancy and baby care. While the magazine competes with PARENTS, PARENTING and
CHILD for the larger childcare market, AMERICAN BABY'S principal competitor is
BABY TALK. AMERICAN BABY also offers several ancillary products including
sampling and couponing programs and a cable television show.
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The Company's other specialty consumer magazines include AUTOMOBILE, which
caters to the high-end automotive market, MODERN BRIDE, a guide to bridal
fashions, home furnishings and honeymoons, the city magazines NEW YORK and
CHICAGO, TRUCKIN', the leading truck customization publication, SEW NEWS, the
premier sewing title and DOG WORLD, the leading publication for dog breeders.
The Company's sales of the automotive titles are primarily newsstand driven; the
sewing and crafts titles are primarily sold by subscription, and the other
titles have significant sales both by subscription and on the newsstand.
Subscriptions are obtained using printed advertisements, direct mail,
clearinghouses and subscription cards in each magazine.
In 1997, the Company acquired CONTEMPORARY BRIDE OF DETROIT, SHOTGUN NEWS,
SURFING, CAR AUDIO AND ELECTRONICS, VETTE, MUSCLE MUSTANGS, LOW RIDER, and
several other related titles. The Company, on January 8, 1998, executed a
definitive agreement with McClatchy Newspapers, Inc. and Cowles Media Company
(the "Cowles Transaction") to acquire Cowles Enthusiast Media consisting of
specialty consumer magazines.
Readers value specialty consumer magazines for their editorial content and
also rely on them as a catalog of products in the relevant topic area. This
catalog aspect makes the specialty consumer magazines an important media buy for
advertisers. Advertising sales for the Company's specialty consumer magazines
are generated by a combination of in-house staff and outside advertising firms.
The magazines compete for advertising on the basis of circulation and the niche
markets they serve. Each of the Company's specialty consumer magazines faces
competition in its subject area from a variety of publishers, and competes for
readers on the basis of high quality, targeted editorial, which is provided by
in-house writers and freelance authors.
In 1997, SEVENTEEN established a brand licensing program centered around the
launch of select categories of SEVENTEEN-branded merchandise. This merchandise
will begin to appear in retail outlets in mid-1998.
With the 1997 launch of websites for SOAP OPERA DIGEST (www.soapdigest.com)
and NEW YORK MAGAZINE (www.newyorkmag.com), the Company now has websites for the
vast majority of its specialty consumer magazines.
In 1997, the Company launched numerous special issues of titles including,
but not limited to, SEVENTEEN, AUTOMOBILE MAGAZINE, HORTICULTURE and TRUCKIN'.
TECHNICAL AND TRADE MAGAZINES
The Company publishes 65 technical and trade magazines that provide vital
information to professionals in fields such as telecommunications (TELEPHONY and
WIRELESS REVIEW), agriculture (SOYBEAN DIGEST), transportation (FLEET OWNER) and
real estate (NATIONAL REAL ESTATE INVESTOR). In 1997, 31 of these publications
ranked number one, and approximately 72% of these publications ranked number one
or two, in the fields they serve based on advertising pages. These magazines are
distributed primarily on a "controlled circulation" basis to members of a
targeted industry group and provide career and business-enhancing technical and
tutorial editorial content. Capitalizing on the centralized circulation,
fulfillment, production and other back office services, new titles can be
spun-off from existing titles or acquired and integrated.
During 1997, approximately 78% of the sales of the technical and trade
titles were generated from advertising. Because each of the technical and trade
magazines is distributed almost exclusively to purchasing decision makers in a
targeted industry group, product and service providers are able to focus their
advertising. The advertising rates charged are based on the size of the
circulation within the target group as well as competitive factors. These
magazines compete for advertising on the basis of advertising rates,
circulation, reach, editorial content and readership commitment. Advertising
sales are made by in-house sales forces, supplemented by independent
representatives in selected regions and overseas.
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Classified advertising is sold through telemarketing. Magazine editorial is
provided by in-house writers and freelance authors, well-known in their specific
industry niches.
In 1997, the Company announced a joint venture with Cheng Cheng Enterprises
Holdings (China) Ltd. to publish technical and trade magazines in China.
Additionally, the company acquired both Cardinal Business Media, Inc., a leading
publisher of technical entertainment business magazines and REGISTERED
REPRESENTATIVE, the leading magazine for retail brokers. As part of the Cowles
Transaction, the Company will acquire Cowles Business Media consisting of 11
technical and trade magazine titles and 15 trade shows.
In addition to its technical and trade magazines, the Company sponsors
seminars and trade shows, including LIGHTING DIMENSIONS INTERNATIONAL,
INTERNATIONAL WIRELESS COMMUNICATIONS EXPO and THE SATELLITE COMMUNICATIONS EXPO
& CONFERENCE, serving the advertisers and readers of the corresponding
publications.
In the technical and trade magazine segment, the Company launched numerous
new media products including 14 websites and a CD-ROM for ELECTRICAL
WHOLESALING.
In 1997, the Company introduced several new products. These include Internet
sites for SOAP OPERA DIGEST (WWW.SOAPDIGEST.COM), NEW YORK (WWW.NEWYORKMAG.COM),
and 14 other sites for technical and trade magazines. Many of these sites carry
paid advertising. The Company also launched a brand licensing program at
SEVENTEEN magazine.
EDUCATION
The Company is a leading provider of supplemental educational materials and
programming in the United States, targeting both classroom and workplace
learning. PRIMEDIA's best-known brands in classroom learning include CHANNEL ONE
and WEEKLY READER, and in workplace learning, PRIMEDIA Workplace Learning,
formerly known as Westcott Communications. Classroom learning takes advantage of
the growth in spending on supplementary educational materials and the projected
increases in elementary and secondary school enrollments over the next decade
(in particular, school enrollments are expected to rise 7% between 1995 and
2005). Workplace learning focuses on the $69 billion training market of which
the outsourced segment is the fastest growing portion, expected to rise 142%
between 1995 and 2005.
CLASSROOM LEARNING
The Company operates CHANNEL ONE NETWORK, WEEKLY READER and Films for the
Humanities and Sciences ("Films").
CHANNEL ONE'S NETWORK news program, CHANNEL ONE NEWS, is the only daily news
program targeted to secondary school students. CHANNEL ONE NEWS broadcasts every
school day via satellite to over eight million students and 350,000 educators in
approximately 12,000 secondary schools in the United States. CHANNEL ONE NETWORK
pioneered the delivery of world events and educational programming into
classrooms via satellite. Its award-winning daily news broadcast reaches more
students than any other electronically delivered educational product. CHANNEL
ONE NEWS has ten times the audience of the evening newscasts of ABC, CBS, NBC
and cable networks.
Schools sign up for the CHANNEL ONE NETWORK service under a three-year
contract pursuant to which they agree to show CHANNEL ONE NEWS, in its entirety,
on at least 90% of all school days. CHANNEL ONE NETWORK provides to schools a
turnkey system of video cassette recorders and networked televisions. These
products and services are provided to schools at no charge; sales are generated
by two minutes of advertising shown during the 12-minute daily newscast.
Substantially all school contracts have come up for renewal at least once and
approximately 99% have been renewed in each renewal cycle.
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CHANNEL ONE NEWS is produced at CHANNEL ONE NETWORK'S Los Angeles studio,
using staff anchors and correspondents who report from U.S. and international
locations. CHANNEL ONE NETWORK has a library of over 1,500 broadcasts including
approximately 200 single subject series, 60 of which have been released as
educational videos.
CHANNEL ONE NEWS has no direct competition in the schools but does compete
for advertising dollars with other media aimed at teenagers. The Company's
primary competitive advantage is its total audience of over eight million
teenagers each school day. For 1997, approximately 64% of CHANNEL ONE NEWS'
advertising sales were from contracts having terms of three or more years. The
top five advertisers in 1997 by dollars were PepsiCo, M&M Mars, Quaker Oats,
Reebok, and Nintendo, which together accounted for approximately 56% of
advertising sales, and 93% of which was pursuant to multi-year contracts
expiring between June 1998 and December 1999.
CHANNEL ONE'S THE CLASSROOM CHANNEL offers a range of instructional
programming to enhance the schools' curriculum. THE CLASSROOM CHANNEL offers an
average of 80 minutes of daily programming at no charge to schools. In 1997,
CHANNEL ONE NETWORK expanded its franchise by expanding the distribution of THE
COLLEGE CHANNEL, a college preparation service produced in conjunction with The
Princeton Review, to more than 5,000 high schools; increasing the traffic on its
CHANNELONE.COM on-line network by more than 100%; licensing its programming in
Thailand; and renewing its weekly ONEZONE news program for a second broadcast
season on public television. Additionally, in 1997, CHANNEL ONE NETWORK acquired
Cover Concepts, a publisher of customized school book covers.
WEEKLY READER is the best-known and highest-circulation student newspaper in
the United States, with over 6.6 million subscriptions for elementary school
students alone. WEEKLY READER and its related products are sold in approximately
70% of all elementary schools and 59% of all secondary schools, and for the
1996-1997 school year had a 55% share of the elementary school market and a 38%
share of the secondary school market.
Eight separate editions of WEEKLY READER, each consisting of 26 issues per
year, are distributed to elementary school students. Each edition is written and
designed for a particular reading and comprehension level in order to bring
current world news to children at a level commensurate with their comprehension
abilities. A teacher's guide with background information, discussion topics and
follow-up questions is included with each edition. In order to capitalize on its
large teacher and school customer base for organic growth, WEEKLY READER
launched SCIENCE SPIN, an optional monthly supplement with separate editions for
grades K to 6. SCIENCE SPIN achieved an initial circulation of 510,000 in its
first year of publication. Every full-color issue contains current and
interesting science news tailored to student reading levels and the school
curriculum.
For the secondary school market, WEEKLY READER publishes eight other
periodicals: READ MAGAZINE, WRITING, CURRENT EVENTS, CURRENT SCIENCE, CURRENT
HEALTH I AND II, CAREER WORLD and KNOW YOUR WORLD EXTRA. These periodicals
provide current information and skills practice in the curriculum areas of
language arts, science, health and remedial reading. Editorial materials for
these publications are generated by in-house writers and freelance authors. The
Company's main competitors in these markets are Scholastic Corporation and Time
Warner, Inc. WEEKLY READER generally competes on the basis of editorial quality,
content and value.
Films is the exclusive distributor of approximately 6,500 educational videos
as well as videodiscs, CD-ROMs and related products that are sold primarily by
direct mail to teachers, instructors and librarians serving primarily grades 8
to 12 and college markets. Films is the largest distributor of such products to
colleges and high schools and competes on the basis of quality and breadth of
the subject matter. In 1997, Films acquired the exclusive right to distribute
the non-theatrical British Broadcasting Corporation videos to the U.S. education
markets.
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WORKPLACE LEARNING
PRIMEDIA Workplace Learning, formerly Westcott Communications, Inc., is a
leading provider of high quality workplace educational materials including video
programming, print and computer based products. PRIMEDIA Workplace Learning has
approximately 20,000 corporate and institutional subscribers. The group's
satellite-delivered and video programming reaches three million professionals
each year on more than 20 networks and is the premier provider of
electronically-delivered workplace training in such fields as automotive,
healthcare, banking, and insurance.
The Company's leading networks include the Executive Education Network
("EXEN") and the Interactive Medical Networks ("IMN"). EXEN delivers executive
education courses taught by professors from leading business schools including
Harvard University, Columbia University and the University of Southern
California to corporate and professional clients nationwide. In 1997, EXEN
expanded internationally with its first live EXEN broadcast featuring expert
leadership strategist John Kotter of Harvard. IMN offers a variety of live
programming, telecourses and other video products, including graduate degree
courses, in-service training and accredited continuing education programming,
designed to reach multiple target audiences within the hospital setting.
In 1997, PRIMEDIA Workplace Learning launched two networks: the WORKPLACE
TRAINING NETWORK ("WTN") which provides satellite-delivered information on
industrial safety and training and the PRIMEDIA FINANCIAL NETWORK ("PFN") which
provides training for financial professionals, delivered by satellite and video.
PRIMEDIA Workplace Learning does not have any multi-industry competitors in
the workplace learning market. The Company competes with a number of businesses
and governmental agencies that provide videotaped training material, consulting
services and instruction via television, print, video, Internet or seminars.
In 1997, PRIMEDIA Workplace Learning acquired Pictorial, the largest
provider of specialized training and certification products for the insurance
industry and QWIZ, the leading provider of computer-based office skills testing.
Both acquisitions add critical training and testing expertise in growth
industries.
INFORMATION
The Company produces over 170 highly targeted consumer and business
information products, most of which hold dominant positions in their niche
markets. The Company's premier consumer information products include APARTMENT
GUIDES, THE WORLD ALMANAC and such specialty reference products as FACTS ON FILE
NEWS SERVICES which is used by public and institutional libraries. Its leading
business directories include BACON'S for public relations professionals and
NELSON for financial professionals.
The growth in advertising supported consumer information (E.G.--targeted
free publications, such as the APARTMENT GUIDES) is being driven by the desire
of advertisers to reach their customers as cost effectively as possible. From
1995 to 2005, advertising revenue generated from free shopping guides is
expected to nearly double. Consequently, APARTMENT GUIDES and PRIMEDIA's other
targeted free publications should continue to provide significant opportunities
for growth through new ventures and acquisitions. Business directories
capitalize on the growth in business spending on information which is expected
to increase 8% on a compound annual basis, between 1995 and 2005.
CONSUMER INFORMATION
The Company publishes over 70 consumer directories and specialized reference
products. These products are distributed nationally in retail outlets and are
sold to public and institutional libraries. The Company publishes and
distributes consumer guides in three categories: rental apartments, new homes
6
<PAGE>
and computer shopping. The Company's leading reference products include THE
WORLD ALMANAC, FACTS ON FILE NEWS SERVICES and the Gareth Stevens line of
juvenile reference works.
The Company is the leading publisher of rental apartment guides in the
United States with 63 local versions of its apartment guides, each of which is
published no less frequently than quarterly and provides informational listings
about featured apartment communities. All listed apartments are carried on the
Internet at WWW.APTGUIDES.COM. These listings are paid for by apartment
community managers, who need to fill vacant apartments, and who represent 100%
of the apartment guide sales. The Company is the dominant information provider
in apartment guides. The Company's only national competitor, FOR RENT, is
present in 37 of the Company's markets. In those markets, on average, the
Company captured 52% of total 1997 advertising pages, with FOR RENT capturing
43% of such advertising pages.
In 1997, the Company acquired apartment guides in Dayton, Nashville, Memphis
and Little Rock, and made its most successful launch ever in Salt Lake City.
Additionally, the Company acquired a new homes guide in Austin.
The Company's DistribuTech Division is the nation's largest distributor of
free publications, including its own consumer directories and over 600 other
titles. In 1997, it managed the distribution of its and other publishers' free
publications to over 19,000 grocery, convenience and drug stores in 65 U.S.
cities, as well as universities, military bases and major employers. The
majority of these locations are operated under exclusive distribution
agreements. The Company's consumer information guides typically are displayed in
free standing, multi-pocket racks. DistribuTech generates substantial revenues
by leasing additional distribution rack pockets to other publications that it
also distributes. DistribuTech competes on the basis of its prime retail
locations for its rack program.
THE WORLD ALMANAC is the leading almanac in the English language ranked by
unit sales and data content with approximately 1.0 million copies of the 1998
edition sold as of December 31, 1997. In 1997, the Company published the third
annual edition of THE WORLD ALMANAC FOR KIDS, which sold approximately 220,000
copies. THE WORLD ALMANAC licenses its content for use on seven CD-ROM products
and six on-line services. The Company's World Almanac Education Division sells
reference books to the school and library market by catalog. Facts On File News
Services publishes subscription products that are sold to schools and libraries.
The flagship product, WORLD NEWS DIGEST, published weekly, is available in
print, CD-ROM and on-line formats, and has a subscriber base of approximately
7,000.
Gareth Stevens, a publisher and distributor of juvenile reference works and
a distributor of multi-media products, was acquired by the Company in February
1997. Gareth Stevens has a title list of approximately 800 titles and its market
focus is North America's primary and secondary school libraries and public
libraries. Funk & Wagnalls' New Encyclopedia licenses its editorial content, for
electronic delivery, to Microsoft Corporation as the textual basis for
Microsoft's ENCARTA CD-ROM product and for use on four CD-ROM products and five
on-line services. The Company experiences competition for its reference products
from other print and electronic products from a variety of publishers.
BUSINESS INFORMATION
The Company publishes nearly 100 specialized directories and databases
focused on the specialized information needs of professionals in such areas as
commerce, public relations, and transportation. The databases are compiled by an
in-house editorial staff, marketed directly to subscribers and advertisers
primarily by an in-house sales staff and distributed predominantly on a paid
subscription basis. Products are available in the most appropriate format for
the customer: Internet, CD-ROM, or print. The Company's Bacon's Information,
Inc. publishes MEDIASOURCE, a CD-ROM directory for public relations and media
professionals, as well as print directories including BACON'S INTERNATIONAL
MEDIA DIRECTORY and BACON'S BUSINESS MEDIA DIRECTORY. To complement its public
relations directories, the Company operates a periodicals clipping service.
NELSON is a premier brand name in the institutional investment industry,
7
<PAGE>
providing specialized investment research and management information through
products such as INSTITUTIONAL MARKETPLACE FOR WINDOWS.
The Company also publishes newsletters that provide in-depth information on
selected markets. WARD'S AUTOMOTIVE REPORTS is recognized as the authoritative
source for industry-wide statistics on automotive production and sales. This
newsletter competes on the basis of the nature and quality of its editorial
content. In addition, the Company publishes, in print and electronic formats,
used vehicle valuation information. Other databases include THE ELECTRONICS
SOURCE BOOK and AC-U-KWIK.
Most of the business directories published by the Company have no
competition. Where competition does exist, in most cases, the Company's
publication is dominant. Competition is on the basis of price and quality of
data. Management believes that the comprehensiveness and quality of its data and
the specialized focus of its publications have prevented others from launching
competing publications or competing effectively.
In 1997, the Company acquired INTELLICHOICE, the leading provider of
Internet-based automobile cost information over the life of the automobile.
In 1997, the Company released several CD-ROM products, including THE
BLUEBOOK OF LOGISTICS EXECUTIVES and ELECTRICAL WHOLESALING.
NON-CORE BUSINESSES SOLD
As part of its strategy to focus on areas of its business that have the
greatest potential for growth, the Company divested certain businesses that did
not fit within its growth vehicles. Those businesses are: Krames Communications,
the Katharine Gibbs Schools, Newbridge Book Clubs, Newbridge Educational
Publishing, NEW WOMAN magazine, STAGEBILL, and Intertec Mailing Services. The
Company intends to divest THE DAILY RACING FORM, a national daily newspaper
covering thoroughbred horse racing.
PRODUCTION AND FULFILLMENT
Virtually all of the Company's print products are printed and bound by
independent printers. The Company believes that outside printing services at
competitive prices are readily available. With the exception of PRIMEDIA
Workplace Learning and Films, which produce video products in-house, and most
Internet sites, all other production of electronic and video products is
performed by third party vendors.
The principal raw material used in the Company's products is paper. The
Company has paper supply contracts and, in almost all cases, supplies paper used
by its outside printers. The Company believes that even if at some point in the
future paper is in limited supply, the existing arrangements providing for the
supply of paper will be adequate. The Company was able to meet its paper
requirements during 1997. In 1997, approximately 39% and 34% of the Company's
paper purchases were supplied through Lindenmeyr Central and Bulkley Dunton,
respectively. The Company's relationship with these suppliers is good and is
expected to continue to be good for the foreseeable future.
Many of the Company's products are packaged and delivered to the U.S. Postal
Service directly by the printer. Other products are sent from warehouses and
other facilities operated by the Company.
COMPANY ORGANIZATION
PRIMEDIA was incorporated on November 22, 1991 in the State of Delaware. The
principal executive office of the Company is located at 745 Fifth Avenue, New
York, New York 10151, telephone number (212) 745-0100.
8
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of PRIMEDIA:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
William F. Reilly.................................... 59 Chairman of the Board and Chief Executive Officer and
Director
Charles G. McCurdy................................... 42 President and Director
Beverly C. Chell..................................... 55 Vice Chairman, General Counsel, Secretary and
Director
Jack L. Farnsworth................................... 52 Executive Vice President
James A. Warner...................................... 44 Vice President
Richard J. LeBrasseur................................ 55 Vice President
Michaelanne C. Discepolo............................. 45 Vice President, Human Resources
George Philips....................................... 67 Vice President
Douglas B. Smith..................................... 37 Vice President and Treasurer
Curtis A. Thompson................................... 46 Vice President and Controller
</TABLE>
Mr. Reilly is Chairman of the Board, Chief Executive Officer and a Director
of PRIMEDIA and has served in such capacities since November 1991. Mr. Reilly is
also a director of FMC Corporation.
Mr. McCurdy is President and a Director of PRIMEDIA and has served in such
capacities since November 1991 and was Treasurer from 1991 to August 1993.
Ms. Chell is Vice Chairman, General Counsel, Secretary and a Director of
PRIMEDIA. Ms. Chell has served as Vice Chairman, General Counsel and Secretary
since November 1991 and as a Director since March 1992. She is also a director
of Mecklermedia Corporation.
Mr. Farnsworth has been Executive Vice President of PRIMEDIA since May 1997,
Vice President of PRIMEDIA since May 1992, President of PRIMEDIA Information
Group since May 1992 and President of PRIMEDIA Workplace Learning, Inc. since
June 1996.
Mr. Warner has been a Vice President of PRIMEDIA since March 1998 and
President of PRIMEDIA Specialty Magazines since February 1998. Prior to that
time, he was President of the CBS Television Network starting in 1995. From 1989
to 1995 he was President of CBS Enterprises.
Mr. LeBrasseur has been a Vice President of PRIMEDIA since March 1998,
President of the Supplemental Education Group since October 1997 and President
and Chief Executive Officer of Weekly Reader Corporation since April 1993.
Ms. Discepolo is Vice President, Human Resources of PRIMEDIA.
Mr. Philips has been a Vice President of PRIMEDIA since May 1992.
Mr. Smith has been a Vice President of PRIMEDIA since May 1997 and Treasurer
of PRIMEDIA since August 1993. Prior to that time he was at The Bank of New York
starting in 1982 holding various positions. He held the position of Senior Vice
President prior to joining PRIMEDIA.
Mr. Thompson is a Vice President and Controller of PRIMEDIA and has served
in such capacities since November 1991.
The business address of the above executive officers of the Company is the
address of the principal executive office of PRIMEDIA.
EMPLOYEES
As of December 31, 1997, the Company had approximately 6,300 full- and
part-time employees, of whom approximately 20 were union members. Management
considers its relations with its employees to be good.
9
<PAGE>
ITEM 2. PROPERTIES.
The Company's principal leased properties used by the education segment are
located in California, Connecticut, Iowa, New Jersey, New York, Tennessee and
Texas; used by the information segment are in Arizona, California, Georgia,
Illinois, Indiana, Iowa, Maryland, New Jersey, New York, Ohio and Wisconsin; and
used by the specialty magazines segment are in Alabama, California, Colorado,
Connecticut, Georgia, Illinois, Kansas, Massachusetts, Michigan, Minnesota,
Mississippi, New York, Pennsylvania and Texas. Property is owned by the Company
and used in the information segment in New Jersey and Georgia and in the
specialty magazines segment in California, Illinois and Missouri. The Company's
only production facilities are small printing operations for THE DAILY RACING
FORM and Films, broadcast production facilities for PRIMEDIA Workplace Learning
and CHANNEL ONE and video duplicating facilities for PRIMEDIA Workplace Learning
and Films. The Company's distribution properties and their capacity is adequate
to satisfy the Company's needs.
ITEM 3. LEGAL PROCEEDINGS.
There are no material pending legal proceedings and no material legal
proceedings including any that were terminated in the fourth quarter of 1997, to
which the Company is or was a party other than ordinary routine litigation
incidental to the business of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the
fourth quarter of 1997.
10
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
PRIMEDIA Common Stock is listed on the New York Stock Exchange. As of
February 19, 1998, there were 323 holders of record of PRIMEDIA Common Stock.
The Company has not and has no present intention to pay dividends on its Common
Stock. High and low sales prices for 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 SALES PRICE
--------------------
QUARTER ENDED HIGH LOW
- -------------------------------------------------------------------- --------- ---------
<S> <C> <C>
March 31............................................................ $ 12 3/4 $ 9 1/2
June 30............................................................. $ 13 1/8 $ 10
September 30........................................................ $ 12 3/4 $ 10 3/4
December 31......................................................... $ 13 7/16 $ 11 5/8
<CAPTION>
1996 SALES PRICE
--------------------
QUARTER ENDED HIGH LOW
- -------------------------------------------------------------------- --------- ---------
<S> <C> <C>
March 31............................................................ $ 12 5/8 $ 11 1/4
June 30............................................................. $ 12 7/8 $ 10 5/8
September 30........................................................ $ 12 5/8 $ 10
December 31......................................................... $ 11 5/8 $ 8 1/2
</TABLE>
On September 26, 1997, PRIMEDIA completed a private offering of 1,250,000
shares of $9.20 Series E Exchangeable Preferred Stock Redeemable 2009, par value
$.01 per share, liquidation preference $100 per share (the "Series E Preferred
Stock"). All shares of the Series E Preferred Stock were sold initially to
Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Brothers Inc., as the placement agents (the "Placement
Agents"). The Placement Agents subsequently sold the Series E Preferred Stock to
qualified institutional buyers and accredited investors in reliance on Rule 144A
and Regulation S under the Securities Act of 1933, as amended. The aggregate
offering price for the Series E Preferred Stock was $125 million; and the net
proceeds to PRIMEDIA, after deduction of discounts, commissions and expenses,
were approximately $121.5 million. The net proceeds were used to redeem the
4,000,000 outstanding shares of $2.875 Senior Exchangeable Preferred Stock of
PRIMEDIA, par value $.01 per share, liquidation preference $25.00 per share on
November 3, 1997 at a redemption price of $26.45 per share plus accrued and
unpaid dividends to the redemption date and to repay borrowings outstanding
under PRIMEDIA's Bank Credit Facilities (as defined herein). Pursuant to a
Registration Rights Agreement between PRIMEDIA and the Placement Agents,
PRIMEDIA caused to become effective on January 16, 1998 a Registration Statement
(Registration No. 333-38451) for 1,250,000 shares of $9.20 Series F Exchangeable
Preferred Stock Redeemable 2009, par value $.01 per share, liquidation
preference $100 per share (the "Series F Preferred Stock"). The shares of Series
F Preferred Stock are exchangeable into 9.20% Class F Subordinated Exchange
Debentures due 2009, in whole but not in part, at the option of PRIMEDIA. The
exchange of shares of Series E Preferred Stock in exchange for Series F
Preferred Stock was completed on February 17, 1998. There were no cash proceeds
to PRIMEDIA from such exchange.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The selected consolidated financial data were derived from the consolidated
financial statements of the Company which are included elsewhere in this Annual
Report. The data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the related notes thereto included herein.
PRIMEDIA INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Sales, net....................................... $1,487,595 $ 1,374,449 $ 1,046,329 $ 964,648 $ 844,748
Depreciation and amortization.................... 184,165 190,702 192,276 136,866 143,267
Other charges(1)................................. 138,640 -- 50,114 15,025 2,644
Operating income (loss)(2)....................... (20,793) 85,901 (26,275) 10,203 (7,669)
Interest expense................................. 136,625 124,601 105,837 78,351 74,336
Income tax benefit(3)............................ 1,685 53,300 59,600 42,100 --
Income (loss) before extraordinary charge........ (157,439) 17,597 (75,435) (29,529) (86,496)
Extraordinary charge-extinguishment of debt(4)... (15,401) (9,553) -- (11,874) --
Net income (loss)(2)............................. (172,840) 8,044 (75,435) (41,403) (86,496)
Preferred stock dividends(5)..................... 65,073 43,526 28,978 25,959 22,290
Loss applicable to common shareholders........... (237,913) (35,482) (104,413) (67,362) (108,786)
Basic and diluted loss applicable to common
shareholders per common share(2)(6):
Loss before extraordinary charge............... $ (1.72) $ (.20) $ (.92) $ (.55) $ (1.22)
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Net loss....................................... $ (1.84) $ (.27) $ (.92) $ (.67) $ (1.22)
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Basic and diluted common shares outstanding...... 129,304,900 128,781,518 113,218,711 101,171,427 89,295,531
OTHER DATA:
EBITDA(7)........................................ $ 302,012 $ 276,603 $ 216,115 $ 162,094 $ 138,242
Capital expenditures, net........................ 31,108 28,790 23,414 14,184 11,485
Net cash provided by operating activities........ 125,360 150,192 64,062 64,890 27,072
Net cash used in investing activities............ (185,725) (721,709) (318,712) (442,126) (95,669)
Net cash provided by financing activities........ 46,688 580,946 263,644 383,924 63,579
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................ $ 22,978 $ 36,655 $ 27,226 $ 18,232 $ 11,544
Working capital (deficiency)(8).................. (146,245) (44,705) (56,560) 1,338 3,605
Intangible assets, gross......................... 2,508,650 2,649,805 1,996,564 1,656,590 1,343,482
Less: accumulated amortization............... 736,597 896,824 762,393 602,542 504,538
---------- ----------- ----------- ----------- -----------
Intangible assets, net........................... 1,772,053 1,752,981 1,234,171 1,054,048 838,944
Total assets..................................... 2,485,990 2,552,215 1,881,416 1,589,692 1,166,502
Long-term debt(9)................................ 1,656,541 1,565,686 1,134,916 1,034,689 661,297
Exchangeable preferred stock..................... 470,280 442,729 231,606 216,229 202,453
Common stock subject to redemption............... 4,376 5,957 28,022 16,552 25,287
Shareholders' equity (deficiency):
Common stock................................. 1,298 1,283 1,259 1,053 947
Additional paid-in capital................... 780,191 772,642 748,194 572,940 488,541
Accumulated deficit.......................... (929,011) (691,098) (655,616) (551,203) (483,841)
Cumulative foreign currency translation
adjustments................................ (1,543) (1,270) (1,275) (1,324) (1,220)
Common stock in treasury, at cost............ (13,158) -- -- -- --
---------- ----------- ----------- ----------- -----------
Total shareholders' equity (deficiency).......... $ (162,223) $ 81,557 $ 92,562 $ 21,466 $ 4,427
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
</TABLE>
(See notes on the following page)
12
<PAGE>
NOTES TO SELECTED FINANCIAL DATA
(1) Represents net provision for loss on the sales of businesses in 1997, 1995
and 1994, provision for restructuring and other costs in 1995 and provision
for write-down of real estate no longer utilized in 1993.
(2) The adoption of a change in method of accounting for direct-response
advertising costs effective July 1, 1994, resulted in an increase in
operating income (decrease in operating loss), an equal decrease in net loss
(increase in net income) and a decrease in basic and diluted loss per common
share of approximately $3,128 ($.02 per share), $2,000 ($.02 per share),
$11,800 ($.10 per share) and $9,800 ($.10 per share) for the years ended
December 31, 1997, 1996, 1995 and 1994, respectively.
(3) At December 31, 1997, 1996, 1995 and 1994, management of the Company
reviewed recent operating results for the years then ended and projected
future operating results for the years through December 31, 2003. At
December 31, 1997, the Company's management determined that no adjustment to
net deferred income tax assets was required. In prior years, management
determined that a portion of the net deferred income tax assets at December
31, 1996, 1995 and 1994 would likely be realized. Accordingly, the Company
recorded an income tax benefit of $53,300 in 1996, $59,600 in 1995 and
$42,100 in 1994. For the year ended December 31, 1997, the Company recorded
an income tax carryback claim of $1,685. At December 31, 1997, the Company
had net operating loss carryforwards ("NOLs") of approximately $749,000
which will be available to reduce future taxable income. In addition to the
NOLs, management estimates that approximately $864,000 of unamortized
goodwill and other intangible assets will be available as deductions from
any future taxable income.
(4) Represents the write-off of unamortized deferred financing costs. For the
years ended December 31, 1997 and 1996, amount also includes the premiums
paid on the redemptions of the 10 5/8% Senior Notes.
(5) In 1997, the Company recorded a preferred stock dividend accrual in the
amount of $9,517. Of the total dividend accrual recorded in 1997, the
amounts that relate to prior periods were not material.
(6) Basic and diluted loss per common share, as well as the basic and diluted
common shares outstanding, were computed as described in Note 17 of the
notes to the audited consolidated financial statements included elsewhere in
this Annual Report. Previously reported loss per share amounts have been
restated as required by the adoption of a new accounting pronouncement.
(7) Earnings before interest, taxes, depreciation, amortization and provision
for one-time charges ("EBITDA") is not intended to represent cash flow from
operations and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to cash
flows as a measure of liquidity. The Company believes EBITDA is a standard
measure commonly reported and widely used by analysts, investors and other
interested parties in the media industry. Accordingly, this information has
been disclosed herein to permit a more complete comparative analysis of the
Company's operating performance relative to other companies in its industry.
This measure may not be comparable to similarly titled measures used by
other companies.
(8) Includes current maturities of long-term debt and assets held for sale.
(9) Excludes current maturities of long-term debt.
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS).
INTRODUCTION
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Company's
historical consolidated financial statements and notes thereto included herein.
The Company organizes its businesses into three segments: specialty magazines,
education and information. The specialty magazines segment has in prior periods
been referred to as the specialty media segment, but the Company believes the
new name is more reflective of the focus of the segment.
Management believes a meaningful comparison of the results of operations for
1997, 1996 and 1995 is obtained by using segment information. This year, the
Company begins presenting results from continuing businesses ("Continuing
Businesses") which exclude the results of the non-core businesses ("Non-Core
Businesses"), which are either sold businesses or businesses held for sale. The
Non-Core Businesses include Krames Communications Incorporated ("Krames"), The
Katharine Gibbs Schools, Inc. ("Katharine Gibbs"), NEW WOMAN, Intertec Mailing
Services, Newbridge Communications, Inc. (excluding Films for the Humanities and
Sciences), and STAGEBILL which have been divested and THE DAILY RACING FORM
which is being held for sale. Management believes that this presentation is the
most useful way to analyze the historical trends of its businesses.
SELECTED FINANCIAL DATA
PRIMEDIA is a targeted information company, focused on highly specialized
niches of the specialty magazine, education and information markets.
SPECIALTY MAGAZINES (57.9% of sales from Continuing Businesses, 67.0% of
operating income from Continuing Businesses before corporate overhead and 50.5%
of EBITDA from Continuing Businesses before corporate overhead): Includes 67
specialty consumer magazines such as SEVENTEEN, SOAP OPERA DIGEST, NEW YORK,
CHICAGO, AMERICAN BABY and LOW RIDER plus 65 technical and trade magazines
including TELEPHONY, FLEET OWNER and REGISTERED REPRESENTATIVE.
This group focuses on reaching enthusiasts, or those interested in the key
topics (hobbies, lifestyles, industry, etc.) that its customers demand, while
providing its advertisers with the most efficient mechanism for reaching the
targeted audience through print, Internet and other allied products.
EDUCATION (18.6% of sales from Continuing Businesses, 5.2% of operating
income from Continuing Businesses before corporate overhead and 22.9% of EBITDA
from Continuing Businesses before corporate overhead): Includes classroom
learning products such as CHANNEL ONE NEWS, WEEKLY READER and Films for the
Humanities and Sciences, plus PRIMEDIA Workplace Learning (formerly Westcott
Communications, Inc.).
The classroom learning group targets grades Kindergarten through 12 with
highly targeted supplemental periodical, video and network products to help
teach students. The workplace learning group is the leading provider of high
quality workplace learning programs in such fields as healthcare, automotive,
banking and insurance.
INFORMATION (23.5% of sales from Continuing Businesses, 27.8% of operating
income from Continuing Businesses before corporate overhead and 26.6% of EBITDA
from Continuing Businesses before corporate overhead): Includes over 70 consumer
guides such as APARTMENT GUIDES, MICROTIMES and new homes guides; specialized
reference products such as THE WORLD ALMANAC and Facts On File News Services;
and nearly 100 specialized directories.
14
<PAGE>
The information segment produces consumer and business information products
in a variety of formats for decision makers in business, professional and
special interest consumer markets. The information is compiled and sold as
reference works, CD-ROMs, almanacs and directories.
In 1997, PRIMEDIA executed a focusing program to accelerate growth, divest
Non-Core Businesses, and strengthen its balance sheet. Proceeds from the sales
of the Non-Core Businesses, excluding THE DAILY RACING FORM which is expected to
be sold in 1998, were $171,575 net of direct selling expenses. The Company
incurred a provision for loss on sales of businesses in the 1997 third quarter
of $138,640, primarily associated with the write-down of the net assets of THE
DAILY RACING FORM.
Additional selected financial data for the Company organized on the
foregoing basis are presented below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Sales, Net:
Continuing Businesses:
Specialty Magazines............................................... $ 718,134 $ 635,392 $ 409,308
Education......................................................... 230,057 181,972 127,660
Information....................................................... 292,053 249,936 202,240
------------ ------------ ------------
Subtotal........................................................ 1,240,244 1,067,300 739,208
Non-Core Businesses................................................... 247,351 307,149 307,121
------------ ------------ ------------
Total........................................................... $ 1,487,595 $ 1,374,449 $ 1,046,329
------------ ------------ ------------
------------ ------------ ------------
Depreciation, Amortization and Other Charges(1):
Continuing Businesses:
Specialty Magazines............................................... $ 66,134 $ 71,424 $ 53,347
Education......................................................... 64,326 51,706 77,320
Information....................................................... 45,276 37,306 54,052
Corporate......................................................... 99 779 703
------------ ------------ ------------
Subtotal........................................................ 175,835 161,215 185,422
Non-Core Businesses................................................... 146,970 29,487 56,968
------------ ------------ ------------
Total........................................................... $ 322,805 $ 190,702 $ 242,390
------------ ------------ ------------
------------ ------------ ------------
Operating Income (Loss):
Continuing Businesses:
Specialty Magazines............................................... $ 91,295 $ 64,971 $ 36,504
Education......................................................... 7,130 7,232 (32,126)
Information....................................................... 37,823 36,668 4,513
Corporate......................................................... (25,644) (22,276) (17,737)
------------ ------------ ------------
Subtotal........................................................ 110,604 86,595 (8,846)
Non-Core Businesses................................................... (131,397) (694) (17,429)
------------ ------------ ------------
Total........................................................... (20,793) 85,901 (26,275)
</TABLE>
(CONTINUED ON FOLLOWING PAGE)
15
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995
------------ ------------ ------------
Other Income (Expense):
<S> <C> <C> <C>
Interest expense...................................................... (136,625) (124,601) (105,837)
Amortization of deferred financing and organizational costs........... (3,071) (3,662) (3,135)
Other, net............................................................ 1,365 6,659 212
------------ ------------ ------------
Loss before income tax benefit and extraordinary charge................. (159,124) (35,703) (135,035)
Income tax benefit...................................................... 1,685 53,300 59,600
------------ ------------ ------------
Income (loss) before extraordinary charge............................... (157,439) 17,597 (75,435)
Extraordinary charge--extinguishment of debt............................ (15,401) (9,553) --
------------ ------------ ------------
Net income (loss)....................................................... $ (172,840) $ 8,044 $ (75,435)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
- ------------------------
(1) Other charges includes net provision for loss on the sales of businesses in
1997 and 1995 and provision for restructuring and other costs in 1995.
RESULTS OF OPERATIONS
1997 COMPARED TO 1996
Sales from Continuing Businesses increased 16.2% to $1,240,244 in 1997 from
$1,067,300 in 1996 due to sales increases in all segments. Sales as reported,
including the Non-Core Businesses, increased by 8.2% in 1997 over 1996.
Operating income from Continuing Businesses increased 27.7% to $110,604
during 1997 from $86,595 during 1996. This increase is attributable to the sales
increase as well as declines in paper costs which began declining in 1996.
Interest expense increased by $12,024 or 9.7% in 1997 over 1996 reflecting
increased borrowings associated with acquisitions.
The loss before income tax benefit and extraordinary charge increased by
$123,421 to $159,124 during 1997 compared to $35,703 during 1996. This increase
is attributable to the provision for loss on the sales of businesses of $138,640
recorded during the third quarter of 1997.
At December 31, 1997 and 1996, management of the Company reviewed recent
operating results for the years then ended and projected future operating
results for the years through 2003. The Company's management determined that no
adjustment to net deferred income tax assets was required at December 31, 1997
and that an income tax benefit of $53,300 should be recognized at December 31,
1996. The Company reported a Federal income tax carryback claim of $1,685 in
1997.
The extraordinary charge in 1997 reflects the aggregate premium paid of
$9,537 on the redemption of the Company's 10 5/8% Senior Notes and an additional
write-off of related deferred financing costs of $5,864. The extraordinary
charge of $9,553 in 1996 resulted primarily from the write-off of deferred
financing costs relating to the replacement of the Company's then existing
credit facilities with new credit facilities.
SPECIALTY MAGAZINES
Results from Continuing Businesses exclude NEW WOMAN, STAGEBILL and Intertec
Mailing Services. Sales from Continuing Businesses increased 13.0% to $718,134
in 1997 from $635,392 in 1996 due largely to $24,388 of advertising and
circulation growth at SEVENTEEN, which achieved record revenues in 1997, and at
SOAP OPERA DIGEST, which became a weekly publication during 1997. Technical and
trade magazines also showed strong growth, and revenue from Internet
advertising, while still a small portion of the segment,
16
<PAGE>
grew significantly. Acquisitions such as LOW RIDER, MUSCLE MUSTANG, SURFING,
REGISTERED REPRESENTATIVE and MIX, also contributed $51,544 to the sales growth.
Operating income from Continuing Businesses increased 40.5% to $91,295 in
1997 from $64,971 in 1996 due to the sales increase as well as declines in paper
costs which began declining in 1996.
EDUCATION
Results from Continuing Businesses exclude Krames, Katharine Gibbs and
Newbridge (excluding Films for the Humanities and Sciences). Sales from
Continuing Businesses increased 26.4% to $230,057 from $181,972 in 1996. The
increase is attributable to advertising growth at CHANNEL ONE, and the
acquisitions of PRIMEDIA Workplace Learning, QWIZ, Cover Concepts and Pictorial
which added $43,995 to sales growth.
Operating income from Continuing Businesses decreased 1.4% to $7,130 in 1997
from $7,232 in 1996 due primarily to increased goodwill and other intangible
amortization expense resulting from acquisitions.
INFORMATION
Results from Continuing Businesses exclude THE DAILY RACING FORM. Sales from
Continuing Businesses increased 16.9% to $292,053 from $249,936 in 1996. This
increase is largely attributable to approximately a $32,000 increase at the
apartment guides, including the start-up of new guides and acquisitions, and
strong performance at BACON'S and the directory units.
Operating income from Continuing Businesses increased 3.1% to $37,823 in
1997 from $36,668 in 1996, largely attributable to the strong sales increases at
the apartment guides partially offset by an $8,000 increase in amortization
expense resulting from acquisitions and increases in other operating expenses.
CORPORATE
Corporate expenses increased 15.1% to $25,644 in 1997 from $22,276 in 1996,
largely attributable to an increase in corporate headcount to accommodate the
growth of the Company as well as a one-time executive death benefit.
NON-CORE BUSINESSES
Sales from Non-Core Businesses declined 19.5% to $247,351 from $307,149 in
1996. Most of this decline resulted from the divestitures of Krames, Katharine
Gibbs and NEW WOMAN during 1997, and lower revenue levels at Newbridge
(excluding Films for the Humanities and Sciences) and THE DAILY RACING FORM. The
operating loss from Non-Core Businesses increased to $131,397 in 1997 from $694
in 1996, attributable to the $138,640 provision for the loss on the sales of
businesses.
1996 COMPARED TO 1995
Sales from Continuing Businesses increased 44.4% to $1,067,300 in 1996 from
$739,208 in 1995. Sales increased due to internal growth in all segments as well
as the impact of acquisitions. Specifically, the acquisitions of Cahners
Consumer Magazines ("Cahners"), PRIMEDIA Workplace Learning and the trade
magazines of Argus Inc. ("Argus") added approximately $199,144 to sales growth.
Sales as reported, including the Non-Core Businesses, increased by 31.4% in 1996
over 1995.
Operating income (loss) from Continuing Businesses increased to $86,595
during 1996 from $(8,846) during 1995. This improvement was driven by increases
in sales, the impact of acquisitions and the impact of several one-time,
principally non-cash charges totaling $68,072 in the second quarter of 1995.
This increase was achieved despite an increase in average purchase prices for
paper in the first half of 1996.
17
<PAGE>
Interest expense increased by $18,764 or 17.7% in 1996 over 1995 primarily
due to increased borrowings associated with acquisitions.
The Company reported an income tax benefit of $53,300 in 1996 compared to
$59,600 in 1995 associated with the partial recognition of NOLs and other
deferred income tax assets. At the end of each year, the Company reviewed its
recent operating results and projected future operating results and determined
that there should be sufficient future taxable income so that a portion of the
net deferred income tax assets would likely be realized. Such future taxable
income is determined principally from management's projection of future
operating results in conjunction with scheduled reductions in intangible asset
amortization expense. The amount of the net deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. Such reductions in
taxable income could occur as a result of many external factors including but
not limited to increased paper and postage costs and rates of interest.
The $9,553 extraordinary charge in 1996 reflects the aggregate premium paid
on the redemptions of the Company's 10 5/8% Senior Notes and the write-off of
unamortized deferred financing costs. The Company reported consolidated net
income of $8,044 in 1996 versus a consolidated net loss of $75,435 in 1995.
SPECIALTY MAGAZINES
Results from Continuing Businesses exclude NEW WOMAN, STAGEBILL and Intertec
Mailing Services. Sales from Continuing Businesses increased 55.2% to $635,392
in 1996 from $409,308 in 1995 due largely to growth of existing properties as
well as the impact of the Cahners and Argus acquisitions. The increases at the
existing properties were primarily due to the double-digit organic revenue
growth at the specialty consumer magazines led by SEVENTEEN, SOAP OPERA DIGEST,
TRUCKIN' and CRAFTS. The full year effect of Argus, acquired in December 1995,
and Cahners, acquired in January 1996, contributed $51,459 and $95,397,
respectively, to the 1996 sales growth.
Operating income from Continuing Businesses increased by $28,467 or 78.0% in
1996 over 1995. This increase was the result of an increase in sales partially
offset by an increase in average paper prices in 1996 over 1995.
EDUCATION
Results from Continuing Businesses exclude Krames, Katharine Gibbs and
Newbridge (excluding Films for the Humanities and Sciences). Sales from
Continuing Businesses increased 42.5% to $181,972 in 1996 from $127,660 in 1995.
The growth is attributable to sales increases at WEEKLY READER and Films for the
Humanities and Sciences and the addition of PRIMEDIA Workplace Learning.
Operating income (loss) from Continuing Businesses increased to $7,232 in
1996 from $(32,126) in 1995. This improvement is primarily due to the one-time
charges in the second quarter of 1995 for the provision for loss associated with
the sale of Newfield Publications, Inc.
INFORMATION
Results from Continuing Businesses exclude THE DAILY RACING FORM. Sales from
Continuing Businesses increased 23.6% to $249,936 in 1996 from $202,240 in 1995.
This increase is largely attributable to double-digit organic growth at the
apartment guides as well as the impact of acquisitions which contributed
approximately $17,600 to the increase in sales.
Operating income from Continuing Businesses increased to $36,668 in 1996
from $4,513 in 1995, largely attributable to the increase in sales and a
decrease in amortization expense. Goodwill and intangible amortization expense
decreased by $24,277 in 1996 over 1995 primarily as a result of an
18
<PAGE>
adjustment to the carrying values of goodwill and other intangibles totaling
approximately $18,000 in the second quarter of 1995.
CORPORATE
Corporate expenses increased 25.6% to $22,276 in 1996 from $17,737 in 1995,
largely attributable to an increase in corporate headcount to accommodate the
growth of the Company.
NON-CORE BUSINESSES
The operating loss from Non-Core Businesses decreased to $694 in 1996 from
$17,429 in 1995, attributable to the one-time restructuring charge recorded in
1995.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain information regarding the Company's
EBITDA and other net cash flow items. Data is presented for both Continuing
Businesses and Non-Core Businesses.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
EBITDA(1):
Continuing Businesses:
Specialty Magazines.................................................... $ 157,429 $ 136,395 $ 89,851
Education.............................................................. 71,456 58,938 45,194
Information............................................................ 83,099 73,974 58,565
Corporate.............................................................. (25,545) (21,497) (17,034)
----------- ----------- -----------
Subtotal............................................................. 286,439 247,810 176,576
Non-Core Businesses...................................................... 15,573 28,793 39,539
----------- ----------- -----------
Total................................................................ $ 302,012 $ 276,603 $ 216,115
----------- ----------- -----------
----------- ----------- -----------
Net Cash Provided by (Used in) Operating Activities:
Continuing Businesses:
Specialty Magazines.................................................... $ 152,323 $ 125,437 $ 69,853
Education.............................................................. 57,103 59,063 26,716
Information............................................................ 66,690 61,106 64,646
Corporate.............................................................. (162,248) (129,090) (111,521)
----------- ----------- -----------
Subtotal............................................................. 113,868 116,516 49,694
Non-Core Businesses...................................................... 11,492 33,676 14,368
----------- ----------- -----------
Total................................................................ $ 125,360 $ 150,192 $ 64,062
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net Cash Provided by (Used in) Investing Activities:
Continuing Businesses:
Specialty Magazines.................................................... $ (137,414) $ (213,203) $ (234,755)
Education.............................................................. (165,657) (434,603) 10,441
Information............................................................ (46,397) (58,813) (82,371)
Corporate.............................................................. (1,740) (1,735) (2,424)
----------- ----------- -----------
Subtotal............................................................. (351,208) (708,354) (309,109)
Non-Core Businesses...................................................... 165,483 (13,355) (9,603)
----------- ----------- -----------
Total................................................................ $ (185,725) $ (721,709) $ (318,712)
----------- ----------- -----------
----------- ----------- -----------
Net Cash Provided by (Used in) Financing Activities:
Continuing Businesses:
Specialty Magazines.................................................... $ (4,318) $ (10,073) $ (5,332)
Education.............................................................. (1,586) (2,653) (160)
Information............................................................ (2,982) (4,698) (2,094)
Corporate.............................................................. 54,656 600,156 272,293
----------- ----------- -----------
Subtotal............................................................. 45,770 582,732 264,707
Non-Core Businesses...................................................... 918 (1,786) (1,063)
----------- ----------- -----------
Total................................................................ $ 46,688 $ 580,946 $ 263,644
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ------------------------
(1) Earnings before interest, taxes, depreciation, amortization and provision
for one-time charges ("EBITDA") is not intended to represent cash flow from
operations and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to cash
flows as a measure of liquidity. The Company believes EBITDA is a standard
measure commonly reported and widely used by analysts, investors and other
interested parties in the media industry. Accordingly, this information has
been disclosed herein to permit a more complete comparative analysis of the
Company's operating performance relative to other companies in its industry.
Consolidated working capital deficiency including current maturities of
long-term debt was $146,245 at December 31, 1997 compared to $44,705 at December
31, 1996. Consolidated working capital deficiency reflects certain industry
working capital practices and accounting principles, including the expensing of
editorial and product development costs when incurred and the recording of
unearned subscription income as a current liability. Advertising costs are
expensed when the promotional activities occur except for certain
direct-response advertising costs which are capitalized and amortized over the
estimated period of future benefit.
1997 COMPARED TO 1996
Consolidated EBITDA from Continuing Businesses increased by 15.6% to
$286,439 in 1997 from $247,810 in 1996 because of higher revenues, paper price
declines and acquisitions of new businesses.
EBITDA from Continuing Businesses in the Specialty Magazines segment
increased 15.4% in 1997 to $157,429 from $136,395 in 1996. This increase is
attributable to strong organic revenue growth, paper price declines and
acquisitions.
EBITDA from Continuing Businesses in the Education segment increased 21.2%
to $71,456 in 1997 from $58,938 in 1996 due to advertising revenue growth at
CHANNEL ONE and the inclusion of acquisitions including PRIMEDIA Workplace
Learning.
EBITDA from Continuing Businesses in the Information segment increased 12.3%
in 1997 to $83,099 from $73,974 in 1996 primarily due to growth at the APARTMENT
GUIDES which was attributable to increased advertising revenue and the impact of
acquisitions.
20
<PAGE>
EBITDA from Non-Core Businesses declined 45.9% to $15,573 in 1997 from
$28,793 in 1996, due to sales declines at Newbridge (excluding Films for the
Humanities and Sciences) and THE DAILY RACING FORM.
The reported net cash provided by operating activities during the year ended
December 31, 1997, after interest payments of $142,421, was $125,360, a decrease
of $24,832 over the 1996 period, due primarily to an increase in interest
payments.
The reported net cash used in investing activities decreased in 1997 as a
result of decreased acquisition activities. The Company spent $326,192 for
acquisitions during 1997 compared with $700,990 in 1996. The reported net
capital expenditures were $31,108 during the 1997 period, an 8.1% increase from
$28,790 in 1996. Increased investment in production and new product technology
is expected to result in increased capital spending in 1998.
The reported net cash provided by financing activities decreased in 1997 as
a result of reduced debt and stock issuances during 1997 as well as the
redemption of certain outstanding borrowings.
1996 COMPARED TO 1995
Consolidated EBITDA from Continuing Businesses increased by 40.3% to
$247,810 in 1996 from $176,576 in 1995 because of growth from existing
operations, new product additions and acquisitions of businesses.
EBITDA from Continuing Businesses in the Specialty Magazines segment
increased 51.8% in 1996 to $136,395 from $89,851 in 1995 due to strong organic
growth in circulation and advertising as well as acquisitions.
EBITDA from Continuing Businesses in the Education segment increased 30.4%
to $58,938 in 1996 from $45,194 in 1995 due to advertising revenue growth at
CHANNEL ONE and the inclusion of the acquisition of PRIMEDIA Workplace Learning.
EBITDA from Continuing Businesses in the Information segment increased 26.3%
in 1996 to $73,974 from $58,565 in 1995 due to increased advertising revenues in
the apartment guides and a portion of Intertec as well as the inclusion of
acquisitions.
EBITDA from Non-Core Businesses declined 27.2% to $28,793 in 1996 from
$39,539 in 1995, primarily due to the sales decline at Newbridge (excluding
Films for the Humanities and Sciences).
The reported net cash provided by operating activities during the year ended
December 31, 1996, after interest payments of $111,752, was $150,192, an
increase of $86,130 over the 1995 period, primarily due to EBITDA growth.
The reported net cash used in investing activities increased as a result of
increased acquisition activities, substantially all of which were financed with
borrowings under the then existing credit agreements and funds from operations.
Payments for businesses acquired of $700,990 were made during the year ended
December 31, 1996 as compared to $353,954 in 1995. The reported net capital
expenditures were $28,790 during the 1996 period, a 23.0% increase from $23,414
in 1995. These expenditures included data processing equipment, televisions,
videocassette recorders, satellite dishes, furniture and leasehold improvements
and were financed with net cash provided by operations.
The reported net cash provided by financing activities increased in 1996 as
a result of increased debt and preferred stock issuances.
NET OPERATING LOSS CARRYFORWARDS
At December 31, 1997, the Company had NOLs of approximately $749,000 which
will be available to reduce future taxable income. In addition, management
estimates that approximately $864,000 of unamortized goodwill and other
intangible assets will be available as deductions from any future taxable
income.
21
<PAGE>
FINANCING ARRANGEMENTS
In January 1997, the Company purchased, in aggregate, $20,850 of the 10 5/8%
Senior Notes at a weighted average price of 105%, plus accrued and unpaid
interest from various brokers on the open market. On May 1, 1997, the Company
redeemed the $212,400 remaining principal amount of the 10 5/8% Senior Notes at
104% plus accrued and unpaid interest. The aggregate premium paid and the
write-off of related deferred financing costs are classified as an extraordinary
charge and are recorded at an aggregate value of $15,401 on the accompanying
statement of consolidated operations for the year ended December 31, 1997.
On April 21, 1997, the Company entered into a new 364-day credit facility
with The Chase Manhattan Bank, the Bank of New York, Bankers Trust Company and
the Bank of Nova Scotia as agents (the "New Credit Facility") which expires
April 20, 1998. Under the terms of the New Credit Facility, the Company has
commitments of $150,000 which can be borrowed in the form of revolving loans to
be used for general corporate and working capital purposes as well as to finance
certain future acquisitions.
The amounts borrowed pursuant to the New Credit Facility bear interest at
rates per annum identical to those in the previously existing credit facilities
("Credit Facilities"). The New Credit Facility combined with the Credit
Facilities are collectively referred to as the "Bank Credit Facilities." At
December 31, 1997, the Company had two interest rate swap agreements in effect
with an aggregate notional amount of $200,000 and an interest rate cap agreement
based on a notional principal amount of $100,000. Under the outstanding swap
agreements, the Company receives a floating rate of interest based on
three-month LIBOR, which resets quarterly, and pays a fixed rate of interest,
each quarter, for the term of the agreements. As of December 31, 1997, the
weighted average variable rate and weighted average fixed rate were 5.88% and
6.68%, respectively. In addition, in July 1997, the Company entered into four,
three-year and two, four-year interest rate swap agreements, with an aggregate
notional amount of $600,000. Under these new swap agreements, which commence on
January 2, 1998, the Company will receive a floating rate of interest based on
three-month LIBOR, which resets quarterly, and the Company will pay a fixed rate
of interest, each quarter, for the terms of the respective agreements.
The Company is exposed to credit risk in the event of nonperformance by
counterparties to its interest rate swap and cap agreements. Credit risk is
limited by entering into such agreements with primary dealers only; therefore,
the Company does not anticipate that nonperformance by counterparties will
occur. Notwithstanding this, the Company's treasury department monitors
counterparty credit ratings at least quarterly through reviewing independent
credit agency reports. Both current and potential exposure are evaluated, as
necessary, by obtaining replacement cost information from alternative dealers.
Potential loss to the Company from credit risk on these agreements is limited to
amounts receivable, if any. The Company enters into these agreements solely to
hedge its interest rate risk.
Under the Bank Credit Facilities, the Company has total commitments of
$1,550,000 and can borrow up to $1,650,000 in the aggregate. As of December 31,
1997, aggregate borrowings under the Bank Credit Facilities were $1,218,101. As
of December 31, 1997, the amounts borrowed under the Bank Credit Facilities bore
interest at a weighted average variable interest rate of 7.05%. Also, at
December 31, 1997, the Company had outstanding $100,000 of 10 1/4% Senior Notes,
$300,000 of 8 1/2% Senior Notes, 1,576,036 shares of $11.625 Series B
Exchangeable Preferred Stock, 2,000,000 shares of $10.00 Series D Exchangeable
Preferred Stock and 1,250,000 shares of $9.20 Series E Exchangeable Preferred
Stock.
The above indebtedness, among other things, limits the ability of the
Company to change the nature of its businesses, incur indebtedness, create
liens, sell assets, engage in mergers, consolidations or transactions with
affiliates, make investments in or loans to certain subsidiaries, issue
guarantees and make certain restricted payments including dividend payments on
its common stock. Under the Company's most restrictive debt covenants, the
Company must maintain a minimum interest coverage ratio of 1.8 to 1 and a
minimum fixed charge coverage ratio of 1.05 to 1 and its maximum allowable
leverage ratio is 6.0 to 1. The Company believes it is in compliance with the
financial and operating covenants of its principal financing
22
<PAGE>
arrangements. Borrowings under the above indebtedness are guaranteed by each of
the domestic wholly-owned subsidiaries of the Company. Such guarantees are full,
unconditional and joint and several. The separate financial statements of the
domestic subsidiaries are not presented because the Company believes the
separate financial statements would not be material to the shareholders and
potential investors. The Company's foreign subsidiaries are not guarantors of
the above indebtedness. The total assets, revenues, income or equity of such
foreign subsidiaries, both individually and on a combined basis, are
inconsequential in relation to the total assets, revenues, income, or equity of
the Company.
The aggregate mandatory reductions of the commitments under the Bank Credit
Facilities are $150,000 in 1998, $90,000 in 1999, $280,000 per year in 2000
through 2003 with a final reduction or paydown of $190,000 in 2004. The 10 1/4%
Senior Notes mature in June 2004 and the 8 1/2% Senior Notes mature in February
2006. The per annum principal and interest payments relating to an acquisition
obligation are scheduled to be $14,333, $21,167, $19,167, and $8,833 to be made
in semi-annual installments in 1998 through 2001, respectively. The Company's
aggregate lease obligations for 1998, 1999 and 2000 are expected to be
approximately $30,000, $27,000 and $24,000, respectively. The Company believes
its liquidity, capital resources and cash flow are sufficient to fund planned
capital expenditures, working capital requirements, interest and principal
payments on its debt, the payment of preferred stock dividends and other
anticipated expenditures for the foreseeable future.
RECENT ACCOUNTING PRONOUNCEMENTS
In 1997, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share" which became effective for the Company's
1997 consolidated financial statements beginning in the fourth quarter of 1997.
SFAS No. 128 eliminates the disclosure of primary earnings per share which
includes the dilutive effect of stock options, warrants and other convertible
securities ("Common Stock Equivalents") and instead requires reporting of
"basic" earnings per share, which excludes Common Stock Equivalents.
Additionally, SFAS No. 128 changes the methodology and criteria for calculating
and reporting fully diluted earnings per share. The adoption of this new
accounting standard did not have a material effect on the reported loss per
share of the Company. SFAS No. 128 also required previously reported loss per
share to be restated.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," which become effective for the
Company's 1998 consolidated financial statements. SFAS No. 130 requires the
disclosure of comprehensive income, defined as the change in equity of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources, in the Company's consolidated financial
statements. SFAS No. 131 requires that a public business enterprise report
certain financial and descriptive information about its reportable operating
segments. In the opinion of the Company's management, it is not anticipated that
the adoption of these new accounting standards will have a material effect on
the consolidated financial statements of the Company.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits,"
which becomes effective for the Company's 1998 consolidated financial
statements. SFAS No. 132 standardizes the disclosure requirements for pensions
and other postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain previously
required disclosures. In the opinion of the Company's management, it is not
anticipated that the adoption of this new accounting standard will have a
material effect on the consolidated financial statements of the Company.
RECENT DEVELOPMENTS
On January 8, 1998, the Company entered into a Stock Purchase Agreement
pursuant to which it will acquire the Cowles Enthusiast Media and Cowles
Business Media divisions of Cowles Media Company
23
<PAGE>
from McClatchy Newspapers, Inc. ("McClatchy") for approximately $200,000. The
transaction is subject to the completion of McClatchy's purchase of Cowles Media
Company, which is expected to close by March 31, 1998.
In January 1998, the Company elected to terminate its defined benefit
pension plan effective March 31, 1998. In connection with this termination, the
Company froze benefit accruals effective December 31, 1997. In the opinion of
the Company's management, the plan termination is adequately accrued for and
will not have a material impact on the Company's consolidated financial
statements. Plan participants will be eligible to participate in the Company's
defined contribution plans.
On February 5, 1998, KKR 1996 Fund L.P., a Delaware limited partnership
affiliated with KKR (the "KKR Fund"), executed an agreement with the Company
pursuant to which the KKR Fund will pay $200,000 for 16,666,667 newly issued
shares of common stock from the Company (the "KKR Fund Investment"). It is
expected that the KKR Fund Investment will be consummated in March 1998.
On February 17, 1998, the Company exchanged the 1,250,000 shares of its
$9.20 Series E Exchangeable Preferred Stock for 1,250,000 shares of $9.20 Series
F Exchangeable Preferred Stock ("Series F Preferred Stock"). The terms of the
Series F Preferred Stock are the same as the $9.20 Series E Exchangeable
Preferred Stock except that the Series F Preferred Stock has been registered
under the Securities Act of 1933.
On February 17, 1998, the Company completed a private offering of 2,500,000
shares of $8.625 Series G Exchangeable Preferred Stock for $250,000 and $250,000
principal amount of 7 5/8% Senior Notes Due 2008. The net proceeds of these
offerings will be used to redeem all of the Company's outstanding $11.625 Series
B Exchangeable Preferred Stock at $105.80 per share plus accrued and unpaid
dividends and to reduce outstanding bank borrowings.
IMPACT OF INFLATION
The impact of inflation was immaterial during 1997 and 1996. Paper prices,
which had risen significantly during 1995 and early 1996, declined around
mid-year 1996 and continued that trend through the first six months of 1997.
Moderate paper price increases occurred in July 1997 for most of the grades of
paper used by the Company. During 1997, paper costs represented approximately
7.8% of the Company's total operating costs and expenses. Postage for product
distribution and direct mail solicitations is also a significant expense of the
Company. The Company uses the U.S. Postal Service for distribution of many of
its products and marketing materials. Postage costs increase periodically and
can be expected to increase in the future. In the past, the effects of inflation
on operating expenses have substantially been offset by PRIMEDIA's ability to
increase selling prices. No assurances can be given that the Company can pass
such cost increases through to its customers. In addition to pricing actions,
the Company is continuing to examine all aspects of the manufacturing and
purchasing processes to identify ways to offset some of these price increases.
YEAR 2000
The Company has evaluated the potential impact of the situation commonly
referred to as the "Year 2000 problem." The Year 2000 problem, which is common
to most corporations, relates to the inability of information systems, primarily
computer software programs, to properly recognize and process date sensitive
information related to the year 2000 and beyond. An assessment of the Company's
systems indicates that the costs associated with solving the Year 2000 problem
will be immaterial, due largely to investments already made in information
systems in recent years. A significant portion of the Company's efforts related
to this issue involves assessing vendor compliance and developing contingency
plans to deal with situations where significant vendors are perceived to be at
risk from the Year 2000 problem.
24
<PAGE>
FORWARD-LOOKING INFORMATION
This report contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition. These
statements are based upon a number of assumptions and estimates which are
inherently subject to uncertainties and contingencies, many of which are beyond
the control of the Company, and reflect future business decisions which are
subject to change. Some of these assumptions may not materialize and
unanticipated events will occur which can affect the Company's results.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
25
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
TABLE OF CONTENTS TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PRIMEDIA INC. AND SUBSIDIARIES
Report of Independent Auditors--Deloitte & Touche LLP................................ 27
Statements of Consolidated Operations for the Years Ended December 31, 1997, 1996 and
1995............................................................................... 28
Consolidated Balance Sheets as of December 31, 1997 and 1996......................... 29
Statements of Consolidated Cash Flows for the Years Ended December 31, 1997, 1996 and
1995............................................................................... 30
Statements of Shareholders' Equity (Deficiency) for the Years Ended December 31,
1997, 1996 and 1995................................................................ 31
Notes to Consolidated Financial Statements for the Years Ended December 31, 1997,
1996 and 1995...................................................................... 33
</TABLE>
26
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
PRIMEDIA Inc.
New York, New York:
We have audited the accompanying consolidated balance sheets of PRIMEDIA
Inc. and subsidiaries as of December 31, 1997 and 1996, and the related
statements of consolidated operations, shareholders' equity (deficiency), and
consolidated cash flows for each of the three years in the period ended December
31, 1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company and subsidiaries at
December 31, 1997 and 1996, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
January 27, 1998
(February 17, 1998 as to Note 25)
27
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
NOTES 1997 1996 1995
--------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Sales, net:
Specialty Magazines............................................. $ 754,410 $ 684,341 $ 452,373
Education....................................................... 379,552 376,217 330,414
Information..................................................... 353,633 313,891 263,542
----------- ----------- ----------
Total sales, net.................................................. 1,487,595 1,374,449 1,046,329
Operating costs and expenses:
Cost of goods sold.............................................. 341,879 337,065 251,347
Marketing and selling........................................... 271,351 249,301 177,167
Distribution, circulation and fulfillment....................... 262,151 230,533 188,147
Editorial....................................................... 120,952 104,484 73,703
Other general expenses.......................................... 163,705 154,966 122,816
Corporate administrative expenses............................... 25,545 21,497 17,034
Depreciation and amortization of prepublication costs, property
and equipment................................................. 9, 11 37,334 38,233 25,761
Provision for loss on the sales of businesses and other, net.... 4 138,640 -- 35,447
Restructuring and other costs................................... 5 -- -- 14,667
Amortization of intangible assets, excess of purchase price over
net assets acquired and other................................. 6, 10 146,831 152,469 166,515
----------- ----------- ----------
Operating income (loss)........................................... (20,793) 85,901 (26,275)
Other income (expense):
Interest expense................................................ (136,625) (124,601) (105,837)
Amortization of deferred financing and organizational costs..... 11 (3,071) (3,662) (3,135)
Other, net...................................................... 4 1,365 6,659 212
----------- ----------- ----------
Loss before income tax benefit and extraordinary charge........... (159,124) (35,703) (135,035)
Income tax benefit................................................ 14 1,685 53,300 59,600
----------- ----------- ----------
Income (loss) before extraordinary charge......................... (157,439) 17,597 (75,435)
Extraordinary charge--extinguishment of debt...................... (15,401) (9,553) --
----------- ----------- ----------
Net income (loss)................................................. (172,840) 8,044 (75,435)
Preferred stock dividends:
Cash............................................................ (45,305) (26,944) (11,500)
Non-cash dividends in kind...................................... (4,451) (16,582) (17,478)
Senior Preferred Stock redemption premium....................... 15 (5,800) -- --
Dividend accrual................................................ 15 (9,517) -- --
----------- ----------- ----------
Loss applicable to common shareholders............................ $ (237,913) $ (35,482) $ (104,413)
----------- ----------- ----------
----------- ----------- ----------
Basic and diluted loss applicable to common shareholders per
common share: 17
Loss before extraordinary charge................................ $ (1.72) $ (.20) $ (.92)
Extraordinary charge............................................ (.12) (.07) --
----------- ----------- ----------
Net loss........................................................ $ (1.84) $ (.27) $ (.92)
----------- ----------- ----------
----------- ----------- ----------
Basic and diluted common shares outstanding....................... 17 129,304,900 128,781,518 113,218,711
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
See notes to consolidated financial statements.
28
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
NOTES 1997 1996
------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................. $ 22,978 $ 36,655
Accounts receivable, net.............................................. 7 199,289 233,603
Inventories, net...................................................... 8 27,597 52,743
Net assets held for sale.............................................. 4 38,665 18,684
Prepaid expenses and other............................................ 33,971 34,834
------------ ------------
Total current assets.............................................. 322,500 376,519
Property and equipment, net............................................. 9 116,361 122,823
Other intangible assets, net............................................ 10 660,268 781,316
Excess of purchase price over net assets acquired, net.................. 10 1,111,785 971,665
Deferred income tax asset, net.......................................... 14 176,200 176,200
Other non-current assets................................................ 11 98,876 123,692
------------ ------------
$ 2,485,990 $ 2,552,215
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable...................................................... $ 95,546 $ 107,258
Accrued interest payable.............................................. 13,622 22,150
Accrued expenses and other............................................ 12 204,770 140,959
Deferred revenues..................................................... 140,474 144,857
Current maturities of long-term debt.................................. 13 14,333 6,000
------------ ------------
Total current liabilities......................................... 468,745 421,224
------------ ------------
Long-term debt.......................................................... 13, 25 1,656,541 1,565,686
------------ ------------
Other non-current liabilities........................................... 48,271 35,062
------------ ------------
Commitments and contingencies 21
Exchangeable preferred stock (aggregated liquidation and redemption
values of $482,604 and $453,153 at December 31, 1997 and 1996,
respectively)......................................................... 15 470,280 442,729
------------ ------------
Common stock subject to redemption ($.01 par value, 402,650 shares and
643,310 shares outstanding at December 31, 1997 and 1996,
respectively)......................................................... 16 4,376 5,957
------------ ------------
Shareholders' equity (deficiency):
Common stock ($.01 par value, 250,000,000 shares authorized;
129,797,078 shares and 128,349,045 shares issued at December 31,
1997 and 1996, respectively)........................................ 16 1,298 1,283
Additional paid-in capital............................................ 16 780,191 772,642
Accumulated deficit................................................... 18 (929,011) (691,098)
Cumulative foreign currency translation adjustments................... (1,543) (1,270)
Common stock in treasury, at cost (1,048,600 shares at December 31,
1997)............................................................... 16 (13,158) --
------------ ------------
Total shareholders' equity (deficiency)........................... (162,223) 81,557
------------ ------------
$ 2,485,990 $ 2,552,215
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
29
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
<S> <C> <C> <C>
1997 1996 1995
---------- ---------- ---------
<CAPTION>
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................................... $ (172,840) $ 8,044 $ (75,435)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation, amortization and other...................................... 187,236 194,364 195,411
Provision for loss on the sales of businesses and other, net.............. 138,640 -- 35,447
Accretion of discount on acquisition obligation, distribution advance and
other................................................................... 7,343 6,398 8,147
Extraordinary charge - extinquishment of debt............................. 15,401 9,553 --
Non-cash income tax benefit............................................... -- (53,300) (59,600)
Other, net................................................................ (1,090) (6,213) (122)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable, net.................................................. 7,885 (24,692) (2,525)
Inventories, net.......................................................... 8,738 24,531 (23,630)
Prepaid expenses and other................................................ (10,433) (598) (13,127)
Increase (decrease) in:
Accounts payable.......................................................... (7,366) 5,807 6,742
Accrued interest payable.................................................. (8,528) 12,824 1,131
Accrued expenses and other................................................ (16,864) (12,674) (26,857)
Deferred revenues......................................................... (17,377) (11,201) 16,971
Other non-current liabilities............................................. (5,385) (2,651) 1,509
---------- ---------- ---------
Net cash provided by operating activities................................. 125,360 150,192 64,062
---------- ---------- ---------
INVESTING ACTIVITIES:
Additions to property, equipment and other, net............................. (31,108) (28,790) (23,414)
Proceeds from sales of businesses........................................... 171,575 8,071 58,656
Payments for businesses acquired............................................ (326,192) (700,990) (353,954)
---------- ---------- ---------
Net cash used in investing activities..................................... (185,725) (721,709) (318,712)
---------- ---------- ---------
FINANCING ACTIVITIES:
Borrowings under credit agreements.......................................... 1,028,049 1,683,787 622,459
Repayments of borrowings under credit agreements............................ (694,950) (1,384,800) (522,500)
Proceeds from issuance of 8 1/2% Senior Notes, net of discount.............. -- 298,734 --
Payments of acquisition obligation.......................................... (6,000) (6,000) (6,000)
Payments of floating rate indebtedness...................................... -- (150,000) --
Proceeds from issuance of common stock, net of redemptions.................. 7,843 3,498 187,520
Proceeds from issuance of Old Preferred Stock............................... -- -- 50,000
Proceeds from issuance of Series C (exchanged into Series D) Preferred
Stock, net of issuance costs.............................................. -- 193,451 --
Proceeds from issuance of Series E (exchanged into Series F) Preferred
Stock, net of issuance costs.............................................. 120,434 -- --
Redemption of Old Preferred Stock........................................... -- -- (52,691)
Redemption of Senior Preferred Stock........................................ (105,800) -- --
Redemptions and purchases of 10 5/8% Senior Notes........................... (242,787) (17,655) --
Purchases of common stock for the treasury.................................. (13,158) -- --
Dividends paid to preferred stock shareholders.............................. (45,305) (26,944) (11,500)
Deferred financing costs paid............................................... (1,372) (13,132) (3,204)
Other....................................................................... (266) 7 (440)
---------- ---------- ---------
Net cash provided by financing activities................................. 46,688 580,946 263,644
---------- ---------- ---------
Increase (decrease) in cash and cash equivalents.............................. (13,677) 9,429 8,994
Cash and cash equivalents, beginning of year.................................. 36,655 27,226 18,232
---------- ---------- ---------
Cash and cash equivalents, end of year........................................ $ 22,978 $ 36,655 $ 27,226
---------- ---------- ---------
---------- ---------- ---------
SUPPLEMENTAL INFORMATION:
Businesses acquired:
Fair value of assets acquired............................................. $ 406,382 $ 779,192 $ 429,810
Liabilities assumed....................................................... 80,190 78,202 75,856
---------- ---------- ---------
Cash paid for businesses acquired......................................... $ 326,192 $ 700,990 $ 353,954
---------- ---------- ---------
---------- ---------- ---------
Interest paid............................................................... $ 142,421 $ 111,752 $ 102,040
---------- ---------- ---------
---------- ---------- ---------
Non-cash investing and financing activities:
Assets acquired under capital lease obligations........................... $ 15,760 $ -- $ 11,738
---------- ---------- ---------
---------- ---------- ---------
Preferred stock dividends in kind......................................... $ 4,451 $ 16,582 $ 17,478
---------- ---------- ---------
---------- ---------- ---------
Accretion in carrying value of preferred stock............................ $ 2,666 $ 1,090 $ 590
---------- ---------- ---------
---------- ---------- ---------
Accretion (reduction) in carrying value of common stock subject to
redemption.............................................................. $ 755 $ (885) $ 9,927
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
See notes to consolidated financial statements.
30
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C>
Balance at January 1, 1995........................................................................................
Issuances of common stock, net of issuance costs..................................................................
Expiration of redemption feature on common stock subject to redemption............................................
$11.625 Series B Exchangeable Preferred Stock--dividends in kind..................................................
$2.875 Senior Exchangeable Preferred Stock--cash dividends........................................................
Old Preferred Stock--dividends in kind............................................................................
Accretion of differences between carrying value and redemption value of:
$2.875 Senior Exchangeable Preferred Stock....................................................................
$11.625 Series B Exchangeable Preferred Stock.................................................................
Common stock subject to redemption............................................................................
Cumulative foreign currency translation adjustments...............................................................
Net loss..........................................................................................................
Balance at December 31, 1995......................................................................................
Issuances of common stock, net of issuance costs..................................................................
Expiration of redemption feature on common stock subject to redemption............................................
$11.625 Series B Exchangeable Preferred Stock--dividends in kind..................................................
$2.875 Senior Exchangeable Preferred Stock--cash dividends........................................................
$10.00 Series D Exchangeable Preferred Stock--cash dividends......................................................
Reduction (accretion) of differences between carrying value and redemption value of:
$2.875 Senior Exchangeable Preferred Stock....................................................................
$11.625 Series B Exchangeable Preferred Stock.................................................................
$10.00 Series D Exchangeable Preferred Stock..................................................................
Common stock subject to redemption............................................................................
Cumulative foreign currency translation adjustments...............................................................
Net income........................................................................................................
Balance at December 31, 1996......................................................................................
Issuances of common stock, net of issuance costs..................................................................
Purchases of treasury stock.......................................................................................
Expiration of redemption feature on common stock subject to redemption............................................
$11.625 Series B Exchangeable Preferred Stock--dividends in kind..................................................
$11.625 Series B Exchangeable Preferred Stock--dividends..........................................................
$2.875 Senior Exchangeable Preferred Stock--dividends.............................................................
$10.00 Series D Exchangeable Preferred Stock--dividends...........................................................
$9.20 Series E Exchangeable Preferred Stock--dividends............................................................
$2.875 Senior Exchangeable Preferred Stock Redemption Premium.....................................................
Accretion of differences between carrying value and redemption value of:
$2.875 Senior Exchangeable Preferred Stock....................................................................
$11.625 Series B Exchangeable Preferred Stock.................................................................
$10.00 Series D Exchangeable Preferred Stock..................................................................
$9.20 Series E Exchangeable Preferred Stock...................................................................
Common stock subject to redemption............................................................................
Cumulative foreign currency translation adjustments...............................................................
Net loss..........................................................................................................
Balance at December 31, 1997......................................................................................
</TABLE>
See notes to consolidated financial statements.
31
<PAGE>
<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN COMMON STOCK
COMMON STOCK ADDITIONAL CURRENCY IN TREASURY
- --------------------------- PAID-IN ACCUMULATED TRANSLATION --------------------
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENTS SHARES AMOUNT TOTAL
- -------------- ----------- ----------- ------------ ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
105,337,809 $ 1,053 $ 572,940 $ (551,203) $ (1,324) -- $ -- $ 21,466
20,435,782 204 184,964 185,168
147,630 2 807 809
(14,787) (14,787)
(11,500) (11,500)
(2,691) (2,691)
(273) (273)
(317) (317)
(9,927) (9,927)
49 49
(75,435) (75,435)
- -------------- ----------- ----------- ------------ ------------- --------- --------- ---------
125,921,221 1,259 748,194 (655,616) (1,275) -- -- 92,562
681,890 7 3,440 3,447
1,745,934 17 21,213 21,230
(16,582) (16,582)
(11,500) (11,500)
(15,444) (15,444)
(273) (273)
(317) (317)
(500) (500)
885 885
5 5
8,044 8,044
- -------------- ----------- ----------- ------------ ------------- --------- --------- ---------
128,349,045 1,283 772,642 (691,098) (1,270) -- -- 81,557
1,209,693 12 8,404 8,416
1,048,600 (13,158) (13,158)
238,340 3 2,566 2,569
(4,451) (4,451)
(16,794) (16,794)
(11,564) (11,564)
(23,333) (23,333)
(3,131) (3,131)
(5,800) (5,800)
(1,734) (1,734)
(317) (317)
(546) (546)
(69) (69)
(755) (755)
(273) (273)
(172,840) (172,840)
- -------------- ----------- ----------- ------------ ------------- --------- --------- ---------
129,797,078 $ 1,298 $ 780,191 $ (929,011) $ (1,543) 1,048,600 $ (13,158) $(162,223)
- -------------- ----------- ----------- ------------ ------------- --------- --------- ---------
- -------------- ----------- ----------- ------------ ------------- --------- --------- ---------
</TABLE>
32
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. DESCRIPTION OF BUSINESS
PRIMEDIA Inc. (which together with its subsidiaries is herein referred to as
either "PRIMEDIA" or the "Company" unless the context implies otherwise) is the
authoritative source for specialized information to targeted markets. The
Company's three business segments are specialty magazines, education and
information. The specialty magazines segment has in prior years been referred to
as the specialty media segment, but the Company believes that the term specialty
magazines is more reflective of the focus of the segment. The specialty
magazines segment includes PRIMEDIA Consumer Magazines, PRIMEDIA Special
Interest Publications (formerly PJS Publications, Inc.), McMullen Argus and the
majority of Intertec. The specialty magazines segment is concentrated primarily
on specialty consumer magazines, and technical and trade magazines. The
education segment includes CHANNEL ONE, Films for the Humanities and Sciences,
PRIMEDIA Workplace Learning (formerly Westcott Communications) and WEEKLY
READER. This segment specializes in providing educational materials to the
classroom learning and workplace learning markets. The information segment
includes PRIMEDIA Reference, PRIMEDIA Information, Haas, BACON'S, NELSON, a
portion of Intertec and THE DAILY RACING FORM. The information segment produces
consumer and business information products in a variety of formats for decision
makers in business, professional and special interest consumer markets. The
information is compiled and sold as guides, reference works, newspapers,
CD-ROMs, almanacs, directories and via the Internet.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of PRIMEDIA and its subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts of
assets, liabilities, revenues and expenses reported in the consolidated
financial statements.
Significant accounting estimates used include estimates for sales returns
and allowances and estimates for the realization of deferred tax assets.
Management has exercised reasonableness in deriving these estimates. However,
actual results may differ from these estimates.
Certain reclassifications have been made to the prior year consolidated
financial statements to conform with the presentation used in the current
period.
In 1997, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share" which became effective for the Company's
consolidated financial statements beginning in the fourth quarter of 1997. SFAS
No. 128 eliminates the disclosure of primary earnings per share which includes
the dilutive effect of stock options, warrants and other convertible securities
("Common Stock Equivalents") and instead requires reporting of "basic" earnings
per share, which excludes Common Stock Equivalents. Additionally, SFAS No. 128
changes the methodology and criteria for calculating and reporting fully diluted
earnings per share. The adoption of this new accounting standard did not have a
material effect on the reported loss per share of the Company. SFAS No. 128 also
required previously reported loss per share to be restated (see Note 17).
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," which become effective for the
Company's 1998 consolidated financial statements. SFAS No. 130 requires the
disclosure of comprehensive income, defined as the change in equity of a
business enterprise
33
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
during a period from transactions and other events and circumstances from
non-owner sources, in the Company's consolidated financial statements. SFAS No.
131 requires that a public business enterprise report certain financial and
descriptive information about its reportable operating segments. In the opinion
of the Company's management, it is not anticipated that the adoption of these
new accounting standards will have a material effect on the consolidated
financial statements of the Company.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits,"
which becomes effective for the Company's 1998 consolidated financial
statements. SFAS No. 132 standardizes the disclosure requirements for pensions
and other postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain previously
required disclosures. In the opinion of the Company's management, it is not
anticipated that the adoption of this new accounting standard will have a
material effect on the consolidated financial statements of the Company.
CASH AND CASH EQUIVALENTS. Management considers all highly liquid
instruments purchased with an original maturity of 90 days or less to be cash
equivalents.
INVENTORIES. Inventories, including paper, purchased manuscripts,
photographs and art, are valued at the lower of cost or market principally on a
first-in, first-out ("FIFO") basis and include the value of inventory for which
a provision for estimated sales returns has been made.
PROPERTY AND EQUIPMENT. Property and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation of property and
equipment, and the amortization of leasehold improvements are provided at rates
based on the estimated useful lives or lease terms, if shorter, using primarily
the straight-line method. Improvements are capitalized while maintenance and
repairs are expensed as incurred.
EDITORIAL AND PRODUCT DEVELOPMENT COSTS. Editorial costs and product
development costs are generally expensed as incurred. Product development costs
include the cost of artwork, graphics, prepress, plates and photography for new
products.
ADVERTISING AND SUBSCRIPTION ACQUISITION COSTS. Advertising and
subscription acquisition costs are expensed the first time the advertising takes
place, except for direct-response advertising, the primary purpose of which is
to elicit sales from customers who can be shown to have responded specifically
to the advertising and that results in probable future economic benefits.
Direct-response advertising consists of product promotional mailings,
catalogues, telemarketing and subscription promotions. These direct-response
advertising costs are capitalized as assets and amortized over the estimated
period of future benefit using a ratio of current period revenues to total
current and estimated future period revenues. The amortization periods range
from 6 months to 2 years subsequent to the promotional event. Amortization of
direct-response advertising costs is included in marketing and circulation
expenses on the accompanying statements of consolidated operations. Advertising
expense was $122,365, $121,158 and $88,176 during the years ended December 31,
1997, 1996 and 1995, respectively (see Note 11).
DEFERRED FINANCING COSTS. Deferred financing costs are being amortized by
the straight-line method over the terms of the related indebtedness.
34
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED WIRING AND INSTALLATION COSTS. Wiring and installation costs
incurred by CHANNEL ONE and PRIMEDIA Workplace Learning have been capitalized
and are being amortized by the straight-line method over the related estimated
useful lives which range from five to 15 years.
$2.875 SENIOR EXCHANGEABLE PREFERRED STOCK ("SENIOR PREFERRED STOCK"),
$11.625 SERIES B EXCHANGEABLE PREFERRED STOCK ("SERIES B PREFERRED STOCK"),
$10.00 SERIES D EXCHANGEABLE PREFERRED STOCK ("SERIES D PREFERRED STOCK") and
the $9.20 SERIES E EXCHANGEABLE PREFERRED STOCK ("SERIES E PREFERRED
STOCK"). The Senior Preferred Stock, Series B Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock are stated at fair value on the
date of issuance less issuance costs. The difference between their carrying
values and their redemption values is being amortized (using the interest
method) by periodic charges to additional paid-in capital.
COMMON STOCK SUBJECT TO REDEMPTION. The common stock subject to redemption
is stated at redemption value which at December 31, 1997 and 1996, is equal to
quoted market value. The difference between the carrying value of such stock and
its redemption value is being amortized by periodic charges to additional
paid-in capital.
COMPUTER SOFTWARE. Computer software costs are expensed as incurred, except
for certain costs incurred in connection with computer software to be sold,
leased or otherwise marketed. These costs, limited to production costs
subsequent to establishing technological feasibility, are reported as other non-
current assets and amortized over the estimated period of future benefit using
the straight-line method.
INTEREST RATE SWAP AGREEMENTS. The Company's interest rate swap agreements
are designated and effective as modifications to existing debt obligations to
reduce the impact of changes in the interest rates on its floating rate
borrowings and, accordingly, are accounted for using the settlement method of
accounting. The differentials to be paid or received under the interest rate
swap agreements are accrued as interest rates change and are recognized as
adjustments to interest expense. The Company considers swap terms including the
reference rate, payment and maturity dates and the notional amount in
determining if an interest rate swap agreement is effective at modifying an
existing debt obligation. If the criteria for designation are no longer met or
the underlying instrument matures or is extinguished, the Company will account
for outstanding swap agreements at fair market value and any resulting gain or
loss will be recognized as other income or expense. Any gains or losses upon
early termination of the agreements will be deferred and amortized over the
shorter of the remaining life of the hedged existing debt obligation or the
original life of the interest rate swap agreement.
PURCHASE ACCOUNTING. With respect to the acquisitions, the total purchase
price has been allocated to the tangible and intangible assets and liabilities
based on their respective fair values.
EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED AND INTANGIBLE
ASSETS. Intangible assets are being amortized using both accelerated and
straight-line methods over periods ranging from 1/4 of 1 year to 40 years. The
excess of purchase price over net assets acquired is being amortized on a
straight-line basis over 40 years. The recoverability of the carrying values of
the excess of the purchase price over the net assets acquired and intangible
assets is evaluated quarterly to determine if an impairment in value has
occurred. An impairment in value will be considered to have occurred when it is
determined that the undiscounted future operating cash flows generated by the
acquired businesses are not sufficient to recover the carrying values of such
intangible assets. If it has been determined that an impairment in value has
occurred, the
35
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
excess of the purchase price over the net assets acquired and intangible assets
would be written down to an amount which will be equivalent to the present value
of the future operating cash flows to be generated by the acquired businesses.
REVENUE RECOGNITION. Advertising revenues for all consumer magazines are
recognized as income at the on-sale date, net of provisions for estimated
rebates, adjustments and discounts. Other advertising revenues are generally
recognized based on the publications' cover dates. Newsstand sales are
recognized as income at the on-sale date for all publications, net of provisions
for estimated returns. Subscriptions are recorded as deferred revenue when
received and recognized as income over the term of the subscription. PRIMEDIA
Workplace Learning subscription and broadcast fees for satellite and videotape
network services are recognized in the month services are rendered. Sales of
books and other items are recognized as revenue principally upon shipment, net
of an allowance for returns which is provided based on sales. Distribution costs
charged to customers are recognized as revenue when the related product is
shipped. CHANNEL ONE advertising revenue, net of commissions, is recognized as
advertisements are aired on the program. Certain advertisers are guaranteed a
minimum number of viewers per advertisement shown; the revenue recognized is
based on the actual viewers delivered not to exceed the original contract value.
FOREIGN CURRENCY. Gains and losses on foreign currency transactions, which
are not significant, have been included in other, net on the accompanying
statements of consolidated operations. The effects of translation of foreign
currency financial statements into U.S. dollars are included in the cumulative
foreign currency translation adjustments account in shareholders' equity
(deficiency).
3. ACQUISITIONS
The Company acquired certain net assets or stock of:
1995--a publisher of 13 specialty consumer magazine titles serving the
sewing, crafts, woodworking and shooting sports areas; a publisher of 11 trade
magazines in the mining, printing and packaging industries, a specialty consumer
magazine, 15 truck and automobile price guides and three marketing and sales
oriented magazines; an information provider for the public relations industry; a
publisher of 21 specialty consumer magazines serving the automobile, truck,
motorcycle and watercraft areas; a publisher of specialty consumer magazines
serving the automotive area; and a publisher of trade magazines and directories
and an operator of trade shows. In addition to the aforementioned, the Company
completed several other smaller acquisitions during 1995.
1996--Cahners Consumer Magazines ("Cahners"), a publisher of specialty
consumer magazines including AMERICAN BABY, MODERN BRIDE, SAIL and POWER &
MOTORYACHT, along with 20 related properties and PRIMEDIA Workplace Learning,
which utilizes various multi-media technologies to provide workplace training,
news, and information to professionals and students in the corporate and
professional, automotive, banking, government and public service, education,
healthcare, and interactive distance training markets. In addition to the
aforementioned, the Company completed several other smaller acquisitions during
1996.
The foregoing acquisitions, except Cahners and PRIMEDIA Workplace Learning,
if they had occurred on January 1 of the year prior to acquisition, would not
have had a material impact on the results of operations. The following unaudited
pro forma information presents the results of operations of the
36
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
3. ACQUISITIONS (CONTINUED)
Company as if the acquisitions of Cahners and PRIMEDIA Workplace Learning had
taken place on January 1, 1995:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
<S> <C> <C>
1996 1995
------------ ------------
Sales, net........................................................ $ 1,413,930 $ 1,238,254
Operating income (loss)........................................... 82,100 (12,563)
Income (loss) before extraordinary charge......................... 1,314 (106,012)
Loss applicable to common shareholders before extraordinary
charge.......................................................... (42,212) (134,990)
Basic and diluted loss applicable to common shareholders per
common share before extraordinary charge........................ (.33) (1.19)
</TABLE>
1997--a provider of interactive, computer-based testing and training
products; a leading electronic automotive cost guide; a publisher of automotive
enthusiast magazines including LOW RIDER, ARTE, LOW RIDER BICYCLE and LOW RIDER
JAPAN; the publisher of REGISTERED REPRESENTATIVE, a trade magazine edited for
and circulated to the retail securities industry in the United States; a
publisher of specialty magazines targeting the professional recording, sound and
music production industry; and the leading provider of highly specialized
training and certification software products for the insurance industry. In
addition to the aforementioned, the Company completed several other smaller
acquisitions during 1997. The 1997 acquisitions, if they had occurred on January
1 of the year prior to acquisition, would not have had a material impact on the
results of operations.
The acquisitions have been accounted for by the purchase method. The
preliminary purchase cost allocations for the above-mentioned current year's
acquisitions are subject to adjustment when additional information concerning
asset and liability valuations are obtained. The final asset and liability fair
values may differ from those set forth on the accompanying consolidated balance
sheet at December 31, 1997; however, the changes are not expected to have a
material effect on the consolidated financial position of the Company. The
consolidated financial statements include the operating results of these
acquisitions subsequent to their respective dates of acquisition.
4. DIVESTITURES
In 1995, the Company sold certain technical and trade magazines, PREMIERE
magazine and Newfield. In connection with these sales, the Company has received
aggregate cash proceeds of $58,656 in 1995 and $1,000 in 1997 and has recorded
amounts due from buyer of approximately $4,000 and $5,000 on the accompanying
consolidated balance sheets at December 31, 1997 and 1996, respectively. In
connection with these sales, the Company recorded a net aggregate provision for
loss on the sales of businesses of $35,447 for the year ended December 31, 1995.
During the second quarter of 1996, the Company completed the sale of certain
technical and trade magazines, which were acquired in 1995 and upon acquisition
were designated to be sold. The differences between the proceeds received and
the carrying values of the assets sold were treated as adjustments to the excess
of purchase price over net assets acquired related to the retained businesses.
In addition, during the second quarter of 1996, the Company sold a monthly
tabloid targeted to electronic design engineers for consideration of a motion
picture and television production magazine and cash proceeds. During the
37
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
4. DIVESTITURES (CONTINUED)
fourth quarter of 1996, the Company completed the sale of the Kits and Leaflets
Division of PRIMEDIA Special Interest Publications and certain specialty
consumer magazines. In connection with these sales, the Company received
aggregate cash proceeds of $8,071 and recorded a net gain on sale of businesses
of approximately $5,800.
During September 1996, the Company decided to divest Katharine Gibbs and
recorded its net assets at net realizable value as net assets held for sale on
the accompanying consolidated balance sheet at December 31, 1996.
On March 11, 1997, the Company announced its intention to divest the
following four non-core business units: THE DAILY RACING FORM, Newbridge
Communications, Inc. (excluding Films for the Humanities and Sciences), NEW
WOMAN magazine, and Krames Communications Incorporated ("Krames"). Subsequently,
the Company decided to sell STAGEBILL and Intertec Mailing Services. These
planned divestitures combined with Katharine Gibbs are collectively referred to
as the Non-Core Businesses ("Non-Core Businesses") and are part of the Company's
plan to focus on six key growth vehicles in markets that have dynamic growth
opportunities.
During the second quarter of 1997, the Company completed the sale of
Katharine Gibbs. During the third quarter of 1997, the Company recorded a
provision aggregating $138,640 for the reduction of the carrying values of
Newbridge Communications, Inc. (excluding Films for the Humanities and
Sciences), THE DAILY RACING FORM, STAGEBILL, Krames, NEW WOMAN magazine and
Intertec Mailing Services to the estimated realizable value of the net assets of
such businesses. During the third quarter, the Company also completed the sales
of Krames, NEW WOMAN magazine and Intertec Mailing Services. During the fourth
quarter, the Company completed the sales of Newbridge Book Clubs, Newbridge
Educational Publishing and STAGEBILL. In connection with these sales, the
Company received aggregate proceeds of $171,575 net of direct selling expenses.
The remaining planned divestiture of THE DAILY RACING FORM is expected to be
completed during 1998. Its net assets have been recorded at net realizable value
as net assets held for sale on the accompanying consolidated balance sheet at
December 31, 1997.
The operating results of the Non-Core Businesses are included on the
accompanying statements of consolidated operations for the years ended December
31, 1997, 1996 and 1995. Total sales for the Non-Core Businesses were $247,351,
$307,149 and $307,121 for the years ended December 31, 1997, 1996 and 1995,
respectively. Excluding the 1997 provision for loss on the sales of businesses
and other, net, operating income (loss) for the Non-Core Businesses was $7,243,
$(694) and $(17,429) for the years ended December 31, 1997, 1996 and 1995,
respectively.
5. RESTRUCTURING AND OTHER COSTS
In the second quarter of 1995, the Company recorded charges of $14,667
related to a corporate restructuring effort at Newbridge Communications, Inc.
("Newbridge"), its professional book club business, and the completion of a
manufacturing outsourcing effort at THE DAILY RACING FORM. Included in the
restructuring charge of $7,272 were employee separation costs of $1,287,
litigation matters of $3,349, a write-down of inventory and other assets of
$2,086 related to the exit of a product line at Newbridge and costs associated
with the termination of a real estate lease which is no longer needed in the
operations of THE DAILY RACING FORM of $550. Included in the other costs of
$7,395 were costs incurred and associated
38
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
5. RESTRUCTURING AND OTHER COSTS (CONTINUED)
with the correction of customer and accounting systems and write-down of certain
assets. During early 1995, the Company experienced certain operational problems
at Newbridge relating to periodic mailings which described its then current
product offerings. These operational problems resulted in higher than normal
levels of bad debts and returns. In addition, Newbridge implemented a new
customer information processing system which inadvertently suppressed a number
of customer and product offering mailings resulting in lower than anticipated
demand for certain products and a corresponding increase in obsolete inventory.
Subsequently, the operational and new system problems were corrected. As a
result of these operational problems, provisions for inventory obsolescence of
approximately $2,500 and for bad debts of approximately $3,500 were recorded,
along with expenses associated with the outside consultants and systems
corrections of approximately $1,400. Approximately $700, $1,200 and $4,100 of
the restructuring and other charges were paid in cash in 1997, 1996 and 1995,
respectively. At December 31, 1997, $700 of these charges is included in accrued
liabilities.
6. ADJUSTMENTS TO THE CARRYING VALUES OF LONG-LIVED ASSETS
In accordance with its accounting policy, during 1995, the Company recorded
aggregate write-downs of $17,958 and $5,786 to the carrying values of the
identifiable intangible assets and goodwill of PRIMEDIA Reference and a product
line of Newbridge, respectively. These adjustments are included in amortization
of intangible assets, excess of purchase price over net assets acquired and
other on the accompanying statement of consolidated operations for the year
ended December 31, 1995 and affect the operating results of the information and
education segments.
7. ACCOUNTS RECEIVABLE, NET
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1997 1996
---------- ----------
Accounts receivable................................................... $ 236,819 $ 273,119
Less: Allowance for doubtful accounts................................. 10,521 15,418
Allowance for returns and rebates................................ 27,009 24,098
---------- ----------
$ 199,289 $ 233,603
---------- ----------
---------- ----------
</TABLE>
8. INVENTORIES, NET
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1997 1996
--------- ---------
Finished goods.......................................................... $ 12,271 $ 41,497
Work in process......................................................... 3,314 2,111
Raw materials........................................................... 14,494 17,838
--------- ---------
30,079 61,446
Less: Allowance for obsolescence........................................ 2,482 8,703
--------- ---------
$ 27,597 $ 52,743
--------- ---------
--------- ---------
</TABLE>
39
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. PROPERTY AND EQUIPMENT, NET
Property and equipment, including that held under capital leases, consist of
the following:
<TABLE>
<CAPTION>
DECEMBER 31,
RANGE OF LIVES ----------------------
(YEARS) 1997 1996
--------------- ---------- ----------
<S> <C> <C> <C>
Land.................................................. -- $ 4,986 $ 2,022
Buildings and improvements............................ 1-40 33,808 24,219
Furniture and fixtures................................ 4-10 28,135 26,027
Machinery and equipment............................... 2-10 81,226 94,091
School equipment...................................... 5-10 58,665 55,860
Other................................................. 2-7 2,992 2,401
---------- ----------
209,812 204,620
Less: Accumulated depreciation and amortization....... 93,451 81,797
---------- ----------
$ 116,361 $ 122,823
---------- ----------
---------- ----------
</TABLE>
Included in property and equipment are assets which were acquired under
capital leases in the amount of $27,498 and $11,738 with accumulated
amortization of $3,043 and $1,739 at December 31, 1997 and 1996, respectively
(see Note 21).
10. INTANGIBLE ASSETS AND EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED, NET
Other intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
RANGE OF LIVES --------------------------
(YEARS) 1997 1996
--------------- ------------ ------------
<S> <C> <C> <C>
Trademarks........................................ 40 $ 342,645 $ 448,490
Membership, subscriber and customer lists......... 2-20 456,716 504,951
Non-compete agreements............................ 1-10 194,116 227,312
Trademark license agreements...................... 2-15 2,909 17,500
Copyrights........................................ 12-20 25,715 47,849
Video library..................................... 1-7 14,837 14,837
Databases......................................... 4-12 10,577 121,377
Advertiser lists.................................. .25-15 223,443 133,850
Distribution agreements........................... 1-7 11,525 15,336
Other............................................. 1.5-15 19,647 63,875
------------ ------------
1,302,130 1,595,377
Less: Accumulated amortization.................... 641,862 814,061
------------ ------------
$ 660,268 $ 781,316
------------ ------------
------------ ------------
</TABLE>
The excess of the purchase price over the fair value of the net assets
acquired is net of accumulated amortization of $94,735 and $82,763 at December
31, 1997 and 1996, respectively.
40
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
11. OTHER NON-CURRENT ASSETS
Other non-current assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1997 1996
---------- ----------
<CAPTION>
<S> <C> <C>
Deferred financing costs, net......................................... $ 15,276 $ 22,814
Deferred wiring and installation costs, net........................... 54,387 58,086
Direct-response advertising costs, net................................ 16,520 28,452
Prepublication and programming costs, net............................. 4,526 6,506
Other................................................................. 8,167 7,834
---------- ----------
$ 98,876 $ 123,692
---------- ----------
---------- ----------
</TABLE>
The deferred financing costs are net of accumulated amortization of $5,093
and $9,794 at December 31, 1997 and 1996, respectively. The deferred wiring and
installation costs are net of accumulated amortization of $18,718 and $12,850 at
December 31, 1997 and 1996, respectively. Direct-response advertising costs are
net of accumulated amortization of $53,840 and $70,661 at December 31, 1997 and
1996, respectively. Prepublication and programming costs are net of accumulated
amortization of $6,843 and $7,968 at December 31, 1997 and 1996, respectively.
12. ACCRUED EXPENSES AND OTHER
Accrued expenses and other current liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1997 1996
---------- ----------
<CAPTION>
<S> <C> <C>
Payroll, commissions and related employee benefits.................... $ 53,494 $ 40,553
Systems costs......................................................... 2,066 2,991
Rent and lease liabilities............................................ 27,247 13,502
Retail display costs and allowances................................... 10,407 8,263
Promotion costs....................................................... 2,739 2,663
Royalties............................................................. 8,367 8,362
Circulation costs..................................................... 6,037 5,420
Professional fees..................................................... 12,319 4,408
Taxes................................................................. 18,528 17,162
Customer advances..................................................... 946 2,482
Deferred purchase price............................................... 16,204 8,231
Other................................................................. 46,416 26,922
---------- ----------
$ 204,770 $ 140,959
---------- ----------
---------- ----------
</TABLE>
41
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
<S> <C> <C>
1997 1996
------------ ------------
Borrowings under Bank Credit Facilities........................... $ 1,218,101 $ 884,992
10 5/8% Senior Notes Due 2002..................................... -- 233,250
10 1/4% Senior Notes Due 2004..................................... 100,000 100,000
8 1/2% Senior Notes Due 2006..................................... 298,902 298,811
------------ ------------
1,617,003 1,517,053
Acquisition obligation payable.................................... 53,871 54,633
------------ ------------
1,670,874 1,571,686
Less: Current maturities of long-term debt........................ 14,333 6,000
------------ ------------
$ 1,656,541 $ 1,565,686
------------ ------------
------------ ------------
</TABLE>
On May 31, 1996, the Company replaced its existing credit facilities under
the Revolving Credit Agreement, BONY Term Loan and the Chase Term Loan through
which the Company could borrow $970,000 in the aggregate with new credit
facilities with The Chase Manhattan Bank, the Bank of New York, Bankers Trust
Company and the Bank of Nova Scotia as agents (the "Credit Facilities"). The
Company used approximately $910,000 of the borrowings under the Credit
Facilities to repay borrowings under the previously existing credit facilities
and to pay certain related fees and expenses.
The Credit Facilities are comprised of a $750,000 Tranche A Revolving Loan
Commitment ("Tranche A Loan Commitment"), a $250,000 Term Loan ("Term Loan") and
an additional $250,000 Revolving Loan Commitment ("Revolver/Term Loan"). In
addition, the Company has the right to solicit commitments of up to $250,000
under the Tranche B Revolving Loan Facility ("Tranche B Facility"). In May 1997,
the Company solicited commitments of $150,000 ("Tranche B Loan Commitment")
under the Tranche B Facility. The Tranche A Loan Commitment may be utilized
through the incurrence of Tranche A revolving credit loans, swingline loans
which may not exceed $40,000 in total, Canadian dollar loans which may not
exceed the Canadian dollar equivalent of $40,000 in total or the issuance of
letters of credit which may not exceed $40,000. The Tranche B Facility may be
utilized through the incurrence of Tranche B revolving credit loans. The
borrowings under the Credit Facilities may be used for general corporate and
working capital purposes as well as to finance certain future acquisitions.
42
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13. LONG-TERM DEBT (CONTINUED)
The commitments under the Tranche A Loan Commitment and the Tranche B Loan
Commitment are subject to mandatory reductions semi-annually on June 30 and
December 31 with the first reduction on June 30, 1999 and the final reduction on
June 30, 2004. The mandatory reductions for the Tranche A Loan Commitment are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1999............................................................................ $ 75,000
2000............................................................................ 150,000
2001............................................................................ 150,000
2002............................................................................ 150,000
2003............................................................................ 150,000
2004............................................................................ 75,000
------------
$ 750,000
------------
------------
</TABLE>
The mandatory reductions for the Tranche B Loan Commitment are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1999............................................................................ $ 15,000
2000............................................................................ 30,000
2001............................................................................ 30,000
2002............................................................................ 30,000
2003............................................................................ 30,000
2004............................................................................ 15,000
------------
$ 150,000
------------
------------
</TABLE>
The mandatory reductions for the Tranche B Loan Commitment are based on
defined percentages of the total Tranche B Loan Commitment. To the extent that
the total revolving credit loans outstanding exceed the reduced commitment
amount, these loans must be paid down to an amount equal to or less than the
reduced commitment amount. However, if the total revolving credit loans
outstanding do not exceed the reduced commitment amount, then there is no
requirement to pay down any of the revolving credit loans.
The principal amounts of the Term Loan and the Revolver/Term Loan will each
be repaid semi-annually on June 30 and December 31 of each year, with an initial
payment of $25,000 on June 30, 2000, installments of $25,000 on each payment
date thereafter through December 31, 2003 and a final payment of $50,000 on June
30, 2004.
On April 21, 1997, the Company entered into a new 364-day credit facility
with The Chase Manhattan Bank, the Bank of New York, Bankers Trust Company and
the Bank of Nova Scotia as agents (the "New Credit Facility") which expires
April 20, 1998. Under the terms of the New Credit Facility, the Company has
commitments of $150,000 which can be borrowed in the form of revolving loans to
be used for general, corporate and working capital purposes as well as to
finance certain future acquisitions.
43
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13. LONG-TERM DEBT (CONTINUED)
At December 31, 1997, the Company has commitments of $1,550,000 and can
borrow up to $1,650,000 in the aggregate under the Credit Facilities and the New
Credit Facility (collectively referred to as the "Bank Credit Facilities").
As of December 31, 1997, the borrowings under the Bank Credit Facilities
consist of the $568,101 under the Tranche A Loan Commitment, $250,000 under the
Revolver/Term Loan, $150,000 under the Tranche B Loan Commitment and $250,000
under the Term Loan.
The amounts borrowed pursuant to the Bank Credit Facilities bear interest,
at the Company's option as follows: (i) the higher of (a) the Federal Funds
Effective Rate as published by the Federal Reserve Bank of New York plus 1/2 of
1% and (b) the prime commercial lending rate announced by the Agent from time to
time (in each case, the "Base Rate"); plus, in each case, an applicable margin
of up to 1/8 of 1% as specified in the Bank Credit Facilities or (ii) the
Eurodollar Rate plus an applicable margin ranging from 1/2 of 1% to 1 1/2% as
specified in the Bank Credit Facilities. All swingline loans bear interest at
the Base Rate plus the applicable margin of up to 1/8 of 1% as specified in the
Bank Credit Facilities. During 1997, the weighted average interest rate on the
Bank Credit Facilities was 7.11%. During 1996, the weighted average interest
rates on the Revolving Credit Agreement, BONY Term Loan, Chase Term Loan and
Bank Credit Facilities were 7.04%, 7.50%, 6.94% and 7.07%, respectively.
Interest rates on the borrowings under the Bank Credit Facilities outstanding at
December 31, 1997 ranged from 7.04% to 8.50%. Interest rates on the borrowings
under the Bank Credit Facilities outstanding at December 31, 1996 ranged from
7.00% to 7.13%.
Under the Credit Facilities, the Company has agreed to pay commitment fees
equal to 3/8 of 1% per annum on the daily average aggregate unutilized
commitment under the Tranche A Loan Commitment and the Tranche B Loan
Commitment. The Company has also agreed to pay certain fees with respect to the
issuance of letters of credit and an annual administration fee. Under the New
Credit Facility, the Company has agreed to pay commitment fees equal to 1/8 of
1% per annum on the daily average aggregate unutilized revolving loan
commitment.
10 5/8% SENIOR NOTES. During November and December 1996, the Company
purchased $16,750 of the 10 5/8% Senior Notes at a premium of 105.4% plus
accrued interest from various brokers on the open market. In January 1997, the
Company purchased, in aggregate, $20,850 of the 10 5/8% Senior Notes at a
weighted average price of 105%, plus accrued and unpaid interest from various
brokers on the open market. On May 1, 1997, the Company redeemed the $212,400
remaining principal amount of the 10 5/8% Senior Notes at 104% plus accrued and
unpaid interest. The aggregate premium paid and the write-off of related
deferred financing costs are classified as an extraordinary charge and are
recorded at an aggregate value of $15,401 on the accompanying statement of
consolidated operations for the year ended December 31, 1997.
10 1/4% SENIOR NOTES. Interest is payable semi-annually in June and
December at an annual rate of 10 1/4%. The 10 1/4% Senior Notes mature on June
1, 2004, with no sinking fund requirements. The 10 1/4% Senior Notes may not be
redeemed prior to June 1, 1999 other than in connection with a change of
control. Beginning in 1999 and thereafter, the 10 1/4% Senior Notes are
redeemable at prices ranging from 104.95% with annual reductions to 100% in 2002
plus accrued and unpaid interest.
44
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13. LONG-TERM DEBT (CONTINUED)
8 1/2% SENIOR NOTES. On January 24, 1996, the Company completed a private
offering of $300,000 of 8 1/2% Senior Notes. The 8 1/2% Senior Notes were issued
at 99.578% with related issuance costs of approximately $7,000. On August 21,
1996, the Company exchanged its 8 1/2% Senior Notes ("Old Notes") for a new
series of $300,000 8 1/2% Senior Notes Due 2006 ("New Notes"). The New Notes
have been registered under the Securities Act of 1933. The New Notes mature on
February 1, 2006, with no sinking fund requirements. Interest on the New Notes
is payable semi-annually in February and August at the annual rate of 8 1/2%.
The New Notes may not be redeemed prior to February 1, 2001 other than in
connection with a change of control. Beginning in 2001 and thereafter, the New
Notes are redeemable in whole or in part, at the option of the Company, at
prices ranging from 104.25% with annual reductions to 100% in 2003 plus accrued
and unpaid interest. Net proceeds from the Old Notes of approximately $293,000
were primarily used to pay down borrowings under the Revolving Credit Agreement.
The 10 1/4% Senior Notes and 8 1/2% Senior Notes (together referred to as
the "Senior Notes"), and the Bank Credit Facilities, all rank senior in right of
payment to all subordinated indebtedness of PRIMEDIA Inc. (a holding company).
The above indebtedness, among other things, limits the ability of the
Company to change the nature of its businesses, incur indebtedness, create
liens, sell assets, engage in mergers, consolidations or transactions with
affiliates, make investments in or loans to certain subsidiaries, issue
guarantees and make certain restricted payments including dividend payments on
its common stock. Under the Company's most restrictive debt covenants, the
Company must maintain a minimum interest coverage ratio of 1.8 to 1 and a
minimum fixed charge coverage ratio of 1.05 to 1. The Company's maximum
allowable leverage ratio is 6.0 to 1. The Company believes it is in compliance
with the financial and operating covenants of its principal financing
arrangements. Borrowings under the above indebtedness are guaranteed by each of
the domestic wholly-owned subsidiaries of the Company. Such guarantees are full,
unconditional and joint and several. The separate financial statements of the
domestic subsidiaries are not presented because the Company believes the
separate financial statements would not be material to the shareholders and
potential investors. The Company's foreign subsidiaries are not guarantors of
the above indebtedness. The total assets, revenues, income or equity of such
foreign subsidiaries, both individually and on a combined basis, are
inconsequential in relation to the total assets, revenues, income or equity of
the Company.
ACQUISITION OBLIGATION. In connection with the acquisition of certain of
the Company's specialty consumer magazine operations and THE DAILY RACING FORM,
an obligation was recorded equivalent to the present value of the principal and
interest payments of the notes payable in the amount of $53,871 at December 31,
1997 and $54,633 at December 31, 1996. The interest rate used in calculating the
present value was 13%, which represents management's estimate of the prevailing
market rate of interest for such obligation at the time of the acquisition.
Principal and interest amounts aggregating $63,500 will be repaid from June 1998
through June 2001.
INTEREST RATE SWAP AGREEMENTS. In May 1995, the Company entered into two,
three-year interest rate swap agreements with an aggregate notional amount of
$200,000. Under the outstanding swap agreements, the Company receives a floating
rate of interest based on three-month LIBOR, which resets quarterly, and pays a
fixed rate of interest which increases each year during the terms of the
respective agreements. The weighted average variable rate and weighted average
fixed rate were 5.7% and 6.5%, respectively, in 1997, 5.5% and 6.2%,
respectively, in 1996 and 6.0% and 6.1%, respectively, in 1995. Also, in May
1995, the
45
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13. LONG-TERM DEBT (CONTINUED)
Company entered into a three-year interest rate cap agreement. As a result of
this transaction, the Company currently has the right to receive payments based
on a notional principal amount of $100,000 to the extent that three-month LIBOR
exceeds 7.75% in year one, 8.75% in year two and 9.75% in year three of the
agreement. Any interest differential received is recognized as an adjustment to
interest expense. The interest rate cap fee is recognized as an adjustment to
interest expense over the life of the interest rate cap agreement.
In the fourth quarter of 1996, the Company entered into six, one-year
interest rate swap agreements with an aggregate notional amount of $600,000.
Under these swap agreements, the Company received a floating rate of interest
based on three-month LIBOR, which resets quarterly, and paid a fixed rate of
interest, each quarter, for the term of the agreements. The weighted average
variable rate and weighted average fixed rate were 5.7% and 5.8%, respectively,
in 1997 and 5.5% and 5.8%, respectively, in 1996. These interest rate swap
agreements expired during the fourth quarter of 1997.
In July 1997, the Company entered into four, three-year and two, four-year
interest rate swap agreements, with an aggregate notional amount of $600,000.
Under these new swap agreements, which commence on January 2, 1998, the Company
will receive a floating rate of interest based on three-month LIBOR, which
resets quarterly, and the Company will pay a fixed rate of interest, each
quarter, for the terms of the respective agreements.
The net interest differential, related to the interest rate swap agreements
and the interest rate cap agreement, charged to interest expense in 1997, 1996
and 1995 was $2,048, $1,943 and $539, respectively. The Company is exposed to
credit risk in the event of nonperformance by counterparties to its interest
rate swap and cap agreements. Credit risk is limited by entering into such
agreements with primary dealers only; therefore, the Company does not anticipate
that nonperformance by counterparties will occur. Notwithstanding this, the
Company's treasury department monitors counterparty credit ratings at least
quarterly through reviewing independent credit agency reports. Both current and
potential exposure are evaluated, as necessary, by obtaining replacement cost
information from alternative dealers. Potential loss to the Company from credit
risk on these agreements is limited to amounts receivable, if any. The Company
enters into these agreements solely to hedge its interest rate risk.
46
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
14. INCOME TAXES
At December 31, 1997, the Company had aggregate net operating loss
carryforwards for Federal and state income tax purposes ("NOLs") of
approximately $749,000 which will be available to reduce future taxable income.
The utilization of such NOLs is subject to certain limitations under Federal
income tax laws. In certain instances, such NOLs may only be used to reduce
future taxable income of the respective company which generated the NOL. The
NOLs are scheduled to expire in the following years:
<TABLE>
<S> <C>
2003.............................................................. $ 24,900
2004.............................................................. 60,300
2005.............................................................. 121,800
2006.............................................................. 93,400
2007.............................................................. 82,700
2008.............................................................. 83,700
2009.............................................................. 68,900
2010.............................................................. 156,100
2011.............................................................. 26,100
2012.............................................................. 31,100
---------
$ 749,000
---------
---------
</TABLE>
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b)
operating loss carryforwards. The tax effects of significant items comprising
the Company's net deferred income tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------
<S> <C> <C> <C>
FEDERAL STATE TOTAL
---------- --------- ----------
DEFERRED INCOME TAX ASSETS:
Difference between book and tax basis of inventory............................. $ 2,187 $ 641 $ 2,828
Difference between book and tax basis of accrued expenses and other............ 16,075 4,709 20,784
Reserves not currently deductible.............................................. 2,615 766 3,381
Difference between book and tax basis of other intangible assets............... 80,945 23,714 104,659
Operating loss carryforwards................................................... 215,832 44,065 259,897
---------- --------- ----------
Total.......................................................................... 317,654 73,895 391,549
---------- --------- ----------
DEFERRED INCOME TAX LIABILITIES:
Difference between book and tax basis of other intangible assets............... 39,283 11,508 50,791
Difference between book and tax basis of property and equipment................ 16,405 4,806 21,211
Other.......................................................................... 19,424 5,691 25,115
---------- --------- ----------
Total.......................................................................... 75,112 22,005 97,117
---------- --------- ----------
Net deferred income tax assets................................................. 242,542 51,890 294,432
Less: Valuation allowances..................................................... 85,500 32,732 118,232
---------- --------- ----------
Net............................................................................ $ 157,042 $ 19,158 $ 176,200
---------- --------- ----------
---------- --------- ----------
</TABLE>
47
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
14. INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------------
<S> <C> <C> <C>
FEDERAL STATE TOTAL
---------- --------- ----------
DEFERRED INCOME TAX ASSETS:
Difference between book and tax basis of inventory............................. $ 3,550 $ 1,041 $ 4,591
Difference between book and tax basis of accrued expenses and other............ 18,583 5,444 24,027
Reserves not currently deductible.............................................. 2,277 667 2,944
Difference between book and tax basis of other intangible assets............... 31,043 9,094 40,137
Operating loss carryforwards................................................... 192,267 56,326 248,593
---------- --------- ----------
Total.......................................................................... 247,720 72,572 320,292
---------- --------- ----------
DEFERRED INCOME TAX LIABILITIES:
Difference between book and tax basis of other intangible assets............... 32,612 9,554 42,166
Difference between book and tax basis of property and equipment................ 11,382 3,335 14,717
Other.......................................................................... 9,757 2,858 12,615
---------- --------- ----------
Total.......................................................................... 53,751 15,747 69,498
---------- --------- ----------
Net deferred income tax assets................................................. 193,969 56,825 250,794
Less: Valuation allowances..................................................... 36,927 37,667 74,594
---------- --------- ----------
Net............................................................................ $ 157,042 $ 19,158 $ 176,200
---------- --------- ----------
---------- --------- ----------
</TABLE>
At December 31, 1997, 1996 and 1995, management of the Company reviewed
recent operating results and projected future operating results. At the end of
each of the respective years, management determined that a portion of the net
deferred income tax assets would likely be realized. The amount of the net
deferred income tax assets was not adjusted in 1997. In 1996, the Company
reduced the valuation allowances by $62,400 and recorded an income tax benefit
of $53,300 ($47,500 and $5,800 related to Federal and state income tax benefits,
respectively) and a reduction of the excess of purchase price over net assets
acquired of $9,100; and in 1995, the Company reduced the valuation allowances by
$67,700 and recorded an income tax benefit of $59,600 ($53,100 and $6,500
related to Federal and state income tax benefits, respectively) and a reduction
of the excess of purchase price over net assets acquired of $8,100. The amount
of the net deferred tax asset considered realizable, however, could be reduced
in the near term if estimates of future taxable income during the carryforward
period are reduced. After the reduction in the valuation allowances discussed
above, there was a net increase in the valuation allowance of $43,638 during
1997 and net decreases in the valuation allowances of $59,420 and $1,404 during
1996 and 1995, respectively.
A portion of the valuation allowances in the amount of approximately $39,000
at December 31, 1997 relates to net deferred tax assets which were recorded in
accounting for the acquisitions of various entities. The recognition of such
amount in future years will be allocated to reduce the excess of the purchase
price over the net assets acquired and other non-current intangible assets.
48
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
15. EXCHANGEABLE PREFERRED STOCK
Exchangeable Preferred Stock consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
---------- ----------
<S> <C> <C>
$2.875 Senior Exchangeable Preferred Stock................................................ $ -- $ 98,266
$11.625 Series B Exchangeable Preferred Stock............................................. 155,281 150,513
$10.00 Series D Exchangeable Preferred Stock.............................................. 194,495 193,950
$9.20 Series E Exchangeable Preferred Stock............................................... 120,504 --
---------- ----------
$ 470,280 $ 442,729
---------- ----------
---------- ----------
</TABLE>
$2.875 SENIOR EXCHANGEABLE PREFERRED STOCK
The Company authorized 4,000,000 shares of $.01 par value Senior Preferred
Stock, all of which was issued and outstanding at December 31, 1996. The
liquidation and redemption value at December 31, 1996 was $100,000. Annual
dividends of $2.875 per share on the Senior Preferred Stock were cumulative and
payable quarterly. In November 1997, the Company redeemed all 4,000,000
outstanding shares of the Senior Preferred Stock for $105,864, which includes a
redemption premium of $5,800, plus accrued and unpaid dividends of $64.
$11.625 SERIES B EXCHANGEABLE PREFERRED STOCK
The Company authorized 2,000,000 shares of $.01 par value Series B Preferred
Stock, 1,576,036 shares and 1,531,526 shares of which were issued and
outstanding at December 31, 1997 and 1996, respectively. The liquidation and
redemption value at December 31, 1997 and 1996 was $157,604 and $153,153,
respectively. Annual dividends of $11.625 per share on the Series B Preferred
Stock are cumulative and payable quarterly in cash or by issuing additional
shares of the Series B Preferred Stock. Commencing in the second quarter of
1997, the Company elected to satisfy its Series B Preferred Stock dividend
requirements in cash. On or after February 1, 1998, the Series B Preferred Stock
may be redeemed in whole or in part, at the option of the Company, at specified
redemption prices plus accrued and unpaid dividends. The Company is required to
redeem the Series B Preferred Stock on May 1, 2005 at a redemption price equal
to the liquidation preference of $100 per share, plus accrued and unpaid
dividends. The Series B Preferred Stock is exchangeable at the option of the
Company on or after an initial public offering of the Company's common stock for
its 11 5/8% Class B Subordinated Exchange Debentures due 2005 provided no shares
of the Senior Preferred Stock are then outstanding. Such debentures are
subordinate to all existing and future liabilities and obligations of the
Company and its subsidiaries. The Series B Preferred Stock is recorded on the
accompanying consolidated balance sheets at the aggregate redemption value (net
of issuance costs) of $155,281 and $150,513 at December 31, 1997 and 1996,
respectively (see Note 25).
$10.00 SERIES D EXCHANGEABLE PREFERRED STOCK
On January 24, 1996, the Company completed a private offering of 2,000,000
shares of $.01 par value, $10.00 Series C Exchangeable Preferred Stock ("Series
C Preferred Stock") at $100 per share. Annual dividends of $10.00 per share on
the Series C Preferred Stock were cumulative and payable quarterly, in cash,
commencing May 1, 1996. On August 21, 1996, the Company exchanged the Series C
Preferred Stock
49
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
15. EXCHANGEABLE PREFERRED STOCK (CONTINUED)
for 2,000,000 shares of $.01 par value, Series D Preferred Stock. Dividend
payment terms of the Series D Preferred Stock are the same as the terms of the
Series C Preferred Stock. The Series D Preferred Stock has been registered under
the Securities Act of 1933. The liquidation and redemption value at December 31,
1997 and 1996 was $200,000. On and after February 1, 2001, the Series D
Preferred Stock may be redeemed in whole or in part, at the option of the
Company, at specified redemption prices plus accrued and unpaid dividends. The
Company is required to redeem the Series D Preferred Stock on February 1, 2008
at a redemption price equal to the liquidation preference of $100 per share,
plus accrued and unpaid dividends. The Series D Preferred Stock is exchangeable
in whole but not in part, at the option of the Company, on any scheduled
dividend payment date into 10% Class D Subordinated Exchange Debentures due 2008
provided that no shares of the Senior Preferred Stock are outstanding on the
date of exchange. Net proceeds from the Series C Preferred Stock offering of
approximately $193,000 were primarily used to pay down borrowings under the
Revolving Credit Agreement. The Series D Preferred Stock is recorded on the
accompanying consolidated balance sheets at the aggregate redemption value (net
of issuance costs) of $194,495 and $193,950 at December 31, 1997 and 1996,
respectively.
$9.20 SERIES E EXCHANGEABLE PREFERRED STOCK
On September 26, 1997, the Company completed a private offering of 1,250,000
shares of $9.20 Series E Preferred Stock at $100 per share, all of which are
issued and outstanding at December 31, 1997. The liquidation and redemption
value at December 31, 1997 was $125,000. Annual dividends of $9.20 per share on
the Series E Preferred Stock are cumulative and payable quarterly, in cash,
commencing February 1, 1998. Prior to November 1, 2002, the Series E Preferred
Stock may be redeemed in whole or in part, at the option of the Company, at a
redemption price equal to the sum of the aggregate liquidation preference plus
accrued and unpaid dividends to the redemption date and the applicable
make-whole premium as defined in the private offering prospectus. On or after
November 1, 2002, the Series E Preferred Stock may be redeemed in whole or in
part, at the option of the Company, at specified redemption prices plus accrued
and unpaid dividends. The Company is required to redeem the Series E Preferred
Stock on November 1, 2009 at a redemption price equal to the liquidation
preference of $100 per share, plus accrued and unpaid dividends. The Series E
Preferred Stock is exchangeable, in whole but not in part, at the option of the
Company, on any scheduled dividend payment date into 9.20% Class E Subordinated
Debentures. The Series E Preferred Stock is recorded on the accompanying
consolidated balance sheet at the aggregate redemption value (net of unamortized
issuance costs) of $120,504 at December 31, 1997. Net proceeds from this private
offering were used to pay down borrowings under the Bank Credit Facilities (see
Note 25).
In 1997, the Company recorded a preferred stock dividend accrual in the
amount of $9,517. Of the total dividend accrual recorded in 1997, the amounts
that relate to prior periods were not material.
16. COMMON STOCK
In October 1995, the Company increased the authorized number of shares of
common stock by 50,000,000 shares to 250,000,000 shares. During November 1995,
the Company completed a public offering of 17,250,000 shares of common stock at
a price of $10.00 per share. Proceeds from this initial public offering, net of
commissions and other related expenses of approximately $9,500, were
approximately
50
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
16. COMMON STOCK (CONTINUED)
$163,000. The Company used the net proceeds from this initial public offering to
repay borrowings outstanding under its Revolving Credit Agreement.
SHARE REPURCHASE PROGRAM. On September 9, 1997, the Company announced that
its board of directors had authorized a program for the Company to repurchase up
to $15,000 of its outstanding common stock from time to time in the open market
and through privately negotiated transactions. During the year ended December
31, 1997, the Company repurchased 1,048,600 shares of common stock for $13,158
at a weighted average price of $12.52.
STOCK PURCHASE AND OPTION PLAN. The PRIMEDIA Stock Purchase and Option Plan
(the "Plan") authorizes sales of shares of common stock and grants of incentive
awards in the forms of, among other things, stock options to key employees and
other persons with a unique relationship with the Company. The stock options are
granted with exercise prices at quoted market value at time of issuance. For the
purpose of determining fair value prior to November 1995, it was recognized that
the Company's common stock was not readily saleable to third parties at that
time, and therefore, was valued at a discount to a publicly-traded common stock.
The common stock issued prior to November 1995 and redeemed is included in the
table of the activity of the common stock subject to redemption.
COMMON STOCK SUBJECT TO REDEMPTION. Under the following circumstances,
employees who purchased shares prior to the Company's initial public offering of
common stock have the right to resell their shares of common stock to the
Company: termination of employment in connection with the sale of the business
for which they work, death, disability or retirement after age 65. The resale
feature expires five years after the effective purchase date of the common
stock. Since inception of the Company, none of the employees has exercised such
resale feature as a result of such sale, death, disability or retirement and the
likelihood of significant resales because the stock is freely tradeable on the
public market is considered by management to be remote.
The following summarizes the activity of the common stock subject to
redemption:
<TABLE>
<CAPTION>
SHARES AMOUNT
--------- ---------
<S> <C> <C>
Balance at January 1, 1995.................................................................. 2,152,180 $ 17,217
Acquisitions of common stock held by management............................................. (57,031) (430)
Issuances of common stock................................................................... 458,994 3,274
Expiration of redemption feature............................................................ (147,630) (809)
Accretion in carrying value................................................................. -- 9,927
--------- ---------
Balance at December 31, 1995................................................................ 2,406,513 29,179
Acquisitions of common stock held by management............................................. (17,269) (148)
Expiration of redemption feature............................................................ (1,745,934) (21,230)
Reduction in carrying value................................................................. -- (885)
--------- ---------
Balance at December 31, 1996................................................................ 643,310 6,916
Acquisitions of common stock held by management............................................. (2,320) (19)
Expiration of redemption feature............................................................ (238,340) (2,569)
Accretion in carrying value................................................................. -- 755
--------- ---------
Balance at December 31, 1997................................................................ 402,650 $ 5,083
--------- ---------
--------- ---------
</TABLE>
The redemption values of the common stock subject to redemption of $5,083
and $6,916 at December 31, 1997 and 1996, respectively, were based on a
repurchase price of $12.625 per share and $10.75 per
51
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
16. COMMON STOCK (CONTINUED)
share which are the quoted market values at December 31, 1997 and 1996,
respectively. Common stock subject to redemption is recorded on the accompanying
consolidated balance sheets net of the amounts of notes receivable from
employees (related to common stock issuances) outstanding of $707 and $959 at
December 31, 1997 and 1996, respectively.
ACCOUNTING FOR EMPLOYEE STOCK BASED COMPENSATION. The Plan has authorized
grants of up to 25,000,000 shares of the Company's common stock or options to
management personnel. The options are exercisable at the rate of 20% per year
over a five-year period commencing on the effective date of the grant; however,
some optionees have received credit for periods of employment with the Company
and its predecessors and subsidiaries prior to the date the options were
granted. All options granted pursuant to the Plan will expire no later than ten
years from the date the option was granted.
A summary of the status of the Company's stock option plan as of December
31, 1997, 1996 and 1995, and changes during the years ending on those dates is
presented below:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------- ------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE EXERCISE
OPTIONS PRICE PRICE OPTIONS PRICE PRICE OPTIONS PRICE
--------- ------------- ----------- --------- ------------- ----------- --------- -------------
Outstanding--
beginning of
year........... 13,211,212 $5.00-$11.94 $ 6.69 12,326,087 $5.00-$ 8.00 $ 5.98 9,610,447 $5.00-$8.00
Granted........ 135,800 1$0.88-$12.00 $ 11.27 1,830,400 1$0.00-$11.94 $ 11.12 3,139,325 $8.00
Exercised...... (1,209,693) $5.00-$11.81 $ 6.96 (681,890) $5.00-$ 8.00 $ 5.36 (193,401) $5.00-$8.00
Forfeited...... (574,389) $5.00-$11.81 $ 9.22 (263,385) $5.00-$ 8.00 $ 7.69 (230,284) $5.00-$8.00
--------- --------- ---------
Outstanding--end
of the year.... 11,562,930 $5.00-$12.00 $ 6.58 13,211,212 $5.00-$11.94 $ 6.69 12,326,087 $5.00-$8.00
--------- --------- ---------
--------- --------- ---------
Exercisable--end
of the year.... 8,953,280 $5.00-$11.94 $ 5.73 8,707,528 $5.00-$ 8.00 $ 5.38 7,269,817 $5.00-$8.00
--------- --------- ---------
--------- --------- ---------
<CAPTION>
<S> <C>
WEIGHTED
AVERAGE
EXERCISE
PRICE
-----------
Outstanding--
beginning of
year........... $ 5.31
Granted........ $ 8.00
Exercised...... $ 5.19
Forfeited...... $ 6.28
Outstanding--end
of the year.... $ 5.98
Exercisable--end
of the year.... $ 5.18
</TABLE>
The weighted-average fair value per option for options granted in 1997, 1996
and 1995 was $4.45, $4.13 and $3.06, respectively.
The following table summarizes information about stock options outstanding
at December 31, 1997:
<TABLE>
<CAPTION>
NUMBER WEIGHTED WEIGHTED
RANGE OF OUTSTANDING AVERAGE REMAINING AVERAGE
EXERCISE PRICES AT 12/31/97 CONTRACTUAL LIFE EXERCISE PRICE
- --------------- ----------- ----------------------- ---------------
<S> <C> <C> <C>
$5.00-$5.44 7,104,260 4 $ 5.00
$7.00 125,400 6 $ 7.00
$8.00 2,711,210 8 $ 8.00
$10.00-$12.00 1,622,060 9 $ 11.12
-----------
11,562,930 6 $ 6.58
-----------
-----------
</TABLE>
SFAS No. 123 provides for a fair-value based method of accounting for
employee options and measures compensation expense using an option valuation
model that takes into account, as of the grant date, the exercise price and
expected life of the option, the current price of the underlying stock and its
52
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
16. COMMON STOCK (CONTINUED)
expected volatility, expected dividends on the stock, and the risk-free interest
rate for the expected term of the option. The Company has elected to continue
accounting for employee stock-based compensation under Accounting Principles
Board Opinion ("APB") No. 25 and related interpretations. Under APB No. 25,
because the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of SFAS No.
123. The fair value of these options was estimated at the date of grant using
the Black-Scholes option pricing model for options granted in 1997, 1996 and
1995. The following weighted-average assumptions were used for 1997, 1996 and
1995, respectively: risk-free interest rates of 6.65%, 6.36% and 6.34%; dividend
yields of 0.0%, 0.0% and 0.0%; volatility factors of the expected market price
of the Company's common stock of 27.70%, 20.83% and 22.59%; and a
weighted-average expected life of the option of six years. The estimated fair
value of options granted during 1997, 1996 and 1995 was $604, $7,560 and $9,592,
respectively.
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the option's vesting period. The Company's
pro forma information is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Pro forma net income (loss)....................................................... $(176,351) $ 5,738 $ (76,388)
Pro forma loss applicable to common shareholders.................................. $(241,424) $ (37,788) $(105,366)
Pro forma basic and diluted loss per common share................................. $ (1.87) $ (.29) $ (.93)
</TABLE>
The Company had reserved approximately 12,000,000 shares of the Company's
common stock or options for future grants in connection with the Plan at
December 31, 1997.
17. LOSS PER SHARE
Loss per share has been determined based on income (loss) before
extraordinary charge after preferred stock dividends, divided by the weighted
average number of common shares outstanding for all periods presented.
Options to purchase 11,562,930, 13,211,212, 12,326,087 shares of common
stock were outstanding at December 31, 1997, 1996 and 1995, respectively, but
were not included in the computation of diluted loss per share because the
effect of their inclusion would be antidilutive.
53
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
18. ACCUMULATED DEFICIT
The accumulated deficit of $929,011 at December 31, 1997 includes non-cash
expenses related to the accumulated amortization of intangible assets, the
excess of the purchase price over the net assets acquired and deferred financing
costs, the write-offs of the unamortized balance of deferred financing costs
associated with all previous financings, the restructuring and other costs and
the net provision on sales of businesses in the aggregate amount of
approximately $1,219,300 which is net of the non-cash income tax benefits
aggregating $155,000 through December 31, 1997.
19. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and the estimated fair values of the Company's
financial instruments for which it is practicable to estimate fair value are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
<S> <C> <C> <C> <C>
1997 1996
---------------------- ----------------------
<CAPTION>
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
10 5/8% Senior Notes............................................. $ -- $ -- $ 233,250 $ 260,950
10 1/4% Senior Notes............................................. 100,000 108,000 100,000 105,400
8 1/2% Senior Notes.............................................. 298,902 307,470 298,811 291,750
Acquisition Obligation........................................... 53,871 55,329 54,633 55,339
Senior Preferred Stock........................................... -- -- 98,266 107,500
Series B Preferred Stock......................................... 155,281 169,818 150,513 154,684
Series D Preferred Stock......................................... 194,495 210,500 193,950 196,000
Series E Preferred Stock......................................... 120,504 125,000 -- --
Interest Rate Swap Agreements.................................... 485 410 982 3,531
Purchased Interest Rate Cap Agreement............................ (43) -- (159) (2)
</TABLE>
The bracketed amounts above represent assets.
The fair values of the senior notes and preferred stocks were determined
based on the quoted market prices and the fair value of the acquisition
obligation was estimated using discounted cash flow analysis, based on current
incremental borrowing rates for similar types of borrowing arrangements. The
fair value of the interest rate swap agreements was determined using discounted
cash flow models.
For instruments including cash and cash equivalents, accounts receivable and
accounts payable, the carrying amount approximates fair value because of the
short maturity of these instruments. The fair value of floating-rate long-term
debt approximates carrying value because these instruments re-price frequently
at current market prices.
20. RETIREMENT PLANS
Substantially all of the Company's employees are eligible to participate in
defined contribution plans. The expense recognized for all of these plans was
approximately $6,300 in 1997, $5,400 in 1996 and $5,200 in 1995.
54
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
20. RETIREMENT PLANS (CONTINUED)
In addition, the employees at PRIMEDIA Magazines and the non-union employees
at THE DAILY RACING FORM are eligible to participate in a non-contributory
defined benefit pension plan ("Pension Plan"). The benefits to be paid under the
Pension Plan are based on years of service and compensation amounts for the
highest consecutive five years of service in the most current ten years. The
Pension Plan is funded by means of contributions by the Company to the plan's
trust. The pension funding policy is consistent with the funding requirements of
U.S. Federal and other governmental laws and regulations. Plan assets consist
primarily of fixed income, equity and other short-term investments. The
components of the net periodic pension cost of the Pension Plan for the years
ended December 31, 1997, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Service cost........................................................................ $ 1,387 $ 1,203 $ 755
Interest cost....................................................................... 1,073 769 581
Actual investment gain on plan assets............................................... (1,763) (610) (812)
Net amortization and deferral....................................................... 945 462 774
--------- --------- ---------
Net periodic pension cost........................................................... $ 1,642 $ 1,824 $ 1,298
--------- --------- ---------
--------- --------- ---------
</TABLE>
The following is a reconciliation of the funded status of the Pension Plan:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested.............................................................. $ (10,737) $ (6,342)
Non-vested.......................................................... (851) (617)
---------- ----------
Accumulated benefit obligation........................................ (11,588) (6,959)
Additional liability based on projected compensation levels........... (6,448) (5,118)
---------- ----------
Projected benefit obligation.......................................... (18,036) (12,077)
Plan assets at fair value............................................. 13,391 5,473
---------- ----------
Projected benefit obligation in excess of plan assets................. (4,645) (6,604)
Unrecognized net loss (gain).......................................... (1,440) 172
Obligation recorded at acquisition date............................... 2,587 2,861
---------- ----------
Accrued pension cost.................................................. $ (3,498) $ (3,571)
---------- ----------
---------- ----------
</TABLE>
The obligation recorded at the acquisition date of PRIMEDIA Magazines and
THE DAILY RACING FORM is the excess of the projected benefit obligation over the
plan assets at the date of acquisition which is included in other non-current
liabilities. The weighted average discount rates used in determining the
actuarial present value of the projected benefit obligation were 7.0% and 7.5%
for 1997 and 1996, respectively. The weighted average rate of compensation
increases used was 4.0% for 1997 and 1996. The weighted average expected
long-term rate of return on plan assets was 8.5% for 1997 and 1996 (see Note
25).
55
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
21. COMMITMENTS AND CONTINGENCIES
COMMITMENTS. Total rent expense under operating leases was $36,844, $31,561
and $24,409 for the years ended December 31, 1997, 1996 and 1995, respectively.
Certain leases are subject to escalation clauses and certain leases contain
renewal options. Minimum rental commitments under noncancelable operating leases
are approximately as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1998............................................................... $ 26,868
1999............................................................... 22,759
2000............................................................... 20,218
2001............................................................... 15,365
2002............................................................... 12,504
Thereafter......................................................... 38,579
--------
$ 136,293
--------
--------
</TABLE>
Future minimum lease payments under capital leases (see Note 9) are
approximately as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1998............................................................... $ 3,102
1999............................................................... 3,663
2000............................................................... 3,663
2001............................................................... 3,663
2002............................................................... 3,663
Thereafter......................................................... 23,379
-------
41,133
Less: amount representing interest................................. 15,760
-------
Present value of net minimum lease payments........................ 25,373
Less: current portion.............................................. 1,373
-------
Long-term obligations (included in other non-current
liabilities)..................................................... $ 24,000
-------
-------
</TABLE>
CONTINGENCIES. The Company is involved in ordinary and routine litigation
incidental to its business. In the opinion of management, there is no pending
legal proceeding that would have a material adverse affect on the consolidated
financial statements of the Company.
At December 31, 1997, the Company had letters of credit outstanding of
approximately $3,100.
56
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
22. RELATED PARTY TRANSACTIONS
During each of the years ended December 31, 1997, 1996 and 1995, the Company
paid $1,000 in administrative and other fees to Kohlberg Kravis Roberts & Co.
("KKR"), an affiliated party. The Company paid an aggregate of $180, in
directors' fees to certain partners of KKR during the years ended December 31,
1997, 1996 and 1995.
On March 1, 1995, 3,125,000 shares of common stock were issued to a
partnership affiliated with KKR at $8.00 per share which was the fair value per
share at such date. On March 1, 1995, pursuant to the related certificate of
designations, 2,500 shares of Series C Preferred Stock ("Old Preferred Stock")
were authorized for issuance and 1,000 shares were issued to partnerships
affiliated with KKR at $50,000 per share, which was the liquidation value per
share at such date. The proceeds from both issuances were used to pay down the
borrowings under the Revolving Credit Agreement. On August 3, 1995, the Company
redeemed all 1,054 shares then outstanding (which included dividends accrued
through redemption date) of the Old Preferred Stock at $50,000 per share for a
total of $52,691. This transaction was financed with borrowings under the
Revolving Credit Agreement (see Notes 13 and 25).
23. UNAUDITED QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1997:
Sales, net...................................... $352,291 $368,762 $368,944 $397,598 $1,487,595
Operating income (loss)......................... 20,478 39,518 (112,326) 31,537 (20,793)
Income (loss) before extraordinary charge....... (12,546) 3,700 (147,674) (919) (157,439)
Extraordinary charge--extinguishment of debt.... (1,554) (13,847) -- -- (15,401)
Net loss........................................ (14,100) (10,147) (147,674) (919) (172,840)
Loss applicable to common shareholders.......... (26,426) (22,602) (160,130) (28,755) (237,913)
Basic and diluted loss applicable to common
shareholders per common share:
Loss before extraordinary charge.............. $(.19) $(.07) $(1.24) $(.22) $(1.72)
Net loss...................................... $(.20) $(.18) $(1.24) $(.22) $(1.84)
Basic and diluted common shares outstanding..... 129,114,344 129,289,307 129,411,579 129,404,368 129,304,900
</TABLE>
57
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
23. UNAUDITED QUARTERLY FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1996:
Sales, net...................................... $314,953 $335,680 $344,418 $379,398 $1,374,449
Operating income................................ 6,985 23,280 18,519 37,117 85,901
Income (loss) before extraordinary charge....... (20,740) (7,066) (11,895) 57,298 17,597
Extraordinary charge--extinguishment of debt.... -- (7,572) -- (1,981) (9,553)
Net income (loss)............................... (20,740) (14,638) (11,895) 55,317 8,044
Income (loss) applicable to common
shareholders.................................. (27,584) (27,041) (23,973) 43,116 (35,482)
Basic income (loss) applicable to common
shareholders per common share:
Income (loss) before extraordinary charge..... $(.21) $(.15) $(.19) $.35 $(.20)
Net income (loss)............................. $(.21) $(.21) $(.19) $.33 $(.27)
Diluted income (loss) applicable to common
shareholders per common share:
Income (loss) before extraordinary charge..... $(.21) $(.15) $(.19) $.34 $(.20)
Net income (loss)............................. $(.21) $(.21) $(.19) $.32 $(.27)
Basic common shares outstanding................. 128,502,847 128,787,528 128,874,002 128,961,695 128,781,518
Diluted common shares outstanding 128,502,847 128,787,528 128,874,002 133,866,122 128,781,518
</TABLE>
The sum of the above quarterly per share amounts may not equal reported
year-to-date per share amounts due to rounding.
During the first quarter of 1997, the Company purchased, in aggregate
$20,850 of the 10 5/8% Senior Notes from various brokers on the open market. The
premium paid on the purchase and the write-off of the related deferred financing
fees totaled $1,554. In the second quarter, the Company redeemed the remaining
principal of the 10 5/8% Senior Notes. The aggregate premium paid and the
write-off of the related deferred financing fees totaled $13,847. During the
third quarter of 1997, the Company recorded a provision for loss on the sales of
businesses and other in the amount of $138,640.
As a result of previous bank refinancings, the Company wrote off $7,572 of
unamortized deferred financings costs in the second quarter of 1996 and $1,981
of unamortized deferred financing costs in the fourth quarter of 1996. In
addition, in the fourth quarter of 1996, the Company recognized an income tax
benefit of $53,300.
58
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
24. BUSINESS SEGMENT INFORMATION
The Company's operations have been classified into three business segments:
specialty magazines, education and information (see Note 1). Summarized
financial information by business segment as of December 31, 1997, 1996 and 1995
and for each of the years then ended is set forth below:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
SALES, NET:
Specialty Magazines............................... $ 754,410 $ 684,341 $ 452,373
Education......................................... 379,552 376,217 330,414
Information....................................... 353,633 313,891 263,542
------------ ------------ ------------
Total............................................. $ 1,487,595 $ 1,374,449 $ 1,046,329
------------ ------------ ------------
------------ ------------ ------------
OPERATING INCOME (LOSS):
Specialty Magazines............................... $ 71,580 $ 59,693 $ 32,169
Education......................................... 12,089 15,011 (32,024)
Information....................................... (78,818) 33,473 (8,683)
Corporate......................................... (25,644) (22,276) (17,737)
------------ ------------ ------------
Total............................................. $ (20,793) $ 85,901 $ (26,275)
------------ ------------ ------------
------------ ------------ ------------
TOTAL ASSETS:
Specialty Magazines............................... $ 972,550 $ 908,374 $ 723,711
Education......................................... 911,299 939,947 547,587
Information....................................... 435,153 531,771 499,418
Corporate......................................... 166,988 172,123 110,700
------------ ------------ ------------
Total............................................. $ 2,485,990 $ 2,552,215 $ 1,881,416
------------ ------------ ------------
------------ ------------ ------------
DEPRECIATION, AMORTIZATION AND OTHER CHARGES:
Specialty Magazines............................... $ 86,364 $ 76,281 $ 58,100
Education......................................... 68,275 64,228 107,284
Information....................................... 171,138 53,091 79,435
Corporate......................................... 99 764 706
------------ ------------ ------------
Total............................................. $ 325,876 $ 194,364 $ 245,525
------------ ------------ ------------
------------ ------------ ------------
CAPITAL EXPENDITURES, NET:
Specialty Magazines............................... $ 9,353 $ 8,252 $ 5,724
Education......................................... 16,258 14,460 10,750
Information....................................... 3,757 4,343 4,516
Corporate......................................... 1,740 1,735 2,424
------------ ------------ ------------
Total............................................. $ 31,108 $ 28,790 $ 23,414
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
- ------------------------
There were no significant intersegment sales or transfers during 1997, 1996
and 1995. Operating income (loss) by business segment excludes interest income
and interest expense. Corporate assets consist
59
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
24. BUSINESS SEGMENT INFORMATION (CONTINUED)
primarily of cash, receivables, property and equipment and the net deferred
income tax asset. Depreciation, amortization and other charges includes the
amortization of deferred financing and organizational costs, the net provision
for loss on sales of businesses of $138,640 and $35,447 in 1997 and 1995,
respectively, and provision for restructuring and other costs of $14,667 in
1995.
25. SUBSEQUENT EVENTS
On January 8, 1998, the Company entered into a Stock Purchase Agreement
pursuant to which it will acquire the Cowles Enthusiast Media and Cowles
Business Media divisions of Cowles Media Company from McClatchy Newspapers, Inc.
("McClatchy") for approximately $200,000. The transaction is subject to the
completion of McClatchy's purchase of Cowles Media Company, which is expected to
close by March 31, 1998.
In January 1998, the Company elected to terminate its defined benefit
pension plan (see Note 20) effective March 31, 1998. In connection with this
termination, the Company froze benefit accruals effective December 31, 1997. In
the opinion of the Company's management, the plan termination is adequately
accrued for and will not have a material impact on the Company's consolidated
financial statements. Plan participants will be eligible to participate in the
Company's defined contribution plans.
On February 5, 1998, KKR 1996 Fund L.P., a Delaware limited partnership
affiliated with KKR (the "KKR Fund"), executed an agreement with the Company
pursuant to which the KKR Fund will pay $200,000 for 16,666,667 newly issued
shares of common stock from the Company (the "KKR Fund Investment"). It is
expected that the KKR Fund Investment will be consummated in March 1998.
On February 17, 1998, the Company exchanged the 1,250,000 shares of its
Series E Preferred Stock for 1,250,000 shares of $9.20 Series F Exchangeable
Preferred Stock ("Series F Preferred Stock"). The terms of the Series F
Preferred Stock are the same as the Series E Preferred Stock except that the
Series F Preferred Stock has been registered under the Securities Act of 1933.
On February 17, 1998, the Company completed a private offering of 2,500,000
shares of $8.625 Series G Exchangeable Preferred Stock for $250,000 and $250,000
principal amount of 7 5/8% Senior Notes Due 2008. The net proceeds of these
offerings will be used to redeem all of the Company's outstanding Series B
Preferred Stock at $105.80 per share plus accrued and unpaid dividends and to
reduce outstanding bank borrowings.
60
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None
PART III
Items 10, 11, 12 and 13 are omitted, except for information as to Executive
Officers set forth in Part I, Item 1.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Documents filed as part of this report:
1. Index to Financial Statements
See Table of Contents to Financial Statements included in Part II, Item 8
of this report.
2. Index to Financial Statement Schedules
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
PRIMEDIA Inc. and Subsidiaries
For the Year Ended December 31, 1997.............................................................. S-1
For the Year Ended December 31, 1996.............................................................. S-2
For the Year Ended December 31, 1995.............................................................. S-3
Independent Auditors' Report on Schedules--Deloitte & Touche LLP.................................... S-4
</TABLE>
All schedules, except those set forth above, have been omitted since the
information required to be submitted has been included in the Consolidated
Financial Statements or Notes thereto or has been omitted as not applicable or
not required.
(b)--Reports on Form 8-K
<TABLE>
<S> <C> <C>
--The Company has not filed any reports on Form 8-K during the fourth
quarter of 1997.
</TABLE>
(c)--Exhibits
<TABLE>
<S> <C> <C>
3.1 --Certificate of Incorporation of K-III. (7)
3.2 --Certificate of Amendment to Certificate of Incorporation of K-III
(changing name to PRIMEDIA Inc.) (*)
3.3 --Certificate of Designations of the Senior Preferred Stock. (2)
3.4 --Certificate of Designations of the Series B Preferred Stock. (3)
3.5 --Certificate of Designations of the Series C Preferred Stock. (9)
3.6 --Amended and Restated By-laws of K-III. (7)
3.7 --Certificate of Incorporation of K-III Prime Corporation. (2)
3.8 --By-laws of K-III Prime Corporation. (2)
3.9 --Certificate of Incorporation of Intertec Publishing Corporation. (2)
3.10 --Amended and Restated By-laws of Intertec Publishing Corporation. (2)
3.11 --Certificate of Incorporation of Newbridge Communications, Inc. (2)
</TABLE>
61
<PAGE>
<TABLE>
<S> <C> <C>
3.12 --Certificate of Amendment to Certificate of Incorporation of Newbridge
Communications, Inc. (changing name to Films for the Humanities and
Sciences, Inc.) (*)
3.13 --By-laws of Newbridge Communications, Inc. (2)
3.14 --Certificate of Incorporation of K-III Directory Corporation (1)
3.15 --Certificate of Amendment to Certificate of Incorporation of K-III
Directory Corporation (changing name to PRIMEDIA Information Inc.) (*)
3.16 --By-laws of K-III Directory Corporation (1)
3.17 --Certificate of Incorporation of R.E.R. Publishing Corporation. (2)
3.18 --Amended and Restated By-laws of R.E.R. Publishing Corporation. (2)
3.19 --Certificate of Incorporation of Intermodal Publishing Company, Ltd. (2)
3.20 --Amended and Restated By-laws of Intermodal Publishing Company, Ltd. (2)
3.21 --Certificate of Incorporation of Weekly Reader Corporation. (2)
3.22 --By-laws of Weekly Reader Corporation. (2)
3.23 --Certificate of Incorporation of K-III Reference Corporation. (9)
3.24 --Certificate of Amendment to Certificate of Incorporation of K-III
Reference Corporation (changing name to PRIMEDIA Reference Inc.) (*)
3.25 --By-laws of K-III Reference Corporation. (2)
3.26 --Certificate of Amendment to Certificate of Incorporation of Funk &
Wagnalls Corporation (changing name to K-III Reference Corporation) (12)
3.27 --Certificate of Incorporation of Funk & Wagnalls Yearbook Corp. (2)
3.28 --By-laws of Funk & Wagnalls Yearbook Corp. (2)
3.29 --Certificate of Incorporation of Daily Racing Form, Inc. (2)
3.30 --By-laws of Daily Racing Form, Inc. (2)
3.31 --Certificate of Incorporation of DRF Finance, Inc. (2)
3.32 --By-laws of DRF Finance, Inc. (2)
3.33 --Certificate of Incorporation of K-III Magazine Corporation. (2)
3.34 --Certificate of Amendment to Certificate of Incorporation of K-III Magazine
Corporation (changing name to PRIMEDIA Magazines Inc.) (*)
3.35 --By-laws of K-III Magazine Corporation. (2)
3.36 --Certificate of Incorporation of K-III Magazine Finance Corporation. (2)
3.37 --Certificate of Amendment to Certificate of Incorporation of K-III Magazine
Finance Corporation (changing name to PRIMEDIA Magazines Finance Inc.) (*)
3.38 --By-laws of K-III Magazine Finance Corporation. (2)
3.39 --Certificate of Incorporation of Musical America Publishing, Inc. (1)
3.40 --By-laws of Musical America Publishing, Inc. (1)
3.41 --Certificate of Incorporation of K-III Holdings Corporation III. (2)
3.42 --Certificate of Amendment to Certificate of Incorporation of K-III Holdings
Corporation III (changing name to PRIMEDIA Holdings III Inc.) (*)
3.43 --By-laws of K-III Holdings Corporation III. (2)
3.44 --Certificate of Incorporation of Nelson Information, Inc. (5)
3.45 --Certificate of Amendment to Certificate of Incorporation of Nelson
Publications, Inc. (changing name to Nelson Information, Inc.) (12)
3.46 --By-laws of Nelson Information, Inc. (5)
3.47 --Certificate of Incorporation of K-III HPC, Inc. (5)
</TABLE>
62
<PAGE>
<TABLE>
<S> <C> <C>
3.48 --By-laws of K-III HPC, Inc. (5)
3.49 --Certificate of Incorporation of Haas Publishing Companies, Inc. (5)
3.50 --By-laws of Haas Publishing Companies, Inc. (5)
3.51 --Certificate of Incorporation of Lifetime Learning Systems, Inc. (8)
3.52 --By-laws of Lifetime Learning Systems, Inc. (8)
3.53 --Certificate of Incorporation of Channel One Communications Corporation.
(8)
3.54 --By-laws of Channel One Communications Corporation. (8)
3.55 --Certificate of Incorporation of Bacon's Information, Inc. (9)
3.56 --By-laws of Bacon's Information, Inc. (9)
3.57 --Certificate of Incorporation of Intertec Market Reports, Inc. (9)
3.58 --By-laws of Intertec Market Reports, Inc. (8)
3.59 --Certificate of Incorporation of Intertec Presentations, Inc. (9)
3.60 --By-laws of Intertec Presentations, Inc. (8)
3.61 --Certificate of Incorporation of Argus Publishers Corporation (9)
3.62 --By-laws of Argus Publishers Corporation (9)
3.63 --Certificate of Incorporation of PJS Publications, Inc. (8)
3.64 --Certificate of Amendment to Certificate of Incorporation of PJS
Publications, Inc. (changing name to PRIMEDIA Special Interest
Publications Inc.) (*)
3.65 --By-laws of PJS Publications, Inc. (8)
3.66 --Certificate of Incorporation of Symbol of Excellence Publishers, Inc. (8)
3.67 --By-laws of Symbol of Excellence Publishers, Inc. (8)
3.68 --Certificate of Incorporation of American Heat Video Productions, Inc. (12)
3.69 --By-laws of American Heat Video Productions, Inc. (12)
3.70 --Certificate of Incorporation of ASTN, Inc. (12)
3.71 --By-laws of ASTN, Inc. (12)
3.72 --Certificate of Incorporation of A WEP Company (12)
3.73 --By-laws of A WEP Company (12)
3.74 --Certificate of Incorporation of Bankers Consulting Company (12)
3.75 --By-laws of Bankers Consulting Company (12)
3.76 --Certificate of Incorporation of Data Book, Inc. (12)
3.77 --By-laws of Data Book, Inc. (12)
3.78 --Certificate of Incorporation of Excellence in Training Corporation (12)
3.79 --By-laws of Excellence in Training Corporation (12)
3.80 --Certificate of Incorporation of Gareth Stevens, Inc. (12)
3.81 --By-laws of Gareth Stevens, Inc. (12)
3.82 --Certificate of Incorporation of IDTN Leasing Corporation (12)
3.83 --By-laws of IDTN Leasing Corporation (12)
3.84 --Certificate of Incorporation of Industrial Training Systems Corporation
(12)
3.85 --By-laws of Industrial Training Systems Corporation (12)
3.86 --Certificate of Incorporation of Law Enforcement Television Network, Inc.
(TX) (12)
3.87 --By-laws of Law Enforcement Television Network, Inc. (TX) (12)
3.88 --Certificate of Incorporation of Lockert Jackson & Associates, Inc. (12)
3.89 --By-laws of Lockert Jackson & Associates, Inc. (12)
</TABLE>
63
<PAGE>
<TABLE>
<S> <C> <C>
3.90 --Certificate of Incorporation of Straight Down, Inc. (12)
3.91 --Agreement of shareholders of Straight Down, Inc. (12)
3.92 --Certificate of Incorporation of Tel-A-Train, Inc. (12)
3.93 --By-laws of Tel-A-Train, Inc. (12)
3.94 --Certificate of Incorporation of TI-IN Acquisition Corporation (12)
3.95 --By-laws of TI-IN Acquisition Corporation (12)
3.96 --Certificate of Incorporation of Westcott Communications, Inc. (12)
3.97 --Certificate of Amendment to Certificate of Incorporation of Westcott
Communications, Inc. (changing name to PRIMEDIA Workplace Learning, Inc.)
(*)
3.98 --By-laws of Westcott Communications, Inc. (12)
3.99 --Certificate of Incorporation of Westcott Communications Michigan, Inc.
(12)
3.100 --By-laws of Westcott Communications Michigan, Inc. (12)
3.101 --Certificate of Incorporation of Westcott ECI, Inc. (12)
3.102 --By-laws of Westcott ECI, Inc. (12)
3.103 --Certificate of Incorporation of Western Empire Publications, Inc. (12)
3.104 --By-laws of Western Empire Publications, Inc. (12)
3.105 --Certificate of Incorporation of McMullen Argus Publishing, Inc. (12)
3.106 --By-laws of McMullen Argus Publishing, Inc. (12)
3.107 --Certificate of Incorporation of The Electronics Source Book, Inc. (12)
3.108 --By-laws of The Electronics Source Book, Inc. (12)
3.109 --Certificate of Incorporation of The Apartment Guide of Nashville, Inc. (*)
3.110 --By-laws of The Apartment Guide of Nashville, Inc. (*)
3.111 --Certificate of Incorporation of Cardinal Business Media, Inc. (*)
3.112 --By-laws of Cardinal Business Media, Inc. (*)
3.113 --Certificate of Incorporation of Cardinal Business Media Holdings, Inc. (*)
3.114 --By-laws of Cardinal Business Media Holdings, Inc. (*)
3.115 --Certificate of Formation of Cover Concepts Marketing Services, LLC (*)
3.116 --Limited Liability Company Agreement of Cover Concepts Marketing Services,
LLC (*)
3.117 --Certificate of Incorporation of CSK Publishing Company Incorporated (*)
3.118 --By-laws of CSK Publishing Company Incorporated (*)
3.119 --Certificate of Incorporation of GO LO Entertainment, Inc. (*)
3.120 --By-laws of GO LO Entertainment, Inc. (*)
3.121 --Certificate of Incorporation of Guinn Communications, Inc. (*)
3.122 --By-laws of Guinn Communications, Inc. (*)
3.123 --Certificate of Incorporation of Health & Sciences Network, Inc. (*)
3.124 --By-laws of Health & Sciences Network, Inc. (*)
3.125 --Certificate of Incorporation of IntelliChoice, Inc. (*)
3.126 --By-laws of IntelliChoice, Inc. (*)
3.127 --Certificate of Incorporation of Little Rock Apartment Guide, Inc. (*)
3.128 --By-laws of Little Rock Apartment Guide, Inc. (*)
3.129 --Certificate of Incorporation of Memphis Apartment Guide, Inc. (*)
3.130 --By-laws of Memphis Apartment Guide, Inc. (*)
</TABLE>
64
<PAGE>
<TABLE>
<S> <C> <C>
3.131 --Certificate of Incorporation of Low Rider Publishing Group, Inc. (*)
3.132 --By-laws of Low Rider Publishing Group, Inc. (*)
3.133 --Certificate of Incorporation of Pictorial, Inc. (*)
3.134 --By-laws of Pictorial, Inc. (*)
3.135 --Certificate of Incorporation of Plaza Communications, Inc. (*)
3.136 --By-laws of Plaza Communications, Inc. (*)
3.137 --Certificate of Incorporation of QWIZ, Inc. (*)
3.138 --By-laws of QWIZ, Inc. (*)
3.139 --Certificate of Incorporation of Bowhunter Magazine, Inc. (*)
3.140 --By-laws of Bowhunter Magazine, Inc. (*)
3.141 --Certificate of Incorporation of Canoe & Kayak, Inc. (*)
3.142 --By-laws of Canoe & Kayak, Inc. (*)
3.143 --Certificate of Incorporation of Climbing, Inc. (*)
3.144 --By laws of Climbing, Inc. (*)
3.145 --Certificate of Incorporation of Cowles Business Media, Inc. (*)
3.146 --By-laws of Cowles Business Media, Inc. (*)
3.147 --Certificate of Incorporation of Cowles Enthusiast Media, Inc. (*)
3.148 --By-laws of Cowles Enthusiast Media, Inc. (*)
3.149 --Certificate of Incorporation of Cowles History Group, Inc. (*)
3.150 --By-laws of Cowles History Group, Inc. (*)
3.151 --Certificate of Incorporation of Cowles/Simba Information, Inc. (*)
3.152 --By-laws of Cowles/Simba Information, Inc. (*)
3.153 --Certificate of Incorporation of Cumberland Publishing, Inc. (*)
3.154 --By-laws of Cumberland Publishing, Inc. (*)
3.155 --Certificate of Incorporation of Horse & Rider, Inc. (*)
3.156 --By-laws of Horse & Rider, Inc. (*)
3.157 --Certificate of Incorporation of Kitplanes Acquisition Company (*)
3.158 --By-laws of Kitplanes Acquisition Company (*)
3.159 --Certificate of Incorporation of RetailVision, Inc. (*)
3.160 --By-laws of RetailVision, Inc. (*)
3.161 --Certificate of Incorporation of Southwest Art, Inc. (*)
3.162 --By-laws of Southwest Art, Inc. (*)
3.163 --Certificate of Incorporation of Vegetarian Times, Inc. (*)
3.164 --By-laws of Vegetarian Times, Inc. (*)
3.165 --Certificate of Incorporation of The Virtual Flyshop, Inc. (*)
3.166 --By-laws of The Virtual Flyshop, Inc. (*)
4.1 --10 5/8% Senior Note Indenture (including form of note and form of
guarantee). (1)
4.2 --Form of 11 1/2% Subordinated Debenture Indenture,
(including form of debenture). (1)
4.3 --Form of Class B Subordinated Debenture Indenture
(including form of debenture). (2)
4.4 --10 1/4% Senior Note Indenture (including form of note and form of
guarantee). (8)
4.5 --8 1/2% Senior Note Indenture (including forms of note and guarantee). (9)
4.6 --Form of Class D Subordinated Debenture Indenture. (11)
</TABLE>
65
<PAGE>
<TABLE>
<S> <C> <C>
4.7 --Form of 9.20% Subordinated Debenture Indenture (including form of note).
(13)
4.8 --Form of Class G Subordinated Debenture (including form of debenture). (*)
4.9 --7 5/8% Senior Note Indenture (including form of note and form of
guarantee). (*)
10.1 --Non-Competition Agreement, dated as of June 17, 1991, between News America
Holdings Incorporated, K-III Holdings Corporation III, K-III Magazines and
Daily Racing Form. (2)
10.2 --Agreement and Plan of Merger, dated as of April 22, 1996, by and among the
Company, K-III Prime Corporation, Acquiror Sub and Westcott. (10)
10.3 --$250,000 Credit Facility with The Chase Manhattan Bank, The Bank of New
York, Bankers Trust Company and The Bank of Nova Scotia, as agents
(including forms of Guaranty and Contribution Agreements). (12)
10.4 --$1,250,000 Credit Facility with The Chase Manhattan Bank, The Bank of New
York, Bankers Trust Company and the Bank of Nova Scotia,
as agents (including forms of Guaranty and Contribution Agreements). (12)
10.5 --$150,000 Credit Facility with The Chase Manhattan Bank, The Bank of New
York, Bankers Trust Company and The Bank of Nova Scotia, as agents
(including forms of Guaranty and Contribution Agreements) (*)
+10.6 --Form of Amended and Restated K-III 1992 Stock Purchase and Option Plan.
(7)
+10.7 --Amendment No. 1 to the 1992 Stock Purchase and Option Plan Amended and
Restated as of March 5, 1997. (12)
+10.8 --Form of Common Stock Purchase Agreement between K-III and senior
management. (2)
+10.9 --Form of Common Stock Purchase Agreement between K-III and various
purchasers. (2)
+10.10 --Form of Non-Qualified Stock Option Agreement between K-III and various
employees. (2)
10.11 --Form of Common Stock Purchase Agreement between K-III and senior
management. (2)
10.12 --Form of Common Stock Purchase Agreement between K-III and various
purchasers. (2)
+10.13 --Form of Non-Qualified Stock Option Agreement between K-III and various
employees. (2)
10.14 --Amended Registration Rights Agreement dated as of May 13, 1992 among
K-III, MA Associates, L.P., FP Associates, L.P., Magazine Associates,
L.P., Publishing Associates, L.P. and KKR Partners II, L.P. with respect
to common stock of K-III. (1)
10.15 --Registration Rights Agreement dated as of September 30, 1994 among K-III,
Channel One Associates, L.P. and KKR Partners II, L.P. with respect to
common stock of K-III. (8)
10.16 --Registration Rights Agreement dated as of March 1, 1995 among K-III and
Channel One Associates, L.P. with respect to common stock of K-III. (8)
+10.17 --Free Cash Flow Long-Term Plan. (1)
+10.18 --Executive Incentive Compensation Plan. (8)
+10.19 --Pension Plan. (1)
+10.20 --1995 Restoration Plan. (8)
+10.21 --Form of K-III Communications Short Term Senior Executive
Non-Discretionary Plan. (7)
</TABLE>
66
<PAGE>
<TABLE>
<S> <C> <C>
+10.22 --Form of K-III Communications Short Term Senior Executive Performance Plan.
(7)
+10.23 --Form of K-III Communications Corporation Directors' Deferred Compensation
Plan. (12)
+10.24 --Agreement, dated as of December 24, 1996, between K-III Communications
Corporation and Harry A. McQuillen (12)
+10.25 --Agreement, dated as of December 24, 1996, between K-III Communications
Corporation and Jack L. Farnsworth (12)
21 --Subsidiaries of K-III. (*)
27.1 --1997 Financial Data Schedule (*)
27.2 --1995 and 1996 Financial Data Schedule (*)
</TABLE>
- ------------------------
(1) Incorporated by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1992. File No. 1-11106.
(2) Incorporated by reference to K-III Communications Corporation's Registration
Statement on Form S-1, File No. 33-46116.
(3) Incorporated by reference to K-III Communications Corporation's Registration
Statement on Form S-1, File No. 33-60786.
(4) Incorporated by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1993. File No. 1-11106.
(5) Incorporated by reference to K-III Communications Corporation's Registration
Statement on Form S-1, File No. 33-77520.
(6) Incorporated by reference to K-III Communications Corporation's Current
Report on Form 8-K dated September 30, 1994.
(7) Incorporated by reference to K-III Communications Corporation's Registration
Statement on Form S-1, File No. 33-96516.
(8) Incorporated by reference to K-III Communications Corporation Annual Report
on Form 10-K for the year ended December 31, 1994, File No. 1-11106.
(9) Incorporated by reference to K-III Communications Corporation's Form 10-K
for the year ended December 31, 1995, File No. 1-11106.
(10) Incorporated by reference to K-III Communications Corporation's Form 10-Q
for the quarter ended March 31, 1996.
(11) Incorporated by reference to K-III Communications Corporation's
Registration Statement on Form S-4, File No. 333-3691.
(12) Incorporated by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1996, File No. 1-11106.
(13) Incorporated by reference to K-III Communications Corporation's
Registration Statement on Form S-4, File No. 333-38451.
(*) Filed herewith.
+ Executive contract or compensation plan or arrangement.
67
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on March 30, 1998.
PRIMEDIA INC.
By /S/ BEVERLY C. CHELL
...................................
(Beverly C. Chell)
VICE CHAIRMAN AND SECRETARY
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
in the capacities indicated on March 30, 1998.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------------- ------------------------------------------------------------
<S> <C>
/s/ WILLIAM F. REILLY Chairman, Chief Executive Officer and Director (Principal
................................................... Executive Officer)
(William F. Reilly)
/s/ CHARLES G. MCCURDY
</TABLE>
<TABLE>
<S> <C>
(Charles G. McCurdy) President and Director (Principal Financial Officer)
/s/ BEVERLY C. CHELL
</TABLE>
<TABLE>
<S> <C>
(Beverly C. Chell) Vice Chairman, Secretary and Director
/s/ MEYER FELDBERG Director
...................................................
(Meyer Feldberg)
/s/ PERRY GOLKIN Director
...................................................
(Perry Golkin)
/s/ HENRY KRAVIS Director
...................................................
(Henry Kravis)
/s/ GEORGE R. ROBERTS Director
...................................................
(George R. Roberts)
/s/ MICHAEL T. TOKARZ Director
...................................................
(Michael T. Tokarz)
/s/ CURTIS A. THOMPSON Vice President and Controller (Principal Accounting Officer)
...................................................
(Curtis A. Thompson)
</TABLE>
68
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on March 30, 1998.
The Apartment Guide of Nashville, Inc.
Argus Publishers Corporation
American Heat Video Productions, Inc.
ASTN, Inc.
A WEP Company
Bacon's Information, Inc.
Bankers Consulting Company
Bowhunter Magazine, Inc.
Canoe & Kayak, Inc.
Cardinal Business Media, Inc.
Cardinal Business Media Holdings, Inc.
Channel One Communications Corp.
Climbing, Inc.
Cover Concepts Marketing Services, LLC
Cowles Business Media, Inc.
Cowles Enthusiast Media, Inc.
Cowles History Group, Inc.
Cowles/Simba Information, Inc.
CSK Publishing Company Incorporated
Cumberland Publishing, Inc.
DRF Finance, Inc.
Daily Racing Form, Inc.
Data Book, Inc.
The Electronics Source Book, Inc.
Excellence in Training Corporation
Films for the Humanities & Sciences, Inc.
Funk & Wagnalls Yearbook Corp.
Gareth Stevens, Inc.
GO LO Entertainment, Inc.
Guinn Communications, Inc.
Haas Publishing Companies, Inc.
Health & Sciences Network, Inc.
Horse & Rider, Inc.
Intermodal Publishing Company, Ltd.
IDTN Leasing Corporation
Industrial Training Systems Corporation
IntelliChoice, Inc.
Intertec Market Reports, Inc.
Intertec Presentations, Inc.
Intertec Publishing Corporation
K-III HPC, Inc.
K-III Prime Corporation
Kitplanes Acquisition Company
Law Enforcement Television Network, Inc.
Lifetime Learning Systems, Inc.
Little Rock Apartment Guide, Inc.
Lockert Jackson & Associates, Inc.
Low Rider Publishing Group, Inc.
McMullen Argus Publishing, Inc.
Memphis Apartment Guide, Inc.
Musical America Publishing, Inc.
Nelson Information, Inc.
Pictorial, Inc.
Plaza Communications, Inc.
PRIMEDIA Holdings III Inc.
PRIMEDIA Information Inc.
PRIMEDIA Magazines Inc.
PRIMEDIA Magazines Finance Inc.
PRIMEDIA Reference Inc.
PRIMEDIA Special Interest Publications Inc.
PRIMEDIA Workplace Learning, Inc.
QWIZ, Inc.
R.E.R. Publishing Corporation
RetailVision, Inc.
Southwest Art, Inc.
Straight Down, Inc.
Symbol of Excellence Publishers, Inc.
Tel-A-Train, Inc.
The Virtual Flyshop, Inc.
TI-IN Acquisition Corporation
Vegetarian Times, Inc.
Weekly Reader Corporation
Westcott Communications Michigan, Inc.
Westcott ECI, Inc.
Western Empire Publications, Inc.
69
<PAGE>
<TABLE>
<S> <C>
By: /s/ BEVERLY C. CHELL
--------------------------------------
(Beverly C. Chell)
VICE CHAIRMAN AND SECRETARY
</TABLE>
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
in the capacities indicated on March 30, 1998.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------------- ------------------------------------------------------------
<S> <C>
/s/ WILLIAM F. REILLY Chairman and Director (Principal Executive Officer)
...................................................
(William F. Reilly)
/s/ CHARLES G. MCCURDY Vice Chairman, Chief Financial Officer and Director
................................................... (Principal Financial Officer)
(Charles G. McCurdy)
/s/ BEVERLY C. CHELL Vice Chairman, Secretary and Director
...................................................
(Beverly C. Chell)
/s/ CURTIS A. THOMPSON Vice President (Principal Accounting Officer)
...................................................
(Curtis A. Thompson)
</TABLE>
70
<PAGE>
SCHEDULE II
PRIMEDIA INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------- ------------ ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Accounts receivable
Allowance for doubtful
accounts...................................... $ 15,418 $ 20,904 $ 850(1) $ (21,982)(3) $ 10,521
$ 1,732(2)
$ (6,401)(4)
Allowance for sales returns
and rebates................................... $ 24,098 $ 83,438 $ (3,378)(4) $ (77,149)(3) $ 27,009
Inventory
Allowance for obsolescence...................... $ 8,703 $ 5,674 $ 218(2) $ (4,837)(3) $ 2,482
$ (7,276)(4)
Accumulated amortization
Goodwill........................................ $ 82,763 $ 29,024 $(17,026)(4) $ (26)(3) $ 94,735
Other intangibles............................... $814,061 $110,799 $(282,911)(4) $ (87)(3) $ 641,862
Deferred financing costs........................ $ 9,794 $ 3,071 $ -- $ (7,772)(3) $ 5,093
Deferred wiring and
installation costs............................ $ 12,850 $ 7,008 $ (7)(4) $ (1,133)(3) $ 18,718
Prepublication and programming costs............ $ 7,968 $ 4,491 $ (3,489)(4) $ (2,127)(3) $ 6,843
Direct-response advertising
costs......................................... $ 70,661 $ 42,659 $(49,320)(4) $ (10,160)(3) $ 53,840
</TABLE>
- ------------------------
Notes:
(1) Increases in related valuation account result from acquisitions.
(2) Increases in related valuation account result from the recovery of amounts
previously written off.
(3) Deductions from related valuation account result from write-offs and actual
returns.
(4) Deductions from related valuation account result from reclassifications and
write-offs related to net assets held for sale.
S-1
<PAGE>
SCHEDULE II
PRIMEDIA INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------- ------------ ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Accounts receivable
Allowance for doubtful
accounts...................................... $ 14,364 $ 21,438 $ 62(1) $(21,069)(3) $ 15,418
$ 970(2)
$ (347)(4)
Allowance for sales returns and
rebates....................................... $ 23,015 $ 79,819 $ -- $(78,736)(3) $ 24,098
Inventory
Allowance for obsolescence...................... $ 7,129 $ 4,423 $ 279(2) $ (3,128)(3) $ 8,703
Accumulated amortization
Goodwill........................................ $ 66,889 $ 23,576 $ (640)(4) $ (7,062)(3) $ 82,763
Other intangibles............................... $695,504 $122,140 $(2,932)(4) $ (651)(3) $ 814,061
Deferred financing costs........................ $ 8,139 $ 3,662 $ -- $ (2,007)(3) $ 9,794
Deferred wiring and
installation costs............................ $ 7,163 $ 6,753 $ -- $ (1,066)(3) $ 12,850
Prepublication and programming costs............ $ 4,121 $ 5,963 $ -- $ (2,116)(3) $ 7,968
Direct-response advertising costs............... $ 29,569 $ 41,481 $ -- $ (389)(3) $ 70,661
</TABLE>
- ------------------------
Notes:
(1) Increases in related valuation account result from acquisitions.
(2) Increases in related valuation account result from the recovery of amounts
previously written off.
(3) Deductions from related valuation account result from write-offs and actual
returns.
(4) Deductions from related valuation account result from reclassifications and
write-offs related to net assets held for sale.
S-2
<PAGE>
SCHEDULE II
PRIMEDIA INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Accounts receivable
Allowance for doubtful
accounts...................................... $ 13,482 $ 19,276 $ 1,195(1) $(20,526)(3) $ 14,364
$ 937(2)
Allowance for sales returns and
rebates....................................... $ 23,543 $ 80,859 $ 663(2) $(82,072)(3) $ 23,015
$ 22(2)
Inventory
Allowance for obsolescence...................... $ 5,138 $ 2,662 $ 622(1) $ (1,463)(3) $ 7,129
$ 170(2)
Accumulated amortization
Goodwill........................................ $ 29,312 $ 37,572 $ 5(2) $ -- $ 66,889
Other intangibles............................... $573,230 $122,609 $ -- $ (335)(3) $ 695,504
Deferred financing costs........................ $ 5,004 $ 3,135 $ -- $ -- $ 8,139
Deferred wiring and
installation costs............................ $ 1,413 $ 6,334 $ -- $ (584)(3) $ 7,163
Prepublication and programming costs............ $ 6,732 $ 1,954 $ -- $ (4,565)(3) $ 4,121
Direct-response advertising costs............... $ 3,126 $ 28,774 $ -- $ (2,331)(3) $ 29,569
</TABLE>
- ------------------------
Notes:
(1) Increases in related valuation account result from acquisitions.
(2) Increases in related valuation account result from the recovery of amounts
previously written off.
(3) Deductions from related valuation account result from write-offs and actual
returns.
S-3
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
To the Shareholders and Board of Directors of
PRIMEDIA Inc.
New York, New York:
We have audited the consolidated balance sheets of PRIMEDIA Inc. and
subsidiaries as of December 31, 1997 and 1996, and the related statements of
consolidated operations, consolidated cash flows and shareholders' equity
(deficiency) for each of the three years in the period ended December 31, 1997,
and have issued our report thereon dated January 27, 1998 (February 17, 1998 as
to Note 25); such report is included elsewhere in this Form 10-K. Our audits
also included the financial statement schedules of PRIMEDIA Inc. and
subsidiaries, listed in Item 14. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
New York, New York
January 27, 1998
(February 17, 1998 as to Note 25)
S-4
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
K-III COMMUNICATIONS CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to the
Certificate of Incorporation of said Corporation:
RESOLVED, that the Board of Directors hereby deems it advisable and in
the best interests of the Corporation and its shareholders that the
Certificate of Incorporation of the Corporation (the "Charter") be
amended by deleting Article FIRST thereof in its entirety and by
substituting, in lieu of said Article, the following new Article:
"FIRST: The name of the Corporation is PRIMEDIA Inc.".
SECOND: That the stockholders holding a majority of all of the outstanding
shares of the Common Stock of the Corporation have given written consent to said
amendment in accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment to the Corporation's Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Section 242 and Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said K-III Communications Corporation has caused this
Certificate to be executed by Beverly C. Chell, its authorized officer, on this
14th day of November, 1997
By /s/ Beverly C. Chell
---------------------------------
Name: Beverly C. Chell
Title: Vice Chairman & Secretary
<PAGE>
Exhibit 3.12
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * * * *
Newbridge Communications, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation at a meeting duly
held, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Newbridge
Communications, Inc. be amended by changing the First Article thereof so
that, as amended, said Article shall be and read as follows: "The name of
the corporation shall be Films for the Humanities & Sciences, Inc."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of sections 242 and 228 of the General Corporation Law
of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said Newbridge Communications, Inc. has caused this
certificate to be signed by Ann Riposanu its Vice President and attested by
Beverly C. Chell its Secretary this 24th day of February, 1998.
NEWBRIDGE COMMUNICATIONS, INC.
------------------------------
Ann M. Riposanu
Vice President
ATTEST:
By:
---------------------------
Beverly C. Chell
Secretary
<PAGE>
Exhibit 3.15
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
K-111 DIRECTORY CORPORATION, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to the
Certificate of Incorporation of said Corporation:
RESOLVED, that the Certificate of Incorporation of this Corporation
be amended by changing the First Article so that, as amended, said
Article shall be and read as follows: "The name of the Corporation
is PRIMEDIA Information Inc.".
SECOND: That by written consent, filed with the minutes of the
Corporation, the sole stockholder approved said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment to the Corporation's Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Section 242 and Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said K-III Directory Corporation has caused this
Certificate to be executed by Beverly Chell its authorized officer, on this 14th
day of November, 1997.
By
Name: Beverly C. Chell
Title: Vice Chairman & Secretary
<PAGE>
Exhibit 3.24
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
K-111 REFERENCE CORPORATION, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to the
Certificate of Incorporation of said Corporation:
RESOLVED, that the Certificate of Incorporation of this Corporation
be amended by changing the First Article so that, as amended, said
Article shall be and read as follows: "The name of the Corporation
is PRIMEDIA Reference Inc.".
SECOND: That by written consent, filed with the minutes of the
Corporation, the sole stockholder approved said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment to the Corporation's Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Section 242 and Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said K-111 Reference Corporation has caused this
Certificate to be executed by Beverly Chell its authorized officer, on this 14th
day of November, 1997.
By
Name: Beverly Chell
Title: Vice Chairman & Secretary
<PAGE>
Exhibit 3.34
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
K-111 MAGAZINE CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to the
Certificate of Incorporation of said Corporation:
RESOLVED, that the Certificate of Incorporation of this Corporation
be amended by changing the First Article so that, as amended, said
Article shall be and read as follows: "The name of the Corporation
is PRIMEDIA Magazines Inc.".
SECOND: That by written consent, filed with the minutes of the
Corporation, the sole stockholder approved said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment to the Corporation's Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Section 242 and Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said K-111 Magazine Corporation has caused this
Certificate to be executed by Beverly Chell its authorized officer, on this 14th
day of November, 1997.
By
Name: Beverly C. Chell
Title: Vice Chairman & Secretary
<PAGE>
Exhibit 3.37
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
K-III MAGAZINE FINANCE CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to the
Certificate of Incorporation of said Corporation:
RESOLVED, that the Certificate of Incorporation of this Corporation be
amended by changing the First Article so that, as amended, said Article
shall be and read as follows: "The name of the Corporation is PRIMEDIA
Magazine Finance Inc.".
SECOND: That by written consent, filed with the minutes of the
Corporation, the sole stockholder approved said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment to the Corporation's Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Section 242 and Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said K-111 Magazine Finance Corporation has caused
this Certificate to be executed by Beverly Chell its authorized officer, on this
14th day of November, 1997.
By
Name: Beverly C. Chell
Title: Vice Chairman & Secretary
<PAGE>
Exhibit 3.42
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
K-111 HOLDINGS CORPORATION III, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to the
Certificate of Incorporation of said Corporation:
RESOLVED, that the Certificate of Incorporation of this Corporation
be amended by changing the First Article so that, as amended, said
Article shall be and read as follows: "The name of the Corporation
is PRIMEDIA Holdings III Inc.".
SECOND: That by written consent, filed with the minutes of the
Corporation, the sole stockholder approved said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment to the Corporation's Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Section 242 and Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said K-III Holdings Corp. III has caused this
Certificate to be executed by Beverly Chell its authorized officer, on this 14th
day of November, 1997.
By
Name: Beverly C. Chell
Title: Vice Chairman & Secretary
<PAGE>
Exhibit 3.64
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
PJS PUBLICATIONS, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to the
Certificate of Incorporation of said Corporation:
RESOLVED, that the Certificate of Incorporation of this Corporation
be amended by changing the First Article so that, as amended, said
Article shall be and read as follows: "The name of the Corporation
is PRIMEDIA Special Interest Publications Inc.".
SECOND: That by written consent, filed with the minutes of the
Corporation, the sole stockholder approved said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment to the Corporation's Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Section 242 and Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said PJS Publications, Inc. has caused this
Certificate to be executed by Beverly Chell its authorized officer, on this 14th
day of November, 1997.
By
Name: Beverly C. Chell
Title: Vice Chairman & Secretary
<PAGE>
Exhibit 3.97
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WESTCOTT COMMUNICATIONS, INC.
Pursuant to the provisions of Articles 4.01 through 4.05 of the Texas
Business Corporation Act, the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation.
ARTICLE I
The name of the corporation is Westcott Communications, Inc. (the
"Corporation").
ARTICLE II
The following amendments to the Articles of Incorporation are adopted by
the Shareholders of the Corporation:
1. The title of the Articles of Incorporation is hereby amended so as to
be and read in its entirely as follows:
"ARTICLES OF INCORPORATION
OF
PRIMEDIA Workplace Learning, Inc."
2. Article One of the Articles of Incorporation is hereby amended so as to
be and read in its entirely as follows:
"ARTICLE ONE
The name of the corporation is PRIMEDIA Workplace Learning,
Inc., (the "Corporation")."
ARTICLE III
These amendments were adopted by the shareholders of the Corporation on
February 9, 1998.
<PAGE>
ARTICLE IV
The total number of outstanding shares of stock of the Corporation, all of
which are entitled to vote on these amendments, is 1,000 shares of Common Stock,
par value $.01 per share.
ARTICLE V
The number of shares voted for such amendment was 1,000 and the number of
shares voted against such amendment was 0.
Dated: February 9, 1998
WESTCOTT COMMUNICATIONS, INC.
By:
--------------------------------
Beverly Chell, Secretary
<PAGE>
Exhibit 3.109
FILED
SECRETARY OF STATE
1984 OCT 24 PM 12:43
CHARTER OF
APARTMENT GUIDE OF NASHVILLE, INC.
The undersigned natural person, having capacity to contract and acting as
the incorporator of a corporation under the Tennessee General Corporation Act,
adopts the following charter for such corporation:
1. The name of the corporation is Apartment Guide of Nashville, Inc.
2. The duration of the corporation is perpetual.
3. The address of the principal office of the corporation in the State of
Tennessee shall be Suite 148, 5100 Poplar Avenue, Memphis, County of Shelby,
Tennessee 38137.
4. The corporation is for profit.
5. The purpose or purposes for which the corporation is organized are:
To publish, print, bind, sell, deliver and distribute magazines,
pamphlets, directories, leaflets and papers, and to copyright the
articles, stories and discussions appearing therein; to sell advertising
space in such magazines and other publications, and to do all such other
things as may be necessary or advisable to carry on such business.
6. The maximum number of shares which the corporation shall have the
authority to issue is one thousand (1,000) shares, with $1.00 par value.
7. The corporation will not commence business until consideration of One
Thousand Dollars ($1,000.00) has been received for issuance of shares.
Dated: October 18, 1984
/s/ Joe B. Guinn
--------------------------
JOE B. GUINN, Incorporator
<PAGE>
RECEIVED
STATE OF TENNESSEE
88 DEC 12 PM 12:52
[ILLEGIBLE] CROWELL
SECRETARY OF STATE
ARTICLES OF AMENDMENT TO THE CHARTER
OF
Apartment Guide of Nashville, Inc.
- --------------------------------------------------------------------------------
Pursuant to the provisions of Section 48-20-106 of the Tennessee Business
Corporation Act, the undersigned corporation adopts the following articles of
amendment to its charter:
1. The name of the corporation is Apartment Guide of Nashville, Inc.
2. The text of each amendment adopted is:
New Address:
5050 Poplar Avenue, Suite 1507, Memphis, TN 38157
3. The corporation is a for-profit corporation.
4. The manner (if not set forth in the amendment) for implementation of any
exchange, reclassification, or cancellation of issued shares is as follows:
5. The amendment was duly adopted on 11/23/88 by (the shareholders).
[NOTE: Please strike the choices which do not apply to this amendment.]
6. If the amendment is not to be effective when these articles are filed by the
Secretary of State, the date/time it will be effective is
_____________________,19 _____________(date)___________________________(time).
[NOTE: The delayed effective date shall not be later than the 90th day after
the date this document is filed by the Secretary of State.]
11/23/88 Apartment Guide of Nashville, Inc.
- ------------------------------- ----------------------------------------
Signature Date Name of Corporation
Treasurer / Secretary /s/ Joan M. Guinn
- ------------------------------- ----------------------------------------
Signer's Capacity Signature
Joan M. Guinn
----------------------------------------
Name (typed or printed)
<PAGE>
ARTICLES OF AMENDMENT TO THE CHARTER
OF
APARTMENT GUIDE OF NASHVILLE, INC.
- --------------------------------------------------------------------------------
Pursuant to the provisions or Section 48-20-106 of the Tennessee Business
Corporation Act, the undersigned corporation adopts the following articles of
amendment to its charter:
1. The name of the corporation is Apartment Guide of Nashville, Inc.
2. The text of each amendment adopted is:
THE ADDRESS IS CHANGED TO:
6041 MT. MORIAH EXTD. #9
MEMPHIS, TN 38115-2664
3. The corporation is a for-profit corporation.
4. The manner (if not set forth in the amendment) for implementation of any
exchange, reclassification, or cancellation of issued shares is as follows:
N/A
5. The amendment was duly adopted on JANUARY 1, 1991 by (the shareholders).
[NOTE: Please strike the choices which do not apply to this amendment.]
6. If the amendment is not to be effective when these articles are filed by the
Secretary of State, the date/time it will be effective is
February 15, 1991 (date) 12:00 am (time).
[NOTE: The delayed effective date shall not be later than the 90th day after the
date this document is filed by the Secretary of State.]
1/28/91 APARTMENT GUIDE OF NASHVILLE, INC.
- ------------------------------- ----------------------------------------
Signature Date Name of Corporation
[Illegible] /s/ Joan M. Guinn
- ------------------------------- ----------------------------------------
Signer's Capacity Signature
JOAN M. GUINN
----------------------------------------
Name (typed or printed)
<PAGE>
EXHIBIT 3.110
BY-LAWS OF
APARTMENT GUIDE OF NASHVILLE, INC.
ARTICLE I.
OFFICES
Section 1. The principal offices of this corporation are 5100 Poplar
Avenue, Memphis, Tennessee. The said principal office may be changed at any time
by appropriate resolution of the Board of Directors. The corporation may have
offices and places of business at such other places within or without the State
of Tennessee as shall be determined by the Board of Directors.
Section 2. The registered office of the corporation for any particular
state may be, but need not be, identical with the principal office of the
corporation in that state, and the address of the registered office may be
changed from time to time by appropriate resolution of the Board of Directors.
ARTICLE II.
SHAREHOLDERS
Section 1. Meetings. All meetings of shareholders shall be held either in
the principal office of the corporation or at any other place in the city of
Memphis, Tennessee.
<PAGE>
Section 2. Annual Meeting. A meeting of the shareholders shall be held in
the principal office of the corporation at 10:00 o'clock in the forenoon on the
first Monday in March, 1985 and on the first Monday in March of each year
thereafter for the purpose of electing directors and for the transaction of any
other business authorized to be transacted by the shareholders. If the appointed
day is a legal holiday the meeting shall be held at the same time on the next
succeeding day not a holiday. In the event that the annual meeting is omitted by
oversight or otherwise on the date herein provided for, the directors shall
cause a meeting in lieu thereof to be held as soon thereafter as conveniently
may be, and any business transacted or elections held at such meeting shall be
as valid as if transacted or held at the annual meeting. Such subsequent meeting
shall be called in the same manner as provided for the annual shareholders
meeting.
Section 3. Special Meetings. Except as otherwise provided by law, special
meetings of the shareholders of this corporation shall be held at such places
and times as may be determined by the President or by a majority of the Board
of Directors, or whenever one or more shareholders who
-2-
<PAGE>
are entitled to vote and who hold at least 10% of the common shares issued and
outstanding shall make written application therefor to the Secretary or an
Assistant Secretary stating the time, place and purpose of the meeting called
for. No business shall be transacted at a special meeting except as stated in
the notice sent to the shareholders, unless by the unanimous consent of the
shareholders, either in person or by proxy, all such stock being represented at
the meeting.
Section 4. Notice of Meetings. Notice of all shareholders' meetings
stating the time, place and the objects for which such meetings are called shall
be given by the President or the Vice-President or the Treasurer or the
Secretary or an Assistant Secretary to each shareholder of record not less than
ten nor more than forty days prior to the date of the meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States Mail
in a sealed envelope with postage thereon prepaid, addressed to the shareholder
at his address as it appears on the stock record books of the corporation,
unless he shall have filed with the Secretary of the corporation a written
request that notice intended for him be mailed to some other address, in which
case it shall be mailed to the address designated in such request.
-3-
<PAGE>
Any meeting of which all shareholders entitled to vote have waived or at
any time shall waive notice in writing shall be a legal meeting for the
transaction of business, notwithstanding that notice has not been given as
hereinbefore provided.
Section 5. Notice of Right to Dissent. If shareholders are to vote at a
meeting on a corporate action which would give rise to a dissenter's right to
payment for his shares in accordance with the Tennessee General Corporation Act,
notice of such meeting shall be given to every shareholder who will be entitled
to dissent from such action and to receive payment for his shares whether or not
entitled to vote thereon. Such notice shall be given in accordance with the
provisions of Section 4 of this Article and shall also contain a statement,
displayed with reasonable prominence, that upon compliance with the Tennessee
General Corporation Act, dissenting shareholders are entitled to be paid the
fair value of their shares as provided in said Act.
Section 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining the shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a
-4-
<PAGE>
determination of shareholders for any other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer book shall be
closed for a stated period not to exceed in any case thirty days. If the stock
transfer book shall be closed for the purpose of determining shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than thirty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof.
-5-
<PAGE>
Section 7. Voting Lists. The officer or agent having charge of the stock
transfer books for common shares of the corporation shall make, at least ten
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each
shareholder, which list, for a period of ten days prior to such meeting shall be
kept on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall be certified by the corporate officer responsible for its preparation or
by the transfer agent and shall be produced and kept open at the time and place
of the meeting and be subject to the inspection of any shareholder during the
entire time of the meeting. In the event of any challenge to the right of any
person to vote at the meeting, the presiding officer at such meeting may rely on
said list as proper evidence of the right of parties to vote at such meeting.
Section 8. Quorum. Except as may be otherwise provided by law, a majority
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of shareholders. In
the event that less than a majority of the outstanding shares are represented at
any meeting, a majority of the
-6-
<PAGE>
shares represented thereat entitled to vote shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of law or of the certificate of incorporation or of these by-laws a larger or
different vote is required, in which case such express provision shall govern
and control the decision of each question.
Section 9. Proxies. Shareholders of record who are entitled to vote may
vote at any meeting either in person or by proxy in writing, which shall be
filed with the Secretary of the meeting before being voted. Such proxy shall
entitle the holders thereof to vote at any adjournment of such meeting, but
shall not be valid after the final adjournment thereof. No proxy shall be valid
after the expiration of eleven months from the date of its execution unless the
shareholder executing it shall have specified therein the length of time it is
to continue in force, which shall be for some limited period.
Section 10. Voting of Shares. Except as otherwise provided in the
certificate of incorporation or these by-laws, each outstanding share
entitled to vote shall be entitled to one vote upon each matter submitted to a
vote at a meeting of shareholders.
-7-
<PAGE>
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe, or in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name, if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares may be pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
-8-
<PAGE>
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Section 12. Cumulative Voting. At all elections of directors of the
corporation, every shareholder entitled to vote at such election shall have the
right to vote, in person or by proxy, the number of shares owned by him for as
many persons as there are directors to be elected and for whose election he has
a right to vote, or to cumulate his votes by giving one candidate as many votes
as the number of such directors multiplied by the number of his shares shall
equal, or by distributing such votes on the same principle among any number of
candidates.
-9-
<PAGE>
ARTICLE III.
BOARD OF DIRECTORS
Section 1. Number, Tenure and Qualifications. The incorporators shall
constitute the first Board of Directors of this corporation. Thereafter the
number of directors shall be determined and they shall be chosen by ballot
annually by the shareholders at their annual meeting or at any meeting held in
place thereof as provided by law. In the event that the corporation has less
than three shareholders the number of directors shall not be less than the
number of record holders of the corporation's shares. Each director shall serve
until the next annual meeting of the shareholders or until his successor is duly
elected and qualified. Directors shall be of full age and citizens of the United
States, but directors need not be residents of the State of Tennessee nor
shareholders of the corporation.
Section 2. Powers of Directors. The Board of Directors shall have the
entire management of the business of the corporation. In the management and
control of the property, business and affairs of the corporation, the Board of
Directors is hereby vested with all the powers possessed by the corporation
itself, so far as this delegation of authority is not inconsistent with the laws
of the State of Tennessee,
- 10 -
<PAGE>
with the certificate of incorporation of the corporation, or with these
by-laws. The Board of Directors shall have the power to determine what
constitutes net earnings, profits, and surplus, respectively, what amount shall
be reserved for working capital and to establish reserves for any other proper
purpose, and what amount shall be declared as dividends, and such determination
by the Board of Directors shall be final and conclusive. The Board of Directors
shall have the power to declare dividends for and on behalf of this corporation,
which dividends may include or consist of stock dividends.
Section 3. Regular Meetings of the Board. Immediately after such annual
election the newly elected directors may meet at the same place for the purpose
of organization, the election of corporate officers and the transaction of other
business; if a quorum of the directors be then present no prior notice of such
meeting shall be required. Other regular meetings of the Board shall be held at
such times and places as the Board by resolution may determine and specify, and
if so determined no notice thereof need be given, provided that unless all the
directors are present at the meeting at which said resolution is passed, that
the first meeting held pursuant to said resolution shall not be held for at
least five days following the date on which the resolution is passed.
- 11 -
<PAGE>
Section 4. Special Meetings. Special meetings of the Board of Directors
may be held at any time or place whenever called by the President, or the
Vice-President or the Treasurer or the Secretary, or by written request of at
least two directors, notice thereof being given to each director by the
Secretary or other officer calling the meeting, or they may be held at any time
without formal notice provided all of the directors are present or those not
present shall at any time waive or have waived notice thereof.
Section 5. Notice. Notice of any special meetings shall be given at least
five days previously thereto by written notice delivered personally or mailed to
each director at his business address, or by telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company.
Section 6. Quorum. A majority of the members of the Board of Directors as
constituted for the time being shall constitute a quorum for the transaction of
business, but a lesser number may adjourn any meeting and the meeting may be
held as adjourned without further notice. When a quorum is
- 12 -
<PAGE>
present at any meeting, a majority of the members present thereat shall decide
any question brought before such meeting, except as otherwise provided by law or
by these by-laws. The fact that a director has an interest in a matter to be
voted on by the meeting shall not prevent his being counted for purposes of a
quorum.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
including vacancies by virtue of removal for cause, may be filled by the vote of
a majority of the Directors, even though less than a quorum.
Section 8. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as a director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 9. Removal. Any director may be removed without cause by a
majority vote of the shareholders. A director may be removed for cause by a
majority of the entire Board of Directors. Cause shall be defined as the
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<PAGE>
final conviction of a felony, declaration of unsound mind by court order,
adjudication of bankruptcy, nonacceptance of office or conduct prejudicial to
the interest of the corporation. Provided, however, that no director may be
removed when the votes cast against his removal would be sufficient to elect him
if voted cumulatively at an election at which the same total number of votes
were cast and the entire board of which he is a member were then being elected.
Section 10. Committees. The majority of the Board of Directors may appoint
an executive committee or such other committees as it may deem advisable,
composed of two or more directors, and may delegate authority to such committees
as is not inconsistent with the Tennessee General Corporation Act. The members
of such committee shall serve at the pleasure of the Board of Directors.
Section 11. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof or shall forward such dissent
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<PAGE>
by registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 12. Informal Action by Directors. Any action required to be taken
at a meeting of the Board of Directors, or any other action which may be taken
at a meeting of the Board of Directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the directors entitled to vote with respect to the subject matter thereof.
ARTICLE IV.
WAIVER OF NOTICE
Whenever any notice whatever is required to be given these by-laws, or the
certificate of incorporation of this corporation, or any other corporation laws
of the State of Tennessee, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Where the person or persons
entitled to such notice sign the minutes of any shareholder's or directors
meeting, which minutes contain the statement that said person or persons
- 15 -
<PAGE>
have waived notice of the meeting, then such person or persons are deemed to
have waived notice in writing.
ARTICLE V.
OFFICERS
Section 1. Number. The officers of the corporation shall be a President,
one or more Vice Presidents (the number thereof to be determined by the Board of
Directors), a Secretary, and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two or more
offices may be held by the same person, except the offices of President and
Secretary.
Section 2. Election and Term of Office. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held in
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected and shall have qualified or until his
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<PAGE>
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its judgment
the best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the corporation thereunto authorized by the Board
of Directors, certificates for shares of the corporation, any deed, mortgages,
bonds, contracts, or other instruments which the Board of
- 17 -
<PAGE>
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these by-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. The Vice-Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice-President (or in the
event there be more than one Vice-President, the Vice-Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice-President may sign, with the
Secretary or an Assistant Secretary, certificates for shares of the corporation;
and shall perform such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors'
- 18 -
<PAGE>
meetings in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these by-laws or as
required by law; (c) be custodian of the corporate records and of the seal (if
any) of the corporation and see that said seal is affixed to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (e) sign with the
President, or a Vice-President, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 8. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall: (a) have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all such
moneys in
- 19 -
<PAGE>
the name of the corporation in such banks, trust companies or other depositories
as shall be selected in accordance with the provisions of Article VI of these
by-laws; and (b) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 9. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice-President certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the Board
of Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President or the Board of Directors.
Section 10. Registered Agent. The Board of Directors may appoint a
Registered Agent for the corporation in accordance with the Tennessee General
Corporation Act and may pay
- 20 -
<PAGE>
the agent such compensation from time to time as it may deem appropriate.
ARTICLE VI.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances, provided, however, that the
corporation shall not make any loan other than a sale on credit in the ordinary
course of business or a life insurance policy loan, either directly or
indirectly, to any director or officer of the corporation except with the
consent of the holders of all the outstanding shares, whether or not such shares
are entitled to vote generally, or with the consent of the holders of a majority
of all the outstanding shares owned or controlled by shareholders other
- 21 -
<PAGE>
than a shareholder for whose benefit such action is being taken.
Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE VII.
SHARES OF STOCK
Section 1. Certificates for Shares. Certificates representing shares of
the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or Vice-
President and by the Secretary or an Assistant Secretary.
- 22 -
<PAGE>
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the corporation as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Shares of stock may be transferred by
delivery of the certificate accompanied either by an assignment in writing on
the back of the certificate or by a written power of attorney to sell, assign
and transfer the same on the books of the corporation, signed by the person
appearing by the certificate to be the owner of the shares represented thereby,
and shall be transferable on the books of the corporation upon surrender thereof
so assigned or endorsed. The person registered on the books of the corporation
as the owner of any shares of stock shall be entitled to all the rights of
ownership with respect to such
- 23 -
<PAGE>
shares. It shall be the duty of every shareholder to notify the corporation of
his post office address.
ARTICLE VIII.
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay dividends on its outstanding shares in the manner and upon the terms and
conditions provided by the Tennessee General Corporation Act and by its articles
of incorporation.
ARTICLE IX.
FISCAL YEAR
The books of the corporation shall be on a calendar year basis and shall
begin on the 1st day of January and end on the 31st day of December of each
year.
ARTICLE X.
SEAL
This corporation may or may not have a seal and in any event the failure
to affix a corporate seal to any instrument executed by the corporation shall
not affect the validity
- 24 -
<PAGE>
thereof. If a seal is adopted, the seal of this corporation shall include the
following letters cut or engraved thereon:
ARTICLE XI.
AMENDMENTS
The by-laws of this corporation may be altered, amended or repealed and
new by-laws may be adopted at any meeting of the Board of Directors of the
corporation by a majority vote of the directors present at the meeting or at any
meeting of the shareholders by a majority vote of the common stock represented
thereat.
ATTEST:
/s/ [ILLEGIBLE]
-------------
Secretary
- 25 -
<PAGE>
EXHIBIT 3.111
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/20/1992
752111003-2295029
CERTIFICATE OF INCORPORATION
OF
CARDINAL BUSINESS MEDIA, INC.
1. The name of the corporation is:
Cardinal Business Media, Inc.
2. The address of its registered office in the State of Delaware is
32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent. The
name of its registered agent at such address is The Prentice-Hall Corporation
System, Inc.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall
have authority to issue is One Thousand (1,000), all of which shall be common
stock; and the par value of each share shall be one cent ($.01).
5. The name and mailing address of the incorporator is:
Victoria C. Phelps
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, California 90071
6. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the bylaws of the corporation.
<PAGE>
7. Election of directors need not be by written ballot unless the
bylaws of the corporation shall so provide.
8. No director of this corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the General Corporation Law of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, herein declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 17th day of April, 1992.
/s/ Victoria C. Phelps
--------------------------------
Victoria C. Phelps
2
<PAGE>
EXHIBIT 3.112
CARDINAL BUSINESS MEDIA, INC.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders of
the Corporation shall be held at such place either within or without the State
of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of stockholders
shall be held, at a date, time and place fixed by the Board of Directors and
stated in the notice of meeting, to elect a Board of Directors and to transact
such other business as may properly come before the meeting. Special meetings of
the stockholders may be called by the President for any purpose and shall be
called by the President or Secretary if directed by the Board of Directors or
requested in writing by the holders of not less than 25% of the capital stock of
the Corporation. Each such stockholder request shall state the purpose of the
proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10 and
not more than 60 days before each meeting of stockholders, written notice of the
time, date and place of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of record,
present in person or by proxy, of a majority of the Corporation's issued and
outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
ARTICLE II
DIRECTORS
<PAGE>
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of three
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by the Board of
Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Director shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution adopted
by a majority of the whole Board, designate one or more committees, including,
without limitation, an Executive Committee, to have and exercise such power and
authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another Director to act at the
meeting in place of any such absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Secretary,
a Treasurer and such other additional officers with such titles as the Board of
Directors shall determine, all of which shall be chosen by and shall serve at
the pleasure of the Board of Directors. Such officers shall have the usual
powers and shall perform all the usual duties incident to their respective
offices. All officers shall be subject to the supervision and direction of the
Board of Directors. The authority, duties or responsibilities of any officer of
the Corporation may be suspended by the President with or without cause. Any
officer elected or appointed by the Board of Directors may be removed by the
Board of Directors with or without cause.
<PAGE>
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation Law,
the Corporation shall indemnify any current or former Director or officer of the
Corporation and may, at the discretion of the Board of Directors, indemnify any
current or former employee or agent of the Corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding brought by or in the right of the Corporation or otherwise, to which
he was or is a party by reason of his current or former position with the
Corporation or by reason of the fact that he is or was serving, at the request
of the Corporation, as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of Incorporation
or these By-Laws require notice to be given to any Director or stockholder, such
notice may be given in writing by mail, addressed to such Director or
stockholder at his address as it appears in the records of the Corporation, with
postage thereon prepaid. Such notice shall be deemed to have been given when it
is deposited in the United States mail. Notice to Directors may also be given by
telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors
<PAGE>
EXHIBIT 3.113
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:15 PM 08/04/1992
752217006-2305785
CERTIFICATE OF INCORPORATION
OF
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
1. The name of the corporation is:
Cardinal Business Media Holdings, Inc.
2. The address of its registered office in the State of Delaware is
32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent. The
name of its registered agent at such Address is The Prentice-Hall Corporation
System, Inc.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is One Million Three Hundred Thousand
(1,300,000), consisting of One Million (1,000,000) shares of Common Stock, par
value $.01 per share, and Three Hundred Thousand (300,000) shares of Preferred
Stock, par value $1.00 per share.
The Preferred Stock may be divided into such number of series as the
Board of Directors may determine. The Board of Directors is authorized to
determine and alter the rights, preferences, privileges and restrictions
(including without limitation voting rights) granted to and imposed upon the
Preferred Stock or any series thereof with respect to any wholly unissued class
or series of Preferred Stock, and to fix the
<PAGE>
number of shares of any series of Preferred Stock and the designation of any
such series of Preferred Stock. The Board of Directors, within the limits and
restrictions stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series, may increase or
decrease (but not below the number of any series then outstanding) the number of
shares of any series subsequent to the issue of shares of that series.
5. The name and mailing address of the incorporator is:
Victoria C. Phelps
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, California 90071
6. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the bylaws of the corporation.
7. Election of directors need not be by written ballot unless the
bylaws of the corporation shall so provide.
8. No director of this corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the General Corporation Law of
Delaware, or (iv) for any
2
<PAGE>
transaction from which the director derived an improper personal benefit.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, herein declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 4th day of August, 1992.
/s/ Victoria C. Phelps
-----------------------------
Victoria C. Phelps
3
<PAGE>
CERTIFICATE OF MERGER
OF
INTERTEC (CARDINAL) CORPORATION
(a Delaware corporation)
WITH AND INTO
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
(a Delaware corporation)
UNDER SECTION 251
OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE
Pursuant to Section 251(c) of the General Corporation Law of the
State of Delaware (the "GCL"), Cardinal Business Media Holdings, Inc., a
Delaware corporation ("Holdings"), hereby certifies the following information
relating to the merger of Intertec (Cardinal) Corporation, a Delaware
corporation ("Intertec (Cardinal)"), with and into Holdings (the "Merger"):
1. The name and state of incorporation of each of the constituent
corporations in the Merger (the "Constituent Corporations") is as follows:
Name State of Incorporation
Intertec (Cardinal) Corporation Delaware
Cardinal Business Media Holdings, Inc. Delaware
2. The Agreement and Plan of Merger (the "Agreement of Merger"),
dated as of November 14, 1997 among Holdings, Intertec Publishing Corporation, a
Delaware corporation ("Purchaser"), and Intertec (Cardinal), a wholly-owned
subsidiary of Purchaser, setting forth the terms and conditions of the Merger,
has been approved, adopted, certified, executed and acknowledged by each of the
Constituent Corporations in accordance with subsection (c) of Section 251 of the
GCL, and as follows: (i) with respect to Intertec (Cardinal), in accordance with
the provisions of Section 251 of the GCL and pursuant to the written consent
executed by all of the stockholders of Intertec (Cardinal) in accordance with
Section 228 of the GCL and its board of directors in accordance with Section 141
of the GCL, (ii) with respect to Holdings, in accordance with the provisions of
Section 251 and Section 141 of the GCL, and consented to by written consent of
the stockholders of Holdings in accordance with Section 228 of the GCL.
3. The name of the corporation surviving the Merger is Cardinal
Business Media Holdings, Inc. (the "Surviving Corporation").
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:45 PM 11/17/1997
971391445 - 2305785
<PAGE>
4. The certificate of incorporation of Holdings, as in effect
immediately prior to the time the Merger becomes effective, shall remain in full
force and effect and shall be the certificate of incorporation of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law.
5. The executed Agreement of Merger is on file at the principal
place of business of the Surviving Corporation at the following address:
Cardinal Business Media Holdings, Inc.
c/o K-III Communications Corporation
745 Fifth Avenue
New York, New York 10151
Attention: Joseph Tedeschi
6. A copy of the Agreement of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of either
of the Constituent Corporations.
7. This Certificate of Merger shall become effective upon its filing
with the Secretary of State of the State of Delaware.
This Certificate of Merger has been executed on this 14th day of
November, 1997.
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
By: /s/ Thomas C. Breslin
----------------------------------
Name: Thomas C. Breslin
Title: Chief Financial Officer
2
<PAGE>
EXHIBIT 3.114
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders of
the Corporation shall be held at such place either within or without the State
of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of stockholders
shall be held, at a date, time and place fixed by the Board of Directors and
stated in the notice of meeting, to elect a Board of Directors and to transact
such other business as may properly come before the meeting. Special meetings of
the stockholders may be called by the President for any purpose and shall be
called by the President or Secretary if directed by the Board of Directors or
requested in writing by the holders of not less than 25% of the capital stock of
the Corporation. Each such stockholder request shall state the purpose of the
proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10 and
not more than 60 days before each meeting of stockholders, written notice of the
time, date and place of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of record,
present in person or by proxy, of a majority of the Corporation's issued and
outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
ARTICLE II
DIRECTORS
<PAGE>
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of three
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by the Board of
Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Director shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution adopted
by a majority of the whole Board, designate one or more committees, including,
without limitation, an Executive Committee, to have and exercise such power and
authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another Director to act at the
meeting in place of any such absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Secretary,
a Treasurer and such other additional officers with such titles as the Board of
Directors shall determine, all of which shall be chosen by and shall serve at
the pleasure of the Board of Directors. Such officers shall have the usual
powers and shall perform all the usual duties incident to their respective
offices. All officers shall be subject to the supervision and direction of the
Board of Directors. The authority, duties or responsibilities of any officer of
the Corporation may be suspended by the President with or without cause. Any
officer elected or appointed by the Board of Directors may be removed by the
Board of Directors with or without cause.
<PAGE>
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation Law,
the Corporation shall indemnify any current or former Director or officer of the
Corporation and may, at the discretion of the Board of Directors, indemnify any
current or former employee or agent of the Corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding brought by or in the right of the Corporation or otherwise, to which
he was or is a party by reason of his current or former position with the
Corporation or by reason of the fact that he is or was serving, at the request
of the Corporation, as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of Incorporation
or these By-Laws require notice to be given to any Director or stockholder, such
notice may be given in writing by mail, addressed to such Director or
stockholder at his address as it appears in the records of the Corporation, with
postage thereon prepaid. Such notice shall be deemed to have been given when it
is deposited in the United States mail. Notice to Directors may also be given by
telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors
<PAGE>
Exhibit 3.115
CERTIFICATE OF FORMATION
OF
COVER CONCEPTS LLC
1. The name of the limited liability company is Cover Concepts LLC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
New Castle. The name of its registered agent at such address is The Corporation
Trust Company.
3. This Certificate of Formation shall be effective on the date such
certificate is received by the State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Formation of Cover Concepts LLC this 22nd day of May, 1997.
/s/ Beverly C. Chell
-----------------------------------
Beverly C. Chell
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
COVER CONCEPTS LLC
1. The name of the limited liability company is COVER CONCEPTS LLC.
2. The Certificate of Formation of the limited liability company is hereby
amended as follows:
RESOLVED, that the Certificate of Formation of Cover Concepts LLC be amended by
changing the First Article thereof, so that, as amended, said Article shall be
and read as follows:
1. The name of the limited liability company is
COVER CONCEPTS MARKETING SERVICES LLC
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment
of COVER CONCEPTS LLC this Tenth day of July, 1997.
/s/ Beverly C. Chell
------------------------
Beverly C. Chell
Authorized Person
<PAGE>
Exhibit 3.116
LIMITED LIABILITY COMPANY AGREEMENT
OF
COVER CONCEPTS LLC
LIMITED LIABILITY COMPANY AGREEMENT, dated as of June 17, 1997, made by
and between the members ("Members") of Cover Concepts LLC, a Delaware limited
liability company, who have executed the signature pages hereof
WITNESSETH:
WHEREAS, Cover Concepts LLC (the "Company") was formed on May 22, 1997
under the name Cover Concepts LLC by the filing of a Certificate of Formation
(the "Certificate") with the Secretary of State of the State of Delaware; and
WHEREAS, the Members wish to state their agreement as to the operation and
management of the Company, as set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the Members hereby agree as follows:
ARTICLE I
FORMATION, NAME, PURPOSE AND TERM
1.1 Formation. The Company was formed as a limited liability company
pursuant to the Delaware Limited Liability Company Act (as hereafter amended
from time to time, the "Act"), effective upon the filing of the Certificate.
1.2 Purposes and Powers. The Company may engage in any lawful business of
every kind and character for which a limited liability company may be organized
under the Act or any successor statute. The Company shall have all of the powers
provided for a limited liability company under the Act.
1.3 Term. The term of the Company commenced on the date Company was formed
and shall continue until terminated as hereinafter provided.
1.4 Offices. The Company shall have its principal place of business at 745
Fifth Avenue, New York, New York 10151, and may change such office, or open such
other places of
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business at such locations, both within and without the State of Delaware, as
the Managing Member (as defined in Section 5.1) may from time to time determine
or as the business and affairs of the Company may require.
1.5 Fiscal Year. The fiscal year of the Company shall be the calendar
year.
ARTICLE II
MEMBERS AND MEMBERSHIP INTERESTS
2.1 Initial Members. The Members and their respective percentage interests
("Percentage Interests") in the Company are set forth below. Each Member's
membership interest in the Company (an "Interest") became effective upon
contribution of the amount set forth opposite his or her name in Section 3.2.
Member Percentage Interest
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Channel One Communications Corporation 99%
Haas Publishing Companies, Inc. 1%
2.2 Additional Issuance of Interests, Additional Classes of Interests.
(a) In order to raise additional capital, acquire assets, redeem or retire
debt of the Company, create incentives for employees and others to make
contributions to the success of the Company or for any other purpose, the
Company may issue Interests in addition to those set forth in Section 2.1 to any
Member or any other person or entity, and may admit such other persons or
entities to the Company as Members, for consideration, and on terms and
conditions, all as determined by the Members.
(b) With the consent of the Members, the Company may issue Interests from
time to time in one or more classes, or one or more series of such classes,
which classes or series shall have, subject to the provisions of applicable law,
such designations, preferences and relative, participating, optional or other
special rights as shall be fixed by the Members, including, without limitation,
with respect to: (i) the allocation of items of profit or loss to each such
class or series; (ii) the right of each such class or series to share in
distributions; (iii) the rights of each such class or series upon dissolution
and liquidation of the Company; (iv) the price at which, and the terms and
conditions upon which, each such class or series may be redeemed by the Company,
if any such class or series is so redeemable; (v) the rate at which, and the
terms and conditions upon which, each such class or series may be converted into
another class or series of Interests; and (vi) the right of each such class or
series to vote on Company matters, including matters relating to the relative
rights, preferences and privileges of such class or series, if any such class or
series is granted any voting rights.
2.3 Interests. A Member's Interest shall be personal property for all
purposes.
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All property owned by the Company shall be deemed to be owned by the Company as
an entity, and no Member shall be deemed to own any such property or any portion
thereof.
2.4 No Preemptive Rights. Except as may otherwise be specifically provided
herein, no Member shall have any preemptive, preferential or other right with
respect to (a) additional capital contributions; (b) the issuance or sale of
Interests; (c) the issuance of any obligations, evidences of indebtedness or
other securities of the Company convertible into or exchangeable for, or
carrying or accompanied by any rights to receive, purchase or subscribe to, any
Interests; (d) the issuance of any right of, subscription to or right to
receive, or any warrant or option for the purchase of, any of the foregoing
securities; or (e) the issuance or sale of any other securities by the Company.
2.5 Return of Contributions. No interest shall accrue on any contributions
to the capital of the Company. No Member shall have the right to withdraw or to
be repaid all or any portion of his capital contribution except as otherwise
provided herein.
2.6 Liability of Members; Indemnity.
(a) No Member shall be personally liable for the debts, obligations or
liabilities of the Company solely by reason of being a Member. Each Member shall
indemnify and hold the other Members and the Managing Member (and, where
applicable, their respective officers, partners, members, directors,
shareholders, employees, agents and affiliates) harmless from and against all
claims, demands, costs, losses and damages, including, without limitation,
attorneys' fees and expenses (collectively, "Losses") incurred as a result of or
in connection with the indemnifying party's breach (directly or by its agents or
other representatives) of any provision of this Agreement or action outside the
scope of this Agreement.
(b) Subject to Section 2.6(a), the Company shall indemnify and hold each
Member (and, where applicable, its officers, partners, members, directors,
shareholders, employees, agents and affiliates) harmless from and against all
Losses incurred as a result of or in connection with (i) any claim that such
Member is liable for any debt, obligation or liability of the Company or is
directly or indirectly required to make payments in respect thereof or in
connection therewith, and (ii) any act or omission by such Member for or on
behalf of the Company, unless such act or omission is unauthorized, contrary to
this Agreement or constitutes gross negligence or fraud.
(c) The Company shall indemnify any executive or employee of the Company
against all expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by such executive or employee of the Company in
connection with any threatened, pending or completed action, suit or proceeding
brought by or in the right of the Company or otherwise, to which such executive
or employee of the Company was or is a party by reason of being an executive or
employee to the Company, or by reason of the fact that he or she is or was
serving, at the request of the Company, as a director, officer, partner,
trustee, executive, employee, or agent of another company, corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, unless the act or omission giving rise to such indemnity obligation
is unauthorized or constitutes gross negligence or fraud.
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(d) Each party to be indemnified (an "indemnified party") under Section
2.6 (a), (b) or (c) shall give each indemnifying party notice of any Losses
subject to the indemnity within 30 days after the indemnified party has received
actual notice thereof. The indemnifying party shall be entitled to participate
in or direct the defense of any action in connection with the reported Losses,
provided that it employs counsel reasonably satisfactory to the indemnified
party. An indemnifying party shall not be liable to an indemnified party in
respect of settlements effected by the indemnified party without the written
consent of the indemnifying party, which consent shall not be unreasonably
withheld or delayed.
ARTICLE III
PROFITS AND LOSSES; CAPITAL ACCOUNTS; DISTRIBUTIONS
3.1 Allocations of Profits and Losses. All distributions and allocations
of income, loss, deduction or credit or similar items shall be allocated to the
Members in accordance with their respective Percentage Interests.
3.2 Capital Accounts. The Company has established and shall maintain
capital accounts for each Member, the initial balances of which were equal to
amounts of their respective initial capital contributions, as set forth below. A
Member's capital account shall be increased by the amount of (a) any additional
capital contributions by, and (b) the income and gain allocated to, such Member,
and shall be decreased by (i) any losses and deductions allocated, and (ii)
distributions made, to such Member pursuant to the terms of this Agreement. It
is the intention of the Members that capital accounts be maintained strictly in
accordance with Treas. Reg. ss. 1.704-1(b)(2)(iv).
Member Initial Capital Contribution
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Channel One Communications Corporation $99.00
Haas Publishing Companies, Inc. $ 1.00
3.3 Additional Capital Contributions. Except as otherwise determined by
the Managing Member, no Member shall have any obligation to make any additional
contribution to the capital of the Company. If additional capital is so
required, each Member shall contribute his or her share of the total additional
amount, based on his or her Percentage Interest.
3.4 Distributions. The Company shall distribute its funds and other assets
to Members at such times and in such amounts as the Managing Member determines
to be appropriate, in accordance with Section 3.1.
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ARTICLE IV
MEETINGS OF MEMBERS
4.1 Annual Meetings. An annual meeting of the Members shall be held in New
York, at the office of the Company, or at such other location as may be
designated by the Managing Member, and on such date as the Managing Member may
determine. At such annual meeting, the Members shall transact such business as
may properly be brought before the meeting.
4.2 Special Meetings. Special meetings of the Members, for any purpose or
purposes, may be called by the Managing Member. Only business within the purpose
or purposes described in the notice of special meeting of Members may be
conducted at such special meeting.
4.3 Notice of Meetings. Written notice of each meeting of Members, stating
the date, time and place and, in the case of a special meeting, the purposes
thereof, shall be sent to each Member not less than ten nor more than 60 days
before the date of such meeting, either by first class mail, postage prepaid, or
by hand or nationally recognized overnight courier. Such notice shall be given
to each Member at the address set forth for such Member beneath his or her name
on the signature pages of this Agreement. If, however, the Managing Member
reasonably determines that there is an emergency for which a meeting should be
called, notice of such meeting may be given orally not less than 24 hours before
the meeting and the Managing Member shall make available telephone conference
call facilities for all Members who advise they wish to be included, but cannot
be physically present.
4.4 Quorum of Members. Members holding more than 75% of all Percentage
Interests held by all Members entitled to vote at a meeting of Members, present
in person or represented by proxy, shall constitute a quorum at each such
meeting. The Members represented in person or by proxy at a meeting of Members
at which a quorum is not present may adjourn the meeting until such time and
place as may be determined by a vote of the Members holding a majority of the
Percentage Interests represented in person or by proxy at that meeting. At any
such adjourned meeting at which a quorum shall be present and acting throughout,
any business may be transacted that might have been transacted at that meeting
as originally convened.
4.5 Voting by Members. At any meeting of Members, every Member having the
right to vote shall be entitled to vote either in person or by proxy executed in
writing by such Member. Except as otherwise set forth herein with respect to any
matter at any meeting, or otherwise with respect to any determination or consent
required or permitted to be made by the Members under this Agreement, the
affirmative vote of the Members holding more than 75% of all Percentage
Interests held by all Members entitled to vote thereon, make such determination
or consent thereto, shall be the act of the Members, provided that, in each
case, the Managing Member, if a Member, or the Member or Members affiliated with
the Managing Member, if any, shall have affirmatively so voted or consented
thereto. No action shall be taken by the Members in the absence of such a vote
or consent.
4.6 Action without a Meeting. Any action required or permitted to be taken
at any
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annual or special meeting of Members, including determinations and consents
under this Agreement, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the Members whose affirmative vote would otherwise be
required for such action at a meeting hereunder at which all Members entitled to
vote thereon were present, provided same shall have been delivered to the
Company within 60 days and all non-consenting Members shall have been advised of
such action, as required by the Act. Action by written consent shall constitute
the act of the Members.
4.7 Telephonic Meetings. Members may participate in and hold meetings by
using conference telephone or similar communications equipment, by means of
which all persons participating in such meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such meeting.
ARTICLE V
MANAGEMENT
5.1 Management of the Company.
(a) Except to the extent otherwise provided herein, the powers of the
Company, including, without limitation, the right to vote or otherwise take
action in respect of securities owned by the Company, shall be exercised by and
under the authority of, and the business and affairs of the Company shall be
managed under the direction of Channel One Communications Corporation (the
"Managing Member") for the benefit of the Members. The Managing Member, acting
in its capacity as such, shall have the authority to act for the Company and to
bind the Company by its signature to any obligation or transaction.
(b) Upon the withdrawal of Managing Member for any reason, the Members may
appoint a successor Managing Member.
(c) The Managing Member shall have the authority and full discretion to
appoint executive officers and to hire and to fire employees. In addition, the
Managing Member shall have the authority to delegate its duties hereunder to any
executive officer who may be appointed or any employee who may be hired.
5.2 Term and Duties, Filling of Vacancies. The Managing Member shall serve
in such capacity in accordance with this Agreement. The Managing Member may
resign on no less than 60 days' prior written notice to the Company. Subject to
Section 5.1(b), if the Managing Member resigns or no longer serves in such
capacity for any reason, the Members may appoint a successor Managing Member,
who need not be a Member, with such qualifications, duties and responsibilities,
and with such compensation, as the Members shall at such time determine in
accordance with Section 5.6. Such successor Managing Member shall execute this
Agreement
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and shall for all purposes be bound as the Managing Member hereunder, except to
the extent this Agreement has been amended by the Members in connection with the
appointment of such successor.
5.3 Removal. The Managing Member may be removed only for intentional
misconduct hereunder or a knowing violation of law which causes material damage
to the Company (and by which the Managing Member personally gained a financial
profit to which it was not legally entitled). Subject to Section 5.1(b), any
vacancy occurring as a result of such removal from office shall be filled as set
forth in Section 5.2.
5.4 Specific Actions.
(a) Without limiting the generality of Sections 5.1 and 5.2, but subject
to the provisions of Sections 5.4(b), the Managing Member shall have the power
and authority, on behalf of the Company and any other legal entity represented
by the Company and in which the Company exercises significant management
control, among other things, to:
(i) acquire property in the ordinary course of business from any
person (including Members or affiliates of any thereof);
(ii) purchase liability and other insurance to protect the property
and the business of the Company, or as may be required by the Members or
any lender to the Company;
(iii) employ, terminate employment of, and otherwise fix the terms
of employment and termination of employment of, employees of Company
(including Members or affiliates of Members);
(iv) invest Company funds in time deposits, short-term governmental
obligations, commercial paper or other similar investments or in any other
capital asset or investment in the ordinary course of business;
(v) execute on behalf of the Company instruments and documents,
including, without limitation, checks, drafts, notes and other negotiable
instruments, leases (and alterations, modifications or terminations
thereof), partnership agreements, and any other instruments or documents
necessary, in the opinion of the Managing Member, to the business of the
Company and relating to transactions that have been approved in accordance
with this Agreement;
(vi) borrow money for the Company in the ordinary course of
business, on a secured or unsecured basis, from banks or any other person
(including Members or affiliates of any thereof);
(vii) enter into any and all other agreements on behalf of the
Company, including, without limitation, any guaranties, with any other
person (including Members or
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affiliates of any thereof), for any purpose in the ordinary course of
business, in such forms as the Managing Member may approve;
(viii) institute, prosecute, defend and settle legal, administrative
or other suits, claims or proceedings against or by the Company or in the
Company's name and engage counsel in connection with any such suit, claim
or proceeding;
(ix) purchase, construct or otherwise acquire real property, or
acquire any equity interest therein;
(x) purchase or otherwise acquire all or substantially all of the
assets of, or shares or interests in, any company, corporation,
partnership, limited liability company, joint venture, trust or other
enterprise; and
(xi) do and perform any and all other lawful acts as may be
necessary or appropriate to conduct the business of the Company.
(b) The Members shall be required to authorize the following acts or
transactions by the Managing Member on behalf of the Company:
(i) the sale, exchange or other disposition of all or substantially
all of the Company's business or assets, in a single transaction or a
series of related transactions;
(ii) any assignment for the benefit of creditors of the Company ,the
filing of a voluntary petition in bankruptcy, or the appointment of a
receiver for the Company; and
(iii) the repurchase of an Interest of a disassociated Member
pursuant to Section 7.3.
(c) Any deed, bill of sale, mortgage, security agreement, contract of sale
or other commitment to convey or encumber substantially all of the Company's
assets shall be signed by the Managing Member.
5.5 Duties and Liability of Managing Member.
(a) The Managing Member shall perform his or her duties as Managing Member
in good faith and with that degree of diligence and care that an ordinarily
prudent person in a like position would use under similar circumstances. The
Managing Member shall be entitled to rely on information, opinions, reports or
statements including financial statements, in each case prepared by one or more
agents or employees, counsel, public accountants or other persons employed by
the Company as to matters that the Managing Member believes to be within such
person's competence.
(b) The Managing Member shall not be personally liable for the debts,
obligations or liabilities of the Company solely by reason of being a Managing
Member. The Company shall indemnify and hold the Managing Member (and, where
applicable, its officers, partners, members,
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directors, shareholders, employees, agents and affiliates) harmless from and
against all Losses incurred as a result of or in connection with (i) any claim
that the Managing Member is liable for any debt, obligation or liability of the
Company or in connection with any act or omission, or any injury suffered, by
any employee of the Company, or is directly or indirectly required to make
payments in respect thereof or in connection therewith, and (ii) any act or
omission by the Managing Member for or on behalf of the Company, provided that
such act or omission was consistent with the Managing Member's duties set forth
in Section 5.5(a).
5.6 Reimbursement and Compensation of Managing Member. All reasonable
direct costs and expenses incurred by the Managing Member in conducting the
business and affairs of the Company shall be reimbursed by the Company as a
Company expense.
5.7 Other Activities. This Agreement shall not preclude or limit, in any
respect, the right of the Managing Member or any of his or her affiliates to
engage or invest, directly or indirectly, in any business activity or venture of
any nature or description. Neither the Company nor any Member shall have any
right to participate in any investments made by, or other activities of, the
Managing Member.
5.8 Accounting by Managing Member. The Managing Member shall account to
the Company for, and hold as trustee for the Company, any profit or benefit
derived by the Managing Member from any transaction connected with the conduct
or winding up of the Company or from any personal use by the Managing Member of
the Company's property without the consent of the Members.
5.9 Delegation to Agents and Officers. The Managing Member may delegate
functions relating to the day-to-day operations of the Company to such officers,
agents, consultants or employees as he or she may from time to time designate or
appoint and remove from office. Such officers, agents, consultants and employees
shall have such duties, powers, responsibilities and authority as may from time
to time be prescribed by the Managing Member, and may be removed at any time,
with or without cause, by the Managing Member.
5.10 Other Duties of Managing Member. In addition to its other duties set
forth herein, the Managing Member:
(a) shall provide to the Members periodic reports summarizing the business
and operations of the Company, including receipts, expenses and charges, in such
form and reasonable detail as the Managing Member may determine;
(b) shall maintain the books and records of the Company, as required under
the Act, and permit each Member access thereto during normal business hours and
upon reasonable prior notice;
(c) shall cause to be timely prepared and sent to each Member a copy of
the Company's federal, state and local income tax or information returns for
each fiscal year of the Company, together with Schedules K-1;
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(d) shall determine, from time to time, the method of accounting and the
independent accountants for the Company;
(e) may make, on behalf of the Company, the election permitted by Code
Section 754 with respect to adjustments to the basis of Company property;
(f) shall, promptly following receipt thereof, give notice to the Members
of any proposed audit or adjustments of any Company tax returns; and
(g) shall maintain, in the name of the Company, bank accounts in which
receipts in respect of the Company's business shall be deposited and from which
all expenses shall be paid.
5.12 Tax Matters Partner. As long as the Managing Member is the Managing
Member and a Member, it is hereby designated as the Company's "Tax Matters
Partner" for purposes of the Internal Revenue Code, and, if the Managing Member
ceases to be a Member or the Managing Member, the successor Managing Member
shall be the Company's Tax Matters Partner as long as it is a Member. If there
is no Managing Member, or if the Managing Member is not a Member, the Members
shall appoint a Tax Matters Partner.
ARTICLE VI
ASSIGNMENTS OF INTERESTS
6.1 Transferability of Interests. Except as otherwise set forth in this
Agreement, a Member may not assign, encumber, pledge or otherwise transfer (any
of which is referred to as a "Transfer") its Interest, any portion thereof or
any rights therein, with or without consideration, to any person or entity
without the prior written consent of both the Managing Member, in its capacity
as such, and all of the remaining Members. Unless an assignee becomes a
substituted Member in accordance with the provisions of Section 6.2, an assignee
shall not be entitled to exercise any of the rights or powers of a Member, other
than the rights to share in profits and losses and to receive such distributions
and allocations of income, loss, deduction or credit or similar items to which
its assignor would otherwise have been entitled (to the extent any such rights
are assigned to the assignee in accordance with this Section). Any Transfer in
violation of this Section shall be null and void and will not bind the Company
or the Managing Member.
6.2 Substitution of Members. An assignee of an Interest shall become a
substituted Member only upon the fulfillment of all of the following conditions:
(a) the assignor shall have assigned to the assignee all of the assignor's
voting and financial rights with respect to the Interest or portion thereof
assigned;
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(b) all of the Members, other than the assignor, shall have consented to
the substitution of the assignee as a Member (unless substitution occurs
pursuant to Section 6.4 or 7.2(b));
(c) the assignee shall have paid to the Company all costs and expenses
incurred in connection with such assignee's substitution as a Member, including,
without limitation, all costs and expenses incurred in connection with amending
this Agreement; and
(d) the assignee shall have executed a counterpart of this Agreement and
such other documents as the Managing Member shall reasonably request to effect
the substitution of the assignee as a Member, including, without limitation, an
assumption of all the assignor's then outstanding obligations hereunder.
6.3 Effect of Substitution. A Member shall cease to be a Member and to
have the power to exercise any rights or powers of a Member upon assignment of
all of its Interest in compliance with the conditions set forth in Sections 6.1
and 6.2. Such Member shall, however, remain liable for his pre-existing
obligations to the Company in any event. The pledge or other encumbrance of
rights in respect of an Interest shall not cause the Member pledging or
encumbering such Interest to cease to be a Member or to have the power to
exercise any rights or powers of a Member.
6.4 Permitted Transfers. The restrictions set forth in Sections 6.1 and
6.2(b) shall not apply to the issuance of an Interest directly by the Company to
a new Member in accordance with Section 2.2, or to any Transfer of an Interest,
any portion thereof or any interest therein, to (a) another Member or (b) the
successor-in-interest of a Member.
ARTICLE VII
DISASSOCIATION OF A MEMBER
7.1 Disassociation. A Member shall cease to be a Member upon the
occurrence of any of the following events:
(a) the Member's bankruptcy, insolvency, or making an assignment for the
benefit of his creditors;
(b) the dissolution and commencement of winding up of the Member.
A Member may not otherwise withdraw voluntarily from the Company before its
dissolution and winding up.
7.2 Rights of Disassociating Member. Subject to the right of the Company
to repurchase the disassociated Member's Interest in the manner, and at the
price, set forth in Section 7.3:
Upon the disassociation of any Member from the Company for any reason set
forth in
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Section 7.1 (a) or (b), the Member (or its successors-in-interest) shall be
entitled to be paid such economic benefits or profits, losses and other
distributions to which the Member would have been entitled as a Member,
including the amount of any distributions to which the Member is entitled under
this Agreement at the time of disassociation, but it shall not (i) be a Member,
(ii) be entitled to vote on any matter, (iii) be entitled to any return of
capital, except at such time or times that the remaining Members become so
entitled; or (iv) be entitled to be paid fair market value for his or her
Interest or otherwise bought out, notwithstanding any provision in the Act to
the contrary.
(b) Upon the disassociation of any Member from the Company for any reason
set forth in Section 7. 1 (b), the successors-in-interest to such Member shall
become substituted Members in his or her place subject to the requirements of
Section 6.2.
7.3 Repurchase Rights.
(a) The Interest of a Member who disassociates from the Company for any
reason set forth in Section 7.1 (a "Disassociation Event") may be repurchased,
at the Company's option, from such Member (or his or her successors-in-interest)
(any of which is referred to as the "Selling Member") as set forth in this
Section. At any time within six months after it receives notice of a
Disassociation Event, the Company may elect, by written notice (the "Purchase
Notice") given to the Selling Member, to repurchase the Selling Member's
Interest for an aggregate amount equal to the Purchase Price (as defined below).
The purchase of a Selling Member's Interest hereunder shall take place on the
date designated in the Purchase Notice, which date shall be not more than one
year after notice of the Disassociation Event was delivered (the "Closing
Date").
(b) The price for a Selling Member's Interest under Section 7.3(a) (the
"Purchase Price") shall be based on the Company's value as a going concern,
including its goodwill. If the Selling Member and the Company cannot agree on
the Purchase Price within 30 days after the end of the six-month period referred
to in Section 7.3 (a), the Purchase Price shall be the appraised value of the
Selling Member's Interest, determined as of the date on which notice of the
Disassociation Event was delivered, by an appraiser jointly designated by the
Selling Member and the Company. If the parties cannot agree upon an appraiser
within ten days following the date on which they acknowledge that they cannot
otherwise agree on the Purchase Price, the Purchase Price shall be determined by
two appraisers, one of which shall be chosen by the Selling Member and the other
of which shall be chosen by the Company within ten days following the date on
which such parties acknowledge that they cannot otherwise agree on a single
appraiser. In the appraisal process, an appropriate discount shall be taken on
the value of an Interest by reason of the fact that it is a minority Interest.
If the two appraisers agree upon the appraised value, they shall jointly render
a written report thereof to the Selling Member and the Company. If the
appraisers have not so agreed, within 15 days following their appointment, they
shall appoint a third appraiser, who shall appraise the Company's assets,
determine the appraised value and render a written report thereof. In such a
case, the appraised value shall be the average of the closest two of the three
appraisals. The two appraisers' determination (or the third appraiser's
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determination of the appraised value hereunder, if required) shall be conclusive
and binding on the parties. Each party shall pay the fees and expenses of the
appraiser designated by that party and shall bear one-half of the fees and
expenses of a single appraiser, or of the third appraiser, if required.
ARTICLE VIII
DISSOLUTION
8.1 Dissolution. Notwithstanding anything contained in the Act to the
contrary, the Company shall be dissolved, and its affairs wound up, only upon
the written consent of Members, including the Managing Member, holding more than
75% of all Percentage Interests, provided that the Managing Member, if a Member,
and all Members that are affiliates of the Managing Member, shall have so
consented.
8.2 Winding Up. Upon dissolution of the Company, its affairs shall be
wound up promptly by the Managing Member (in such capacity, collectively, the
"Liquidator").
8.3 Distributions. Unless otherwise required by law, the proceeds of any
dissolution of the Company shall be distributed in the following order of
priority:
(a) first, to the payment of the debts and liabilities of the Company,
including liabilities to disassociated Members and to Members who are also
creditors of the Company, and the expenses of dissolution and liquidation;
(b) then, to the establishment of any reserves which the Liquidator shall
deem reasonably necessary for payment of such other debts and liabilities of the
Company (contingent or otherwise), as are specified by the Liquidator, such
reserves to be held by a bank or trust company selected by the Liquidator, as
escrow holder, to be disbursed as directed by the Liquidator in payment of any
of the specified debts and liabilities or, at the expiration of such period as
the Liquidator may deem advisable, to be distributed in the manner hereinafter
provided; and
(c) finally, to the Members consistent with Article III.
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ARTICLE IX
MISCELLANEOUS
9.1 Integration; Amendments. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and no
amendment, alteration or modification hereof shall be binding unless in writing
and signed by all Members.
9.2 Benefits and Obligations. Except as otherwise specifically provided
herein, this Agreement shall be binding upon and shall inure to the benefit of
each of the Members and their respective successors and permitted assigns.
9.3 Severability. If any provision of this Agreement, or portion thereof,
or the application thereof to any person or circumstance, is invalid or
unenforceable, then the remainder of this Agreement, or the application of the
provision or portion thereof to other persons or circumstances, shall not be
affected thereby, provided that if any provision or portion thereof or the
application thereof is invalid or unenforceable, then a suitable or equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid or enforceable, the intent and purpose of the invalid or unenforceable
provision or portion thereof.
9.4 Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware applicable to agreements made
and wholly performed therein by residents thereof, and specifically, the Act.
9.5 No Right to Petition for Dissolution. The Members agree that
irreparable harm would be done to the business and goodwill of the Company if
any Member were to bring an action under the Act for the judicial dissolution of
the Company. Accordingly, each Member, in his capacity as such, hereby
irrevocably waives any such right to petition for dissolution of the Company
under the Act, and all similar rights under other applicable law, except to the
extent such relief may be sought by the Company itself as authorized by the
Members in accordance with this Agreement.
9.6 No Third-Party Beneficiaries. The covenants, obligations and rights
set forth in this Agreement are not intended to benefit any creditor of the
Company or of any Member or assignee thereof or any other third person, and
except as permitted by applicable law in connection with certain wrongful
distributions, no such person shall, under any circumstances, have any right to
compel any actions or payments by the Managing Member and/or the Members or
shall, by reason of any provision contained herein, be entitled to make any
claim in respect of any debt, liability, obligation or otherwise against the
Company or any Member.
9.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
14
<PAGE>
9.8 Headings. The headings in this Agreement are solely for convenience of
reference and shall not affect its interpretation.
9.9 Arbitration. Any controversy or claim arising out of or relating to
this Agreement or under or in connection with any other agreement or instrument
relating to the Business, shall be finally resolved by arbitration pursuant to
the Commercial Arbitration Rules of the American Arbitration Association. Any
such arbitration shall take place in New York, New York, before a single
arbitrator chosen in accordance with such Rules. The parties further agree that
(a) the arbitrator shall be empowered to order injunctive relief and/or specific
performance of the terms and conditions of this Agreement, as well as to include
arbitration costs and attorneys' fees in the award to the prevailing party in
any such proceeding, and (b) the award in such proceeding shall be final and
binding on the parties. Judgment on the arbitrators' award may be entered in any
court having the requisite jurisdiction. Nothing in this Agreement shall require
the arbitration of disputes between the parties that arise from actions, suits
or proceedings instituted by third parties.
IN WITNESS WHEREOF, the parties hereto have duly executed this Limited
Liability Company Agreement as of the date first set forth above.
Channel One Communications Corporation
By:
----------------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
Haas Publishing Companies, Inc.
By:
----------------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
15
<PAGE>
EXHIBIT 3.117
CERTIFICATE OF INCORPORATION
OF
CSK Publishing Company Incorporated
FIRST. - The name of this Corporation is CSK Publishing Company
Incorporated
SECOND. - Its registered office in the State of Delaware is to be located
at 229 South State Street, in the City of Dover, County of Kent.
The Registered Agent in charge thereof is The Prentice Hall Corporation System,
Inc. at 229 South State Street, Dover Delaware 19901.
THIRD. - The nature of the business and, the object and purposes proposed
to be transacted, promoted and carried on, are to do any or all the things
herein mentioned, as fully and to the same extent as natural persons might or
could do, and in any part of the world, viz;
The purpose of the corporation is to engage in any Lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
<PAGE>
FOURTH. - The amount of the total authorized capital stock of this
corporation is, _______________________________________ divided into one
thousand _______________ shares, of No-Par Value each.
FIFTH. - The names and mailing addresses of each of the incorporator or
incorporators are as follows:
Name MAILING ADDRESSES
Herbert J. Cohen 161 Locust Ave., Rye, N.Y. 10580
Jules Kroll 200 Locust Ave., Rye, N.Y. 10580
Stephen Schneider 99-72 65th Road, N.Y., N.Y. 11374
SIXTH. - the Directors shall have power to make and to alter or amend the
By- Laws: to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of this Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
authority to dispose, in any manner, of the whole property of this corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them, shall be open to the inspection of
the stockholders; and no stockholder shall have any right of inspecting any
account, or book, or document of this corporation, except as conferred by the
law or the By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and
keep the books, documents and papers of the corporation outside the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
2
<PAGE>
It is the intention that the objects, purposes and powers specified in the
third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from the
terms of any other clause or paragraph in this Certificate of Incorporation, but
that the objects, purposes and powers specified in the third paragraph and in
each of the clauses or paragraphs of this Charter shall be regarded as
independent objects, purposes and powers.
WE, THE UNDERSIGNED, for the purpose of forming a Corporation under the
laws of the State of Delaware, do make, file and record this Certificate, and do
certify that the facts herein stated are true; and we have accordingly hereunto
set our respective hands.
DATED as of this first day of
May ____________ 1979
/s/ Herbert J. Cohen
--------------------------------
/s/ Jules Kroll
--------------------------------
/s/ Stephen Schneider
--------------------------------
<PAGE>
EXHIBIT 3.118
CSK PUBLISHING COMPANY INCORPORATED
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders of
the Corporation shall be held at such place either within or without the State
of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of stockholders
shall be held, at a date, time and place fixed by the Board of Directors and
stated in the notice of meeting, to elect a Board of Directors and to transact
such other business as may properly come before the meeting. Special meetings of
the stockholders may be called by the President for any purpose and shall be
called by the President or Secretary if directed by the Board of Directors or
requested in writing by the holders of not less than 25% of the capital stock of
the Corporation. Each such stockholder request shall state the purpose of the
proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10 and
not more than 60 days before each meeting of stockholders, written notice of the
time, date and place of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of record,
present in person or by proxy, of a majority of the Corporation's issued and
outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The
<PAGE>
first Board of Directors shall consist of three Directors. Thereafter, within
the limits specified above, the number of Directors shall be determined by the
Board of Directors or the stockholders. The Directors shall be elected by
stockholders at their annual meeting. Vacancies and newly created directorships
resulting from any increase in the number of Directors may be filled by a
majority of the Directors then in office, although less than a quorum, or by the
sole remaining Director or by the stockholders. A Director may be removed with
or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by the Board of
Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Director shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution adopted
by a majority of the whole Board, designate one or more committees, including,
without limitation, an Executive Committee, to have and exercise such power and
authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another Director to act at the
meeting in place of any such absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Secretary,
a Treasurer and such other additional officers with such titles as the Board of
Directors shall determine, all of which shall be chosen by and shall serve at
the pleasure of the Board of Directors. Such officers shall have the usual
powers and shall perform all the usual duties incident to their respective
offices. All officers shall be subject to the supervision and direction of the
Board of Directors. The authority, duties or responsibilities of any officer of
the Corporation may be suspended by the President with or without cause. Any
officer elected or appointed by the Board of Directors may be removed by the
Board of Directors with or without cause.
<PAGE>
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation Law,
the Corporation shall indemnify any current or former Director or officer of the
Corporation and may, at the discretion of the Board of Directors, indemnify any
current or former employee or agent of the Corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding brought by or in the right of the Corporation or otherwise, to which
he was or is a party by reason of his current or former position with the
Corporation or by reason of the fact that he is or was serving, at the request
of the Corporation, as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of Incorporation
or these By-Laws require notice to be given to any Director or stockholder, such
notice may be given in writing by mail, addressed to such Director or
stockholder at his address as it appears in the records of the Corporation, with
postage thereon prepaid. Such notice shall be deemed to have been given when it
is deposited in the United States mail. Notice to Directors may also be given by
telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors.
<PAGE>
Exhibit 3.119
1491090
ENDORSED
FILED
In the office of the
Secretary of State
of the State of California
DEC 21 1990
MARCH FONG EU, Secretary of State
ARTICLES OF INCORPORATION
OF
Go Lo Entertainment, Inc.
I. NAME
The name of the corporation is Go Lo Entertainment, Inc.
II. PURPOSE
The purpose of the corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business, or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III. AGENT FOR SERVICE OF PROCESS
The name and address in this state of the corporation's initial agent for
service of process is:
Alberto Lopez
3101 Pomona Blvd.
Pomona, CA 91764
IV. STOCK
The corporation is authorized to issue only one class of shares having a
total number of one million shares.
EXECUTION
IN WITNESS WHEREOF, the undersigned, who is the incorporator of this
incorporation, has executed these Articles of Incorporation on December 18,
1990.
/s/ Alberto Lopez
---------------------------
Alberto Lopez, Incorporator
-1-
<PAGE>
DECLARATION
I declare that I am the person who executed the above Articles of
Incorporation, and such instrument is my act and deed.
Executed on December 18, 1990, at Pomona, California.
/s/ Alberto Lopez
-----------------------
Alberto Lopez
-2-
<PAGE>
EX-3.120
BYLAWS OF
Go Lo Entertainment, Inc.
ARTICLE I. OFFICES
Principal Executive Office [Corp. Code Sec. 1502(a)]
Section 1.01. The principal executive office of the corporation is located
at 3101 Pomona Blvd., Pomona, CA 91768.
Other Offices
Section 1.02. The corporation may also have offices at such other places,
within or without the State of California, where the corporation is qualified to
do business, as the Board of Directors may from time to time designate or the
business of the corporation may require.
1
<PAGE>
ARTICLE II. DIRECTORS
Definitions
"Board"
Section 2.01. (a) As used in these Bylaws, the word "Board" means the
Board of Directors of the corporation.
"Directors"
(b) "Directors," as used in these bylaws in relation to any power or duty
requiring collective action, means the Board of Directors of the corporation.
Responsibility of Board [Corp. Code Sec. 300(a)]
Section 2.02. Subject to the provisions of the General Corporation Law and
to any limitations in the Articles of Incorporation relating to action required
to be approved by the shareholders, as that term is defined in California
Corporations Code Section 153, or by the outstanding shares, as that term is
defined in California Corporations Code Section 152, the business and affairs of
the corporation shall be managed and all corporate powers shall be exercised by
or under the direction of the Board of Directors. The Board may delegate the
management of the day-to-day operation of the business of the corporation to a
management company or other person provided that the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised under
the ultimate direction of the Board.
Number of Directors [Corp. Code Sec. 212(a)]
Section 2.03. The number of directors of the corporation shall be three.
Election and Term of Office [Corp. Code Sec. 301]
Section 2.04. Directors shall be elected at each annual meeting of
shareholders to hold office until the next annual meeting. Each director,
including a director elected to fill a vacancy (see Sec. 2.07 of these Bylaws),
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
2
<PAGE>
Resignation [Corp. Code Sec. 305 (d)]
Section 2.05. Any director may resign effective on giving written notice
to the Chairman of the Board, the President, the Secretary, or the Board of
Directors of the corporation, unless the notice specifies a later time for the
effectiveness of the resignation. If the resignation is effective at a future
tine, a successor may be elected to take office when the resignation becomes
effective.
Vacancies [Corp. Code Secs. 192,302-304]
When Vacancy Occurs [Corp. Code Sec. 192]
Section 2.06. (a) A vacancy on the Board occurs when any authorized
position of director is not filled by a duly elected director, whether caused by
death, resignation, removal, change in the authorized number of directors (by
the Board or the shareholders), or otherwise.
Declaration of Vacancy [Corp. Code Sec. 302]
(b) The Board may declare vacant the office of a director who has been
declared of unsound mind by order of court or convicted of a felony.
Removal of Directors by Shares [Corp. Code Sec. 303(a)]
(c) Any or all of the directors may be removed without cause if removal is
approved by the outstanding shares, as that term is defined in Section 152 of
the California Corporations Code, subject to the following:
(1) No director may be removed (unless the entire Board is removed) when
the votes cast against removal, or not consenting in writing to that
removal, would be sufficient to elect that director if voted
cumulatively at an election at which the same total number of votes
were cast (or, if action is taken by written consent, all shares
entitled to vote were voted) and the entire number of directors
authorized at the tine of the director's most recent election were
then being elected; and
(2) When by the provisions of the Articles the holders of the shares of
any class or series, voting as a class or series, are entitled to
elect one or more directors, any director so selected may be removed
only by the applicable vote of the holders of the shares of that
class or series.
3
<PAGE>
Removal by Court [Corp. Code Sec. 304]
(d) Shareholders holding at least ten percent of the number of outstanding
shares of any class of the corporation may sue in the superior court of the
county in which the principal executive office of the corporation is located to
remove from office any director in case of fraudulent or dishonest acts or gross
abuse of authority or discretion with reference to the corporation. In such a
case, the corporation must be made a party to the action.
Reduction of Authorized Number of Directors
[Corp. Code Sec. 303(b)]
(e) Any reduction of the authorized number of directors does not remove
any director prior to the expiration of the director's term of office.
Provisions Exclusive [Corp. Code Sec. 303(c)]
(f) Except as provided in paragraphs (a) through (d) of this Section 2.06,
no director may be removed from office prior to the expiration of the director's
term of office.
Filling Vacancies
By Board [Corp. Code Sec. 305(a)]
Section 2.07. (a) Except as otherwise provided in the Articles or in these
Bylaws, and except for a vacancy created by the removal of a director as
provided in Section 2.06, vacancies on the Board may be filled by approval of
the Board pursuant to Section 151 of the Corporations Code, or, if the number of
directors then in office is less than a quorum, by (1) the unanimous written
consent of the directors then in office; (2) the affirmative vote of a majority
of the directors then in office at a meeting held pursuant to notice or waivers
of notice complying with Section 307 of the Corporations Code; or (3) a sole
remaining director.
4
<PAGE>
By Shareholders [Corp. Code Secs. 305(a),(b),603(d)]
(b) Unless the Articles or a bylaw adopted by the shareholders provide
that vacancies occurring in the Board by reason of the removal of directors may
be filled by the Board, those vacancies may be filled only by approval of the
shareholders, as that term is defined in Section 153 of the California
Corporations Code. Moreover, the shareholders may elect a director at any time
to fill any vacancy not filled by the directors. Any election of directors by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote; provided, however, that no director shall be elected by
written consent to fill a vacancy created by removal of any director except by
the unanimous written consent of all shares entitled to vote for the election of
directors.
By Special Meeting [Corp. Code Sec. 305(c)]
(c) If, after the filling of any vacancy by the directors, the directors
then in office who have been elected by the shareholders shall constitute less
than a majority of the directors then in office, any holder or holders of an
aggregate of five (5) percent or more of the total number of shares at the time
outstanding having the right to vote for such directors may call a special
meeting of the shareholders, or apply to the superior court of the county in
which the principal executive office of the corporation is located for an order
that a special meeting be held to elect the entire Board. The term of office of
any director not elected by the shareholders shall terminate on the election of
a successor.
Call of Meetings [Corp. Code Secs. 212(b)(2), 307(a)(1)]
Section 2.08. Meetings of the Board may be called by the Chairman of the
Board, or the President, or any Vice President, or the Secretary, or any two
directors of the corporation.
Place of Meetings [Corp. Code Secs. 212(b)(2), 307(a)(5)]
Section 2.09. Meetings of the Board may be held at any place within or
without California which has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, designated by resolution of
the Board; and if not so designated, then at the principal executive office of
the corporation.
5
<PAGE>
Time of Regular Meetings [Corp. Code Secs. 212(b)(2),
307(a)(2)]
Section 2.10. Regular meetings of the Board of Directors shall be held on
the second Tuesday of March commencing at the hour of l0:A.M. Should any such
day as herein specified fall on a legal holiday, the meeting scheduled for that
day shall be held at the same hour on the next succeeding day which is not a
legal holiday.
Notice of Meetings [Corp. Code Secs. 113, 118,
212(b)(2), 307(a)(2)]
Section 2.11. Regular meetings of the Board may be held without notice.
Special meetings shall be held on four (4) days' notice by first-class mail,
postage prepaid, or forty-eight (48) hours' notice delivered personally or by
telephone or telegraph. The notice need not specify the purpose of the meeting.
Waiver of Notice [Corp. Code Secs. 212(b)(2),
307(a)(2), (3)]
Section 2.12. Notice of any meeting need not be given to any director who
signs a waiver of notice, or a consent to holding the meeting or an approval of
the minutes thereof, whether before or after the meeting, or who attends the
meeting without protesting, prior to the meeting or at its commencement, the
lack of notice to such director. Any waiver of notice need not specify the
purpose of the meeting. All waivers, consents, and approvals of minutes shall be
filed with the corporate records or made a part of the minutes of the meeting to
which they pertain.
Quorum [Corp. Code Secs. 212(b)(4), 307(a)(7)]
Section 2.13. A majority of the authorized number of directors constitutes
a quorum of the Board for the transaction of business.
Transactions of Board [Corp. Code Sec. 307(a)(8)]
Section 2.14. Except as otherwise provided in the Articles of
Incorporation or in these Bylaws, every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present is the act of the Board, subject to the provisions of Sections 2.23 and
2.28 of these Bylaws.
6
<PAGE>
Withdrawal of Quorum [Corp. Code Sec. 307(a)(8)]
Section 2.15. Any meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum for
such meetings.
Adjournment [Corp. Code Sec. 307(a)(4)]
Section 2.16. A majority of the directors present, whether or not a quorum
is present, may adjourn any meeting to another time and place. If the meeting is
adjourned for more than twenty-four (24) hours, however, notice of the
adjournment to another time or place must be given prior to the time of the
adjourned meeting to the directors who were not present at the time of the
adjournment.
Section 2.17. [Reserved]
Conduct of Meetings [Corp. Code Sec. 212(b)(2)]
Section 2.18. At every meeting of the Board, the Chairman of the Board or,
in his absence, the President of the corporation or, in his absence, the Vice
President designated by him or, in the absence .of such designation, a chairman
chosen by a majority of the directors present shall preside. The Secretary of
the corporation shall act as Secretary of the Board. In the event the Secretary
shall be absent from any meeting, the Chairman may appoint any person to act as
secretary of the meeting.
Telephone Participation [Corp. Code Secs. 212(b)(2),
307(a)(6)]
Section 2.19. Members of the Board may participate in any meeting through
use of conference telephone or similar communications equipment, whenever, such
participation is authorized by resolution adopted by the Board, so long as all
members participating in such meeting can hear one another.
Action Without Meeting [Corp. Code Sec. 307(b)]
Section 2.20. Any action required or permitted to be taken by the Board
may be taken without a meeting, if all members of the Board shall individually
or collectively consent in writing to such action. Such written consent or
consents must be filed with the minutes of the proceedings of the Board. Action
by written consent has the same force and effect as a unanimous vote of the
directors.
7
<PAGE>
Duties of Directors [Corp. Code Sec. 309]
Section 2.21. (a) Each director shall perform the duties of a director,
including duties as a member of any committee of the Board on which the director
may serve, in good faith, in a manner such director believes to be in the best
interests of the corporation and with such care, including reasonable inquiry,
as an ordinarily prudent person in a like position would use under similar
circumstances.
(b) In performing his or her duties, each director shall be entitled, so
long as in any such case he or she acts in good faith after reasonable inquiry
when the need for it is indicated by the circumstances and without knowledge
that Would cause such reliance to be unwarranted, to rely on information,
opinions, reports, or statements, including financial statements and other
financial data, in each case prepared or presented by:
(1) One or more officers or employees of the corporation whom the
director believes to be reliable and competent in the matters
presented;
(2) Counsel, independent accountants, or other persons as to matters
which the director believes to be within such person's professional
or expert competence; or
(3) A committee of the Board on which the director does not serve, as to
matters within its designated authority, which committee the
director believes to merit confidence.
(c) A person who performs the duties of director in accordance with
paragraphs (a) and (b) of this Section 2.21 shall have no liability based on any
alleged failure to discharge the person's obligation as a director.
Compensation [Corp. Code Sec. 212(b)(2)]
Section 2.22. Directors shall receive such compensation for their services
and reimbursement for their expenses as shall be determined from time to time by
resolution of the Board. Any director may serve the corporation in any other
capacity as an officer, agent, employee, or otherwise and receive compensation
therefor.
8
<PAGE>
Transactions With Corporation [Corp. Code Sec. 310]
Section 2.23. (a) No contract or other transaction between the corporation
and one or more of its directors, or between the corporation and any
corporation, firm or association in which one or more of the directors of this
corporation has a material financial interest; is either void or voidable
because such director or directors or such other corporation, firm, or
association are parties or because such director or directors are present at the
meeting of the Board or Board committee which authorizes, approves, or ratifies
the contract or transaction, if:
(1) The material facts as to the transaction and as to the director's
interest are fully disclosed or known to the shareholders and such
contract or transaction is approved by the shareholders, as that
term is defined in Section 153 of the California Corporations Code,
in good faith, with the shares owned by the interested director or
directors not being entitled to vote thereon; or
(2) The material facts as to the transaction and as to such director's
interest are fully disclosed or known to the Board or Board
committee, and the Board or Board committee authorizes, approves, or
ratifies the contract or transaction in good faith by a vote
sufficient without counting the vote of the interested director or
directors and the contract or transaction is just and reasonable as
to the corporation at the time it is authorized, approved, or
ratified; or
(3) As to contracts or transactions not approved as provided in clauses
(1) and (2) above, of this paragraph (a), the person asserting the
validity of the contract or transaction sustains the burden of
proving that the contract or transaction was just and reasonable as
to the corporation at the time it was authorized, approved, or
ratified.
A mere common directorship does not constitute a material financial
interest within the meaning of the above provisions. Nor is a director
interested within the meaning of the above provisions in a resolution fixing the
compensation of another director as a director, officer, or employee of
corporation, notwithstanding the fact that the first director is also receiving
compensation from the corporation.
(b) No contract or other transaction between the corporation and any
corporation or association of which one or more of the directors of this
corporation are directors is either void or voidable because such director or
directors are present at the Board or Board committee meeting which authorizes,
approves, or ratifies the contract or transaction, if:
9
<PAGE>
(1) The material facts as to the transaction and as to such director's
other directorship are fully disclosed or known to the Board or
Board committee, and the Board or Board committee authorizes,
approves, or ratifies the contract or transaction in good faith by a
vote sufficient without counting the vote of the common director or
directors or the contract or transactions approved by the
shareholders, as that term is defined in Section 153 of the
California Corporations Code, in good faith; or
(2) As to contracts or transactions not approved as provided in clause
(1) of this paragraph (b), the contract or transaction is just and
reasonable as to the corporation at the time it is authorized,
approved, or ratified.
This provision does not apply to contracts or transactions covered by
paragraph (a) of this Section 2.23.
(c) Interested or common directors may be counted in determining the
presence of a quorum at a meeting of the Board or Board committee which
authorizes, approves, or ratifies a contract or transaction.
Liability of Directors [Corp. Code Sec. 316(a), (b), (e)]
Section 2.24. (a) Subject to the provisions of Section 2.21 of these
Bylaws, directors who approve any of the following corporate actions shall be
jointly and severally liable to the corporation for the benefit of all of the
creditors or shareholders entitled to institute an action under Section 316(c)
of the California Corporations Code:
(1) The making of any distribution to its shareholders, as that term is
defined in Section 166 of the California Corporations Code, to the
extent that it is contrary to the provisions of Sections 500 to 503,
inclusive, of the California Corporations Code.
(2) The distribution of assets to shareholders after institution of
dissolution proceedings of the corporation, if any, without paying
or adequately providing for all known liabilities of the
corporation, excluding any claims not filed by creditors within the
time limit set in the notice given to creditors under the provisions
of Sections 1800 to 2011, inclusive, of the California Corporations
Code.
(3) The making of any loan or guaranty contrary to Section 315 of the
California Corporations Code.
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(b) a director who is present at a meeting of the Board, or any Board
committee, at which action specified in paragraph (a) of this Section 2.24 is
taken and who abstains from voting shall be considered to have approved the
action.
(c) Directors liable under this Section of these Bylaws shall be entitled
to be subrogated to the rights of the corporation:
(1) With respect to clause (1) of paragraph (a) of this Section 2.24,
against shareholders who received the distribution.
(2) With respect to clause (2) of paragraph (a) of this Section 2.24,
against shareholders who received the distribution of assets.
(3) With respect to clause (3) of paragraph (a) of this Section 2.24,
against the person who received the loan or guaranty.
Indemnification [Corp. Code Sec. 317]
Definitions [Corp. Code Sec. 317(a)]
Section 2.25. (a) For the purposes of Sections 2.26-2.32 of these Bylaws,
"agent" means any person who is or was a director, officer, employee, or other
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, or other enterprise.
(b) For the purposes of Sections 2.26-2.32 of these Bylaws, "proceeding"
means any threatened, pending, or completed action or proceeding whether civil,
criminal, administrative, or investigative; and "expenses" include without
limitation attorneys' fees and any expenses of establishing a right to
indemnification under Section 2.27 or Paragraph (d) of Section 2.28.
Power to Indemnify [Corp. Code Sec. 317(b), (c)]
Section 2.26. (a) The corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any proceeding
(other than an action by or in the right of the corporation to procure a
judgement in its favor) by reason of the fact that that person is or was an
agent of the corporation, against expenses, judgements, fines, settlements, and
other amounts actually and reasonably incurred in connection with that
proceeding if the person acted in good faith and in a manner the person reason
ably believed to be in the best interests of the corporation and, in the case of
a criminal proceeding, had no
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reasonable cause to believe the conduct of that person was unlawful. The
termination of any proceeding by judgement, order, settlement, conviction, or on
a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner that the
person reasonably believed to be in the best interests of the corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
(b) The corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action by or in the right of the corporation to procure a judgement in
its favor by reason of the fact that the person is or was an agent of the
corporation, against expenses actually and reasonably incurred by the person in
connection with the defence or settlement of that action if that person acted in
good faith, in a manner such person believed to be in the best interests of the
corporation and its shareholders. No indemnification shall be made for any of
the following:
(1) Any claim, issue, or matter for which any person shall have been
adjudged to be liable to the corporation in the performance of that
person's duty to the corporation and its shareholders, unless and
only to the extent that the court in which the proceeding was or is
pending shall determine on application that, in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for expenses, and then only to the extent that
the court shall determine;
(2) Amounts paid in settling or otherwise disposing of a threatened or
pending action, with or without court approval; or
(3) Expenses incurred in defending a threatened or pending action that
is settled or otherwise disposed of without court approval.
Expenses of Successful Agent [Corp. Code Sec. 317(d)]
Section 2.27. To the extent that an agent of this corporation has been
successful on the merits in the defense of any proceeding referred to in Section
2.26 or in defense of any claim, issue, or matter therein, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.
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Determination That Indemnification Is Proper
[Corp. Code Sec. 317(e)]
Section 2.28. Except as provided in Section 2.27, any indemnification
under Sections 2.26-2.31 of these Bylaws shall be made by the corporation only
if authorized in the specific case, on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Section 2.26 by:
(a) A majority vote of a quorum consisting of directors who are not
parties to that proceeding;
(b) If such a quorum of directors is not obtainable, by independent
legal counsel in a written opinion;
(c) Approval of the shareholders, as that term is defined in Section 153
of the California Corporations Code, with the shares owned by the
person to be indemnified not being entitled to vote thereon; or
(d) The court in which that proceeding is or was pending on application
made by the corporation or the agent or the attorney or other person
rendering services in connection with the defence, whether or not
the application by the agent, attorney, or other person is opposed
by the corporation.
Advance of Expenses [Corp. Code Sec. 317(f)]
Section 2.29. Expenses incurred in defending any proceeding may be
advanced by the corporation prior to the final disposition of that proceeding on
receipt of an undertaking by or on behalf of the agent to repay that amount if
it is determined ultimately that the agent is not entitled to be indemnified as
authorized in Sections 2.26-2.31 of these Bylaws.
Nonexclusive Provisions [Corp. Code Sec. 317(g)]
Section 2.30. The indemnification authorized by Sections 2.26-2.31 of
these Bylaws shall not be deemed exclusive of any additional rights to
indemnification for breach of duty to the corporation and its shareholders while
acting in the capacity of a director or officer of the corporation to the extent
the additional rights to indemnification are authorized in an article provision
adopted pursuant to California Corporations Code Section 204(a) (11). The
indemnification provided by Sections 2.26-2.31 of these Bylaws for acts,
omissions, or transactions while acting in the capacity of, or while serving as,
a director or officer of the corporation but not involving breach of duty to the
corporation and
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its shareholders shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any bylaw, agreement, vote
of shareholders or disinterested directors, or otherwise, to the extent the
additional rights to indemnification are authorized in the Articles.
An Article provision authorizing indemnification "in excess of that
otherwise permitted by Corporations Code Section 317" or "to the fullest extent
permissible under California law" or the substantial equivalent thereof shall be
construed to be both a provision for additional indemnification for breach of
duty to the corporation and its shareholders as referred to in, and with the
limitations required by, California Corporations Code Section 204(a)(11), and a
provision for additional indemnification.
The rights to indemnity hereunder shall continue for a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of the person. Nothing
contained in this Section shall affect any right to indemnification to which
persons other than the directors and officers may be entitled by contract or
otherwise.
Limitation on Indemnification [Corp. Code Sec. 317(h)]
Section 2.31. No indemnification or advance shall be made under Sections
2.26-2.29 of these Bylaws, except as provided in Section 2.27 or Paragraph (d)
of Section 2.28, in any circumstance in which it appears:
(a) That it would be inconsistent with a provision of the Articles, these
Bylaws, a resolution of the shareholders, or an agreement in effect at the time
of the accrual of the alleged cause of action asserted in the proceeding in
which the expenses were incurred or other amounts were paid, that prohibits or
otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed by
a court in approving a settlement.
Insurance [Corp. Code Sec. 317(i)]
Section 2.32. The corporation shall have power to purchase and maintain
insurance on behalf of any agent against any liability asserted against or
incurred by the agent in that capacity or arising out of the agent's status as
an agent, whether or not the corporation would have power to indemnify the agent
against that liability under the provisions of Sections 2.25-2.31 of these
Bylaws.
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The fact that the corporation owns all or a portion of the shares of the
company issuing a policy of insurance shall not affect the corporation's power
to purchase and maintain that insurance in the following circumstances: (1) if
authorized in the corporation's articles, any policy issued is limited to the
extent provided in Corporations Code Section 204(d); or (2) the company issuing
the policy is organized, licensed, and operated in a manner that complies with
the insurance laws and regulations applicable to its jurisdiction of
organization; that company provides procedures for processing claims that do not
permit it to be subject to direct control of the corporation that purchased the
policy; and the policy provides for some manner of risk sharing between the
issuer and purchaser of the policy, and some unaffiliated person or persons.
Risk sharing may be undertaken by providing for more than one unaffiliated owner
of the company issuing the policy, or by providing that a portion of the
coverage furnished will be obtained from some unaffiliated insurer or reinsurer.
Board Committees
Authority to Appoint [Corp. Code Sec. 311]
Section 2.33. (a) The Board may, by resolution adopted by a majority of
the authorized number of directors, designate one or more committees, each
consisting of two or more directors, to serve at the pleasure of the Board. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent member at any meeting of the committee. The
appointment of members or alternate members of a committee shall require the
vote of a majority of the authorized number of directors.
Authority of Committee [Corp. Code Sec. 311]
(b) Any such committee referred to in paragraph (a) of this Section 4.33,
to the extent provided in the Board resolution or in these Bylaws, shall have
all the authority of the Board, except with respect to:
(1) The approval of any action for which the General Corporation Law
also requires shareholders' approval, as that term is defined in
Section 153 of the California Corporations Code, or approval of the
outstanding shares, as that term is defined in Section 152 of the
California Corporations Code.
(2) The filling of vacancies on the Board or in any committee.
(3) The fixing of compensation of the directors for serving on the Board
or on any committee.
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(4) The amendment or repeal of these Bylaws or the adoption of new
bylaws.
(5) The amendment or repeal of any resolution of the Board which by its
express terms is not so amendable or repealable.
(6) A distribution to the shareholders of the corporation, as defined in
Section 166 of the California Corporations Code, except at a rate or
in a periodic amount or within a price range determined by the
Board.
(7) The appointment of other committees of the Board or the members
thereof:
Applicability of Other Sections [Corp. Code Sec. 307(c)]
(c) The provisions of Sections 2.08-2.17, inclusive, and of Sections 2.19
and 2.20 of this Article II apply to such committees, mutatis mutandis.
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ARTICLE III. DETERMINING SHAREHOLDERS
OF RECORD
Record Date Fixed by Board [Corp. Code Secs. 212(b)(7),
701(a)]
Section 3.01. (a) In order that the corporation may determine the
shareholders entitled to notice of any meeting or to vote, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than sixty (60) nor less than ten (10) days prior to the date of such meeting
nor more than sixty (60) days prior to any of the other aforementioned actions.
Record Date Not Fixed [Corp. Code Sec. 701(b)]
(b) If no record date is fixed:
(1) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be the close of
business on the business day next preceding the day on which notice
is given or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held.
(2) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (see Sec.
4.16), when no prior action by the Board has been taken, shall be
the day on which the first written consent is given.
(3) The record date for determining shareholders for any other purpose
shall be the close of business on the day on which the Board adopts
the resolution relating thereto, or the sixtieth (60th) day prior to
the date of such other action, whichever is later.
Record Date for Adjourned Meeting [Corp. Code Sec. 701(c)]
(c) A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board fixes a new record date for the adjourned meeting. The Board
must, however, fix a new record date if the meeting is adjourned for more than
forty-five (45) days from the date set for the original meeting.
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Rights of Shareholders of Record [Corp. Code Sec. 701(4)]
(d) Shareholders at the close of business on the record date are entitled
to notice and to vote or to receive the dividend, distribution, or allotment of
rights, or to exercise the rights, as the case maybe, notwithstanding any
transfer of any shares on the books of the corporation after the record date,
except as otherwise provided in the Articles or by agreement or in the General
Corporation Law.
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ARTICLE IV. SHAREHOLDERS' MEETINGS
Place of Meetings [Corp. Code Secs. 212(b)(2), 600(a)]
Section 4.01. Meetings of shareholders shall be held at any place within
or without the State of California designated in the notice of the meeting or by
resolution of the Board of Directors. In the absence of any such designation or
resolution, shareholders' meetings shall be held at the principal executive
office of the corporation.
Annual Meeting
Time of Meeting; Business Transacted
[Corp. Code Secs. 212(b)(2), (4), 600(b), 601(a)]
Section 4.02. (a) The annual meeting of shareholders shall be held on the
second Tuesday of March of each year, at the hour of 10:30 A.M., provided,
however, that should said day fall on a legal holiday, then at the same time on
the next day thereafter which is not a legal holiday. At such meetings directors
shall be elected, reports on the affairs of the corporation shall be considered,
and any other proper matter may be presented and business transacted which is
within the power of the shareholders.
Failure to Hold [Corp. Code Secs. 177, 600(c)]
(b) If there is a failure to hold the annual meeting for a period of sixty
(60) days after the date designated therefor as provided in paragraph (a) of
this Section 4.02, any shareholder may apply to the superior court of the
county in which the corporation's principal executive office is located for an
order compelling the corporation to hold the meeting. The shares represented at
the meeting so held, either in person or by proxy, and entitled to vote thereat
shall constitute a quorum for the purpose of such meeting, notwithstanding any
provision of the Articles, these Bylaws, or the General Corporation Law to the
contrary.
Notice of Meetings [Corp. Code Secs. 212(b)(2), 601(a)]
Section 4.03. (a) Whenever shareholders are required or permitted to take
any action at a meeting, a written notice of the meeting shall be given to each
shareholder entitled to vote thereat, subject to the provisions of paragraph (f)
of this Section 4.03.
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Method of Giving Notice [Corp. Code
Secs. 212(b)(2), 601(b)]
(b) Notice of a shareholders' meeting shall be given either personally or
by mail, postage prepaid, or other means of written communication, addressed to
the shareholder at the address of such shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice; or if no such address appears or is given, at the place where the
principal executive office of the corporation is located or by publication at
least once in a newspaper of general circulation in the county in which the
principal executive office is located. The notice shall be deemed to have been
given at the time when delivered personally or deposited in the mail or sent by
other means of written communication.
If any notice addressed to the shareholder at the address of such
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver it to the shareholder at such
address, all future notices shall be deemed to have been duly given without
further mailing if the same shall be available for the shareholder on written
demand of the shareholder at the principal executive office of the corporation
for a period of one year from the date of the giving of the notice to all other
shareholders.
Time of Notice [Corp. Code Secs. 212(b)(2), 601(a))
(c) Notice of any meeting of the shareholders shall be sent by first-class
mail to each shareholder entitled thereto not less than ten (10) nor more that
sixty (60) days before the date of the meeting; provided, however, that at any
time that this corporation has outstanding shares held of record by 500 or more
persons (determined as provided in Section 605 of the California Corporations
Code) on the record date for the shareholders' meeting, notice may be sent by
third-class mail if sent not less than 30 days before the date of the meeting.
Contents of Notice [Corp. Code Sec. 601(a), (f)]
(d) The notice of any meeting of the shareholders shall state the place,
date, and hour of the meeting and: (1) in the case of a special meeting, the
general nature of the business to be transacted, and no other business may be
transacted; or (2) in the case of the annual meeting, those matters which the
Board, at the time of the mailing of the notice, intends to present for action
by the shareholders, but any proper matter may be presented at the meeting for
such action, provided, however, that any shareholder approval at a meeting,
other than unanimous approval by those
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entitled to vote, pursuant to Section 310 (relating to contracts and
transactions between the corporation and any director or legal entity in which a
director has a material financial interest (see Sec. 2.23 of these Bylaws)),
Section 902 (relating to amendment of the articles), Section 1201 (relating to
reorganizations), Section 1900 (relating to voluntary dissolution), or Section
2007 (relating to distribution plans on dissolution) of the Corporations Code
shall be valid only if the general nature of the proposal so approved was stated
in the notice of meeting or in any written waiver of notice. The notice of any
meeting at which directors are to be elected must include the names of nominees
intended at the time of the notice to be presented by management for election.
Notice of Adjourned Meeting [Corp. Code Sec. 601(d)]
(e) When a shareholders' meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken, provided,
however, that if the adjournment is for more than forty-five (45) days or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting must be given to each shareholder of record
entitled to vote at the meeting. At the adjourned meeting the corporation may
transact any business which might have been transacted at the original meeting.
Waiver of Notice and Other Defects
[Corp. Code Sec. 601(e), (f)]
(f) The transactions of any meeting of shareholders, however called and
noticed and wherever held, are as valid as though had at a meeting duly held
after regular call and notice, if a quorum (see Sec. 4.05 of these Bylaws) is
present either in person or by proxy and if, either before or after the meeting,
each of the persons entitled to vote, not present in person or by proxy, signs a
written waiver of notice, or a consent to the holding of the meeting, or an
approval of the minutes thereof. All such waivers, consents, and approvals must
be filed with the corporate records or made a part of the minutes of the
meeting. Except as provided in Paragraph (d) of this Section 4.03 and unless
otherwise provided in the Articles, neither the business to be transacted nor
the purpose of any regular or special meeting of shareholders need be specified
in any written waiver of notice, consent to the holding of the meeting, or
approval of the minutes of the meeting.
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Attendance by a person at any such meeting also constitutes a waiver of
notice to that person if he or she fails to object at the beginning of the
meeting to the transaction of business because the meeting was not lawfully
called or convened, but such attendance does not constitute a waiver of the
right to object to the consideration of matters required to be included in the
notice but not so included if the objection is expressly made at the meeting.
Calling of Special Meeting [Corp. Code Secs. 177,
212(b) (2), 601(c)]
Section 4.04. (a) On request in writing to the Chairman of the Board, or
the President, or a Vice President, or the Secretary of the corporation by any
person (other than the Board) entitled to call a special meeting of the
shareholders (see paragraph (b) of this Section 4.04), the officer forthwith
must cause notice to be given to the shareholders entitled to vote that a
meeting will be held at a time requested by the person or persons calling the
meeting, not less than thirty-five (35) nor more than sixty (60) days after
receipt of the request. If the notice is not given within twenty (20) days after
receipt of the request, the persons entitled to call the meeting may give the
notice or they may apply to the superior court of the county in which the
principal executive office of the corporation is located or an order, after
notice to the corporation giving it an opportunity to be heard, summarily
ordering the giving of the notice.
Persons Entitled to Call Special Meetings
[Corp. Code Secs. 212(b)(2), 600(d)]
(b) Special meetings of the shareholders may be called by the Board of
Directors, the Chairman of the Board, the President, or the holders of shares
entitled to cast not less than ten (10) percent of the votes at the meeting.
Quorum of Shareholders [Corp. Code Secs. 112, 602(a)]
Section 4.05. (a) A majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum at a meeting of shareholders,
provided, however, that whenever shares are disqualified by the General
Corporations Law from voting on any matter, they shall not be considered
outstanding for the determination of a quorum at any meeting to act on that
matter under any other provision of the General Corporation Law or the Articles
or these Bylaws.
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Loss of Quorum [Corp. Code Sec. 602(b)]
(b) The shareholders present at a duly called or held meeting at which a
quorum is present may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, if any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum.
Adjournment for Lack of Quorum [Corp. Code Sec. 602(c)]
(c) In the absence of a quorum, any meeting of shareholders may be
adjourned from time to time by the vote of a majority of the shares represented
either in person or by proxy, but no other business may be transacted, except as
provided in paragraph (b) of this Section 4.05.
Effect of Vote [Corp. Code Secs. 112, 602(a)]
Section 4.06. If a quorum is present, the affirmative vote of the majority
of the shares represented at the meeting and entitled to vote on any matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by the General Corporation Law or the Articles,
and except as provided in paragraph (a) of Section 4.05 of these Bylaws,
provided, however, that whenever shares are disqualified by the General
Corporation Law from voting on any matter, they shall not be considered
outstanding for the determination of the required vote to approve action on that
matter under any other provision of the General Corporation Law or the Articles
or these Bylaws.
Election of Directors [Corp. Code Sec. 708(c), (e)]
Section 4.07. Elections for directors need not be by ballot unless a
shareholder demands election by ballot at the meeting and before the voting
begins. In any election of directors, the candidates receiving the highest
number of votes of the shares entitled to be voted for them up to the number of
directors to be elected by such shares are elected.
Votes Per Share--Voting of Fractional Shares [Corp. Code Secs. 112,407, 700(a)]
Section 4.08. Except as provided in Section 4.09 and except as may
otherwise be provided in the Articles, each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote of
shareholders. A certificate for a fractional share shall, but scrip or warrants
shall not unless otherwise provided therein, entitle the holder to exercise
voting rights.
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Voting Multiple Shares [Corp. Code Sec. 700(b)]
Section 4.09. Any holder of shares entitled to vote on any matter may vote
part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, other than elections to
office, but, if the shareholder fails to specify the number of shares being
voted affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares the shareholder is entitled to
vote.
Cumulative Voting [Corp. Code Sec. 708(a)-(c)]
Section 4.10. Every shareholder entitled to vote at any election of
directors may cumulate votes and give one candidate a number of votes equal to
the number of directors to be elected multiplied by the number of votes to which
the shareholder's shares are entitled, or distribute them on the same principle
among as many candidates as the shareholder thinks fit. But no shareholder shall
be entitled to cumulate votes (i.e., cast for any one or more candidates a
number of votes greater than the number of the shareholder's shares) unless such
candidate's or candidates' names have been placed in nomination prior to the
voting and the shareholder has given notice at the meeting prior to the voting
of the shareholder's intention to cumulate votes. If any one shareholder has
given such notice, all shareholders may cumulate their votes for candidates in
nomination.
Voting of Shares by Fiduciaries, Minors, or Entities
[Corp. Code Secs. 702-704]
Section 4.11. (a) The rights of the persons and entities specified in this
section to vote shares are governed by the provisions of this Section of the
Bylaws.
Personal Representative [Corp. Code Sec. 702(a)]
(b) Except as provided in paragraph (i) of this Section 4.11, shares held
by an administrator, executor, guardian, conservator, or custodian may be voted
by such holder either in person or by proxy, without a transfer of the shares
into the holder's name.
Trustee [Corp. Code Sec. 702(a)]
(c) Shares standing in the name of a trustee may be voted by the trustee,
either in Person or by proxy, but no trustee shall be entitled to vote shares so
held without a transfer of them into the trustee's name.
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Receiver [Corp. Code Sec. 702(b)]
(d) Shares standing in the name of a receiver may be voted by the
receiver. Shares held by or under the control of a receiver may be voted by the
receiver without their being transferred into the receiver's name if authority
to so vote them is contained in the court order appointing the receiver.
Pledgee [Corp. Code Sec. 702(c)]
(e) Subject to the provisions of Section 4.12 of these Bylaws and except
where otherwise agreed in writing between the parties, a shareholder whose
shares are pledged shall be entitled to vote such shares until they have been
transferred into the name of the pledgee, and thereafter the pledgee shall be
entitled to vote the shares so transferred.
Minor [Corp. Code Sec. 702(d)]
(f) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the minor,
in person or by proxy, whether or not the corporation has notice, actual or
constructive, or the nonage, unless a guardian of the minor's property has been
appointed and written notice of the appointment given to the corporation.
Corporation [Corp. Code Sec. 703(a)]
(g) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxyholder as the bylaws of
such other corporation may prescribe or, in the absence of such provision, as
the board of directors of such other corporation may determine or, in the
absence of such determination, by the chairman of the board, president, or any
vice president of such other corporation, or by any other person authorized to
do so by the chairman of the board, president, or any vice president of such
other corporation. Shares which are purported to be voted or any proxy purported
to be executed in the name of a corporation (whether or not any title of the
person signing is indicated) shall be presumed to be voted or the proxy executed
in accordance with the foregoing provisions; unless the contrary is shown.
Subsidiary [Corp. Code Sec. 703(b)]
(h) Shares of the corporation owned by any subsidiary of the corporation
shall not be entitled to vote on any matter.
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Corporate Fiduciary [Corp. Code Sec. 703(c)]
(i) Shares held by the corporation in a fiduciary capacity, and shares of
the corporation held in a fiduciary capacity by its subsidiary, if any, shall
not be entitled to vote on any matter, except to the extent that the settlor or
beneficial owner possesses and exercises a right to vote or to give the
corporation binding instructions as to how to vote such shares.
Shares in Names of Two or More Persons
[Corp. Code Sec. 704]
(j) If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, husband
and wife as community property, tenants by the entirety, voting trustees,
(persons entitled to vote under a shareholder voting agreement,) or otherwise,
or if two or more persons (including proxyholders) have the same fiduciary
relationship respecting the same shares, unless the Secretary of the corporation
is given written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, their acts with respect to voting shall have the following effect:
(1) If only one votes, such act binds all.
(2) If more than one vote, the act of the majority so voting binds all.
(3) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionately.
If the instrument so filed or the registration of the shares shows that
any such tenancy is held in unequal interests, a majority or even split for the
purpose of the above shall be a majority or even split in interest.
Proxies [Corp. Code Sec. 705]
Section 4.12. (a) Every person entitled to vote shares may authorize
another person or persons to act by proxy with respect to such shares. Except as
otherwise provided by written agreement between the parties, the recordholder of
shares which a person holds as pledgee or otherwise as security or which belong
to another must issue to the pledgor or to the owner of such shares, on demand
therefor and payment of necessary expenses thereof, a proxy to vote or take
other action thereon.
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Presumptive Validity [Corp. Code Sec. 705(a)]
(b) Any proxy purporting to be executed in accordance with this Section
4.12 shall be presumptively valid.
Duration of Proxy [Corp. Code Sec. 705(b)]
(c) No proxy shall be valid after the expiration of eleven (11) months
from the date thereof unless otherwise provided in the proxy. Every proxy
continues in full force and effect until revoked by the person executing it
prior to the vote pursuant thereto, except as provided in paragraphs (f) and (g)
of this Section 4.12. The dates contained on the forms of proxy presumptively
determine the order of execution, regardless of the postmark dates on the
envelopes in which they are mailed.
Death or Incapacity of Maker [Corp. Code Sec. 705(c)]
(d) A proxy is not revoked by the death or incapacity of the maker, unless
(except as provided in paragraph (f) of this Section 4.12), before the vote is
counted, written notice of such death or incapacity is received by the
corporation.
Revocation of Proxy [Corp. Code Secs. 212(b)(3), 705(b)]
(e) Revocation of a proxy is effected by a writing delivered to the
corporation stating that the proxy is revoked or by a subsequent proxy executed
by, or as to any meeting by attendance at such meeting and voting in person by,
the person executing the proxy.
Proxy Providing for Irrevocability [Corp. Code Sec. 705(e)]
(f) A proxy which states that it is irrevocable is irrevocable for the
period specified therein (notwithstanding paragraph (d) of this Section 4.12)
when it is held by any of the following or a nominee of any of the following:
(1) A pledgee.
(2) A person who has purchased or agreed to purchase or holds an option
to purchase the shares or a person who has sold a portion of such
person's shares in the corporation to the maker of the proxy.
(3) A creditor or creditors of the corporation or the shareholder who
extended or continued credit to the corporation or the shareholder
in consideration of the proxy if the proxy states that it was given
in consideration of such extension or continuation of credit and the
name of the person extending or continuing credit.
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(4) A person who has contracted to perform services as an employee of
the corporation, if a proxy is required by the contract of the
employment and if the proxy states that it was given in
consideration of such contract of employment, the name of the
employee, and the period of employment contracted for.
(5) A beneficiary of a trust with respect to shares held by the trust.
In addition, a proxy may be made irrevocable (notwithstanding paragraph
(d) of this Section 4.12) if it is given to secure the performance of a duty or
to protect a title, either legal or equitable, until the happening of events
which, by its terms, discharge the obligations secured by it.
When Irrevocable Proxy Is Revocable [Corp.
Code Sec. 705(e), (f)]
(g) Notwithstanding the period of irrevocability specified in the proxy as
provided in paragraph (f) of this Section 4.12, the proxy becomes revocable when
the pledge is redeemed, the option or agreement to purchase is terminated, or
the seller no longer owns any shares of the corporation or dies, the debt of the
corporation or the shareholder is paid, the period of employment provided for in
the contract of employment has terminated or the agreement under section 706 of
the Corporation Code has terminated.
A proxy may be revoked, notwithstanding a provision making it irrevocable,
by a transferee of shares without knowledge of the existence of the provision
unless the existence of the proxy and its irrevocability appears on the
certificate representing such shares.
Form of Proxy or Written Consent [Corp. Code Sec. 604]
(h) Any form of proxy or written consent (see Section 4.16 of these
Bylaws) distributed to ten (10) or more shareholders must, if the outstanding
shares are held of record by one hundred (100) or more persons as determined
under Section 605 of the California Corporations Code, afford an opportunity on
the proxy or form of written consent to specify a choice between approval and
disapproval of each matter or group of related matters intended to be acted on
at the meeting for which the proxy is solicited or by such written consent,
other than elections to office, and must provide, subject to reasonable
specified conditions, that where the person solicited specifies a choice with
respect to any such matter the shares will be voted in accordance therewith.
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In any election of directors, any form of proxy in which the directors to
be voted on are named therein as candidates and which is marked by a shareholder
"withhold" or otherwise marked in a manner indicating that the authority to vote
for the election of directors is withheld shall not be voted either for or
against the election of a director.
Failure to comply with this paragraph (h) does not invalidate any
corporate action taken, but may be the basis for challenging any proxy at a
meeting and any shareholder may sue in the superior court to compel compliance
therewith.
Directors' Determination of Execution and Use of Proxies
[Corp. Code Sec. 212(b)(3)]
(i) The Board of Directors may, in advance of any annual or special
meeting of the shareholders, prescribe additional regulations concerning the
manner of execution and filing of proxies and the validation of the same, which
are intended to be voted at any such meeting.
Voting Trust [Corp. Code Sec. 706(b)]
Section 4.13. (a) Shares may be transferred by written agreement to
trustees in order to confer on them the right to vote and otherwise represent
the shares for such period of time, not exceeding ten (10) years, as may be
specified in the agreement. At any time within two (2) years prior to the time
of expiration of any voting trust agreement as originally fixed or as last
extended as provided in this paragraph, one or more beneficiaries under the
voting trust agreement may, by written agreement and with the written consent of
the voting trustee or trustees, extend the duration of the voting trust
agreement with respect to their shares for an additional period not exceeding
ten (10) years from the expiration date of the trust as originally fixed or as
last extended as provided in this paragraph. A duplicate of the voting trust
agreement and any extension thereof must be filed with Secretary of the
corporation and shall be open to inspection by a shareholder, a holder of a
voting trust certificate, or the agent of either, on the same terms as the
record of shareholders of the corporation is open to inspection.
Effect of Section [Corp. Code Sec. 706(d)]
(b) This section of the Bylaws is not intended to invalidate any voting or
other agreement among shareholders or any irrevocable proxy meeting the
requirements of paragraph (f) of Section 4.12 of these Bylaws.
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Inspectors of Election [Corp. Code Sec. 707]
Appointment [Corp. Code Sec. 707(a)]
Section 4.14. (a) In advance of any meeting of shareholders the Board may
appoint inspectors of election to act at the meeting and any adjournment
thereof. If inspectors of election are not so appointed, or if any persons so
appointed fail to appear on refuse to act, the chairman of any meeting of
shareholders may, and on the request of any shareholder or a shareholder's proxy
must, appoint inspectors of election (or persons to replace those who so fail or
refuse) at the meeting.
Number [Corp. Code Sec. 707(a)]
(b) The number of inspectors shall be either one or three. If the
inspector or inspectors are appointed at a meeting on the request of one or more
shareholders or proxies, the majority of shares represented in person or by
proxy shall determine whether one or three inspectors are to be appointed.
Duties [Corp. Code Sec. 707(b), (c)]
(c) The inspector or inspectors of election shall:
(1) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity, and effect of proxies.
(2) Receive votes, ballots, or consents.
(3) Hear and determine all challenges and questions in any way arising
in connection with the right to vote.
(4) Count and tabulate all votes or consents.
(5) Determine when the polls shall close.
(6) Determine the result of the election.
(7) Do such acts as may be proper to conduct the election or vote with
fairness to all shareholders.
(8) Perform his, her, or their duties impartially, in good faith, to the
best of his, her, or their ability and as expeditiously as is
practical.
Decision, Act, or Certificate [Corp. Code Sec. 707(c)]
(d) If there are three inspectors of election, the decision, act, or
certificate of a majority is effective in all respects as the decision, act, or
certificate of all. Any report or certificate made by the inspectors of election
is prima facie evidence of the facts stated in it.
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Conduct of Meetings [Corp. Code Sec. 212(b)(2)]
Section 4.15. At every meeting of the shareholders, the President of the
corporation, or in his absence the Vice President designated by the President,
or in the absence of such designation a chairman (who shall be one of the Vice
Presidents, if any is present) chosen by a majority in interest of the
shareholders of the corporation present in person or by proxy and entitled to
vote, shall act as chairman. The Secretary of the corporation, or in the
Secretary's absence and Assistant Secretary, if any, shall act as Secretary of
all meetings of the shareholders. In the absence at such meeting of the
Secretary and all Assistant Secretaries, if any, the chairman may appoint
another person to act as secretary for the meeting.
Action Without a Meeting [Corp. Code Sec. 603]
When Authorized [Corp. Code Sec. 603(a), (d)]
Section 4.16. (a) Unless otherwise provided in the Articles, any action
which may be taken at any annual or special meeting of shareholders may be taken
without a meeting and without prior notice, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted, provided, however, that directors may not be
elected by written consent except by the unanimous written consent of all shares
entitled to vote for the election of directors.
Notice of Shareholder Approval [Corp. Code Sec. 603(b)]
(b) Unless the consents of all shareholders entitled to vote have been
solicited in writing, notice to those shareholders entitled to vote who have not
consented in writing must be given as follows:
(1) Notice of any shareholder approval pursuant to Section 310 (relating
to contract or transaction between corporation and its director or
legal entity in which one or more of its directors has a material
financial interest (see sec. 2:23 of these Bylaws)), Section 317
(relating to indemnification by corporation of its director,
officer, employee, or agent arising out of court, administrative, or
investigative proceeding (see secs. 2.25-2.32 of these Bylaws)),
Section 1201 (relating to reorganizations), or Section 2007
(relating to plan of distribution on dissolution) of the California
Corporations Code without a meeting by less than unanimous written
consent must be given at least ten (10)
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days before the consummation of the action authorized by such
approval; and
(2) Prompt notice must be given of the taking of any other corporate
action approved by shareholders without a meeting by less than
unanimous written consent.
Paragraph (b) of Section 4.03 of these Bylaws, relating to the method of
giving notice, applies to the notice provided by this section.
Revocation of Consent [Corp. Code Sec. 603 (c)]
(c) Any shareholder giving a written consent, or the shareholder's
proxyholders, or a transferee of the shares, or a personal representative of the
shareholder, or their respective proxyholders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the corporation, but may not do so thereafter. The
revocation is effective on its receipt by the Secretary of the corporation.
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ARTICLE V. OFFICERS
Number and Titles [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.01. The officers of the corporation shall be a Chairman of the
Board or a President or both a Chairman of the Board and a President, a
Secretary, and a Chief Financial Officer who may also be called Treasurer. The
corporation may also have, at the discretion of the Board, any other officers
that may be appointed in accordance with the provisions of Section 5.03 of this
Article. One person may hold two or more offices. In its discretion, the Board
of Directors may leave unfilled, for any period it may fix, any office except
the offices of Chairman of the Board or President, Secretary, and Chief
Financial Officer.
Appointment [Corp. Code Secs. 212(b)(6), 312(b)]
Section 5.02. The officers of the corporation, except those officers that
are appointed in accordance with the provisions of Sections 5.03 or 5.05 of this
Article, shall be chosen annually by the Board. Each officer shall serve at the
pleasure of the Board, subject to any rights that he or she has under any
employment contract with the corporation, and shall hold office until the
appointment of his or her successor, or until his or her resignation, removal
from office pursuant to Section 5.04, or other disqualification.
Other Officers [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.03. The Board may appoint any officers that may be necessary to
enable the corporation to sign instruments and share certificates including one
or more Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. Each such officer shall hold office for the period, have
the authority, and perform duties that the Board may, by resolution, from time
to time determine.
Removal and Resignation [Corp. Code Secs. 212(b)(6), 312(b)]
Section 5.04. Any officer may be removed, either with or without cause,
subject to any rights of the officer under any employment contract with the
corporation, by the vote of the Board at any regular or special meeting of the
Board, or by the unanimous written consent of the directors then in office
without a meeting. Any officer may resign at any time without prejudice to any
rights of the corporation under any contract to which the officer is a party by
giving written notice to the Chairman of the Board, if there is such an officer,
or to the President, or to the Secretary of the corporation. Any such
resignation shall take effect on the date the notice is received unless a later
effective date is
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<PAGE>
specified, in which case the resignation is effective on the specified date.
Unless otherwise specified in the notice, acceptance of the resignation by the
Board shall not be necessary to make it effective.
Vacancies [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.05. If the office of Chairman of the Board, President,
Secretary, or Chief Financial Officer becomes vacant by reason of death,
resignation, removal, or otherwise, the Board shall fill it by appointing a
successor officer [who shall hold the office for the unexpired term). If any
other office becomes vacant, the Board may, in its discretion, leave it unfilled
for any period that it may fix or it may appoint a successor officer to fill the
vacancy.
Chairman of the Board [Corp. Code Secs. 212(b)(6), 312(a),
416(a)]
Section 5.06. The Chairman of the Board, if there is such an officer,
shall, if present, preside at all meetings of the Board and exercise and perform
any other powers and duties that are assigned to him or her by the Board or
prescribed by law or by these Bylaws. When so directed by the Board, the
Chairman shall, with the Secretary or an Assistant Secretary, if any, or the
Chief Financial Officer or Assistant' Treasurer, if any, sign share
certificates. Signatures on the certificates may be facsimile.
President [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.07. Subject to the supervisory powers, if any, that may be given
by the Board to the Chairman of the Board, if there is such an officer, the
President shall be the chief executive officer of the corporation and, except as
otherwise provided in these Bylaws, shall have: (1) general supervision,
direction, and control of the business and officers of the corporation; (2) the
general powers and duties of management usually vested in the office of,
President of a corporation; and (3) any other powers and duties prescribed by
the Board or by these Bylaws. Within this authority and in the course of his or
her duties, the President shall:
Meetings
(a) Preside at all meetings of the shareholders, preside at Board Meetings
in the absence of the Chairman of the Board, or if there is none, at all
meetings of the Board, and be ex officio a member of all Board committees.
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Share Certificates [Corp. Code Sec. 416(a)]
(b) Except when otherwise directed by the Board, sign, with the Secretary
or an Assistant Secretary, if any, or the Chief Financial Officer or Assistant
Treasurer, if any, all share certificates of the corporation. Signatures on the
certificates may be facsimile.
Instruments
(c) Sign all corporate instruments on behalf of the corporation as
provided in Section 6.02 of Article VI of these Bylaws.
Hire and Fire Employees
(d) Subject to direction from the Board, appoint and remove, employ and
discharge, and prescribe the duties and fix the compensation of all agents and
employees of the corporation other than the officers. These functions may,
however, be delegated by the President, or the Board, to specified persons in
the various levels of management.
Voting Shares of Other Corporations
[Corp. Code Sec. 703(a)]
(e) Unless otherwise directed by the Board and subject to its control,
attend in person and, unless prohibited by law, act and vote, on behalf of this
corporation, at all meetings of the shareholders of any corporation in which
this corporation holds shares.
Vice President [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.08. In the absence or disability of the President, the Vice
President or the Vice Presidents if there are more than one in order of their
rank as fixed by the Board, or if not ranked the Vice President designated by
the Board, shall perform all the duties of the President and shall for this
purpose act within the President's scope of authority. The Vice President or the
Vice Presidents shall have any other powers and perform any other duties
prescribed for them respectively by the Board or by these Bylaws.
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Secretary [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.09. The Secretary shall:
Seal [Corp. Code Sec. 207(a)]
(a) Have custody of the corporate seal and shall affix it in appropriate
cases to all corporate instruments.
Records, Reports, and Statements
(b) Have custody of the records of the corporation and ensure that the
books, reports, statements, certificates, and all other documents and records
required by law are properly kept and filed.
Notices
(c) Ensure that all notices are given in accordance with the provisions of
these Bylaws or as required by law. In case of the Secretary's absence,
disability, or neglect or refusal to act, notice may be given and served or
caused to be served by an Assistant Secretary, if any, by the President or a
Vice President of the corporation, or by the Board of Directors.
Minutes
(d) Act as Secretary at all meetings of shareholders and of the Board and
record, or cause to be recorded, in the minute book all actions taken at those
meetings. In case of the Secretary's absence, disability, neglect of duties, or
refusal to act, this duty may be performed by an Assistant Secretary, if any, or
any other person appointed by the person presiding at the meeting.
Minute Book [Corp. Code Sec. 1500]
(e) Keep a written book of minutes, at the corporation's principal
executive office or other place designated by the Board, of all proceedings of
the corporation's shareholders, Board, and Board committees, including: the time
and place of meeting; whether the meeting was regular or special; the
authorization for any special meeting; the type of notice given, the names of
the persons attending Board and committee meetings; the number of shares present
or represented at shareholder meetings; and the proceedings of the meeting.
Articles of Incorporation [see Corp. Code Sec. 209]
(f) Keep the original or a copy of the Articles of Incorporation,
certified by the Secretary of State, with all amendments in the minute book.
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Bylaws [Corp. Code Sec. 213]
(g) Keep at the corporation's principal executive office the original or a
copy of these Bylaws to date, that shall be open to inspection by the
shareholders at all reasonable times during office hours.
Record of Shareholders [Corp. Code Sec. 1500]
(h) Keep at the corporation's principal executive office or at the office
of its transfer agent or registrar in California a record of the corporation's
shareholders, showing the names and addresses of all shareholders and the number
and class of shares held by each.
Certify Records [Corp. Code Sec. 314]
(i) When requested to do so by the Board, any director individually, a
Board committee, or the President or other officer of this corporation, or when
so required by law, certify as a true copy a copy of the Bylaws of the
corporation, or of the minutes of any meeting of the incorporators,
shareholders, directors, Board committee, or other, or of any resolution adopted
by the Board, a Board committee, or the shareholders. This duty may be performed
by any Assistant Secretary of the corporation.
Share Certificates [Corp. Code Sec. 416(a)]
(j) Sign, with the Chairman of the Board or the Vice Chairman, if any, or
the President or a Vice-President, all share certificates of the corporation. In
lieu of signing by the Secretary, the certificates may be signed by an Assistant
Secretary, if any, or by the Chief Financial Officer or Assistant Treasurer, if
any, of the corporation. Signatures on the certificates may be facsimile.
Exhibit Record of Shareholders [Corp. Code Sec. 1600(a), (c),
(d)]
(k) Make the record of shareholders available during usual business hours
for inspection and copying:
(1) To any shareholder or shareholders who hold at least 5 percent in
the aggregate of the outstanding voting shares of a corporation, or
who hold at least 1 percent of those voting shares and who have
filed a Schedule 14B with the United States Securities and Exchange
Commission relating to the election of directors of the corporation,
on five business days' prior written demand on the corporation; and
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(2) To any shareholder or holder of a voting trust certificate on
written demand on the corporation for a purpose reasonably related
to that holder's interests as a shareholder or holder of a voting
trust certificate.
Any inspection and copying under this paragraph may be made in person or
by agent or attorney.
Exhibit Minutes to Shareholder [Corp. Code Sec. 1601]
(l) On the written demand on the corporation of any shareholder or holder
of a voting trust certificate, make available for inspection at any reasonable
time during usual business hours to that shareholder or holder of such voting
trust certificate for a purpose reasonably related to that holder's interests as
a shareholder or as the holder of that voting trust certificate, or to his or
her agent or attorney, the minutes of any proceedings of the shareholders, the
Board, or Board committee, or any accounting books and records in the
Secretary's custody. This right of inspection includes the right to copy and
make extracts.
Exhibit Records to Director [Corp. Code Sec. 1602]
(m) Make available at any reasonable time to any director who requests, or
to his or her agent or attorney, for inspection all books, records, and
documents of every kind of the corporation that the Secretary is charged by
these Bylaws with maintaining and/or keeping or that are in the Secretary's
custody. This right of inspection includes the right to copy and make extracts.
Other Duties
(n) Perform any and all other functions and duties that may be specified
in other sections of these Bylaws and any other duties that may from time to
time be assigned by the Board.
Absence of Secretary
(o) In case of the Secretary's absence, disability, neglect of duties, or
refusal to act, the Assistant Secretary, or if there is none, the Chief
Financial Officer acting as Assistant Secretary may perform all of the functions
and duties of the Secretary. In case of the absence, disability, neglect of
duties, or refusal to act, of the Assistant Secretary or Chief Financial
Officer, as the case may be, as well as the Secretary, then any person
authorized by the President, Vice President, or Board of Directors shall perform
the functions and duties of the Secretary.
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Assistant Secretary [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.10. If the Board appoints one or more Assistant Secretaries,
then, at the request of the Secretary or in case of the Secretary's absence or
disability, the Assistant Secretary, or, if there is more than one, the
Assistant Secretary designated by the Secretary, shall perform all the duties of
the Secretary, and shall for this purpose act within the Secretary's scope of
authority. The Assistant Secretary or Assistant Secretaries shall also perform
any other duties that from time to time may be assigned to them by the Board or
by the Secretary.
Chief Financial Officer [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.11. The Chief Financial Officer shall:
Funds--Custody and Deposit
(a) Have charge and custody of, and be responsible for, all funds and
securities of the corporation, and deposit all the funds in the name of the
corporation in the banks, trust companies, or other depositaries selected by the
Board.
Funds--Receipt
(b) Receive, and give receipt for, moneys due and payable to the
corporation from any source whatever.
Funds--Disbursement
(c) Disburse or cause to be disbursed, the funds of the corporation as may
be directed by the Board, taking proper vouchers for those disbursements.
Maintain Accounts [Corp. Code Sec. 1500]
(d) Keep and maintain adequate and correct books and records of account
either in written form or in any other form capable of being converted into
written form.
Reports to President and Directors
(e) Render to the President and directors, whenever they request it, an
account of all transactions as Chief Financial Officer and of the financial
condition of the corporation.
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Financial Reports to Shareholders
[Corp. Code Secs. 114, 1501(a),(c),(d)]
(f) Take the following actions with respect to financial reports:
(1) Prepare, or cause to be prepared, the balance sheet, income
statement, and statement of changes in the corporation's financial
position for the fiscal year to be included in the annual report to
shareholders, and either ensure that the statements are accompanied
by a report on them of independent accountants or, if there is no
accountant's report, certify that the statements were prepared
without audit from the books and records of the corporation.
(2) On the written request of any shareholder or shareholders holding at
least 5 percent of the outstanding shares of any class, prepare, or
cause to be prepared, and deliver or mail to the person making the
request within 30 days after the request an income statement of the
corporation for the three-month, six-month, or nine-month period of
the current fiscal year ended more than 30 days prior to the date of
the request and a balance sheet of the corporation as of the end of
that period and, if no annual report for the last fiscal year was
sent to shareholders, the statements required by clause (l) of this
paragraph.
(3) Keep on file in the corporation's principal office for a period of
12 months a copy of the statements referred to in clause (2) of this
paragraph and exhibit them at all reasonable times to any
shareholder demanding an examination of them or mail a copy of them
to that shareholder.
(4) Either cause the quarterly income statements and balance sheets
referred to in clause (2) of this paragraph to be accompanied by the
report on the statements prepared by independent accountants engaged
by the corporation or, if there is no such report, certify that the
statements were prepared without audit from the books and records of
the corporation.
(5) Prepare the financial statements, balance sheets, income statements,
and statements of changes in financial position referred to in this
paragraph, or have them prepared, in accordance with generally
accepted accounting principles.
Exhibit Accounts to Shareholders [Corp. Code Sec. 1601]
(g) On the written demand on the corporation of any shareholder or holder
of a voting trust certificate, exhibit for inspection at any reasonable time
during usual business hours to
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that shareholder or holder of such voting trust certificate for a purpose
reasonably related to that holder's interests as a shareholder or as the holder
of such voting trust certificate, or to his or her agent or attorney any or all
of the accounting books and records of the corporation. This right of inspection
includes the right to copy and make extracts.
Exhibit Accounts to Directors [Corp. Code Sec. 1602]
(h) Exhibit at any reasonable time to any director of the corporation who
so requests, or to his' or her agent or attorney, for inspection any and all
books, records, and documents of every kind that the Chief Financial Officer is
charged by these Bylaws with maintaining and/or keeping or that are in the Chief
Financial Officer's custody. This right of inspection includes the right to copy
and make extracts.
Share Certificates [Corp. Code Sec. 416(a)]
(i) Sign, with the Chairman of the Board or Vice Chairman, if any, or the
President or a Vice President, all share certificates of the corporation. In
lieu of signing by the Chief Financial Officer, those certificates may be signed
by an Assistant Treasurer, if any, or by the Secretary or by an Assistant
Secretary, if any, of the corporation. Signatures on the certificates may be
facsimile.
Bond
(j) If required by the Board or the President, give to the corporation a
bond, with one or more sureties or a surety company, in a sum satisfactory to
the Board, for the faithful performance of the duties as Chief Financial Officer
and for the restoration to the corporation, in the event of the Chief Financial
Officer's death, resignation, retirement, or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in his or her
possession or under his or her control belonging to the corporation.
Other Duties
(k) Perform any and all other functions and duties required of the Chief
Financial Officer that may be specified in other sections of these Bylaws and,
in general, perform all the duties incident to the office of Chief Financial
Officer and such other duties as from time to time may be assigned by the Board.
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Absence of Chief Financial Officer
(1) In case of the Chief Financial Officer's absence, disability, refusal
to act, or neglect of duties, the Assistant Treasurer, or if there is none, the
Secretary acting as Assistant Treasurer may perform all of the functions and
duties of the Chief Financial Officer. In case of the absence, disability,
refusal to act, or neglect of duties, of the Assistant Treasurer or Secretary,
as the case may be, as well as of the Chief Financial Officer, then any person
authorized by the President or Vice President or by the Board shall perform the
functions and duties of the Chief Financial Officer.
Assistant Treasurer [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.12. If the Board appoints one or more Assistant Treasurers they
shall, if so required by the Board, each give a bond for the faithful discharge
of his or her respective duties in the sum, and with the sureties, as the Board
shall require. At the request of the Chief Financial Officer or in the case of
the Chief Financial Officer's absence or disability, the Assistant Treasurer
shall perform all the duties of the Chief Financial Officer and for these
purposes shall act within the Chief Financial Officer's scope of authority. If
there is more than one Assistant Treasurer, the Assistant Treasurer designated
by the Chief Financial Officer, or, if there has been no such designation, the
Assistant Treasurer designated by the Board, shall perform these duties. The
Assistant Treasurer or Assistant Treasurers shall also perform any other duties
that may from time to time be assigned to them by the Board of Directors or by
the Chief Financial Officer.
Compensation [Corp. Code Sec. 212(b)(6)]
Section 5.13. The officers of the corporation shall receive the salaries
and other compensation that are fixed from time to time by the Board, and no
officer shall be prevented from receiving that salary and compensation by reason
of the fact that he or she is also a director of the corporation.
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ARTICLE VI. EXECUTION OF INSTRUMENTS
AND DEPOSIT OF FUNDS
Limitations [see Corp. Code Sec. 313]
Section 6.01. Except as otherwise provided in these Bylaws, the Board may,
by duly adopted resolution, authorize any officer or agent of the corporation to
enter into any contract, or to execute and deliver any instrument, in the name
of and on behalf of this corporation. Authorization may be general or may be
confined to specified instances. Unless expressly authorized, no officer, agent,
or employee shall have any power or authority to bind the corporation by any
contract or engagement, or to pledge its credit, or to render it liable
pecuniarily for any purpose or in any amount.
Execution of Instrument and Papers
[see Corp. Code Secs. 313, 416(a)]
Section 6.02. Unless otherwise expressly required by the Board or by law,
deeds and other conveyances, promissory notes, deeds of trust, mortgages, and
other evidences of indebtedness of the corporation, and share certificates shall
be executed, signed, or endorsed by the Chairman of the Board, if any, or by the
President or a Vice President of the corporation, and by the Chief Financial
Officer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of the corporation. Signatures on share certificates only may be facsimile.
Signing of Checks
Section 6.03. All checks, drafts, or other orders for the payment of money
issued in the name of the corporation shall be signed by the person or persons
and in the manner determined from time to time by resolution of the Board.
Deposit and Withdrawal of Funds
Section 6.04. (a) All funds of the corporation, including all checks,
drafts, or other orders for the payment of money payable to the corporation,
shall be deposited by the Chief Financial Officer from time to time to the
credit of the corporation with any banks, trust companies, or other depositaries
that the Board may select or that may be selected by any Board committee,
officer, or agent of the corporation to whom that power may be delegated from
time to time by the Board. All checks, drafts, or other orders for the payment
of money requiring endorsement by the corporation before deposit shall be
endorsed "for deposit only" by handstamped impression in the name of the
corporation.
(b) The withdrawal of funds from any such accounts may be made only by
check signed as provided in Section 6.03 of this Article.
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ARTICLE VII. ISSUANCE OF SHARES AND
SHARE CERTIFICATES
Authority to Issue [Corp. Code Secs. 207(d), 400(a)]
Section 7.01. (a) The corporation may issue one or more classes or series
of shares or both, with full, limited, or no voting rights and with any other
rights, preferences, privileges, and restrictions that are stated or authorized
in its Articles of Incorporation. No denial of limitation of voting rights
shall, however, be effective unless at the time one or more classes or series of
outstanding shares or debt securities, singly or in the aggregate, are entitled
to full voting rights. No denial or limitation of divided or liquidation rights
shall be effective unless at the time one or more classes or series of
outstanding shares, singly or in the aggregate, are entitled to unlimited
dividend and liquidation rights.
Equality of Rights [Corp. Code Sec. 400(b)]
(b) All shares of any one class shall have the same voting, conversion,
and redemption rights and other rights, preferences, privileges, and
restrictions, unless the class is divided into series. If a class is divided
into series, all the shares of any one series shall have the same voting,
conversion, and redemption rights and other rights, preferences, privileges, and
restrictions.
Consideration [Corp. Code Sec. 409(a)(1), (b), (c)]
(c) Shares may be issued for any consideration that is determined from
time to time by the Board consisting of any or all of the following:
(1) Money paid;
(2) Labor done;
(3) Services actually rendered to the corporation or for its benefit or
in its formation or reorganization;
(4) Debts or securities canceled; and
(5) Tangible or intangible property actually received either by this
corporation or by any wholly owned subsidiary of this corporation.
Neither promissory notes of the purchaser (unless adequately secured by
collateral other than the shares acquired or unless permitted by Section 7.06 of
this Article) nor future services shall constitute payment or part payment of
shares of the corporation.
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When shares are issued for any consideration other than money, the Board
must state by resolution its determination of the fair value of the
consideration to the corporation in monetary terms.
In the absence of fraud in the transaction, the judgement of the directors
as to the value of the consideration for shares shall be conclusive.
Share Dividends; Reclassification of Shares
[Corp. Code Sec. 409(a)(2)]
(d) Shares may also be issued as a share dividend or on a stock split,
reverse stock split, reclassification of outstanding shares into shares of
another class, conversion of outstanding shares into shares of another class,
exchange of outstanding shares for shares of another class, or other change
affecting outstanding shares.
Compliance with Corporate Securities Law
(e) The corporation shall not offer to sell or sell any security issued by
it, whether or not through underwriters, until the offer or sale has been
qualified by the California Commissioner of Corporations as required by the
Corporate Securities Law and the rules and regulations of the Commissioner,
unless the security or transaction is exempted from the qualification and the
applicable statutes and rules and regulations have been complied with.
Payment for Shares [Corp. Code Sec. 410]
(f) Every subscriber to shares and every person to whom shares are
originally issued is liable to the corporation for the full consideration agreed
to be paid for the shares. The full agreed consideration shall be paid prior to
or concurrently with the issuance of the shares, unless the shares are issued as
partly paid pursuant to Section 7.03 of this Article, in which case the
consideration shall be paid in accordance with the agreement of subscription or
purchase.
Shares as Deemed Fully Paid [Corp. Code Sec. 409(b)]
(g) Except as provided in section 7.03 of this Article, shares issued as
provided in paragraphs (c) and (d) of this Section or Section 7.06 of this
Article shall be declared and taken to be fully paid stock and not liable to any
further call, nor shall the holder thereof be liable for any further payments
under the provisions of the General Corporation Law.
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Fractional Shares [Corp. Code Sec. 407]
Authority to Issue
Section 7.02. (a) The corporation may, if the Board so determines, issue
fractions of a share originally or on transfer.
Failure to Issue
(b) If the corporation does not issue fractions of a share, it shall, in
connection with any original issuance of shares:
(l) Arrange for the disposition of fractional interests by those
entitled to them;
(2) Pay in cash the fair value of fractions of a share as of the time
when those entitled to receive the fractions are determined
(provided, however, that the corporation may not pay cash for
fractional shares if that action would result in the cancellation of
more than 10 percent of the outstanding shares of any class); or
(3) Issue scrip or warrants in registered form, as certificated or
uncertificated securities, or in bearer form as certificated
securities, that shall entitle the holder to receive a certificate
for a full share on the surrender of the scrip or warrants
aggregating a full share. Scrip or warrants shall not, however,
unless they provide otherwise, entitle the holder to exercise voting
rights, to receive dividends thereon, or to participate in any of
the assets of the corporation in the event of liquidation.
Partly Paid Shares [Corp. Code Secs. 409(d), 410, 413]
Section 7.03. The corporation may, if the Board so determines, issue the
whole or any part of its shares as partly paid and subject to call for the
remainder of the consideration to be paid for them. If shares are so issued, the
corporation shall, on the declaration of any dividend on fully paid shares,
declare a dividend on partly paid shares of the same class, but only on the
basis of the percentage of the consideration actually paid on them.
A subscriber to partly paid shares is liable to the corporation as
provided in Section 7.01(f) of this Article, but a person holding shares as a
pledgee, executor, administrator, guardian, conservator, trustee, receiver, or
in any representative or fiduciary capacity is not personally liable for any
unpaid balance, although the estate and funds in the hands of the fiduciary or
representative are liable for any unpaid balance of the subscription price and
the shares are subject to sale therefor.
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Options [Corp. Code Sec. 404]
Section 7.04. Either in connection with the issue, subscription, or sale
of any of its shares, bonds, debentures, notes, or other securities, or
independently of the foregoing, the corporation may, if so determined by the
Board, grant options to purchase or subscribe for shares of any class or series
on any terms and conditions that the Board may deem expedient. Option rights may
be transferable or nontransferable and separable or inseparable from other
securities of the corporation, as determined by the Board.
No Preemptive Rights [Corp. Code Sec. 406]
Section 7.05. Unless the Articles provide otherwise, the Board may issue
shares, options, or securities having conversion or option rights without first
offering them to shareholders of any class.
Employee Plans
Authority to Adopt [Corp. Code Secs. 207(f), 408(a)]
Section 7.06. (a) The corporation may, as determined by the Board, and
subject to the approval of the shareholders, as that term is defined in
California Corporations Code Section 153, adopt and carry out a stock purchase
plan or agreement, or stock option plan or agreement providing for the issue and
sale for any consideration that may be fixed of its unissued shares or of issued
shares acquired or to be acquired, to one or more of the employees or directors
of the corporation or of any subsidiary or parent of the corporation or to a
trustee on their behalf and for the payment of those shares in installments or
at one time, and may provide for aiding those persons in paying for those shares
by compensation for services rendered, promissory notes, or otherwise.
Includable Features [Corp. Code Sec. 408(b)]
(b) The plan or agreement may include, among other features, as determined
by the Board, the fixing of eligibility for participating in it; the class and
price of shares to be issued or sold under the plan or agreement; the number of
shares that may be subscribed for; the method of payment for the shares; the
reservation of title until full payment has been made; the effect of the
termination of employment; an option or obligation on the part of the
corporation to repurchase the shares on termination of employment, subject to
California Corporations Code Sections 500-511; restrictions on transfer of
shares; and the time limits of and termination of the plan.
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Certificates of Determination
Execution of Officers' Certificate
[Corp. Code Secs. 173, 401(a)]
Section 7.07. (a) Before the corporation issues any share of any class or
series of which the rights, preferences, privileges, and restrictions, or any of
them, or the number of shares constituting any series or the designation of the
series, are not set forth in the Articles but are fixed in a resolution adopted
by the Board pursuant to authority given in its articles, an officers'
certificated, as that term is defined in California Corporations Code Section
173, setting forth a copy of the resolution and the number of shares of the
class or series, and stating that none of the shares of the class or series has
been issued, shall be executed and filed in the office of the California
Secretary of State.
Change in Rights [Corp. Code Sec. 401(b), (d), (e)]
(b) After any certificate of determination as provided in Paragraph (a) of
this section has been filed in the office of the California Secretary of State,
but before the corporation has issued any shares of the class or series covered
by it, the Board may alter or revoke any right, preference, privilege, or
restriction fixed or determined by the resolution set forth in it by the
adoption of another resolution appropriate for that purpose and the execution
and filing of an officers's certificate settling forth a copy of the resolution
and stating that none of the shares of the class or the series affected has been
issued
After shares of a class or series have been issued, the provisions of the
resolution set forth in a certificate of determination may be amended only by
the adoption and approval of an amendment in accordance with California
Corporations Code Sections 902, 903, or 904, and the filing of a certificate of
amendment in accordance with California Corporations Code Sections 905 and 908.
However, a certificate to increase or decrease the number of shares of a series
also may be filed as permitted by California Corporations Code Section 401(c),
as set forth in Paragraph (c) of this section.
When the Board effects a change in rights, the provision of the original
certificate of determination being amended must be identified in the amendment
in accordance with California Corporations Code Section 907(a).
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Shareholder's Right to Share Certificate
[Corp. Code Sec. 416(a)]
Section 7.08. (a) Every holder of shares in the corporation shall be
entitled to have a certificate signed in the name of the corporation by the
Chairman of the Board, if any, or the President or a Vice President and by the
Chief Financial Officer or an Assistant Treasurer, or the Secretary or any
Assistant Secretary of the corporation, certifying the number of shares and the
class or series of shares owned by the shareholder. Any or all of the signatures
on the certificate may be facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed on a
certificate shall have ceased to be an officer, transfer agent, or registrar
before that certificate is issued, the certificate may be issued by the
corporation with the same effect as if that person were an officer, transfer
agent, or registrar at the date of issue.
Fractional Shares [Corp. Code Sec. 407]
(b) If the corporation issues fractions of a share originally or on
transfer, it shall issue certificates for those shares as provided in paragraph
(a) of this section. A certificate for a fractional share shall entitle the
holder to exercise voting rights, to receive dividends thereon, and to
participate in any of the assets of the corporation in the event of liquidation.
Partly Paid Shares [Corp. Code Sec. 409(d)]
(c) If the corporation issues partly paid shares, it shall issue
certificates for those shares as provided in paragraph (a) of this section.
Contents of Certificate [Corp. Code Secs. 409(d), 417, 418(a),
(c), (d)]
Section 7.09. (a) The certificates shall contain the matter specified in
Section 7.08(a) of this Article. In addition, if the shares of the corporation
are classified or if any class of shares has two or more series, there shall
appear on the certificate one of the following:
(1) A statement of the rights, preferences, privileges, and restrictions
granted to or imposed on each class or series of shares authorized
to be issued and on the holders thereof.
(2) A summary of the rights, preferences, privileges, and restrictions
with reference to the provisions of the Articles of Incorporation
and any certificates of determination establishing those rights and
restrictions.
(3) A statement setting forth the office or agency of the
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corporation from which shareholders may obtain, on request and
without charge, a copy of the statement referred to in clause (1) of
this paragraph.
(b) There shall also appear on the certificate (unless stated or
summarized under clause (1) or clause (2) of paragraph (a) of this section the
statements required by all of the following clauses to the extent applicable:
(1) The fact that the shares are subject to restrictions on transfer.
(2) If the shares are assessable or are not fully paid, a statement that
they are assessable or a statement of the total amount of
consideration to be paid and the amount paid, as required by
Corporations Code Section 409(d).
(3) The fact that the shares are subject to a voting agreement under
California Corporations Code Section 706(a) or an irrevocable proxy
under California Corporations Code Section 705(e) or restrictions on
voting rights contractually imposed by the corporation.
(4) The fact that the shares are redeemable.
(5) The fact that the shares are convertible and the period for
conversion.
Exchange of Certificates
On Amendment of Articles or Otherwise
[Corp. Code Sec. 422(a)]
Section 7.10. (a) If the Articles are amended in any way affecting the
statements contained in the certificates for outstanding shares, or it becomes
desirable for any reason, in the discretion of the Board of Directors, to cancel
any outstanding certificate for shares and issue a new certificate therefor
conforming to the rights of the holder, the Board may order any holders of
outstanding certificates for shares to surrender and exchange them for new
certificates within a reasonable time to be fixed by the Board.
Contents of Order [Corp. Code Sec. 422(b)]
(b) The order may provide that a holder of any certificates so ordered to
be surrendered is not entitled to vote or to receive dividends or exercise any
of the other rights of shareholders until the holder has complied with the
order, but the order operates to suspend those rights only after notice and
until compliance. The duty of surrender of any outstanding certificates may also
be enforced by the corporation by civil action.
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Lost, Stolen, or Destroyed Certificate; Issuance of New
Certificate [Corp. Code Sec. 419(a)]
Section 7.11. (a) The corporation may issue a new share certificate or a
new certificate for any other security in the place of any certificate therefore
issued by it, alleged to have been lost, stolen, or destroyed. The corporation
may require the owner of the lost, stolen, or destroyed certificate, or the
owner's legal representative, to give the corporation a bond (or other adequate
security) sufficient to indemnify it against any claim that may be made against
it (including any expense or liability) on account of the alleged loss, theft,
or destruction of any certificate or the issuance of a new certificate.
Purchase by Bona Fide Purchaser
[Com. Code Sec. 8405(3)]
(b) If after a new security has been issued for a lost, destroyed, or
stolen security, a bona fide purchaser of the original security presents it for
registration or transfer, the corporation must register the transfer unless
registration would result in over issue, in which event the corporation's
liability is that set forth in the last paragraph of Section 8.03 of Article
VIII of these Bylaws. In addition to any rights on the indemnity bond, the
corporation may recover the new security from the person to whom it was issued
or any person taking under him or her except a bona fide purchaser.
Alternative System in Lieu of Certificates
[Corp. Code Sec. 416(b))
Section 7.12. Notwithstanding the provisions of paragraph (a), Section
7.08, of this Article VII, the corporation may adopt a system of issuance,
recordation, and transfer of its shares by electronic or other means not
involving any issuance of certificates, including provisions for notice to
purchasers in substitution for the required statements on the certificates under
paragraphs (a) and (b) of Section 7.09 of this Article VII, which system has
been approved by the United States Securities and Exchange Commission, or which
is authorized in any statute of the United States, or is in accordance with
Division, 8 of the California Commercial Code.
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ARTICLE VIII. TRANSFER OF SHARES
Duty of Corporation [Com. Code Sec. 8401(1)]
Section 8.01. When a security in registered form is presented to the
corporation with a request to register transfer, the corporation is under a duty
to register the transfer as required if:
(a) The security is indorsed by the appropriate person or persons;
(b) Reasonable assurance is given that those indorsements are genuine and
effective;
(c) The corporation has no duty to inquire into adverse claims or has
discharged any such duty; and
(d) Any applicable law relating to the collection of taxes has been
complied with.
Nobility of Corporation
Registration of Transfer [Com. Code Sec. 8404(2)]
Section 8.02. (a) Except as otherwise provided in any law relating to the
collection of taxes, the corporation is not liable to the owner or any other
person suffering loss as a result of the registration of a transfer of a
security if:
(1) There were on or with the security the necessary indorsements; and
(2) The corporation had no duty to inquire into adverse claims or has
discharged any such duty.
Failure to Notify Corporation of Lost, Destroyed, or Stolen
Security [Com. Code Sec. 8405(1)]
(b) Where a security has been lost, apparently destroyed, or wrongfully
taken and the owner fails to notify the corporation of that fact within a
reasonable time after he or she has notice of it and the corporation registers a
transfer of the security before receiving such notification, the owner is
precluded from asserting against the corporation any claim for registering the
transfer or any claim to a new security.
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Liability of Corporation [Com. Code Secs. 8104, 8404(2)]
Section 8.03. Where the corporation has registered a transfer of a
security to a person not entitled to it, the corporation on demand must deliver
a like security to the true owner unless:
(a) The registration was pursuant to paragraph (a) of Section 8.02 of this
Article VIII;
(b) The owner is precluded from asserting any claim for registering the
transfer as provided in paragraph (c) of Section 8.02 of this Article VIII; or
(c) Such delivery would result in overissue.
In this latter case, if an identical security which does not constitute an
overissue is reasonably available for purchase, the person entitled to such
issue may compel the corporation to purchase and deliver it to him or her
against surrender of the security, if any, which he or she holds; or if such a
security is not available for purchase, the person entitled to such issue may
recover from the corporation the purchase price such person or the last
purchaser for the value paid for it with interest from the date of the demand.
Liability on Transfer of Partly Paid Shares
Good Faith Purchaser [Corp. Code Sec. 411]
Section 8.04. (a) A transferee of shares for which the full agreed
consideration has not been paid to the corporation, who acquired them in good
faith, without knowledge that they were not paid in full or to the extent stated
on the certificate representing them, is liable only for the amount shown by the
certificate to be unpaid on the shares represented thereby, until transferee
transfers the shares to one who becomes liable therefor. The liability of any
holder of such shares who derives title through such a transferee and who is not
a party to any fraud affecting the issue of the shares is the same as that of
the transferee through whom title was derived.
Purchase With Knowledge [Corp. Code Sec. 412]
(b) Every transferee of partly paid shares who acquired them under a
certificate showing the fact of part payment, and every transferee of such
shares (other than a transferee who derives title through a holder in good faith
without knowledge and who is not party to any fraud affecting the issue of such
shares) who acquired them with actual knowledge that the full agreed
consideration had not been paid to the extent stated on the certificate
therefor, is personally liable to the corporation for
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installments of the amount unpaid becoming due until the shares are transferred
to one who becomes liable therefor.
Transferor [Corp. Code Sec. 411, 412]
(c) In either case mentioned in paragraph (a) or (b) of this Section 8.04,
the transferor shall remain personally liable for the unpaid consideration if so
provided in the certificate or agreed on in writing.
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ARTICLE IX. CORPORATE RECORDS,
REPORTS, AND SEAL
Minutes of Meetings [Corp. Code Sec. 1500]
Section 9.01. The corporation shall keep minutes in written form of the
proceedings of its shareholders, Board, and Board committees.
Books and Records of Account [Corp. Code Sec. 1500]
Section 9.02. The corporation shall keep adequate and correct books and
records of account either in written form or in any other form capable of being
converted into written form.
Record of Shareholders [Corp. Code Sec. 1500]
Section 9.03. The corporation shall keep at its principal executive
office, or at the office of its transfer agent or registrar, a record of its
shareholders, giving the names and addresses of all shareholders and the number
and class of shares held by each. Such record must be kept either in written
form or in any other form capable of being converted into written form.
Shareholders' Rights to Inspect Record of Shareholders
by Written Demand of Holders of Specified Percentage
of Shares [Corp. Code Sec. 1600(a)]
Section 9.04. (a) A shareholder or shareholders holding at least five (5)
percent in the aggregate of the outstanding shares of the corporation shall have
an absolute right to:
(1) Inspect a copy of the record of shareholders' names and addresses
and shareholdings during usual business hours on five (5) business
days' prior written demand on the corporation; and
(2) Obtain from the corporation's transfer agent, on written demand and
on the tender of its usual charges for such a list (the amount of
which charges shall be stated to the shareholder by the transfer
agent on request), a list of shareholders' names and addresses, who
are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which it has
been compiled or as of a date specified by the shareholders
subsequent to the date of the demand. The list must be made
available on or before the later of five (5) business days after the
demand is received or the date specified therein as the date as of
which the list is to be compiled. The corporation shall have the
responsibility to cause its transfer agent to comply with this
requirement.
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By Written Demand of Any Shareholder
[Corp. Code Sec. 1600(c)]
(b) The record of shareholders shall also be open to inspection and
copying by any shareholder at any time during usual business hours on written
demand on the corporation, for a for purpose reasonably related to such holder's
interests as a shareholder.
Inspection by Agent or Attorney [Corp. Code Sec. 1600(d)]
(c) Any inspection and copying under this Section 9.04 may be made in
person or by agent or attorney.
Shareholders' Rights to Inspect Books of Account and
Minutes [Corp. Code Sec. 1601]
Section 9.05. The accounting books and records and minutes of proceedings
of the shareholders, Board, and Board committees of this corporation shall be
open to inspection on the written demand on the corporation of any shareholder
(or holder of a voting trust certificate) at any reasonable time during business
hours, for a purpose reasonably related to such holder's interest as a
shareholder. Such inspection may be made in person or by agent or attorney, and
the right of inspection includes the right to copy and make extracts.
Inspection by Directors [Corp. Code Sec. 1602]
Section 9.06. Every director of this corporation shall have the absolute
right at any reasonable time to inspect and copy all books, records, and
documents of every kind and to inspect the physical properties of this
corporation. The inspection may be made in person or by agent or attorney and
the right of inspection includes the right to copy and make extracts.
Annual Report
Section 9.07. (a) An annual report shall be prepared.
When Required [Corp. Code Secs. 113, 601(a), 1501(a)]
(b) The Board of Directors shall cause an annual report to be sent by
first-class mail, postage prepaid, to the shareholders not later than 120 days
after the close of the fiscal year and at least 15 days prior to the annual
meeting of shareholders to be held during the next fiscal year; provided,
however, that the annual report may be sent by third-class mail if it is sent to
shareholders at least 35 days prior to the annual meeting.
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Contents [Corp. Code Sec. 1501(a),(b)]
(c)(1) The annual report shall contain a balance sheet as of the end of
the fiscal year and an income statement and statement of changes in financial
position for the fiscal year, accompanied by any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without an audit
from the books and records of the corporation.
(2) In addition, if the corporation is either not subject to the reporting
requirements of Section 13 of the Securities Exchange Act of 1934, or is
exempted from the reporting requirements by Section 12(g) (2) of that Act, the
annual report shall also describe briefly both of the following:
(i) Any transaction (excluding compensation of officers and directors)
during the previous fiscal year involving an amount in excess of
$40,000 (other than contracts let at competitive bid or services
rendered at prices regulated by law) to which the corporation [or
its parent or subsidiary) was a party and in which any director or
officer of the corporation (or of a subsidiary) or [(if known to the
corporation or its parent or subsidiary)) any holder of more than 10
percent of the outstanding voting shares of the corporation had a
direct or indirect material interest, naming the person and stating
the person's relationship to the corporation, the nature of the
person's interest in the transaction and, if practicable, the amount
of the interest; provided, that in the case of a transaction with a
partnership of which the person is a partner, only the interest of
the partnership need be stated; and provided further that no such
report need be made in the case of transactions approved by the
shareholders, as that term is defined in California Corporations
Code Section 153 (see Sec. 2.23 of these Bylaws).
(ii) The amount and circumstances of any indemnification or advances
aggregating more than ten thousand dollars paid during the fiscal
year to any officer or director of the, corporation pursuant to
California Corporations Code Section 317 (see Secs. 2.25-2.31 of
these Bylaws); provided, that no such report need be made in the
case of indemnification approved by the shareholders, as that term
is defined in California corporations Code Section 153, under
California Corporations Code Section 317(e) (3) (see Sec. 2.28 of
these Bylaws).
57
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Special Financial Statements to Shareholders
[Corp. Code Sec. 1501(c),(d)]
Section 9.08. (a) Any shareholder or shareholders holding at least 5
percent of the outstanding shares of any class of this corporation may make a
written request to the corporation for an income statement of the corporation
for the three-month, six-month, nine-month period of the current fiscal year
ended more than 30 days prior to the date of the request and a balance sheet of
the corporation as of the end of that period and, in addition, if no annual
report for the last fiscal year has been sent to shareholders, the statements
referred to in clause (l) of paragraph (c) of Section 9.07 of this Article IX
for the last fiscal year. The statement must be delivered or mailed to the
person making the request within 30 days thereafter. A copy of the statements
shall be kept on file in the principal office of the corporation for 12 months
and they shall be exhibited at all reasonable times to any shareholder demanding
an examination of them or a copy shall be mailed to that shareholder.
(b) The quarterly income statements and balance sheets referred to in this
Section 9.08 shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that those financial statements were
prepared without audit from the books and records of the corporation.
Fiscal Year
Section 9.09. The fiscal year of the corporation shall begin on the first
day of January and end on the last day of December each year.
Corporate Seal [Corp. Code Sec. 207(a)]
Section 9.10. The Board shall adopt a corporate seal which shall be in the
following form and design:.
The Secretary of the corporation shall have custody of the seal and affix it in
appropriate cases to all corporate documents. Failure to affix the seal does
not, however, affect the validity of any instrument.
58
<PAGE>
ARTICLE X. CERTIFICATION, INSPECTION,
AND AMENDMENT OF BYLAWS
Inspection and Certification of Bylaws
[Corp. Code Secs. 213, 314]
Section 10.01. The corporation shall keep at its principal executive
office in California the original or a copy of its Bylaws as amended to date,
which shall be open to inspection by the shareholders at all reasonable times
during office hours. The original or a copy of the Bylaws certified to be a true
copy by a person purporting to be the Secretary or an Assistant Secretary of the
corporation is prima facie evidence of the adoption of such bylaws and of the
matters stated in them.
Adoption, Amendment, Repeal of Bylaws by Shareholders
[Corp. Code Secs. 207(b), 211, 212]
Section 10.02. These Bylaws may, from time to time and at any time, be
amended or repealed, and new or additional bylaws adopted, by approval of the
outstanding shares of the corporation, as that term is defined in Section 152 of
the California Corporations Code, provided, however, that such bylaws may not
contain any provision in conflict with law or with the Articles of Incorporation
of the corporation and, provided further, that a bylaw reducing the number of
directors to a number less than five (5) (see Section 2.03 of Article II of
these Bylaws) cannot be adopted if the votes cast against its adoption at a
meeting of shareholders or the shares not consenting in the case of action by
written consent are equal to more than sixteen and two-thirds (16 2/3) percent
of the outstanding shares entitled to vote.
Adoption, Amendment, Repeal of Bylaws by Directors
[Corp. Code Secs. 211, 212]
Section 10.03. Subject to the right of the outstanding shares to adopt,
amend, or repeal bylaws (see Sec. 10.02 of these Bylaws) and to any restrictions
imposed by the Articles on the power of the Board to adopt, amend, or repeal
bylaws, these Bylaws may, from time to time and at any time, be amended or
repealed, and new or additional bylaws adopted, by approval of the Board of
Directors, provided, however, that such bylaws may not contain any provision in
conflict with law or with the Articles and, provided further, that after shares
are issued any bylaw changing the number or directors or changing from a fixed
to a variable Board may be adopted only by approval of the outstanding shares.
59
<PAGE>
ARTICLE XI. CONSTRUCTION OF BYLAWS
Section 11.01. Unless otherwise stated in these Bylaws or unless the
context otherwise requires, the definitions contained in the General Corporation
Law shall govern the construction of these Bylaws. Without limiting the
generality of the foregoing, the masculine gender includes the feminine and the
neuter, one singular number includes the plural and the plural number includes
the singular, and the word "person" includes a corporation or other entity as
well as a natural person.
CERTIFICATE OF SECRETARY [Corp. Code Sec. 314]
I, the undersigned, do hereby certify:
1. That I am the Secretary of Go Lo Entertainment, Inc., a California
corporation; and
2. That the foregoing Bylaws, consisting of eleven articles and 60 pages,
constitute the Bylaws of said corporation as duly approved at a meeting of the
Board of Directors duly held on ______ day of January, 1991, at Pomona., CA.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of the corporation on _____ day of January, 1991.
/s/ Enedina L. Lopez
-------------------------------
Enedina L. Lopez, Secretary
60
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TABLE OF CONTENTS
ARTICLE I. OFFICES ....................................................... 1
Principal Executive Office .......................................... 1
Other Offices ....................................................... 1
ARTICLE II. DIRECTORS .................................................... 2
Definitions ......................................................... 2
"Board" ........................................................ 2
"Directors" .................................................... 2
Responsibility of Board ............................................. 2
Number of Directors ................................................. 2
Election and Term of Office ......................................... 2
Resignation ......................................................... 3
Vacancies ........................................................... 3
When Vacancy Occurs ............................................. 3
Declaration of Vacancy .......................................... 3
Removal of Directors by Shares .................................. 3
Removal by Court ................................................ 4
Reduction of Authorized Number of Directors ..................... 4
Provisions Exclusive ............................................ 4
Filling Vacancies ................................................... 4
By Board ........................................................ 4
By Shareholders ................................................. 5
By Special Meeting .............................................. 5
Call of Meetings .................................................... 5
Place of Meetings ................................................... 5
Time of Regular Meetings ............................................ 6
Notice of Meetings .................................................. 6
Waiver of Notice .................................................... 6
Quorum .............................................................. 6
Transactions of Board ............................................... 6
Withdrawal of Quorum ................................................ 7
Adjournment ......................................................... 7
Conduct of Meetings ................................................. 7
Telephone Participation ............................................. 7
Action Without Meeting .............................................. 7
Duties of Directors ................................................. 8
Compensation ........................................................ 8
Transactions With Corporation ....................................... 9
Liability of Directors. ............................................. 10
Indemnification ..................................................... 11
Definitions ..................................................... 11
Power to Indemnify .................................................. 11
Expenses of Successful Agent ........................................ 12
Determination That Indemnification Is Proper ........................ 13
Advance of Expenses ................................................. 13
Nonexclusive Provisions ............................................. 13
Limitation on Indemnification ....................................... 14
Insurance ........................................................... 14
61
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Board Committees .................................................... 15
Authority to Appoint ............................................ 15
Authority of Committee .......................................... 15
Applicability of Other Sections ................................. 16
ARTICLE III. DETERMINING SHAREHOLDERS OF RECORD .......................... 17
Record Date Fixed by Board .......................................... 17
Record Date Not Fixed ............................................... 17
Record Date for Adjourned Meeting ................................... 17
Rights of Shareholders of Record .................................... 18
ARTICLE IV. SHAREHOLDERS' MEETINGS ....................................... 19
Place of Meetings ................................................... 19
Annual Meeting ...................................................... 19
Time of Meeting; Business Transacted ............................ 19
Failure to Hold ................................................. 19
Notice of Meetings .................................................. 19
Method of Giving Notice ......................................... 20
Time of Notice .................................................. 20
Contents of Notice .............................................. 20
Notice of Adjourned Meeting ..................................... 21
Waiver of Notice and Other Defects .............................. 21
Calling of Special Meeting .......................................... 22
Persons Entitled to Call Special Meetings ....................... 22
Quorum of Shareholders .............................................. 22
Loss of Quorum .................................................. 23
Adjournment for Lack of Quorum .................................. 23
Effect of Vote ...................................................... 23
Election of Directors ............................................... 23
Votes Per Share--Voting of Fractional Shares ........................ 23
Voting Multiple shares .............................................. 24
Cumulative Voting ................................................... 24
Voting of Shares by Fiduciaries, Minors, or Entities ................ 24
Personal Representative ......................................... 24
Trustee ......................................................... 24
Receiver ........................................................ 25
Pledgee ......................................................... 25
Minor ........................................................... 25
Corporation ..................................................... 25
Subsidiary ...................................................... 25
Corporate Fiduciary ............................................. 26
Shares in Names of Two or More Persons .......................... 26
Proxies ............................................................. 26
Presumptive Validity ............................................ 27
Duration of Proxy ............................................... 27
Death or Incapacity of Maker .................................... 27
Revocation of Proxy ............................................. 27
Proxy Providing for Irrevocability .............................. 27
When Irrevocable Proxy Is Revocable ............................. 28
62
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Form of Proxy or Written Consent ................................. 28
Directors' Determination of Execution and Use of Proxies ......... 29
Voting Trust ......................................................... 29
Effect of Section ................................................ 29
Inspectors of Election ............................................... 30
Appointment ...................................................... 30
Number ........................................................... 30
Duties ........................................................... 30
Decision, Act, or Certificate .................................... 30
Conduct of Meetings .................................................. 31
Action Without a Meeting ............................................. 31
When Authorized .................................................. 31
Notice of Shareholder Approval ................................... 31
Revocation of Consent ............................................ 32
ARTICLE V. OFFICERS ....................................................... 33
Number and Titles .................................................... 33
Appointment .......................................................... 33
Other Officers ....................................................... 33
Removal and Resignation .............................................. 33
Vacancies ............................................................ 34
Chairman of the Board ................................................ 34
President ............................................................ 34
Meetings ......................................................... 34
Share Certificates ............................................... 35
Instruments ...................................................... 35
Hire and Fire Employees .......................................... 35
Voting Shares of Other Corporations .............................. 35
Vice President ....................................................... 35
Secretary ............................................................ 36
Seal ............................................................. 36
Records, Reports, and Statements ................................. 36
Notices .......................................................... 36
Minutes .......................................................... 36
Minute Book ...................................................... 36
Articles of Incorporation ........................................ 36
Bylaws ........................................................... 37
Record of Shareholders ........................................... 37
Certify Records .................................................. 37
Share Certificates ............................................... 37
Exhibit Record of Shareholders ................................... 37
Exhibit Minutes to Shareholder ................................... 38
Exhibit Records to Director ...................................... 38
Other Duties ..................................................... 38
Absence of Secretary ............................................. 38
Assistant Secretary .................................................. 39
Chief Financial Officer .............................................. 39
Funds--Custody and Deposit ....................................... 39
Funds--Receipt ................................................... 39
Funds--Disbursement .............................................. 39
Maintain Accounts ................................................ 39
63
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Reports to President and Directors ............................... 39
Financial Reports to Shareholders ................................ 40
Exhibit Accounts to Shareholders ................................. 40
Exhibit Accounts to Directors .................................... 41
Share Certificates ............................................... 41
Bond ............................................................. 41
Other Duties ..................................................... 41
Absence of Chief Financial Officer ............................... 42
Assistant Treasurer .................................................. 42
Compensation ......................................................... 42
ARTICLE VI. EXECUTION OF INSTRUMENTS AND DEPOSIT OF FUNDS ................. 43
Limitations .......................................................... 43
Execution of Instrument and Papers ................................... 43
Signing of Checks .................................................... 43
Deposit and Withdrawal of Funds ...................................... 43
ARTICLE VII. ISSUANCE OF SHARES AND SHARE CERTIFICATES .................... 44
Authority to Issue ................................................... 44
Equality of Rights ............................................... 44
Consideration .................................................... 44
Share Dividends; Reclassification of Shares ...................... 45
Compliance with Corporate Securities Law ......................... 45
Payment for Shares ............................................... 45
Shares as Deemed Fully Paid ...................................... 45
Fractional Shares .................................................... 46
Authority to Issue ............................................... 46
Failure to Issue ................................................. 46
Partly Paid Shares ................................................... 46
Options .............................................................. 47
No Preemptive Rights ................................................. 47
Employee Plans ....................................................... 47
Authority to Adopt ............................................... 47
Includable Features .............................................. 47
Certificates of Determination ........................................ 48
Execution of Officers' Certificate ............................... 48
Change in Rights ................................................. 48
Shareholder's Right to Share Certificate ............................. 49
Fractional shares ................................................ 49
Partly Paid Shares ............................................... 49
Contents of Certificate .............................................. 49
Exchange of Certificates ............................................. 50
On Amendment of Articles or Otherwise ............................ 50
Contents of Order ................................................ 50
Lost, Stolen, or Destroyed Certificate; Issuance of New Certificate .. 51
Purchase by Bona Fide Purchaser .................................. 51
Alternative System in Lieu of Certificates ........................... 51
64
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ARTICLE VIII. TRANSFER OF SHARES .......................................... 52
Duty of Corporation .................................................. 52
Nobility of Corporation .............................................. 52
Registration of Transfer ......................................... 52
Failure to Notify Corporation of Lost, Destroyed,
or Stolen Security ........................................... 52
Liability of Corporation ............................................. 53
Liability on Transfer of Partly Paid Shares .......................... 53
Good Faith Purchaser ............................................. 53
Purchase With Knowledge .......................................... 53
Transferor ....................................................... 54
ARTICLE IX. CORPORATE RECORDS, REPORTS, AND SEAL .......................... 55
Minutes of Meetings .................................................. 55
Books and Records of Account ......................................... 55
Record of Shareholders ............................................... 55
Shareholders' Rights to Inspect Record of Shareholders by
Written Demand of Holders of Specified Percentage of Shares ........ 55
By Written Demand of Any Shareholder ............................. 56
Inspection by Agent or Attorney .................................. 56
Shareholders' Rights to Inspect Books of Account and Minutes ........ 56
Inspection by Directors ............................................. 56
Annual Report ....................................................... 56
When Required .................................................... 56
Contents ......................................................... 57
Special Financial Statements to Shareholders ........................ 58
Fiscal Year ......................................................... 58
Corporate Seal ...................................................... 58
ARTICLE X. CERTIFICATION, INSPECTION, AND AMENDMENT OF BYLAWS ............. 59
Inspection and Certification of Bylaws ............................. 59
Adoption, Amendment, Repeal of Bylaws by Shareholders .............. 59
Adoption, Amendment, Repeal of Bylaws by Directors ................. 59
ARTICLE XI. CONSTRUCTION OF BYLAWS ........................................ 60
Certificate of Secretary ........................................... 60
65
<PAGE>
Exhibit 3.121
CHARTER
OF
GUINN COMMUNICATIONS, INC.
The undersigned person(s), under the Tennessee General Corporation
Act, adopt(s) the following charter for such corporation:
1. The name of the corporation is GUINN COMMUNICATIONS, INC.
2. The number of shares of stock the corporation is authorized to issue is
One Hundred Thousand (100,000).
3. (a) The complete address of the corporation's initial registered office
in Tennessee is 6041 Mt. Moriah, Suite 9, Memphis, TN 38115, County of Shelby.
(b) The name of the initial registered agent, to be located at the
address listed in 3(a) is JOE B. GUINN.
4. The name and complete address of the incorporator is:
Donald A. Malmo
5860 Ridgeway Center Parkway #404
Memphis, TN 38120
5. The complete address of the corporation principal office is 6041 Mt.
Moriah, Suite 9, Memphis, Tennessee 38115.
6. The corporation is for profit.
<PAGE>
7. The purpose or purposes for which the corporation is organized are:
To engage in any lawful act or activity for which corporations for
profit are organized under the Tennessee Business Corporations Act
including, without
<PAGE>
limitation, the publication and distribution of magazines,
periodicals, brochures, advertising materials and other similar
publications, and to provide for the display and maintenance of
publications in stores, supermarkets and other places frequented by
the public.
8. The corporation shall have the power to do all things necessary or
convenient to carry out its business affairs in accordance with the laws of the
State of Tennessee.
9. Directors shall not have personal liability to the corporation or the
corporation's shareholders for monetary damages for a breach of fiduciary duty
as a director. This limitation shall not eliminate or limit the liability of a
director for any breach of a director's duty of loyalty the corporation or its
shareholders or for any acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or unlawful distributions.
10. The holders of the common shares shall have preemptive rights to
purchase any common shares of the corporation hereafter issued or any securities
exchangeable for or convertible into such common shares or any warrants or other
instruments evidencing rights or options to subscribe for, purchase or otherwise
acquire such common shares.
11. At all elections of directors, each shareholder shall be entitled to
as many votes as shall equal the number of shares of stock held by such
shareholder multiplied by the number of directors to be elected, and such
shareholder may cast all of such votes for a single director or may distribute
them among the
<PAGE>
number to be voted for as such shareholder may see fit.
- --------------------------- -------------------------------------
Signature Date Incorporator' s Signature
DONALD A. MALMO
-------------------------------------
Incorporator's Name (typed or
printed)
<PAGE>
EXHIBIT 3.122
BY-LAWS OF
GUINN COMMUNICATIONS, INC.
ARTICLE I.
OFFICES
Section 1. The principal offices of this corporation are 6041 Mt. Moriah,
Ext., #9, Memphis, Tennessee. The said principal office may be changed at any
time by appropriate resolution of the Board of Directors. The corporation may
have offices and places of business at such other places within or without the
State of Tennessee as shall be determined by the Board of Directors.
Section 2. The registered office of the corporation for any particular
state may be, but need not be, identical with the principal office of the
corporation in that state, and the address of the registered office may be
changed from time to time by appropriate resolution of the Board of Directors.
ARTICLE II.
SHAREHOLDERS
Section 1. Meetings. All meetings of shareholders shall be held either in
the principal office of the corporation or at any other place in the city of
Memphis, Tennessee.
<PAGE>
Section 2. Annual Meeting. A meeting of the shareholders shall be held in
the principal office of the corporation at 10:00 o'clock in the forenoon on the
first Monday in March, 1992 and on the first Monday in March of each year
thereafter for the purpose of electing directors and for the transaction of any
other business authorized to be transacted by the shareholders. If the appointed
day is a legal holiday the meeting shall be held at the same time on the next
succeeding day not a holiday. In the event that the annual meeting is omitted by
oversight or otherwise on the date herein provided for, the directors shall
cause a meeting in lieu thereof to be held as soon thereafter as conveniently
may be, and any business transacted or elections held at such meeting shall be
as valid as if transacted or held at the annual meeting. Such subsequent meeting
shall be called in the same manner as provided for the annual shareholders
meeting.
Section 3. Special Meetings. Except as otherwise provided by law, special
meetings of the shareholders of this corporation shall be held at such places
and times as may be determined by the President or by a majority of the Board of
Directors, or whenever one or more shareholders who
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<PAGE>
are entitled to vote and who hold at least 10% of the common shares issued and
outstanding shall make written application therefor to the Secretary or an
Assistant Secretary stating the time, place and purpose of the meeting called
for. No business shall be transacted at a special meeting except as stated in
the notice sent to the shareholders, unless by the unanimous consent of the
shareholders, either in person or by proxy, all such stock being represented at
the meeting.
Section 4. Notice of Meetings. Notice of all shareholders' meetings
stating the time, place and the objects for which such meetings are called shall
be given by the President or the Vice-President or the Treasurer or the
Secretary or an Assistant Secretary to each shareholder of record not less than
ten nor more than forty days prior to the date of the meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States Mail
in a sealed envelope with postage thereon prepaid, addressed to the shareholder
at his address as it appears on the stock record books of the corporation,
unless he shall have filed with the Secretary of the corporation a written
request that notice intended for him be mailed to some other address, in which
case it shall be mailed to the address designated in such request.
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<PAGE>
Any meeting of which all shareholders entitled to vote have waived or at
any time shall waive notice in writing shall be a legal meeting for the
transaction of business, notwithstanding that notice has not been given as
hereinbefore provided.
Section 5. Notice of Right to Dissent. If shareholders are to vote at a
meeting on a corporate action which would give rise to a dissenter's right to
payment for his shares in accordance with the Tennessee General Corporation Act,
notice of such meeting shall be given to every shareholder who will be entitled
to dissent from such action and to receive payment for his shares whether or not
entitled to vote thereon. Such notice shall be given in accordance with the
provisions of Section 4 of this Article and shall also contain a statement,
displayed with reasonable prominence, that upon compliance with the Tennessee
General Corporation Act, dissenting shareholders are entitled to be paid the
fair value of their shares as provided in said Act.
Section 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining the shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a
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<PAGE>
determination of shareholders for any other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer book shall be
closed for a stated period not to exceed in any case thirty days. If the stock
transfer book shall be closed for the purpose of determining shareholders,
such books shall be closed for at least ten days immediately preceding such
meeting. In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than thirty days and, in case
of a meeting of shareholders, not less than ten days prior to the date on which
the particular action requiring such determination of shareholders is to be
taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
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<PAGE>
Section 7. Voting Lists. The officer or agent having charge of the stock
transfer books for common shares of the corporation shall make, at least ten
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each
shareholder, which list, for a period of ten days prior to such meeting shall be
kept on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall be certified by the corporate officer responsible for its preparation or
by the transfer agent and shall be produced and kept open at the time and
place of the meeting and be subject to the inspection of any shareholder during
the entire time of the meeting. In the event of any challenge to the right of
any person to vote at the meeting, the presiding officer at such meeting may
rely on said list as proper evidence of the right of parties to vote at such
meeting.
Section 8. Quorum. Except as may be otherwise provided by law, a majority
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of shareholders. In
the event that less than a majority of the outstanding shares are represented at
any meeting, a majority of the
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<PAGE>
shares represented thereat entitled to vote shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of law or of the certificate of incorporation or of these by-laws a larger or
different vote is required, in which case such express provision shall govern
and control the decision of each question.
Section 9. Proxies. Shareholders of record who are entitled to vote may
vote at any meeting either in person or by proxy in writing, which shall be
filed with the Secretary of the meeting before being voted. Such proxy shall
entitle the holders thereof to vote at any adjournment of such meeting, but
shall not be valid after the final adjournment thereof. No proxy shall be valid
after the expiration of eleven months from the date of its execution unless the
shareholder executing it shall have specified therein the length of time it is
to continue in force, which shall be for some limited period.
Section 10. Voting of Shares. Except as otherwise provided in the
certificate of incorporation or these by-laws, each outstanding share entitled
to vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders.
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<PAGE>
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe, or in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name, if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares may be pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
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<PAGE>
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Section 12. Cumulative Voting. At all elections of directors of the
corporation, every shareholder entitled to vote at such election shall have the
right to vote, in person or by proxy, the number of shares owned by him for as
many persons as there are directors to be elected and for whose election he has
a right to vote, or to cumulate his votes by giving one candidate as many votes
as the number of such directors multiplied by the number of his shares shall
equal, or by distributing such votes on the same principle among any number of
candidates.
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<PAGE>
ARTICLE III.
BOARD OF DIRECTORS
Section 1. Number, Tenure and Qualifications. The incorporators shall
constitute the first Board of Directors of this corporation. Thereafter the
number of directors shall be determined and they shall be chosen by ballot
annually by the shareholders at their annual meeting or at any meeting held in
place thereof as provided by law. In the event that the corporation has less
than three shareholders the number of directors shall not be less than the
number of record holders of the corporation's shares. Each director shall serve
until the next annual meeting of the shareholders or until his successor is duly
elected and qualified. Directors shall be of full age and citizens of the United
States, but directors need not be residents of the State of Tennessee nor
shareholders of the corporation.
Section 2. Powers of Directors. The Board of Directors shall have the
entire management of the business of the corporation. In the management and
control of the property, business and affairs of the corporation, the Board of
Directors is hereby vested with all the powers possessed by the corporation
itself, so far as this delegation of authority is not inconsistent with the laws
of the State of Tennessee,
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<PAGE>
with the certificate of incorporation of the corporation, or with these by-laws.
The Board of Directors shall have the power to determine what constitutes net
earnings, profits, and surplus, respectively, what amount shall be reserved for
working capital and to establish reserves for any other proper purpose, and what
amount shall be declared as dividends, and such determination by the Board of
Directors shall be final and conclusive. The Board of Directors shall have the
power to declare dividends for and on behalf of this corporation, which
dividends may include or consist of stock dividends.
Section 3. Regular Meetings of the Board. Immediately after such annual
election the newly elected directors may meet at the same place for the purpose
of organization, the election of corporate officers and the transaction of other
business; if a quorum of the directors be then present no prior notice of such
meeting shall be required. Other regular meetings of the Board shall be held at
such times and places as the Board by resolution may determine and specify, and
if so determined no notice thereof need be given, provided that unless all the
directors are present at the meeting at which said resolution is passed, that
the first meeting held pursuant to said resolution shall not be held for at
least five days following the date on which the resolution is passed.
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<PAGE>
Section 4. Special Meetings. Special meetings of the Board of Directors
may be held at any time or place whenever called by the President, or the
Vice-President or the Treasurer or the Secretary, or by written request of at
least two directors, notice thereof being given to each director by the
Secretary or other officer calling the meeting, or they may be held at any time
without formal notice provided all of the directors are present or those not
present shall at any time waive or have waived notice thereof.
Section 5. Notice. Notice of any special meetings shall be given at least
five days previously thereto by written notice delivered personally or mailed to
each director at his business address, or by telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company.
Section 6. Quorum. A majority of the members of the Board of Directors as
constituted for the time being shall constitute a quorum for the transaction of
business, but a lesser number may adjourn any meeting and the meeting may be
held as adjourned without further notice. When a quorum is
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<PAGE>
present at any meeting, a majority of the members present thereat shall decide
any question brought before such meeting, except as otherwise provided by law or
by these by-laws. The fact that a director has an interest in a matter to be
voted on by the meeting shall not prevent his being counted for purposes of a
quorum.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
including vacancies by virtue of removal for cause, may be filled by the vote of
a majority of the Directors, even though less than a quorum.
Section 8. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as a director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 9. Removal. Any director may be removed without cause by a
majority vote of the shareholders. A director may be removed for cause by a
majority of the entire Board of Directors. Cause shall be defined as the
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<PAGE>
final conviction of a felony, declaration of unsound mind by court order,
adjudication of bankruptcy, nonacceptance of office or conduct prejudicial to
the interest of the corporation. Provided, however, that no director may be
removed when the votes cast against his removal would be sufficient to elect him
if voted cumulatively at an election at which the same total number of votes
were cast and the entire board of which he is a member were then being elected.
Section 10. Committees. The majority of the Board of Directors may appoint
an executive committee or such other committees as it may deem advisable,
composed of two or more directors, and may delegate authority to such committees
as is not inconsistent with the Tennessee General Corporation Act. The members
of such committee shall serve at the pleasure of the Board of Directors.
Section 11. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof or shall forward such dissent
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<PAGE>
by registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 12. Informal Action by Directors. Any action required to be taken
at a meeting of the Board of Directors, or any other action which may be taken
at a meeting of the Board of Directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the directors entitled to vote with respect to the subject matter thereof.
ARTICLE IV.
WAIVER OF NOTICE
Whenever any notice whatever is required to be given by these by-laws, or
the certificate of incorporation of this corporation, or any other corporation
laws of the State of Tennessee, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Where the person or persons
entitled to such notice sign the minutes of any shareholder's or directors
meeting, which minutes contain the statement that said person or persons
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<PAGE>
have waived notice of the meeting, then such person or persons are deemed to
have waived notice in writing.
ARTICLE V.
OFFICERS
Section 1. Number. The officers of the corporation shall be a President,
one or more Vice Presidents (the number thereof to be determined by the Board of
Directors), a Secretary, and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two or more
offices may be held by the same person, except the offices of President and
Secretary.
Section 2. Election and Term of Office. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held in
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected and shall have qualified or until his
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<PAGE>
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its judgment
the best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the corporation thereunto authorized by the Board
of Directors, certificates for shares of the corporation, any deed, mortgages,
bonds, contracts, or other instruments which the Board of
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<PAGE>
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these by-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. The Vice-Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice-President (or in the
event there be more than one Vice-President, the Vice-Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice-President may sign, with the
Secretary or an Assistant Secretary, certificates for shares of the corporation;
and shall perform such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall: (a) keep the minutes of
the shareholders' and of the Board of Directors'
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<PAGE>
meetings in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these by-laws or as
required by law; (c) be custodian of the corporate records and of the seal (if
any) of the corporation and see that said seal is affixed to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (e) sign with the
President, or a Vice-President, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 8. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall: (a) have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all such
moneys in
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<PAGE>
the name of the corporation in such banks, trust companies or other depositories
as shall be selected in accordance with the provisions of Article VI of these
by-laws; and (b) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 9. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice-President certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the Board
of Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them of the Secretary or the Treasurer, respectively, or by
the President or the Board of Directors.
Section 10. Registered Agent. The Board of Directors may appoint a
Registered Agent for the corporation in accordance with the Tennessee General
Corporation Act and may pay
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<PAGE>
the agent such compensation from time to time as it may deem appropriate.
ARTICLE VI.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances. Provided, however, that the
corporation shall not make any loan other than a sale on credit in the ordinary
course of business or a life insurance policy loan, either directly or
indirectly, to any director or officer of the corporation except with the
consent of the holders of all the outstanding shares, whether or not such shares
are entitled to vote generally, or with the consent of the holders of a majority
of all the outstanding shares owned or controlled by shareholders other
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<PAGE>
than a shareholder for whose benefit such action is being taken.
Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE VII.
SHARES OF STOCK
Section 1. Certificates for Shares. Certificates representing shares of
the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or Vice-
President and by the Secretary or an Assistant Secretary.
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<PAGE>
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the corporation as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Shares of stock may be transferred by
delivery of the certificate accompanied either by an assignment in writing on
the back of the certificate or by a written power of attorney to sell, assign
and transfer the same on the books of the corporation, signed by the person
appearing by the certificate to be the owner of the shares represented thereby,
and shall be transferable on the books of the corporation upon surrender thereof
so assigned or endorsed. The person registered on the books of the corporation
as the owner of any shares of stock shall be entitled to all the rights of
ownership with respect to such
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<PAGE>
shares. It shall be the duty of every shareholder to notify the corporation of
his post office address.
ARTICLE VIII.
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay dividends on its outstanding shares in the manner and upon the terms and
conditions provided by the Tennessee General Corporation Act and by its articles
of incorporation.
ARTICLE IX.
FISCAL YEAR
The books of the corporation shall be on a calendar year basis and shall
begin on the 1st day of January and end on the 31st day of December of each
year.
ARTICLE X.
SEAL
This corporation may or may not have a seal and in any event the failure
to affix a corporate seal to any instrument executed by the corporation shall
not affect the validity
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<PAGE>
thereof. If a seal is adopted, the seal of this corporation shall include the
following letters cut or engraved thereon:
ARTICLE XI.
AMENDMENTS
The by-laws of this corporation may be altered, amended or repealed and
new by-laws may be adopted at any meeting of the Board of Directors of the
corporation by a majority vote of the directors present at the meeting or at any
meeting of the shareholders by a majority vote of the common stock represented
thereat.
ATTEST:
/s/ [ILLEGIBLE]
---------------
Secretary
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<PAGE>
Exhibit 3.123
ARTICLES OF INCORPORATION
OF
INNOVATIVE VIDEO SYSTEMS, INC.
FIRST: The name of this corporation is
INNOVATIVE VIDEO SYSTEMS, INC.
SECOND: The purpose of this corporation is to engage in any lawful
act or activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust company
business or the practice of a profession permitted to be incorporated by the
California Corporations Code.
THIRD: The name and address in this state of the corporation's
initial agent for service of process is:
Steven Laxineta
2472 Angelo Drive
Los Angeles, California 90077
FOURTH: This corporation is authorized to issue only one class of
shares of stock, which shall be common stock; the total number of shares which
the corporation is authorized to issue shall be One Hundred Thousand (100,000).
IN WITNESS WHEREOF, for the purposes of forming this corporation
under the laws of the State of California the undersigned, the sole incorporator
of this corporation, has executed these Articles of incorporation this 2nd day
of September, 1981.
/s/ Moshe J. Kupietzky
--------------------------------
MOSHE J. KUPIETZKY
DECLARATION OF INCORPORATOR
The undersigned, MOSHE J. KUPIETZKY, does hereby declare that he is
the person whose name is subscribed to the above Articles of Incorporation and
that he executed the same by subscribing his name thereto, which execution is
his act and deed.
Executed at Los Angeles, California, this 2nd day of September,
1981.
/s/ Moshe J. Kupietzky
--------------------------------
MOSHE J. KUPIETZKY
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INNOVATIVE VIDEO SYSTEMS, INC.
STEPEHN LAXINETA and JUDITH LAXINETA certify that:
1. They constitute a majority of the directors of INNOVATIVE VIDEO
SYSTEMS, INC., a California corporation.
2. They hereby adopt the following amendment of the Articles of
Incorporation of this corporation:
A new Article FIFTH is hereby added, to read in full as follows:
FIFTH: Subject to the provisions of this Article FIFTH, the holders
of common shares of this corporation shall have the exclusive right to
purchase any common shares of the corporation, and any rights, options,
warrants or other instruments of securities exchangeable for, or
convertible into, common shares, or evidencing any right to subscribe for,
purchase or otherwise acquire common shares, in each event, to the extent
issued for cash by the corporation. The portion of the securities which
each shareholder shall have the right to purchase in any such issuance
shall be in the same percentage of the total number (or principal amount)
of securities to be issued as the ratio which the number of common shares
held of record by such shareholder on the date set to determining the
shareholders entitled to such right, bears to the total number of common
shares at the time outstanding. After giving notice of any proposed
issuance of common shares and affording the holders of outstanding common
shares the opportunity to purchase such shares during a period of twenty
(20) days after the giving of such notice, the corporation may thereafter
sell any of such common shares unsold which are not purchased by holders
of common shares without further offering them to holders of common
shares. Notwithstanding anything to the contrary expressed or implied
hereinabove, the corporation may issue shares of its common stock now or
hereafter authorized without first offering the same to the shareholders
of the corporation upon exercise of any stock option or warrant granted
to, or upon exercise of any stock option or warrant granted by, any
employee of the corporation pursuant to any stock option, stock bonus,
stock purchase or other similar employee benefit plan or incentive program
adopted by the corporation with the affirmative vote or written
<PAGE>
consent of the majority of the outstanding common shares of the
corporation, and similarly may grant options, warrants or stock purchase
rights under any one or more of such plans or programs approved by the
common shareholders of this corporation without first offering the same to
shareholders of the corporation.
3. No shares have been issued.
/s/ Stephen Laxineta
--------------------------------
Stephen Laxineta
/s/ Judith Laxineta
--------------------------------
Judith Laxineta
The undersigned declare under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge. Executed at
2412 Angelo Dr., L.A. CA on September 20, 1981
/s/ Stephen Laxineta
--------------------------------
Stephen Laxineta
/s/ Judith Laxineta
--------------------------------
Judith Laxineta
-2-
<PAGE>
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
INNOVATIVE VIDEO SYSTEMS, INC.
STEPHEN LAXINETA and RONALD J. PION, M.D., certify that:
1. They are the President and the Secretary, respectively, of INNOVATIVE
VIDEO SYSTEMS, INC. a California corporation.
2. They hereby adopt the following amendments to the Articles of
Incorporation of this Corporation:
Article FIRST is amended to read as follows:
"The name of this Corporation is HOSPITAL SATELLITE NETWORK, INC."
Article FOURTH is amended to read as follows:
"A. This Corporation is authorized to issue two classes of
shares to be designated respectively as "Common Shares" and "Preferred
Shares." The number of authorized Common Shares shall be Five Thousand
(5,000) and each of such shares shall have a par value of $0.001. The
number of authorized Preferred Shares shall be One Hundred (100), and each
of such shares shall have a par value of One Dollar ($1.00). The Preferred
Shares shall be issuable from time to time in one or more series; the
number of shares in such series and the designation of such series to be
issued shall be determined, from time to time, by the Board of Directors
of the Corporation.
B. The Board of Directors is authorized to issue shares of
Preferred Stock from time to time in one or more series; to fix or alter
the dividend rights, dividend rate, conversion rights, voting rights and
terms of redemption (including sinking fund provisions), redemption price
or prices and liquidation preferences, or any of them, as to wholly
unissued series of shares of Preferred Stock; and to fix the number of
shares constituting any such series and designation thereof, or any of
them, and to increase or
1
<PAGE>
decrease the number of shares in any series subsequent to the issuance
of shares of that series, but not below the number of shares of any
series then outstanding, in case the number of shares of such series be
so increased, the shares outstanding upon such increase shall resume
the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
Upon this amendment becoming effective, each issued and
outstanding share of Common stock is reclassified as one share of $0.001
par value of Common stock, and each issued and outstanding share of
Preferred stock is reclassified as one share of $1.00 par value of
Preferred stock."
Article FIFTH is amended to read as follows:
"The shareholders of any class of stock, upon the issue or sale of
shares of stock of that class (whether now or hereafter authorized) or
of any securities convertible into the stock of such class, have the
right, during such period of time and on such conditions as the Board of
Directors shall prescribe, to subscribe to and purchase such shares or
securities in proportion to their respective holdings of stock of that
class, at such price or prices as the Board of Directors may from time to
time prescribe and as may be permitted by law."
Article SIXTH is added to read as follows:
"A quorum at all meetings of shareholders shall consist of not less than
91% of the shares entitled to vote. Approval of any amendment to the
Articles of Incorporation, the By-Laws, filling any vacancy on the Board
of Directors, a reorganization within the meaning of Section 181 or
Chapter 19 of Title 1, Division 1 of the California Corporations Code, or
a sale of all or substantially all the assets of the Corporation shall
require the affirmative vote of 91% of the shares entitled to vote."
Article SEVENTH is added to read as follows:
"A quorum at all meetings of the Board of Directors, except as provided
herein, shall consist of no less than five members of the Board. The
affirmative vote of no less than five directors shall be required for the
following action:
(a) Approval of any reorganization, within the meaning of Section
181 or Chapter 19 of Title 1, Division 1 of the California Corporations
Code.
(b) Any removal from office of any officer unless such officer has
been convicted of a felony, or said officer is in violation of any
employment contract he may have with the Corporation.
2
<PAGE>
(c) The sale of all, or substantially all, the assets of the
Corporation.
(d) Any rejection of a related business opportunity that is
submitted to the board of directors pursuant to a shareholders' agreement
as defined therein.
(e) The incurring of any voluntary indebtedness if the result of
such transaction is to cause the ratio of debt to equity to exceed 200
percent as such ratio appears on the books of the Corporation, maintained
in accordance with generally accepted accounting principles.
(f) Any proposed amendment to the Articles of Incorporation.
(g) Any modification or alteration of the rights, preferences,
privileges or restrictions of any Class or series of preferred stock.
At any meeting of the Board of Directors to consider the resignation
and removal of directors, a quorum shall consist of five directors, and
any action with respect thereto shall require the approval of five
directors."
3. The foregoing Amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing Amendment of Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902 of
the Corporation Code. The total number of outstanding shares of the corporation
is 1,000 shares common stock. The number of shares voting in favor of the
amendment was all of the outstanding shares of this Corporation.
/s/ Stephen Laxineta
----------------------------
STEPHEN LAXINETA,
President
/s/ Ronald J. Pion
----------------------------
RONALD J. PION, M.D.
Secretary
3
<PAGE>
The undersigned declare under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge. Executed at
Los Angeles, California on April 25, 1983.
/s/ Stephen Laxineta
----------------------------
STEPHEN LAXINETA
/s/ Ronald J. Pion
----------------------------
RONALD J. PION, M.D.
4
<PAGE>
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
HOSPITAL SATELLITE NETWORK, INC.
STEPHEN LAXINETA and RONALD J. PION, M.D., certify that:
1. They are the President and the Secretary, respectively, of HOSPITAL
SATELLITE NETWORK, INC., a California corporation.
2. They hereby adopt the following amendments to the Articles of
Incorporation of this Corporation:
Article FOURTH is amended to read follows:
"A. This Corporation is authorized to issue three classes of shares
to be designated respectively as "Common Shares", "Preferred Shares" and "Class
A Preferred Stock." The number of authorized Common Shares shall be Five
Thousand (5,000) and each of such shares shall have a par value of $0.001. The
number of authorized Preferred Shares shall be One Hundred (100), and each of
such shares shall have a par value of One Dollar ($1.00). The number of
authorized Class A Preferred Stock shall be Fifty Thousand (50,00), and each of
such shares shall have a par value of One Hundred Dollars ($100.00) The
Preferred Shares and the Class A Preferred Stock shall be issuable from time to
time in one or more series; the number of shares to be issued shall be
determined, from time to time, by the Board of Directors of the Corporation.
1
<PAGE>
B. The Board of Directors is authorized to issue the Preferred
Shares and the Class A Preferred Stock from time to time in one or more series;
to fix or alter the dividend rights, dividend rate, conversion rights, voting
rights and terms of redemption (including sinking fund provisions), redemption
price or prices and liquidation preferences, or any of them, as to wholly
unissued series of shares of Preferred Shares and Class A Preferred Stock; and
to fix the number of shares constituting any such series and designation
thereof, or any of them, and to increase or decrease the number of shares of any
series subsequent to the issuance of shares of that series, but not below the
number of shares of such series then outstanding. In case the number of shares
of such series be decreased, the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series."
3. The foregoing Amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing Amendment of Articles of Incorporation has been duly
approved by the required vote shareholders in accordance with Section 902 of the
Corporations Code. The total number of outstanding shares of this Corporation
entitled to vote with respect to the amendment is 5,000 shares Common Stock. The
number of shares voting in favor of the amendment was all of the outstanding
shares of Common stock of this Corporation.
In witness hereof, the undersigned have executed this Certificate on April
10, 1984.
/s/ Stephen Laxineta
----------------------------
STEPHEN LAXINETA
President
/s/ Ronald J. Pion
----------------------------
RONALD J. PION, M.D.
Secretary
2
<PAGE>
The undersigned, Stephen Laxineta, President, and Ronald J. Pion, M.D.,
Secretary, of Hospital Satellite Network, Inc., each declares under penalty of
perjury that the matters set out in the foregoing Certificate are true and
correct of his own knowledge. Executed at Los Angeles, California on April 10,
1984.
/s/ Stephen Laxineta
----------------------------
STEPHEN LAXINETA
President
/s/ Ronald J. Pion
----------------------------
RONALD J. PION, M.D.
Secretary
3
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PRIMARK CAPITAL GROUP, INC.
AND
HOSPITAL SATELLITE NETWORK, INC.
AGREEMENT AND PLAN OF MERGER, dated as of April 29, 1988 by and
between Primark Capital Group, Inc., a Delaware corporation ("Capital"), and
Hospital Satellite Network, Inc., a California corporation ("HSN").
WHEREAS, the terms and conditions of the merger (the "Merger")
herein contained were by Actions by Written Consent dated as of April 29, 1988
advised, authorized and approved by the Board of Directors of each of Capital
and HSN, and approved by the sole shareholder of each of Capital and HSN.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, Capital and HSN agree that in accordance with the Delaware General
Corporation Law (the "DGCL") and the California General Corporation Law (the
"CGCL"), Capital shall, on the Effective Date of the Merger (as hereinafter
defined), be merged into HSN, which shall be the surviving corporation (the
"Surviving Corporation"), and that the terms and conditions of the Merger, the
mode of carrying it into effect and other
<PAGE>
details and provisions deemed necessary or proper are and shall be as set forth
below:
PLAN OF MERGER
FIRST: Capital shall be, on Effective Date of the Merger, merged
with and into HSN, which shall be the Surviving Corporation and which shall be
renamed Primark Capital Group, Inc. (Capital and HSN are hereinafter sometimes
collectively referred to as the "Constituent Corporations").
SECOND: (a) The Articles of Incorporation of HSN, as in effect on
the Effective Date of the Merger, shall continue in full force and effect as the
Articles of Incorporation of the Surviving Corporation, except that:
Article FIRST is amended to read in its entirety as follows:
The name of this corporation is Primark Capital Group, Inc.,
Article FIFTH is amended to read in its entirety as follows:
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the by-laws of the Corporation.
Article SIXTH is amended to read in its entirety as follows:
2
<PAGE>
Election of directors need not be by written ballot unless the
by-laws of the Corporation shall so provide. Meetings of stockholders may be
held within or without the State of California, as the by-laws may provide. The
books of the Corporation may be kept (subject to any provision contained in the
statutes) outside the State of California at such places or places as may be
designated from time to time by the Board of Directors or in the by-laws of the
Corporation.
Article SEVETH is amended to read in its entirety as follows:
The Corporation reserves the right to amend, alter, change or repeal
any provision in these Articles of Incorporation, in the manner now or hereafter
prescribed by statute or these Articles, and all rights conferred upon the
stockholders by these Articles are granted subject to this reservation.
Article EIGHT is added to read as follows:
The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permitted under California
law. No amendment to or repeal of this Article EIGHT shall apply to or have any
effect on the liability or alleged liability of any director of the Corporation
for or with respect to any acts or omissions of such director occurring prior to
such amendment or repeal.
Article NINTH is added to read as follows:
The Corporation is authorized to provide indemnification of agents,
as that term is defined in Section 317 of the California General Corporation
Law, in excess of that expressly permitted by said Section 317, under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, to the
fullest extent such indemnification may be authorized hereby, subject to the
limits on such excess indemnification set forth in Section 204 of the California
General Corporation Law. The Corporation is further authorized to provide
insurance for agents as set forth in Section 317 of the California General
Corporation Law, provided that, in cases where the Corporation owns all or a
portion of the shares of the company issuing the insurance policy, the company
3
<PAGE>
and/or the policy must meet one of the two sets of conditions set forth in
Section 317, as amended.
(b) The by-laws of HSN, as in effect immediately prior to the
Effective Date of the Merger, shall be the by-laws of the Surviving Corporation,
to remain in full force and effect until the same shall be amended or repealed
as provided therein.
THIRD: (a) On the Effective Date of the Merger, Stephen H. Curran
shall become a director of the Surviving Corporation. Joseph E. Kasputys and
Michael R. Kargula, both of whom are currently directors of HSN, shall remain
directors of the Surviving Corporation and shall, together with Stephen H.
Curran, serve as directors of the Surviving Corporation until their respective
successors shall have been duly qualified and elected.
(b) On the Effective Date of the Merger, Peter A. Feeney,
David S. Kerin, Russell B. Benfold, Richard Schreier and Jack Weiblen will
resign from the positions of President and Chief Executive Officer, Senior Vice
President, Vice President-Sales and Marketing, Vice President-Programming, and
Chairman, respectively, of HSN, and shall be appointed President and Chief
Executive Officer, Senior Vice President, Vice President-Sales and Marketing,
Vice President-Programming, and Chairman, respectively, of Hospital
4
<PAGE>
Satellite Network, an unincorporated business division of the Surviving
Corporation, to serve until their respective successors shall have been duly
appointed. On the Effective Date of the Merger, Joseph E. Kasputys and Michael
R. Kargula, Stephen H. Curran and William J. Swift III shall be appointed
President and Chief Executive Officer, Vice President and Secretary, and Vice
President and Treasurer, and Vice President of Tax, respectively, of the
Surviving Corporation, to serve until their respective successors shall have
been duly appointed.
FOURTH: (a) On the Effective Date of the Merger, each of the 1000
shares of the common stock of Capital, $1.00 par value, issued and outstanding
immediately prior to the Effective Date of the Merger shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into five (5.00) shares of the common stock, $0.001 par value, of HSN; one-tenth
(0.10) of one share of the preferred stock, $1.00 par value, of HSN; and
twenty-five (25.00) shares of the Class A preferred stock, par value $100.00, of
HSN.
(b) On the Effective Date of the Merger, each of the 5,000
shares of common stock, $0.001 par value; 100 shares of preferred stock, $1.00
par val-
5
<PAGE>
ue; and 25,000 shares of Class A preferred stock, $100.00 par value, of HSN
issued and outstanding immediately prior to the Effective Date of the Merger
(all of which are owned of record and beneficially by Capital) shall be
cancelled.
FIFTH: On the Effective Date of the Merger, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises of a
public as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular, the rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, and all
debts due to either of the Constituent Corporations on whatever account, shall
be vested in the Surviving Corporation; and all property, rights, privileges,
powers and franchises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Corporation as they were of the
several and respective Constituent Corporations, and the title to any real
estate vested by deed or otherwise, under the laws of any state of the United
States, in either of the Constituent Corporations, shall not revert or be in any
way impaired by reason hereof; but all rights of creditors
6
<PAGE>
and all liens upon any property of either of the Constituent Corporations shall
be reserved unimpaired, and all debts, liabilities and duties of the respective
Constituent Corporations shall thenceforth attach to the Surviving Corporation
and may be enforced against it to the same extent as if said debts, liabilities
and duties had been incurred or contracted by it.
SIXTH: As soon as practicable after the date hereof: the Surviving
Corportion shall file or cause to be filed (i) a Certificate of Merger with the
Secretary of State of Delaware in accordance with Section 252 of the DGCL; and
(ii) a copy of this Agreement and Plan of Merger and Officers' Certificates with
the Secretary of State of California in accordance with Section 1103 of the CGCL
(each such filing is referred to herein as a "Merger Filing"). As soon as
practicable following the aforementioned filing with the Secretarry of State of
Delaware, the Surviving Corporation shall file or cause to be filed a copy of
the aforesaid Certificate of Merger, certified by the Secretary of State of
Delaware, in the Office of the Recorder of New Castle County in Delaware, in
accordance with Section 103 of the DGCL.
SEVENTH: The Merger shall become effective and the corporate
existence of Capital shall cease upon the
7
<PAGE>
later of the Merger Filings. The date and time of such later Merger Filing shall
be the "Effective Date of the Merger" as said term is used in this Agreement and
Plan of Merger.
EIGHT: This Agreement and Plan of Merger may be terminated or
amended (subject to limitations on such amendments imposed by the DGCL and the
CGCL) by the Board of Directors of either Constituent Corporation prior to the
time that a Merger Filing has been made.
8
<PAGE>
IN WITNESS WHEREOF, this Agreement and Plan of Merger has been
signed by the President of each of the Constituent Corporations and each of the
Constituent Corporations has caused its corporate seal to be hereunder affixed
and attested by its Secretary, all as of the date of this Agreement and Plan of
Merger.
Primark Capital Group, Inc.
By: /s/ Joseph E. Kasputys
------------------------------
Joseph E. Kasputys
President
[Seal]
Attest:
By: /s/ Michael R. Kargula
--------------------------
Michael R. Kargula
Secretary
Hospital Satellite Network, Inc.
By: /s/ Peter A. Feeney
------------------------------
Peter A. Feeney
President
[Seal]
Attest:
By: /s/ Linda Luke Lee
--------------------------
Linda Luke Lee
Secretary
9
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
PRIMARK CAPITAL GROUP, INC.
Kenneth T. Nelson and Cynthia L. Hathaway certify:
1. That they are the Vice President/Assistant Treasurer and Secretary
respectively of Primark Capital Group, Inc., a California corporation (the
"Corporation").
2. That by written consent in lieu of a special meeting of the board of
directors executed with effect as of Septemeber 20, 1990, the following
resolution was adopted by the board of directors of the Corporation:
RESOLVED, that the Articles of Incorporation of the Corporation be, and it
hereby is, amended by deleting Article First in its entirety and inserting
in its place the following new language:
1. The name of the Corporation is Health & Sciences Network, Inc.
3. That the shareholders have adopted said amendment by written consent.
That the wording of the amended article, as set forth in the shareholders'
written consent, is the same as that set forth in the directors' resolution in
Paragraph 2 above.
4. That the number of shares represented by shareholders' written consent
is 5,000 common shares. That the total number of shares entitled to vote on or
consent to the amendment is 5,000 common shares.
/s/ Kenneth T. Nelson
----------------------------------------
Kenneth T. Nelson
Vice President and Assistant Treasurer
/s/ Cynthia L. Hathaway
----------------------------------------
Cynthia L. Hathaway
Secretary
The undersigned declare under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
EXECUTED at Fairfax, Virginia on September 28, 1990.
/s/ Kenneth T. Nelson
----------------------------------------
Kenneth T. Nelson
/s/ Cynthia L. Hathaway
----------------------------------------
Cynthia L. Hathaway
<PAGE>
CERTIFICATE OF MERGER
OF
HSN ACQUISITION, INC.
WITH AND INTO
HEALTH & SCIENCES NETWORK, INC.
It is hereby certified that:
1. The constituent business corporations participating in the merger
herein certified are:
(i) HSN Acquisition. Inc., which is incorporated under the laws of
the State of Delaware; and
(ii) Health & Sciences Network, Inc., which is incorporated under
the laws of the State of California.
2. An Agreement of Merger has been approved, adopted, certified, executed,
and acknowledged by each of the aforesaid constituent corporations in accordance
with the provisions of Section 252(c) of the General Corporation Law of the
State of Delaware.
3. The name of the surviving corporation in the merger herein certified is
Health & Sciences Network, Inc., which will continue its existence as said
surviving corporation under said name, upon the effective date of said merger
pursuant to the provisions of the General Corporation Law of the State of
California.
4. The Certificate of Incorporation of Health & Sciences Network, Inc.
shall continue to be the Certificate of Incorporation of said surviving
corporation until amended and changed in accordance with the provisions of the
General Corporation Law of the State of California.
5. The executed Agreement of Merger to which the aforesaid constituent
corporations are parties is on file at the principal place of the aforesaid
surviving corporation, the address of which is as follow:
9300 Lee Highway
Fairfax, VA 22031
6. A copy of the aforesaid Agreement of Merger will be furnished by the
aforesaid surviving corporation, on request, and without cost, to any
stockholder of either of the aforesaid constituent corporations.
<PAGE>
7. Health & Sciences Network, Inc., as the surviving corporation, hereby
agrees that it may be served with process in the State of Delaware in any
proceeding for enforcement of any obligation of HSN Acquisition, Inc., as well
as for enforcement of any obligation of the surviving corporation arising from
the merger herein certified, including any suit or other proceeding to enforce
the right of any stockholders as determined in appraisal proceedings pursuant to
the provisions of Section 262 of the General Corporation Law of the State of
Delaware. Health & Sciences Network, Inc. hereby irrevocably appoints the
Secretary of State of the State of Delaware as its agent to accept service of
process in any suit or other proceedings. The address to which a copy of which
process may be mailed by the Secretary of State of the State of Delaware is as
follows
9300 Lee Highway
Fairfax, VA 22031
Dated: February 5, 1992 HEALTH & SCIENCES NETWORK, INC.
By: /s/ Jack T. Smith
-------------------------------
Jack Smith, President
ATTEST:
/s/ Phyllis Farragut
- --------------------------------
Phyllis Farragut, Secretary
2
<PAGE>
EXHIBIT 3.124
Annex A
BY-LAWS OF
PRIMARK CAPITAL GROUP, INC.
(formerly Hospital Satellite Network, Inc.)
A California Corporation
------------------------
ARTICLE I
OFFICES
SECTION 1.1 Principal Executive Office. The principal executive office of
the corporation shall be located at 8251 Greensboro Drive, Suite 700, McLean,
Virginia, 22102.
SECTION 1.2 Other Offices. The corporation may also have offices at such
other places both within and without the State of California as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 Annual Meeting. The annual meeting of stockholders shall be
held each year on such day, and at such time and such place as shall be
designated by the Board of Directors. At such meeting, the stockholders shall
elect directors and transact such other busi-
<PAGE>
ness as may properly come before the meeting. If the annual meeting is not held
on the date designated therefor, the Board shall cause the meeting to be held
as soon thereafter as convenient.
SECTION 2.2 Special Meetings. Except as otherwise prescribed by law,
special meetings of the stockholders, for any purpose or purposes, may be called
by the President or in his absence by the Vice President, or by the Secretary at
the request of the Board of Directors. The notice of the special meeting shall
state the time, place, and purposes of the proposed special meeting. Business
transacted at a special meeting shall be confined to the purposes stated in the
notice.
SECTION 2.3 Place of Meetings. Each meeting of the stockholders for the
election of directors shall be held at the principal executive office of the
corporation in Los Angeles, California, unless the Board of Directors shall by
resolution designate any other place, within or without the State of California
as the place of such meeting. Hearings of stockholders for any other purpose may
be held at any such place, within or without the State of California and at such
time as shall be stated in the notice of the meeting, or in a duly executed
waiver thereof.
2
<PAGE>
SECTION 2.4 Notice of Meetings. Except as otherwise provided by law,
written notice of the time, place and, in case of a special meeting, the purpose
or purposes for which the meeting is called, shall be given not less than ten
nor more than sixty days before the date of the meeting to each stockholder of
record entitled to vote at the meeting.
SECTION 2.5 Stockholder List. At least ten days before every meeting of
stockholders, the officer or agent having charge of the stock transfer books
shall prepare a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, with the address of, and number of
shares registered in the name of each. Such list shall be open to examination of
any stockholder during ordinary business hours, for any purpose germane to the
meeting, for a period of at least 10 days prior to the meeting, either at a
place in the city where such meeting shall be held, which place shall be
specified in the notice of meeting or, if not so specified, at the place where
the meeting is to be held; and the list shall be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by
any such stockholder who may be present.
3
<PAGE>
SECTION 2.6 Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite for, and shall constitute, a quorum at all meetings of
the stockholders of the corporation for the transactions of business, except as
otherwise provided by law or these bylaws.
SECTION 2.7 Proxies. At every meeting of stockholders, each stockholder has
the right to vote in person or by proxy. Such proxy shall be appointed by an
instrument in writing subscribed by the stockholder or his authorized agent or
representative, and bearing a date not more than three (3) years prior to such
meeting, unless the proxy provides for a longer period. Each proxy shall be
filed with the Secretary of the corporation prior to or at the time of the
meeting.
SECTION 2.8 Voting. Each outstanding share is entitled to one vote on each
matter submitted to a vote unless otherwise provided in the Articles of
Incorporation. When a quorum is present at any meeting of the stockholders, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by
4
<PAGE>
provision of law or these bylaws, a different vote is required, in which case
such provision shall govern and control the decision of such question. Directors
of the corporation shall be elected by a plurality of the votes cast at an
election.
SECTION 2.9 Voting of Certain Shares. Shares standing in the name of
another corporation, domestic or foreign, and entitled to vote may be voted by
such officer, agent, or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provision, as the Board of Directors of such
corporation may determine.
SECTION 2.10 Action Without Meeting. Any action required or permitted to be
taken at any annual or special meeting of stockholders of the corporation may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or to take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Such consent shall be filed
with the minutes of the proceedings of the stockholders. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written
5
<PAGE>
consent shall be given to those stockholders who have not consented in writing.
SECTION 2.11 Presiding Officers. The President, or in his absence, the Vice
President, shall call the meeting of the stockholders to order and shall act as
chairman thereof. In the absence of both the President and the Vice President,
the stockholders present at the meeting shall elect a chairman. The Secretary
shall act as a secretary of all meetings of stockholders. In the absence of the
Secretary at any meeting of stockholders, the presiding officer may appoint any
person to act as secretary of the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1 Management Responsibility. The business and affairs of the
corporation shall be managed by the Board of Directors except as otherwise
provided by law or by the Articles of Incorporation.
SECTION 3.2 Number; Elections; Term. The number of members of the Board of
Directors shall not be fewer than three (3) nor more than ten (10) and, within
such limits, shall be determined and established from time to time by resolution
adopted by the majority vote of the directors then in office. The directors
shall be
6
<PAGE>
elected at the annual meeting of the stockholders, or at any adjournment
thereof, or at special meetings of stockholders held in accordance with
Section 2.2 of Article II of these bylaws. Each director elected shall hold
office until the succeeding annual meeting and until his successor shall be
elected and shall qualify, or until his earlier resignation or removal.
SECTION 3.3 Resignation and Vacancies. Any director may resign at any time
by giving written notice to the corporation. Any such resignation shall take
effect at the date of the receipt of such notice or at any later time specified
therein, and, unless otherwise specified therein the acceptance of such
resignation shall not be necessary to make it effective. Any vacancy occurring
in the Board of Directors may be filled by an affirmative vote of a majority of
the remaining directors even though less than a quorum of the Board of
Directors, or by the sole remaining director. A directorship to be filled
because of an increase in the number of directors may be filled by the board for
a term of office continuing only until the next election of directors by the
stockholders.
7
<PAGE>
SECTION 3.4 Meetings. Meetings of the Board of Directors may be called at
any time by the President or the Secretary or by a majority of the Board of
Directors. The directors shall be notified by telephone, telegraph or personally
delivered notice of the time, place and purpose of all meetings of the Board at
least forty-eight (48) hours prior to the time scheduled for said meeting with
the exception of the annual meeting of the Board of Directors, for which no
notice shall be provided, and which shall be held immediately after the annual
meeting of the stockholders. Attendance of a director at a meeting constitutes a
waiver of notice of said meeting, except where the director attends the meeting
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened.
SECTION 3.5 Quorum. At each meeting of the Board of Directors, the presence
of not less than a majority of the whole Board shall be necessary and sufficient
to constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by law. If a quorum shall not be
8
<PAGE>
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting until a quorum shall be present. A member of the Board may participate
in any meeting of the Board, or of any committee thereof, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this Section 3.5 constitutes presence in person at the meeting.
SECTION 3.6 Action Without Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee of the
Board, may be taken without a meeting if a written consent thereto is signed by
all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee. Such consent shall have the same effect as a vote of the Board or
committee for all purposes.
SECTION 3.7 Salary and Expenses. Directors shall not receive any stated
salary for their services as such. Members of the Board of Directors shall be
allowed their reasonable travelling expenses when actually engaged in the
business of the corporation. Members of any
9
<PAGE>
committee may be allowed like expenses for attending committee meetings. Nothing
herein contained shall be construed as precluding any director from serving the
corporation in any other capacity and receiving compensation therefor.
ARTICLE IV
NOTICES
SECTION 4.1 Manner of Notice to Directors. Whenever under the provisions of
law, the Articles of Incorporation, or these bylaws, notice is required to be
given to any director such notice may be given in writing by personal delivery
to the business address of such director; and such notice shall be deemed to be
given when it is thus delivered. Notice may also be given in writing by mail
addressed to such director at his business address, and such notice shall be
deemed to be given at the time when it is deposited in the United States mail in
a sealed envelope, with first class postage affixed thereto. Notice to directors
may also be given by telephone or telegram. It shall be the duty of every
director to furnish the Secretary with his business address and to notify the
Secretary of any change therein.
10
<PAGE>
SECTION 4.2 Notice to Stockholders. Whenever under the provisions of law,
the Articles of Incorporation, or these bylaws, notice is required to be given
to any stockholder, that requirement of notice shall not be construed to
require personal delivery, and such notice may be given, in writing, by mail
addressed to such stockholder at the address of such stockholder as it appears
in the stock transfer books of the corporation. Such notice shall be deemed to
be given at the time when it is deposited in the United States mail in a sealed
envelope, with first class postage affixed thereto.
SECTION 4.3 Waiver of Notice. Whenever any notice is required to be given
under the provisions of law, the Articles of Incorporation, or these bylaws, a
waiver thereof in writing signed by the person or persons entitled to said
notice, whether before or after the time stated herein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
SECTION 5.1 Officers and Official Positions. The officers of the
corporation shall be a President, one or more Vice Presidents, a Secretary, a
Treasurer, and such other officers as the Board of Directors shall de-
11
<PAGE>
termine. Any two or more offices may be held by the same person.
SECTION 5.2 Election and Term of Office. The officers of the corporation
shall be elected annually by the Board of Directors. Each officer shall hold
office for the term for which he is elected, and until his successor is elected
or appointed and qualified, or until his earlier resignation or removal.
SECTION 5.3 Removal or Resignation. Any officer may be removed with or
without cause, by the Board of Directors at any regular or special meeting of
the Board. Any officer may resign at any time by giving written notice to the
corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 5.4 Vacancies. Any vacancy occurring in any office of the
corporation because of death, resignation, removal or any other cause may be
filled for the unexpired portion of the term by the Board of Directors.
SECTION 5.5 President. The President shall be the chief executive officer,
and subject only to the Board of Directors shall direct and have general
control
12
<PAGE>
of the management and operations of the corporation. He shall preside at all
meetings of the stockholders and of the Board of Directors at which is he
present.
SECTION 5.6 Vice Presidents. The Vice Presidents in the order determined by
the Board of Directors, shall, in the absence or disability of the President,
perform the duties and have the authority and exercise the powers of the
President. They shall perform such other duties and have such other authority
and powers as the Board of Directors may from time to time prescribe or as the
President may from time to time delegate.
SECTION 5.7 Secretary. The Secretary shall: (a) attend all meetings of the
stockholders and of the Board of Directors, keep the minutes of the
stockholders, the Board of Directors and committees of directors, in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) have
charge of the corporate records and of the seal of the corporation, and shall
affix the seal to any instrument requiring it, and when so affixed, shall attest
to it by his signature. He shall perform such other duties and have such other
authority and powers as the Board of
13
<PAGE>
Directors may from time to time prescribe; or as the President may direct.
SECTION 5.8 Treasurer. The Treasurer shall: (a) be responsible to the Board
of Directors for the collection, receipt, custody and disbursement of all funds
and securities of the corporation; (b) receive and give receipts for moneys due
and payable to the corporation from any source whatsoever and deposit all such
moneys in the name of the corporation in such banks, trust companies, or other
depositories as the Board of Directors shall designate; (c) endorse all
commercial documents for or on behalf of the corporation; (d) disburse the funds
of the corporation as ordered by the Board of Directors or the President or as
required in the ordinary conduct of the business of the corporation; (e) render
to the President or the Board of Directors, upon request, an account of all his
transactions as Treasurer and a report on the financial condition of the
corporation; and (f) in general, perform all the duties incident to the office
of Treasurer and such other duties as from time to time may be assigned to him
by the Board of Directors, the President, or these bylaws. If required by the
Board of Directors or the President, the Treasurer shall give a bond for the
faithful discharge of his du-
14
<PAGE>
ties in such form, and with such surety or sureties, as the Board of Directors
or the President shall determine.
SECTION 5.9 Assistant Treasurers and Assistant Secretaries. The Assistant
Treasurers and Assistant Secretaries shall, in the absence of the Treasurer or
Secretary, respectively, perform all functions and duties which such absent
officer shall delegate; but such delegation shall in no wise relieve the absent
officer from the responsibilities and liabilities of his office. The Assistant
Treasurers and Assistant Secretaries shall, in general, perform such duties as
shall be assigned to them by the Treasurer or Secretary, respectively, or by the
President or the Board of Directors. The Assistant Treasurers shall, if
required, by the Board of Directors, or the President, give bonds for the
faithful discharge of their duties in such sums, and with such surety or
sureties, as the Board of Directors or the President shall determine.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
AGENTS AND OTHERS PERSONS
SECTION 6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved (as a party, witness, or
other-
15
<PAGE>
wise), in any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (hereafter a
"Proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, or other enterprise, or was a
director, officer, employee, or agent of a foreign or domestic corporation that
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged action in
an official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent (hereafter an
"Agent"), shall be indemnified and held harmless by the corporation to the
fullest extent authorized by statutory and decisional law, as the same exists or
may hereafter be interpreted or amended (but, in the case of any such amendment
or interpretation, only to the extent that such amendment or interpretation
permits the corporation to
16
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provide broader indemnification rights than were permitted prior thereto)
against all expenses, liability, and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes and penalties, amounts paid or to be paid in
settlement, any interest, assessments, or other charges imposed thereon, and any
federal, state, local, or foreign taxes imposed on any Agent as a result of the
actual or deemed receipt of any payments under this Article reasonably incurred
or suffered by such person in connection with investigating, defending, being a
witness in, or participating in (including on appeal), or preparing for any of
the foregoing in any Proceeding (hereafter "Expenses"). The right to
indemnification conferred in this Article shall be a contract right. It is the
corporation's intention that these bylaws provide indemnification in excess of
that expressly permitted by Section 317 of the California General Corporation
Law, as authorized by the corporation's Articles of Incorporation.
SECTION 6.2 Authority to Advance Expenses. Expenses incurred by an officer
or director (acting in his capacity as such) in defending a Proceeding shall be
paid by the corporation in advance of the final disposition of such Proceeding,
provided, however, that if required by the California General Corporation Law,
as
17
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amended, such expenses shall be advanced only upon delivery to the corporation
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Article or otherwise.
Expenses incurred by other Agents of the corporation (or by the directors or
officers not acting in their capacity as such, including service with respect to
employee benefit plans) may be advanced upon the receipt of a similar
undertaking, if required by law, and upon such other terms and conditions as the
Board of Directors deems appropriate. Any obligation to reimburse the
corporation for Expense advances shall be unsecured and no interest shall be
charged thereon.
SECTION 6.3 Right of Claimant to Bring Suit. If a claim under Section 6.1
or 6.2 of these bylaws is not paid in full by the corporation within thirty (30)
days after a written claim has been received by the corporation, the claimant
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense (including attorneys' fees) of
prosecuting such claim. It shall be a defense to any such action (other than an
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action brought to enforce a claim for expenses incurred in defending a
Proceeding in advance of its final disposition where the required undertaking
has been tendered to the corporation) that the claimant has not met the
standards of conduct that make it permissible under the California General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed. The burden of proving such a defense shall be on the corporation.
SECTION 6.4 Provisions Nonexclusive. The rights conferred on any person by
this Article shall not be exclusive of any other rights that such person may
have or hereafter acquire under any statute, provision of the Articles of
Incorporation, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office. To the extent that any provision of the
Articles, agreement, or vote of the stockholders or disinterested directors is
inconsistent with these bylaws, the provision, agreement, or vote shall take
precedence.
19
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SECTION 6.5 Authority to Insure. The corporation may purchase and maintain
insurance to protect itself and any Agent against any Expense asserted against
or incurred by such person, whether or not the corporation would have the power
to indemmify the Agent against such Expense under applicable law or the
provisions of this Article, provided that, in cases where the corporation owns
all or a portion of the shares of the company issuing the insurance policy, the
company and/or the policy must meet one of the two sets of conditions set forth
in Section 317 of the California General Corporation Law, as amended.
SECTION 6.6 Survival of Rights. The rights provided by this Article shall
continue as to a person who has ceased to be an Agent and shall inure to the
benefit of the heirs, executors, and administrators of such person.
SECTION 6.7 Settlement of Claims. The corporation shall not be liable to
indemnify any Agent under this Article (a) for any amounts paid in settlement of
any action or claim effected without the corporation's written consent, which
consent shall not be unreasonably withheld; or (b) for any judicial award, if
the corporation was not given a reasonable and timely opportunity,
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at its expense, to participate in the defense of such action.
SECTION 6.8 Effect of Amendment. Any amendment, repeal, or modification of
this Article shall not adversely affect any right or protection of any Agent
existing at the time of such amendment, repeal, or modification.
SECTION 6.9 Subrogation. In the event of payment under this Article, the
corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the Agent, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the corporation effectively to
bring suit to enforce such rights.
SECTION 6.10 No Duplication of Payments. The corporation shall not be
liable under this Article to make any payment in connection with any claim made
against the Agent to the extent the Agent has otherwise actually received
payment (under any insurance policy, agreement, vote, or otherwise) of the
amounts otherwise indemnifiable hereunder.
21
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ARTICLE VII
CERTIFICATES OF STOCK AND
THEIR TRANSFER
SECTION 7.1 Certificates of Stock. Every stockholder shall be entitled to a
certificate, in such form as the Board of Directors shall from time to time
approve, signed by the President or a Vice President and by the Secretary or an
Assistant Secretary. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar as of the date of such issue.
SECTION 7.2 Replacement of Lost or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the corporation alleged to
have been lost or destroyed, upon the making of an affidavit by the person
claiming the certificate to be lost, stolen, or destroyed as to his ownership of
the certificate and of the facts as to its loss, theft, or destruction.
22
<PAGE>
SECTION 7.3 Transfer of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 7.4 Fixing Record Date. In order that the corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting nor more than sixty days prior to any other action. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of
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<PAGE>
Directors may fix a new record date for the adjourned meeting.
SECTION 7.5 Record Ownership of Stock. The corporation shall be entitled to
treat the person in whose name any share of stock is registered as the owner
thereof, for all purposes, and shall not be bound to recognize any equitable or
other claim to, or interest in, such share on the part of any other person,
whether or not it shall have notice thereof, except as otherwise expressly
provided by the laws of California.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Dividends. Subject to the statutes of the State of California,
the Board of Directors may declare and pay dividends or make other distributions
in cash, its securities, or its property.
SECTION 8.2 Books and Records. The corporation shall keep current and
complete books and records of account and shall keep minutes of the proceedings
of the stockholders and Board of Directors, and shall keep at its principal
executive office, or at the office of its transfer agent or registrar, a record
of its stockholders, the names and addresses of all stockholders and the number
and class of the shares held by each.
24
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SECTION 8.3 Checks and Notes. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
SECTION 8.4 Fiscal Year. The fiscal year of the corporation shall be the
calendar year.
SECTION 8.5 Seal. The corporation shall have a corporate seal in a form
which shall be approved by the Board of Directors.
SECTION 8.6 Voting of Stock. Unless otherwise ordered by the Board of
Directors, the President or any Vice President of the corporation shall have
full power and authority to act and vote, in the name and on behalf of this
corporation, at any meeting of stockholders of any corporation in which this
corporation may hold stock, and at any such meeting shall possess and may
exercise any and all of the rights and powers incident to the ownership of such
stock, and shall have full power and authority to execute, in the name of and on
behalf of this corporation, proxies authorizing any suitable person or persons
to act and to vote at any meeting of stockholders of any corporation in which
this corporation may hold stock, and at any meeting the person or person so
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<PAGE>
designated shall possess and exercise any and all of the rights and powers
incident to the ownership of such stock.
SECTION 8.7 Amendment of Bylaws. These bylaws may be altered, amended or
repealed at any meeting of the Board of Directors at which a quorum is present
by a majority vote of the directors. Nothing in this Article VIII shall be
construed to limit the power of the stockholders to amend, alter or rescind any
of the bylaws of the corporation.
26
<PAGE>
1598846
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
OCT 23 1987
MARCH FUNG EU, Secretary of State
ARTICLES OF INCORPORATION
OF
INTELLICHOICE, INC.
I.
The name of this corporation is INTELLICHOICE, INC.
II.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
The name and address in the State of California of this corporation's
initial agent for service of process is:
Peter Levy
4771 La Cresta Way
San Jose, California 95129
IV.
This corporation is authorized to issue only one class of shares of stock,
designated as Common Stock, and the total number of shares which this
corporation is authorized to issue is 10,000,000.
DATED: 10/23/87
----------
/s/ Peter Levy
------------------------
Peter Levy, Incorporator
I hereby declare that I am the person who executed the foregoing Articles
of Incorporation, which execution is my act and deed.
/s/ Peter Levy
------------------------
Peter Levy
<PAGE>
A362153
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
DEC 16 1988
MARCH FUNG EU, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INTELLICHOICE, INC.
Peter Levy and Steven Gross certify that:
1. They are the President and Secretary, respectively, of INTELLICHOICE,
INC., a California Corporation (the "Corporation")
2. Article IV of the Articles of Incorporation of this Corporation is
amended in its entirety as follows:
"IV
(a) (i) The Corporation is authorized to issue two classes of
shares, to be designated respectively Preferred Stock ("Preferred") and Common
Stock ("Common"). The total number of shares of Preferred the Corporation shall
have authority to issue is 550,000 and the total number of shares of Common the
Corporation shall have authority to issue is 10,000,000.
The Corporation from time to time in accordance with the laws of the
State of California shall increase the authorized amount of its Common if at any
time the number of shares of Common remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred.
(ii) The Preferred authorized by these Articles of InCorporation
shall be issued in series as set forth herein. The first series of Preferred
shall be designated Series A Preferred Stock ("Series A Preferred") and shall
consist of Five Hundred Fifty Thousand (550,000) shares. The shares of each
series of Preferred have the rights, preference, privileges and restrictions
granted or imposed in paragraph (b) below.
(b) The relative rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes of the shares of capital stock
or the holders thereof are as follows:
Section 1. General Definitions. For purposes of this Article the
following definitions shall apply:
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<PAGE>
A. 'Junior Shares' shall mean all Common and any other shares of the
Corporation other than the Preferred.
B. 'Subsidiary' shall mean any Corporation at least 50% of whose
outstanding voting shares shall at the time be owned by the Corporation or by
one or more of such subsidiaries.
C. 'Original Issue Date' shall mean the date on which the first shares of
Series A Preferred were issued.
Section 2. Dividend Rights of Preferred. The holders of the Series A
Preferred shall be entitled to receive, out of any funds legally available
therefor, cash dividends at the rate of Four Cents ($0.04) per annum, on each
outstanding share of Series A Preferred, and no more, payable in preference and
priority to any payment of any dividends on Junior Shares out of any funds
legally available therefor, when and as declared by the Board of Directors. The
right to such dividends on the Preferred shall not be cumulative, and no right
shall accrue to holders of Preferred by reason of the fact that dividends on
such shares are not declared or paid in any prior year. No dividend shall be
declared or paid with respect to the Common during any fiscal year unless and
until the dividends provided for in the first sentence of this Section 2 are
declared and paid, or set apart for payment, on each outstanding share of
Preferred. After dividends in the amount of Four Cents ($0.04) per share of
Series A Preferred have been so declared and paid or set apart in any one fiscal
year of the Corporation, if the Board thereafter elects to declare additional
dividends in the same fiscal year out of funds legally available therefor, such
additional dividends shall be declared solely on the Junior Shares. In the event
that the Corporation shall have declared and unpaid dividends outstanding
immediately prior to, and in the event of, a conversion of Preferred (as
provided in Section 5 hereof), the Corporation shall pay such dividends, in cash
to the holder(s) of Preferred.
Section 3. Liquidation Preference.
(a) Priority. In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the holders of
the Series A Preferred shall be entitled to receive, out of the assets of the
Corporation available for distribution to its shareholders, prior and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Junior Shares by reason of their ownership
thereof, the amount of $.55 per share for each share of Series A Preferred then
held by them (as appropriately adjusted for any stock dividends, stock splits,
recapitalization, consolidation, or the like, with respect to such shares), and,
in addition, an amount equal to all declared but unpaid dividends on such Series
A Preferred, and no more,
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<PAGE>
such amount to be payable in cash, or securities delivered in the transaction,
or a combination of both. If, upon occurrence of such event, the assets and
funds thus distributed among the holders of the Series A Preferred shall be
insufficient to permit the payment to such holders of the full preferential
amount, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the Series A
Preferred in proportion to the respective preferential amount each such holder
is entitled to receive. For purposes of this Section 3, a liquidation,
dissolution or winding up of the Corporation shall be deemed to be occasioned
by, and shall include, the Corporation's sale of all or substantially all of its
assets or the acquisition of the Corporation by another entity by means of a
merger or consolidation resulting in the exchange of the outstanding shares of
the Corporation for securities or consideration issued, or caused to be issued,
by such other entity.
(b) Payment to Junior Shares. All of the preferential amounts to be
paid to the holders of Preferred under this Section 3 shall be paid or set apart
for payment prior to payment or setting apart for payment of any amount for, or
the distribution of any amounts to, the holders of any Junior Shares in
connection with such liquidation, dissolution or winding up. If the Corporation
has assets remaining after payment or setting apart for payment of the
preferential amounts so payable to the holders of the Preferred, the holders of
Junior Shares shall be entitled to receive all remaining assets of the
Corporation, pro rata, based upon the number of shares of Common (or the number
of shares of Common into which shares of any other class could be converted)
held by each holder at the record date for any distribution.
(c) Valuation. For purposes of this Section 3, if the distributions
or consideration received by the shareholders of the Corporation is other than
cash, its value will be deemed to be its fair market value as determined in good
faith by the Board of Directors of the Corporation. In the case of publicly
traded securities listed on an exchange, fair market value shall mean the
average last closing sale price as reported by such exchange or by a
consolidated transaction reporting system for the five-day period immediately
preceding the date such sale, merger, consolidation or other reorganization is
consummated. In the case of publicly traded securities not listed on an
exchange, fair market value shall mean the average last closing bid price as
reported by the National Association of Securities Dealers Automatic Quotation
System, Inc. or such successor or similar organization, for the five-day period
immediately preceding the date on which such sale, merger, consolidation or
other reorganization is consummated.
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<PAGE>
Section 4. Mandatory Redemption.
(a) Mandatory Redemption; Price. The Corporation shall redeem one-third of
the Series A Preferred outstanding (the "Redeemed Shares") each on the fifth
(5th), sixth (6th) and seventh (7th) anniversaries of the Original Issue Date.
The Corporation shall pay cash for each share to be redeemed pursuant to this
section 4 in the amount of $.55 per, share (as appropriately adjusted for any
stock dividends, stock splits, recapitalization, consolidation, or the like,
with respect to the Series A Preferred), together with an amount equal to any
declared but unpaid dividends on Series A Preferred to the date fixed for
redemption, and delivery of a certificate representing the number of shares of
Common Stock which the holders would have received had they elected to convert
the Redeemed Shares into Common upon the Redemption Date (as that term is
defined below). Such amount and the number of shares of Common Stock is
hereinafter referred to as the "Redemption Price."
(b) Redemption Date; Notice. Not less than thirty (30) days nor more than
sixty (60) days prior to the date fixed for any redemption of Series A Preferred
(hereinafter referred to as the "Redemption Date"), written notice shall be
mailed, postage prepaid, to each holder of record of Series A Preferred to be
redeemed, at the post office address last shown on the records of the
Corporation, specifying the Redemption Date, the total number of Series A
Preferred being redeemed, the number of Series A Preferred held by the holder to
whom such notice is sent, the applicable Redemption Price, and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, the certificate or certificates representing the shares to be
redeemed (such notice is hereinafter referred to as the "Redemption Notice"). On
or after the Redemption Date, each holder of Series A Preferred to be redeemed
shall surrender the certificate or certificates representing such shares to the
Corporation, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price of such shares shall be payable to the order
of the person whose name appears on such certificate or certificates as the
owner of such shares and each surrendered certificate shall be cancelled. From
and after the Redemption Date, all rights of the holders of Series A Preferred
designated for redemption in the Redemption Notice (except the right to receive
the Redemption Price without interest upon surrender of their certificate or
certificates) shall cease and terminate with respect to such shares, and such
shares shall not subsequently be transferred on the books of the Corporation or
be deemed to be outstanding for any purpose whatsoever. In the event fewer than
all of the shares represented by such surrendered certificate are redeemed, a
new certificate representing the unredeemed shares shall be issued forthwith.
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<PAGE>
(c) Deposit. On or prior to the Redemption Date, the Corporation shall
deposit the Redemption Price of all shares of Series A Preferred designated for
redemption in the Redemption Notice and not yet redeemed with a bank or trust
company having aggregate capital and surplus in excess of one hundred million
dollars ($100,000,000) as a trust fund for the benefit of the respective holders
of the shares designated for redemption and not yet redeemed, with irrevocable
instructions and authority to the bank or trust company to pay the Redemption
Price for such shares to their respective holders on or after the Redemption
Date upon receipt of notification to the Corporation pursuant to Section 4 (b).
The balance of any funds deposited by the Corporation pursuant to this
subparagraph 4 (c) remaining unclaimed at the expiration of one (1) year
following the Redemption Date shall be returned to the Corporation upon its
request expressed in a resolution of its Board of Directors.
Section 5. Conversion. The holders of the Series A Preferred shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred shall be
convertible, at the option of the holder thereof, at the office of the
Corporation or any transfer agent for the Preferred, into such number of fully
paid and non-assessable shares of Common, as is determined by dividing $.55 for
each share of Series A Preferred by the Conversion Price (determined as
hereinafter provided) in effect at the time of conversion. The price at which
shares of Common shall be deliverable upon conversion (the "Conversion Price")
initially shall be $.55 for each share of Series A Preferred per share of
Common. Such Conversion Price shall be subject to adjustment as hereinafter
provided.
(b) Automatic Conversion. Each share of Preferred automatically
shall be converted into shares of Common at the then effective Conversion Price
on the effective date of a firm commitment underwritten public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of Common for the account of the
Corporation to the public at a price per share (prior to underwriting
commissions and expenses) of not less than $2.00 per share (as adjusted for
stock splits, recapitalization, consolidation or the like) and an aggregate
offering price of not less than $2,000,000.
(c) Mechanics of Conversion. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of any share
of Preferred. If, upon conversion of any share of Preferred, except for the
provisions of this Section 5(c), the registered holder would be entitled to
receive a
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<PAGE>
fractional share of Common, then an amount equal to such fractional share
multiplied by the then fair market value (as determined in good faith by the
Corporation's Board of Directors) of a share of the Corporation's Common shall
be paid by the Corporation in cash to such registered holder. Before any holder
of Preferred shall be entitled to convert the same into shares of Common, the
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for the Preferred, and
shall give written notice to the Corporation at such office that the holder
elects to convert the same. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred, a
certificate or certificates for the number of shares of Common to which the
holder shall be entitled as aforesaid and a check payable to the holder in the
amount of any cash amounts payable as the result of a conversion into fractional
shares of Common. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of
Preferred to be converted, or in the case of automatic conversion on the
effective date of the offering as provided in Section 5(b), and the person or
persons entitled to receive the shares of Common issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common on such date.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 5(d),
the following definitions shall apply:
(1) 'Options' shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(2) 'Convertible Securities' shall mean any evidences
of indebtedness, shares (other than Common) or other securities convertible into
or exchangeable for Common.
(3) 'Additional Shares of Common' shall mean all
shares of Common issued (or, pursuant to Section 5(d)(iii), deemed to be issued)
by the Corporation after the Original Issue Date, other than shares of Common
issued or issuable (or pursuant to Section 5(d)(iii), deemed to be issued):
(A) upon conversion of shares of Series A
Preferred; and
(B) to officers, directors or employees of, or
contractors or consultants to, the Corporation pursuant to
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<PAGE>
a stock grant, option plan or purchase plan or other stock incentive program or
agreement approved by the Board of Directors not exceeding 535,000 shares of
Common and including an additional 2,125,000 shares which were held by officers,
directors, employees and consultants on October 21, 1988, which are repurchased
from officers, directors, employees or consultants upon termination of the
employment, consulting relationship or services to the Corporation of such
person.
(ii) No Adjustment of Conversion Price. No adjustment in the
Conversion Price of a particular share of Series A Preferred shall be made in
respect of the issuance of Additional Shares of Common unless the consideration
per share for an Additional Share of Common issued or deemed to be issued by the
Corporation is less than the Conversion Price in effect on the date of, and
immediately prior to such issue, for such share of Series A Preferred.
(iii) Deemed Issue of Additional Shares of Common.
(A) Options and Convertible Securities. In the event, at
any time or from time to time after the Original Issue Date, the Corporation
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date, provided that Additional Shares of Common shall
not be deemed to have been issued as to Series A Preferred unless the
consideration per share (determined pursuant to Section 5(d)(v) hereof) of such
Additional Shares of Common would be less than the Conversion Price applicable
to the Series A Preferred in effect on the date of, and immediately prior to
such issue, or such record date, as the case may be, and provided further that
in any such case in which Additional Shares of Common are deemed to be issued:
(1) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
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(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Corporation, or decrease in the number of
shares of Common issuable (including a decrease resulting from the expiration of
such Options or the rights of conversion or exchange of such Convertible
Securities), upon the exercise, conversion or exchange thereof, the Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities as if such
Options or Convertible Securities had never been issued;
(3) no readjustment pursuant to clause (2) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the Conversion Price on the original adjustment date,
or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common between the original adjustment date and such
readjustment date; and
(4) no readjustment of the Conversion Price shall
occur upon the expiration of any such Options or any rights of conversion or
exchange under such Convertible Securities.
(B) Stock Dividends. In the event the Corporation at any
time or from time to time after the Original Issue Date shall declare or pay any
dividend on the Common payable in Common, the Additional Shares of Common shall
be deemed to have been issued on the record date for the determination of
holders of any class of securities entitled to receive such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common. In the event the Corporation shall issue Additional
Shares of Common (including Additional Shares of Common deemed to be issued
pursuant to Section 5(d)(iii)) without consideration or for a consideration per
share less than the Conversion Price of the Series A Preferred in effect on the
date of, and immediately prior to such issue, then, and in such event, such
Conversion Price for Series A Preferred shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by the following
formula:
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<PAGE>
CP(1) = CP(0) x CS + C/CP(0)/(CS + AS)
where:
(1) CP(0) = the Conversion Price in effect on the date of
and immediately prior to such issue;
(2) CP(1) = the Conversion Price as so adjusted;
(3) CS = the number of shares of Common outstanding
immediately prior to such issuance (including
shares of Common issuable upon conversion or
exercise of any Convertible Securities and
the Preferred, or upon exercise of Options);
(4) C = the aggregate consideration, if any,
received by the Corporation for the total
number of Additional Shares of Common so
issued, provided that if the Additional
Shares of Common are issued without
consideration then C shall be zero (0); and
(5) AS = the number of such Additional Shares of
Common so issued.
and provided further that, immediately after any Additional Shares of Common are
deemed issued pursuant to Section 5(d)(iii), such Additional Shares of Common
shall be deemed to be outstanding shares of Common for the purposes of the
foregoing formula.
(v) Determination of Consideration. For purposes of this
Section 5(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(1) Cash and Property: Such consideration shall:
(A) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation excluding amounts paid
or payable for accrued interest or accrued dividends, and provided further that
no deduction shall be made for any commissions or expenses paid or incurred by
the Corporation for any underwriting of the issue or otherwise in connection
therewith;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the
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<PAGE>
time of such issue, as determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received in respect of the Additional Shares of Common,
computed as provided in clauses (A) and (B) above, as determined in good faith
by the Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 5(d)(iii), relating to
Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities or, in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by
(y) the maximum number of shares of Common (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(3) Stock Dividends. Any additional shares of Common
deemed to have been issued relating to stock dividend shall be deemed to have
been issued for no consideration.
(e) Adjustment for Subdivisions and Combinations. If the
Corporation at any time or from time to time effects a subdivision of the
outstanding Common, the Conversion Price of the Series A Preferred then in
effect immediately before that subdivision shall be proportionately decreased,
and, conversely, if the Corporation at any time or from time to time combines
the outstanding shares of Common, the Conversion Price of the Series A Preferred
then in effect immediately before the combination shall be proportionately
increased. Any adjustment of the Conversion Price of the Series A Preferred
under this Section
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<PAGE>
5(e) shall become effective at the close of business on the date the subdivision
or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time or from time to time makes, or fixes a record
date for the determination of holders of Common entitled to receive, a dividend
or other distribution payable in additional shares of Common, then and in each
such event the Conversion Price then in effect shall be decreased as of the time
of such issuance or, in the event such a record date is fixed, as of the close
of business on such record date, by multiplying the Conversion Price then in
effect by a fraction (1) the numerator of which is the total number of shares of
Common issued and outstanding immediately prior to the time of such issuance on
the close of business on such record date, and (2) the denominator of which
shall be the total number of shares of Common issued and outstanding immediately
prior to the time of such issuance on the close of business on such record date
plus the number of shares of Common issuable in payment of such dividend or
distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this Section 5(e) as of the time of actual payment of
such dividends or distributions.
(g) Adjustments for Other Dividends or Distributions. In the
event the Corporation at any time or from time to time makes or fixes a record
date for the determination of holders of shares of Common entitled to receive a
dividend or other distribution payable in securities or other property of the
Corporation (other than shares of Common and other than as otherwise adjusted in
this Section 5), then, and in each such event, provision shall be made so that
the holders of shares of Preferred shall receive upon conversion thereof, in
addition to the number of shares of Common receivable thereupon, the amount of
securities and other property of the Corporation which they would have received
had their shares of Preferred been converted into shares of Common on the date
of such event and had they thereafter, during the period from the date of such
event to and including the date of conversion, retained such securities and
other property receivable by them as aforesaid during such period, subject to
all other adjustments called for during such period under this Section 5 with
respect to the rights of the holders of shares of Preferred.
(h) Adjustments for Reclassification. Exchange and
Substitution. If the shares of Common issuable upon conversion of the Preferred
shall be changed into the same or a different number of shares of any other
class or classes of stock, whether by capitalization, reclassification or
otherwise
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<PAGE>
(other than a subdivision or combination of shares, stock dividend, or
reorganization, merger, consolidation or sale of assets, as provided for
herein), then and in any such event each holder of Series A Preferred thereafter
shall have the right to convert such stock into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification or other change, by holders of the number of shares of Common
into which such shares of Preferred might have been converted immediately prior
to such recapitalization, reclassification or change, all subject to such
further adjustments applicable as specified herein.
(i) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Preferred a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Preferred, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
at the time in effect, and (iii) the number of shares of Common and the amount,
if any, of other property which at the time would be received upon the
conversion of Preferred.
(j) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its
Common, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders
of any class or series of its stock any additional shares of stock of any class
or series or other rights;
(iii) to effect any reclassification or recapitalization
of its Common outstanding involving a change in the Common; or
(iv) to merge or consolidate with or into any other
Corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of the Preferred:
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<PAGE>
(1) at least ten (10) days' prior written notice
of the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
shall be entitled thereto) or for determining rights to vote in respect of the
matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in
(iii) and (iv) above, at least ten (10) days' prior written notice of the date
when the same shall take place (and specifying the date on which the holders of
Common shall be entitled to exchange their Common for securities or other
property deliverable upon the occurrence of such event)
Each such written notice shall be given by certified or registered mail,
postage prepaid, addressed to the holders of Preferred at the address for each
such holder as shown on the books of this Corporation.
(k) No Impairment. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation by will at all times in good faith assist in the carrying out of all
the provisions of this Section 5 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred against impairment.
Section 6. Voting Rights. Except as otherwise expressly provided herein or
as required by law, the holder of each share of Common issued and outstanding
shall have one vote per share and the holder of each share of Preferred shall be
entitled to the number of votes equal to the number of shares of Common into
which such holder's shares of Preferred could be converted (as adjusted from
time to time pursuant to Section 5 hereof) at the record date for determination
of the stockholders entitled to vote on such matters, or, if no such record date
is established, at the date such vote is taken or any written consent of
stockholders is solicited, such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not
separately as a class. Holders of shares of Common and Preferred shall be
entitled to notice of any stockholders' meeting in accordance with the Bylaws of
the Corporation. No fractional votes shall be permitted, and any fractional
voting rights resulting from the above formula (after aggregating all shares
into which shares of Preferred held by each holder could be converted) shall be
rounded to the nearest whole number.
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<PAGE>
Section 7. Covenants. In addition to any other rights provided by law, so
long as any Series A Preferred shall be outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of not less than a majority of such outstanding shares of Series A Preferred
(not less than seventy-five percent (75%) in the case of item (c) below) voting
as a class:
(a) Authorize or issue shares of any class or series having
any preference or priority as to dividends or assets superior to any such
preference or priority of Series A Preferred; or
(b) Increase the authorized number of shares of Preferred or
Series A Preferred.
(c) Materially and adversely alter or change the rights,
preferences, privileges or restrictions of the Series A Preferred.
Section 8. Consent for Certain Repurchases of Common Stock Deemed to be
Distributions. Each holder of an outstanding share of Preferred shall be deemed
to have consented, for purposes of Sections 502, 503 and 506 of the General
Corporation Law, to distributions made by the Corporation in connection with the
repurchase of shares of Common issued to or held by employees, officers,
directors, consultants or other persons performing services for the Corporation
or any Subsidiary upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase between the Corporation
and such persons.
Section 9. Residual Rights. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary herein shall be
vested in the Common.
Section 10. Status of Converted or Redeemed Stock. In the event any shares
of Preferred shall be redeemed or converted, the shares so converted or redeemed
shall be cancelled and shall not have the status of authorized but unissued
shares of Preferred and shall not be issuable by the Corporation and the
Articles of InCorporation of this Corporation shall be amended to effect the
corresponding reduction in the Corporation's capital stock."
3. The foregoing amendment of Articles of InCorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of InCorporation has been duly
approved by the required vote of shareholders in accordance with Section 902 and
903 of the Corporations Code. The total number of outstanding shares of the
Corporation is
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<PAGE>
2,125,000 shares of Common Stock. The number of shares voting in favor of the
amendment equalled or exceeded the vote required. The percentage vote required
was more than 50%. No other class of shares is outstanding.
/s/ Peter Levy 12-15-88
--------------------------
Peter Levy, President
/s/ Steven Gross 12/15/88
--------------------------
Steven Gross, Secretary
The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
Executed at San Jose, California on December __, 1988.
/s/ Peter Levy 12-15-88
-------------------------
Peter Levy, President
/s/ Steven Gross 12/15/88
--------------------------
Steven Gross, Secretary
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<PAGE>
A384508
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
Mar 29 1990
MARCH FUNG EU, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INTELLICHOICE, INC.
Peter Levy and Steven Gross certify that:
1. They are the President and Secretary, respectively, of INTELLICHOICE,
INC., a California corporation.
2. The Articles of Incorporation of this corporation are amended to
include Articles V, VI, and VII as follows:
"V.
The liability of the directors of this corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
VI.
This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the Corporations Code) for breach of duty to the
corporation and its stockholders through bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
by Section 317 of the Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the Corporations Code.
VII.
Any repeal or modification of the foregoing provisions of Articles V and
VI by the shareholders of this corporation shall not adversely affect any right
or protection of a director of this corporation existing at the time of such
repeal or modification."
3. The foregoing amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902 and
903 of the Corporations Code. The total number of outstanding shares of the
corporation is 2,125,000 shares of Common Stock and 290,000 shares of Series A
Preferred Stock. The number of shares voting in favor of the
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<PAGE>
amendment equalled or exceeded the vote required. The percentage vote required
was more than 50% of the classes voting together.
/s/ Peter Levy
-------------------------
Peter Levy, President
/s/ Steven Gross
-------------------------
Steven Gross, Secretary
The undersigned declare under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
Executed at San Jose, California on March 2, 1989.
/s/ Peter Levy
-------------------------
Peter Levy, President
/s/ Steven Gross
-------------------------
Steven Gross, Secretary
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<PAGE>
A386003
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
APR 27 1990
MARCH FUNG EU, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INTELLICHOICE, INC.
Peter Levy and Steven Gross certify that:
1. They are the President and Secretary, respectively, of INTELLICHOICE,
INC., a California Corporation (the "Corporation").
2. Article IV of the Articles of Incorporation of this Corporation is
amended in its entirety as follows:
"IV
(a) (i) The Corporation is authorized to issue two classes of
shares, to be designated respectively Preferred Stock ("Preferred") and Common
Stock ("Common"). The total number of shares of Preferred the Corporation shall
have authority to issue is 850,000 and the total number of shares of Common the
Corporation shall have authority to issue is 10,000,000.
The Corporation from time to time in accordance with the laws of the
State of California shall increase the authorized amount of its Common if at any
time the number of shares of Common remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred.
(ii) The Preferred authorized by these Articles of
Incorporation shall be issued in series as set forth herein. The first series of
Preferred shall be designated Series A Preferred Stock ("Series A Preferred")
and shall consist of Five Hundred Fifty Thousand (550,000) shares. The second
series of Preferred shall be designated Series B Preferred Stock ("Series B
Preferred") and shall consist of Three Hundred Thousand (300,000) shares. The
shares of each series of Preferred have the rights, preference, privileges and
restrictions granted or imposed in paragraph (b) below.
(b) The relative rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes of
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<PAGE>
the shares of capital stock or the holders thereof are as follows:
Section 1. General Definitions. For purposes of this Article the following
definitions shall apply:
A. 'Junior Shares' shall mean all Common and any other shares of the
Corporation other than the Preferred.
B. 'Subsidiary' shall mean any Corporation at least 50% of whose
outstanding voting shares shall at the time be owned by the Corporation or by
one or more of such subsidiaries.
C. 'Original Issue Date' shall mean the date on which the first shares of
Series A Preferred and Series B Preferred, respectively, were issued.
Section 2. Dividend Rights of Preferred. The holders of the Series A
Preferred shall be entitled to receive, out of any funds legally available
therefor, cash dividends at the rate of (i) Four Cents ($0.04) per annum, on
each outstanding share of Series A Preferred, and (ii) Six Cents ($0.06) per
annum, on each outstanding share of Series B Preferred, and no more, payable in
preference and priority to any payment of any dividends on Junior Shares out of
any funds legally available therefor, when and as declared by the Board of
Directors. The right to such dividends on the Preferred shall not be cumulative,
and no right shall accrue to holders of Preferred by reason of the fact that
dividends on such shares are not declared or paid in any prior year. No dividend
shall be declared or paid with respect to the Common during any fiscal year
unless and until the dividends provided for in the first sentence of this
Section 2 are declared and paid, or set apart for payment, on each outstanding
share of Preferred. After dividends in the amount specified per share for each
series of Preferred have been so declared and paid or set apart in any one
fiscal year of the Corporation, if the Board thereafter elects to declare
additional dividends in the same fiscal year out of funds legally available
therefor, such additional dividends shall be declared solely on the Junior
Shares. In the event that the Corporation shall have declared and unpaid
dividends outstanding immediately prior to, and in the event of, a conversion of
Preferred (as provided in Section 5 hereof), the Corporation shall pay such
dividends, in cash to the holder(s) of Preferred.
Section 3. Liquidation Preference.
(a) Priority. In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the holders of
the Preferred shall be entitled to receive, out of the assets of the Corporation
available for distribution to its shareholders, prior and in preference to any
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<PAGE>
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Junior Shares by reason of their ownership thereof, the amount of
(i) $0.55 per share for each share of Series A Preferred and (ii) $0.85 per
share for each share of Series B Preferred, then held by them (as appropriately
adjusted for any stock dividends, stock splits, recapitalization, consolidation,
or the like, with respect to such shares), and, in addition, an amount equal to
all declared but unpaid dividends on each of the respective series of Preferred,
and no more, such amount to be payable in cash, or securities delivered in the
transaction, or a combination of both. If, upon occurrence of such event, the
assets and funds thus distributed among the holders of the Preferred shall be
insufficient to permit the payment to such holders of the full preferential
amount, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the Preferred
in proportion to the respective preferential amount each such holder is entitled
to receive. For purposes of this Section 3, a liquidation, dissolution or
winding up of the Corporation shall be deemed to be occasioned by, and shall
include, the Corporation's sale of all or substantially all of its assets or the
acquisition of the Corporation by another entity by means of a merger or
consolidation resulting in the exchange of the outstanding shares of the
Corporation for securities or consideration issued, or caused to be issued, by
such other entity.
(b) Payment to Junior Shares. All of the preferential amounts to be
paid to the holders of Preferred under this Section 3 shall be paid or set apart
for payment prior to payment or setting apart for payment of any amount for, or
the distribution of any amounts to, the holders of any Junior Shares in
connection with such liquidation, dissolution or winding up. If the Corporation
has assets remaining after payment or setting apart for payment of the
preferential amounts so payable to the holders of the Preferred, the holders of
Junior Shares shall be entitled to receive all remaining assets of the
Corporation, pro rata, based upon the number of shares of Common (or the number
of shares of Common into which Junior Shares could be converted) held by each
holder at the record date for any distribution.
(c) Valuation. For purposes of this section 3, if the distributions
or consideration received by the shareholders of the Corporation is other than
cash, its value will be deemed to be its fair market value as determined in good
faith by the Board of Directors of the Corporation. In the case of publicly
traded securities listed on an exchange, fair market value shall mean the
average last closing sale price as reported by such exchange or by a
consolidated transaction reporting system for the five-day period immediately
preceding the date such sale, merger, consolidation or other reorganization is
consummated. In the
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<PAGE>
case of publicly traded securities not listed on an exchange, fair market value
shall mean the average last closing bid price as reported by the National
Association of Securities Dealers Automatic Quotation System, Inc. or such
successor or similar organization, for the five-day period immediately
preceding the date on which such sale, merger, consolidation or other
reorganization is consummated.
Section 4. Mandatory Redemption.
(a) Mandatory Redemption; Price. The Corporation shall redeem one-third of
the Series A Preferred and Series B Preferred outstanding (the "Redeemed
Shares") each of January 6, 1994, January 6, 1995 and January 6, 1996. The
Corporation shall pay cash for each share to be redeemed pursuant to this
Section 4 in the amount of (i) $0.55 per share of Series A Preferred and (ii)
$0.85 per shares of Series B Preferred (the foregoing appropriately adjusted for
any stock dividends, stock splits, recapitalization, consolidation, or the like,
with respect to such series A Preferred), together with an amount equal to any
declared but unpaid [Illegible] dividends on such series of Preferred being
redeemed to the date fixed for redemption, and delivery of a certificate
representing the number of shares of Common Stock which the holders would have
received had they elected to convert the Redeemed Shares into Common upon the
Redemption Date (as that term is defined below). The amount to be paid for a
share of the series of Preferred to be redeemed is hereinafter referred to as
the "Redemption Price."
(b) Redemption Date; Notice. Not less than thirty (30) days nor more than
sixty (60) days prior to the date fixed for any redemption of a series of
Preferred (hereinafter referred to as the "Redemption Date"), written notice
shall be mailed, postage prepaid, to each holder of record of such series of
Preferred to be redeemed, at the post office address last shown on the records
of the Corporation, specifying the Redemption Date, the total number shares of
such series of Preferred being redeemed, the number of shares of such series of
Preferred held by the holder to whom such notice is sent, the applicable
Redemption Price, and calling upon such holder to surrender to the Corporation,
in the manner and at the place designated, the certificate or certificates
representing the shares to be redeemed (such notice is hereinafter referred to
as the "Redemption Notice"). On or after the Redemption Date, each holder of the
series of Preferred to be redeemed shall surrender the certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner of such shares and each
surrendered certificate shall be cancelled. From and after the Redemption Date,
all rights of the holders of the
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<PAGE>
series of Preferred designated for redemption in the Redemption Notice (except
the right to receive the Redemption Price without interest upon surrender of
their certificate or certificates) shall cease and terminate with respect to
such shares, and such shares shall not subsequently be transferred on the books
of the Corporation or be deemed to be outstanding for any purpose whatsoever. In
the event fewer than all of the shares represented by such surrendered
certificate are redeemed, a new certificate representing the unredeemed shares
shall be issued forthwith.
(c) Deposit. On or prior to the Redemption Date, the Corporation shall
deposit the Redemption Price of all shares of the series of Preferred designated
for redemption in the Redemption Notice and not yet redeemed with a bank or
trust company having aggregate capital and surplus in excess of one hundred
million dollars ($100,000,000) as a trust fund for the benefit of the respective
holders of the shares designated for redemption and not yet redeemed, with
irrevocable instructions and authority to the bank or trust company to pay the
Redemption Price for such shares to their respective holders on or after the
Redemption Date upon receipt of notification to the Corporation pursuant to
Section 4(b). The balance of any funds deposited by the Corporation pursuant to
this Section 4(c) remaining unclaimed at the expiration of one (1) year
following the Redemption Date shall be returned to the Corporation upon its
request expressed in a resolution of its Board of Directors.
Section 5. Conversion. The holders of the Preferred shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred shall be convertible,
at the option of the holder thereof, at the office of the Corporation or any
transfer agent for the Preferred, into such number of fully paid and
nonassessable shares of Common, as is determined by dividing (i) $0.55 for each
share of Series A Preferred and (ii) $. 85 for each share of Series B Preferred
by the Conversion Price (determined as hereinafter provided) in effect at the
time of conversion. The price at which shares of Common shall be deliverable
upon conversion (the "Conversion Price") initially shall be (ii) $0.55 for each
share of Series A Preferred and (ii) $0.85 for each share of Series B Preferred,
per share of Common. Such Conversion Price shall be subject to adjustment as
hereinafter provided.
(b) Automatic Conversion. Each share of Preferred automatically
shall be converted into shares of Common at the then effective Conversion Price
on the effective date of a firm commitment underwritten public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of Common for the account of
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<PAGE>
the Corporation to the public at a price per share (prior to underwriting
commissions and expenses) of not less than $2.00 per share (as adjusted for
stock splits, recapitalization, consolidation or the like) and an aggregate
offering price of not less than $2,000,000.
(c) Mechanics of Conversion. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of any share
of Preferred. If, upon conversion of all of shares of Preferred held by a
registered holder which are being converted (after aggregating such shares),
except for the provisions of this Section 5(c), the registered holder would be
entitled to receive a fractional share of Common, then an amount equal to such
fractional share multiplied by the then fair market value (as determined in good
faith by the Corporation's Board of Directors) of a share of the Corporation's
Common shall be paid by the Corporation in cash to such registered holder.
Before any holder of Preferred shall be entitled to convert the same into shares
of Common, the holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for the
Preferred, and shall give written notice to the Corporation at such office that
the holder elects to convert the same. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred, a certificate or certificates for the number of shares of Common to
which the holder shall be entitled as aforesaid and a check payable to the
holder in the amount of any cash amounts payable as the result of a conversion
into fractional shares of Common. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of Preferred to be converted, or in the case of automatic conversion
on the effective date of the offering as provided in Section 5(b), and the
person or persons entitled to receive the shares of Common issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common on such date.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 5(d),
the following definitions shall apply:
(1) 'Options' shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(2) 'Convertible Securities' shall mean any evidences
of indebtedness, shares (other than Common) or other securities convertible into
or exchangeable for Common.
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<PAGE>
(3) 'Additional Shares of Common' shall mean all
shares of Common issued (or, pursuant to Section 5(d) (iii), deemed to be
issued) by the Corporation after the Original Issue Date, other than shares of
Common issued or issuable (or pursuant to Section 5(d) (iii), deemed to be
issued):
(A) upon conversion of shares of Series A
Preferred or Series B Preferred; and
(B) to officers, directors or employees of, or
contractors or consultants to, the Corporation pursuant to a stock grant, option
plan or purchase plan or other stock incentive program or agreement approved by
the Board of Directors not exceeding 535,000 shares of Common and including an
additional 2,125,000 shares which were held by officers, directors, employees
and consultants on October 21, 1988, which are repurchased from officers,
directors, employees or consultants upon termination of the employment,
consulting relationship or services to the Corporation of such person.
(ii) No Adjustment of Conversion Price. No adjustment in the
Conversion Price of a particular share of a series of Preferred shall be made in
respect of the issuance of Additional Shares of Common unless the consideration
per share for an Additional Share of Common issued or deemed to be issued by the
Corporation is less than the Conversion Price in effect on the date of, and
immediately prior to such issue, for such share of a series of Preferred.
(iii) Deemed Issue of Additional Shares of Common.
(1) Options and Convertible Securities. In the event, at
any time or from time to time after the Original Issue Date, the Corporation
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date, provided that Additional Shares of Common shall
not be deemed to have been issued as to a series of Preferred unless the
consideration per share (determined pursuant to Section 5(d)(v) hereof) of such
Additional Shares of Common
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would be less than the applicable Conversion Price in effect on the date of, and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common are
deemed to be issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Corporation, or decrease in the number of
shares of Common issuable (including a decrease resulting from the expiration of
such Options or the rights of conversion or exchange of such Convertible
Securities), upon the exercise, conversion or exchange thereof, the Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities as if such
Options or Convertible Securities had never been issued;
(C) no readjustment pursuant to clause (B) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the Conversion Price on the original adjustment date,
or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common between the original adjustment date and such
readjustment date; and
(D) no readjustment of the Conversion Price shall
occur upon the expiration of any such Options or any rights of conversion or
exchange under such Convertible Securities.
(2) Stock Dividends. In the event the Corporation at any
time or from time to time after the Original Issue Date shall declare or pay any
dividend on the Common payable in Common, the Additional Shares of Common shall
be deemed to have been issued on the record date for the determination of
holders of any class of securities entitled to receive such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common. In the event the Corporation shall issue Additional
Shares of Common (including Additional Shares of Common deemed to be issued
pursuant to Section
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5(d) (iii)) without consideration or for a consideration per share less than the
Conversion Price of the Series A Preferred or Series B Preferred in effect on
the date of, and immediately prior to such issue, then, and in such event, such
Conversion Price for such series of Preferred shall be reduced, concurrently
with such issue, to a price (calculated to the nearest cent) determined by the
following formula:
CP(1) = CP(0) x CS + C/CP(0)/(CS + AS)
where:
(1) CP(0) = the Conversion Price in effect on the date of
and immediately prior to such issue;
(2) CP(1) = the Conversion Price as so adjusted;
(3) CS = the number of shares of Common outstanding
immediately prior to such issuance (including
shares of Common issuable upon conversion or
exercise of any Convertible Securities and
the Preferred, or upon exercise of Options);
(4) C = the aggregate consideration, if any,
received by the Corporation for the total
number of Additional Shares of Common so
issued, provided that if the Additional
Shares of Common are issued without
consideration then C shall be zero (0); and
(5) AS = the number of such Additional Shares of
Common so issued.
and provided further that, immediately after any Additional Shares of Common are
deemed issued pursuant to Section 5(d) (iii), such Additional Shares of Common
shall be deemed to be outstanding shares of Common for the purposes of the
foregoing formula.
(v) Determination of Consideration. For purposes of this
Section 5(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(1) Cash and Property: Such consideration shall:
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(A) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation excluding amounts paid
or payable for accrued interest or accrued dividends, and provided further that
no deduction shall be made for any commissions or expenses paid or incurred by
the Corporation for any underwriting of the issue or otherwise in connection
therewith;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received in respect of the Additional Shares of Common,
computed as provided in clauses (A) and (B) above, as determined in good faith
by the Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 5(d)(iii), relating to
Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities or, in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by
(y) the maximum number of shares of Common (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(3) Stock Dividends. Any additional shares of Common
deemed to have been issued relating to stock dividends shall be deemed to have
been issued for no consideration.
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(e) Adjustment for Subdivisions and Combinations. If the
Corporation at any time or from time to time effects a subdivision of the
outstanding Common, the Conversion Price of such series of Preferred then in
effect immediately before that subdivision shall be proportionately decreased,
and, conversely, if the Corporation at any time or from time to time combines
the outstanding shares of Common, the Conversion Price of such series of
Preferred then in effect immediately before the combination shall be
proportionately increased. Any adjustment of the Conversion Price of a series of
Preferred under this Section 5(e) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time or from time to time makes, or fixes a record
date for the determination of holders of Common entitled to receive, a dividend
or other distribution payable in additional shares of Common, then and in each
such event the Conversion Price of each series of Preferred then in effect shall
be decreased as of the time of such issuance or, in the event such a record date
is fixed, as of the close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction (1) the numerator of which is the
total number of shares of Common issued and outstanding immediately prior to the
time of such issuance on the close of business on such record date, and (2) the
denominator of which shall be the total number of shares of Common issued and
outstanding immediately prior to the time of such issuance on the close of
business on such record date plus the number of shares of Common issuable in
payment of such dividend or distribution; provided, however, that if such record
date is fixed and such dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Conversion Price shall be recomputed
accordingly as of the close of business on such record date and thereafter the
Conversion Price shall be adjusted pursuant to this Section 5(e) as of the time
of actual payment of such dividends or distributions.
(g) Adjustments for Other Dividends or Distributions. In the
event the Corporation at any time or from time to time makes or fixes a record
date for the determination of holders of shares of Common entitled to receive a
dividend or other distribution payable in securities or other property of the
Corporation (other than shares of Common and other than as otherwise adjusted in
this Section 5), then, and in each such event, provision shall be made so that
the holders of shares of Preferred shall receive upon conversion thereof, in
addition to the number of shares of Common receivable thereupon, the amount of
securities and other property of the Corporation which they would have received
had their shares of Preferred been converted into shares of Common on the date
of such event and had they thereafter, during the period from the date of such
event to and
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including the date of conversion, retained such securities and other property
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 5 with respect to
the rights of the holders of shares of Preferred.
(h) Adjustments for Reclassification. Exchange and
Substitution. If the shares of Common issuable upon conversion of the Preferred
shall be changed into the same or a different number of shares of any other
class or classes of stock, whether by capitalization, reclassification or
otherwise (other than a subdivision or combination of shares, stock dividend, or
reorganization, merger, consolidation or sale of assets, as provided for
herein), then and in any such event each holder of Series A Preferred thereafter
shall have the right to convert such stock into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification or other change, by holders of the number of shares of Common
into which such shares of Preferred might have been converted immediately prior
to such recapitalization, reclassification or change, all subject to such
further adjustments applicable as specified herein.
(i) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Preferred a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Preferred, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
at the time in effect, and (iii) the number of shares of Common and the amount,
if any, of other property which at the time would be received upon the
conversion of Preferred.
(j) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its
Common, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders
of any class or series of its stock any additional shares of stock of any class
or series or other rights;
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<PAGE>
(iii) to effect any reclassification or recapitalization
of its Common outstanding involving a change in the Common; or
(iv) to merge or consolidate with or into any other
Corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of the Preferred:
(1) at least ten (10) days' prior written notice
of the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
shall be entitled thereto) or for determining rights to vote in respect of the
matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in
(iii) and (iv) above, at least ten (10) days' prior written notice of the date
when the same shall take place (and specifying the date on which the holders of
Common shall be entitled to exchange their Common for securities or other
property deliverable upon the occurrence of such event).
Each such written notice shall be given by certified or registered mail,
postage prepaid, addressed to the holders of Preferred at the address for each
such holder as shown on the books of this Corporation.
(k) No Impairment. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation by will at all times in good faith assist in the carrying out of all
the provisions of this Section 5 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred against impairment.
Section 6. Voting Rights. Except as otherwise expressly provided herein or
as required by law, the holder of each share of Common issued and outstanding
shall have one vote per share and the holder of each share of Preferred shall be
entitled to the number of votes equal to the number of shares of Common into
which such holder's shares of Preferred could be converted (as adjusted from
time to time pursuant to Section 5 hereof) at the record date for determination
of the stockholders entitled to vote on such matters, or, if no such record date
is established,
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<PAGE>
at the date such vote is taken or any written consent of stockholders is
solicited, such votes to be counted together with all other shares of stock of
the Corporation having general voting power and not separately as a class.
Holders of shares of Common and Preferred shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation. No
fractional votes shall be permitted, and any fractional voting rights resulting
from the above formula (after aggregating all shares into which shares of
Preferred held by each holder could be converted) shall be rounded to the
nearest whole number.
Section 7. Covenants. In addition to any other rights provided by law, so
long as any Preferred shall be outstanding, the Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of not
less than a majority of such outstanding shares of the series of Preferred
affected (not less than seventy-five percent (75%) in the case of item (c)
below) voting as a class:
(a) Authorize or issue shares of any class or series having
any preference or priority as to dividends or assets superior to any such
preference or priority of such series of Preferred; or
(b) Increase the authorized number of shares of Preferred or
such series of Preferred.
(c) Materially and adversely alter or change the rights,
preferences, privileges or restrictions of such series of Preferred.
Section 8. Consent for Certain Repurchases of Common Stock Deemed to be
Distributions. Each holder of an outstanding share of Preferred shall be deemed
to have consented, for purposes of Sections 502, 503 and 506 of the General
Corporation Law, to distributions made by the Corporation in connection with the
repurchase of shares of Common issued to or held by employees, officers,
directors, consultants or other persons performing services for the Corporation
or any Subsidiary upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase between the Corporation
and such persons.
Section 9. Residual Rights. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary herein shall be
vested in the Common.
Section 10. Status of Converted or Redeemed Stock. In the event any shares
of Preferred shall be redeemed or converted, the shares so converted or redeemed
shall be cancelled and shall not have the status of authorized but unissued
shares of
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<PAGE>
Preferred and shall not be issuable by the Corporation and the Articles of
InCorporation of this Corporation shall be amended to effect the corresponding
reduction in the Corporation's capital stock."
3. The foregoing amendment of Articles of InCorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of InCorporation has been duly
approved by the required vote of shareholders in accordance with section 902 and
903 of the Corporations Code. The total number of outstanding shares of the
Corporation is 2,200,000 shares of Common Stock and 527,724 shares of Series A
Preferred Stock. The number of shares voting in favor of the amendment equalled
or exceeded the vote required. The percentage vote required was more than 50% of
the classes voting together and more than 50% of the Series Preferred voting
separately as a class. No other class of shares is outstanding.
/s/ Peter Levy
------------------------
Peter Levy, President
/s/ Steven Gross
------------------------
Steven Gross, Secretary
The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
Executed at San Jose, California on April 9, 1990.
/s/ Peter Levy
------------------------
Peter Levy, President
/s/ Steven Gross
------------------------
Steven Gross, Secretary
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<PAGE>
EXHIBIT 3.126
BYLAWS
for the regulation, except as
otherwise provided by statute or
the Articles of Incorporation, of
INTELLICHOICE, INC.,
a California corporation
<PAGE>
TABLE OF CONTENTS
Section Title Page
- ------- ----- ----
ARTICLE I. CORPORATE OFFICES
1.1 Principal Office 1
1.2 Other Offices 1
ARTICLE II. SHARES AND SHAREHOLDERS
2.1 Meetings of Shareholders 1
(a) Place of Meetings 1
(b) Annual Meetings 1
(c) Special Meetings 1
(d) Notice of Meetings 1
(e) Adjourned Meeting and Notice Thereof 2
(f) Waiver of Notice 3
(g) Quorum 3
2.2 Action Without a Meeting 3
2.3 Voting of Shares 4
(a) In General 4
(b) Cumulative Voting 4
(c) Election by Ballot 4
2.4 Proxies 4
2.5 Inspectors of Election 5
(a) Appointment 5
(b) Duties 5
2.6 Record Date 5
2.7 Share Certificates 6
(a) In General 6
(b) Two or More Classes or Series 6
(c) Special Restrictions 7
2.8 Lost, Stolen or Destroyed Certificates 7
ARTICLE III. DIRECTORS
3.1 Powers 7
3.2 Number of Directors 7
3.3 Election and Term of Office 8
3.4 Removal 8
(a) Removal for Cause 8
(b) Removal without Cause 8
3.5 Vacancies 8
3.6 Resignation 8
3.7 Meetings of the Board of Directors 8
(a) Regular Meetings 8
(b) Annual Meeting 9
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Section Title Page
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(c) Special Meetings; Notices; Waiver of Notice 9
(d) Notice of Adjournment 9
(e) Place of Meeting 9
(f) Presence by Conference Telephone Call 9
(g) Quorum 9
3.8 Action Without Meeting 10
3.9 Committees of the Board 10
(a) Membership and Authority 10
(b) Meetings and Action 10
3.10 Fees and Compensation of Directors 10
3.11 Loans and Guaranties to Directors, Officers and Others 11
ARTICLE IV. OFFICERS
4.1 Officers 12
4.2 Elections 12
4.3 Other Officers 12
4.4 Removal 12
4.5 Resignation 12
4.6 Vacancies 12
4.7 Chairman of the Board 12
4.8 President 13
4.9 Vice Presidents 13
4.10 Secretary 13
4.11 Chief Financial Officer 13
ARTICLE V. RECORDS AND REPORTS
5.1 Books, Records and Reports 14
(a) Books of Account and Reports 14
(b) Annual Report 14
(c) Shareholders' Requests for Financial Reports 14
5.2 Rights of Inspection 15
(a) By Shareholders 15
(b) By Directors 16
ARTICLE VI. MISCELLANEOUS
6.1 Checks, Drafts, Etc. 16
6.2 Authority to Execute Contracts 16
6.3 Representation of Shares of Other Corporations 16
6.4 Replace w/Article 8 [ILLEGIBLE] 16
6.5 Employee Stock Purchase Plans 18
6.6 Construction and Definitions 18
ARTICLE VII. AMENDMENTS
7.1 Power of Shareholders 19
7.2 Power of Directors 19
ARTICLE VIII. INDEMNIFICATION
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<PAGE>
BYLAWS
for the regulation, except as otherwise provided
by statute or the Articles of Incorporation
of
INTELLICHOICE, INC.
Article I. General Provisions.
Section 1.1. Principal Office. The Board of Directors shall fix the location of
the principal executive office of the corporation at any place within or outside
the State of California. If the principal executive office is located outside of
such state and the corporation has one or more business offices in such state,
then the Board of Directors shall fix and designate a principal business office
in the State of California.
Section 1.2. Other Offices. The Board of Directors may at any time establish
branch or subordinate offices at any place or places where the corporation is
qualified to do business.
Article II. Shares and Shareholders.
Section 2.1. Meetings of Shareholders.
(a) Place of Meeting. Meetings of shareholders shall be held at any place within
or without the State of California designated by the Board of Directors. In the
absence of any such designation, shareholders' meetings shall be held at the
principal executive office of the corporation.
(b) Annual Meeting. An annual meeting of the shareholders of the corporation
shall be held on Second Tuesday of April each year at 2:00 p.m. or at such other
date and time as may be designated by the Board of Directors; provided, however,
that should said day fall upon a legal holiday, the annual meeting of
shareholders shall be held at the same time on the next day thereafter ensuing
which is a full business day. At each annual meeting directors shall be elected,
and any other proper business may be transacted.
(c) Special Meeting. Special meetings of the shareholders may be called by the
Board of Directors, the chairman of the board or the president, or by the
holders of shares entitled to cast not less than 10% of the votes at the
meeting. Upon request in writing to the chairman of the board, the president,
any vice president or the secretary by any person (other than the Board)
entitled to call a special meeting of shareholders, such officer forthwith shall
cause notice to be given to the shareholders entitled to vote that a meeting
will be held at a time requested by the person or persons calling the meeting,
which time shall be not less than 35 nor more than 60 days after the receipt of
the request. If the notice is not given within 20 days after receipt of the
request, the persons entitled to call the meeting may give the notice.
(d) Notice of Meeting. Notice of any shareholders' meeting shall be given not
less than 10 (or, if sent by third-class mail, 30) nor more than 60 days before
the date of the
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meeting to each shareholder entitled to vote at such meeting. Such notice shall
state the place, date and hour of the meeting and (i), in the case of a special
meeting, the general nature of the business to be transacted, and no other
business may be transacted, or (ii), in the case of an annual meeting, those
matters which the Board, at the time of the giving of the notice, intends to
present for action by the shareholders. The notice of any meeting at which
directors are to be elected shall include the names of nominees intended at the
time of the notice to be presented by the Board for election.
If any action within the scope of Section 310 (entitled "Transactions
Between Corporations and Directors or Corporations Having Interrelated
Directors"), 902 (entitled "Amendments After Issuance of Shares"), 1201
(entitled "Shareholder Approval -- Abandonment -- Attack on Validity of
Reorganization"), 1900 (entitled "Authorization for Voluntary Dissolution") or
2007 (entitled "Plan of Distribution -- Demand for Cash Payment") of the
California General Corporation Law is proposed to be taken at any meeting, the
notice shall also state the general nature of such action.
Notice of a shareholders' meeting or any report shall be given to each
shareholder either personally or by first-class mail, or, in the case of a
corporation with outstanding shares held of record by 500 or more persons on the
record date for the shareholders' meeting, notice may be sent by third-class
mail, or other means of written communication, addressed to such shareholder at
the address of such shareholder appearing on the books of the corporation or
given by such shareholder to the corporation for the purpose of notice. If no
such address appears or is given, notice shall and will be deemed to be given at
the place where the principal executive office of the corporation is located or
by publication at least once in a newspaper of general circulation in the county
in which the principal executive office is located. The notice shall be deemed
to have been given at the time when delivered personally or deposited in the
mail or sent by other means of written communication. An affidavit of mailing of
any notice executed by the secretary, assistant secretary or any transfer agent
shall be prima facie evidence of the giving of such notice or report.
If any notice or report addressed to the shareholder at the address of
such shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice or report to the
shareholder at such address, all future notices or reports shall be deemed to
have been duly given without further mailing if the same shall be available for
the shareholder upon written demand of the shareholder at the principal
executive office of the corporation for a period of one year from the date of
the giving of the notice or report to all other shareholders.
(e) Adjourned Meeting and Notice Thereof. Any annual or special meeting of
shareholders may be adjourned from time to time by the vote of a majority of the
shares represented either in person or by proxy whether or not a quorum is
present. When a shareholders' meeting is adjourned to another time or place,
except as provided below, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting. No other business may
be transacted at the adjourned meeting other than as set forth in this
paragraph. If the adjournment is for more than 45 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 shareholder of record entitled to
vote at the meeting.
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(f) Waiver of Notice. The transactions of any annual or special meeting of
shareholders, however called and noticed and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy and if, either before or after the meeting,
each of the persons entitled to vote, not present in person or by proxy, signs a
written waiver of notice or a consent to the holding of the meeting or an
approval of the minutes thereof. Such waiver of notice, consent or approval need
not specify the nature of any action proposed to be taken or taken at the
meeting other than action within the scope of Section 310 (entitled
"Transactions Between Corporations and Directors or Corporations Having
Interrelated Directors"), 902 (entitled "Amendments After Issuance of Shares"),
1201 (entitled "Shareholder Approval -- Abandonment -- Attack on Validity of
Reorganization"), 1900 (entitled "Authorization for Voluntary Dissolution") or
2007 (entitled "Plan of Distribution -- Demand for Cash Payment") of the
California General Corporation Law, unless such action was unanimously approved
by the shareholders entitled to vote. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting. Attendance of a person at a meeting also shall constitute a waiver of
notice of, and presence, at such meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters required by
the General Corporation Law to be included in the notice but not so included, if
such objection is expressly made at the meeting.
(g) Quorum. The presence in person or by proxy of the persons entitled to vote a
majority of the shares entitled to vote at any meeting of shareholders shall
constitute a quorum for the transaction of business at such meeting. Except as
provided herein, the affirmative vote of a majority of the shares represented
and voting at a duly held meeting at which a quorum is present (which shares
voting affirmatively also constitute at least a majority of the required quorum)
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by law or the Articles of Incorporation of the
corporation.
The shareholders present at a duly called or held meeting at which a
quorum is present may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, provided that any action taken (other than adjournment) must be approved
by at least a majority of the shares required to constitute a quorum. In the
absence of a quorum, any meeting of shareholders may be adjourned from time to
time by the vote of a majority of the shares represented either in person or by
proxy, but no other business may be transacted other than as set forth in this
paragraph.
Section 2.2. Action Without a Meeting. An action which may be taken at any
annual or special meeting of shareholders may be taken without a meeting and
without prior notice if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Notwithstanding the foregoing and subject to Section 3.5 hereof,
directors may not be elected by written consent except by unanimous written
consent of all shares entitled to vote for the election of directors.
Unless the consents of all shareholders entitled to vote have been solicited in
writing, (a) notice of any shareholder approval pursuant to Section 310
(entitled
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"Transactions Between Corporations and Directors or Corporations Having
Interrelated Directors"), 317 (entitled "Indemnification of Corporate 'Agent'"),
1201 (entitled "Shareholder Approval -- Abandonment -- Attack on Validity of
Reorganization"), or 2007 (entitled "Plan of Distribution -- Demand for Cash
Payment") of the California General Corporation Law without a meeting by less
than unanimous written consent shall be given at least 10 days before the
consummation of the action authorized by such approval, and (b) prompt notice
shall be given of any other corporate action approved by the shareholders
without a meeting by less than unanimous written consent to those shareholders
entitled to vote who have not consented in writing. Such notice shall be given
in the same manner as notice of a shareholders' meeting.
Section 2.3. Voting of Shares.
(a) In General. Except as otherwise provided in the Articles of Incorporation
and subject to Subparagraph (b) hereof, each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote of
shareholders. Any holder of shares entitled to vote on any matter may vote part
of the shares in favor of the proposal and refrain from voting the remaining
shares or vote them against the proposal, other than elections to office, but,
if the shareholder fails to specify the number of shares such shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares such shareholder is entitled to
vote. Except as provided herein, the affirmative vote of a majority of the
shares represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a majority
of the required quorum) shall be the act of the shareholders, unless the vote of
a greater number or voting by classes is required by law or the Articles of
Incorporation of the corporation.
(b) Cumulative Voting. At any shareholders' meeting at which directors are to be
elected, no shareholder shall be entitled to cumulate votes (i.e., cast for any
candidate a number of votes greater than the number of votes which such the
shareholder normally is entitled to cast) unless such candidate or candidates'
names have been placed in nomination prior to the voting and a shareholder has
given notice at the meeting prior to the voting of the shareholder's intention
to cumulate the shareholder's votes. If any one shareholder has given such
notice, all shareholders entitled to vote may cumulate their votes for
candidates in nomination and give any candidate a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which the
shareholder's shares are normally entitled, or distribute the shareholder's
votes on the same principle among as many candidates as the shareholder thinks
fit. In any election of directors, the candidates receiving the highest number
of affirmative votes up to the number of directors to be elected are elected.
(c) Election by Ballot. The shareholders' vote may be by voice vote or ballot;
provided, however, that any election for directors must be by ballot if a
shareholder demands election by ballot at the meeting and before the voting
begins.
Section 2.4. Proxies. Every person entitled to vote shares may authorize another
person or persons to act by proxy with respect to such shares by a written proxy
signed by such person and filed with the secretary of the corporation. A proxy
shall be deemed signed by such person if such person's name is placed on the
proxy (whether by manual signature, typewriting, telegraphic transmission or
otherwise) by such person or such person's attorney in fact. No proxy shall be
valid after the expiration of 11 months from the date of the proxy unless
otherwise provided in the proxy. A valid proxy which does not state
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that it is irrevocable shall continue in full force and effect until revoked by
the person executing it before the vote pursuant to that proxy or unless written
notice of the death or incapacity of the maker of that proxy is received by the
corporation before the vote pursuant to that proxy is counted. Such revocation
of a revocable proxy may be effected by a writing delivered to the corporation
stating that the proxy is revoked or by a subsequent proxy executed by the
person executing the prior proxy and presented to the meeting, or as to any
meeting by attendance at such meeting and voting in person by the person
executing the proxy. The revocability of a proxy that states on its face that it
is irrevocable shall be governed by the provisions of Sections 705(e) and 705(f)
of the California General Corporation Law.
Section 2.5. Inspectors of Election.
(a) Appointment. In advance of any meeting of shareholders the Board of
Directors may appoint inspector(s) of election to act at the meeting and any
adjournment thereof. If inspectors of election are not so appointed, or if any
persons so appointed fail to appear or refuse to act, the chairman of any
meeting of shareholders may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election (or persons to replace
those who so fail or refuse) at the meeting. The number of inspectors shall be
either one or three. If inspectors are to be appointed at a meeting on the
request of one or more shareholders or proxies, the majority of shares
represented in person or by proxy shall determine whether one or three
inspectors are to be appointed.
(b) Duties. The inspectors of election shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity and effect of proxies;
receive votes, ballots or consents; hear and determine all challenges and
questions in any way arising in connection with the right to vote; count and
tabulate all votes or consents; determine when the polls shall close; determine
the result; and do such acts as may be proper to conduct the election or vote
with fairness to all shareholders. The inspectors of election shall perform
their duties impartially, in good faith, to the best of their ability and as
expeditiously as is practical. If there are three inspectors of election, the
decision, act or certificate of a majority is effective in all respects as the
decision, act or certificate of all. Any report or certificate made by the
inspectors of election is prima facie evidence of the facts stated therein.
Section 2.6. Record Date. In order that the corporation may determine the
shareholders entitled to notice of any meeting or to vote thereat or entitled to
give consent to corporate action or entitled to receive payment of any dividend
or other distribution or allotment of any rights or entitled to exercise any
rights in respect of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than 60 nor less than 10 days
prior to the date of such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(1) The record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(2) The record date for determining shareholders entitled to give consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors has been taken, shall be the day on which the first written
consent is given.
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(3) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto, or the 60th day prior to the date of
such other action, whichever is later.
A determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting unless the
Board of Directors fixes a new record date for the adjourned meeting, but the
Board of Directors shall fix a new record date if the meeting is adjourned for
more than 45 days from the date set for the original meeting.
Shareholders at the close of business on the record date are entitled to notice
and to vote or to receive the dividend, distribution or allotment of rights or
to exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date, except as
otherwise provided in the Articles of Incorporation or by agreement or in the
California General Corporation Law.
Section 2.7. Share Certificates.
(a) In General. The corporation shall issue a certificate or certificates
representing shares of its capital stock. A certificate or certificates for
shares of the corporation shall be issued to each shareholder when any of such
shares are fully paid. The Board of Directors may authorize the issuance of
certificates for shares partly paid provided that these certificates shall state
the total amount of the consideration to be paid for them and the amount
actually paid. Each certificate so issued shall be signed in the name of the
corporation by the chairman or vice chairman of the Board of Directors or the
president or a vice president and by the chief financial officer or the
treasurer or an assistant treasurer or the secretary or an assistant secretary,
shall state the name of the record owner thereof and shall certify the number of
shares and the class or series of shares represented thereby. Any or all of the
signatures on the certificate may be facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate has 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 person were an officer, transfer agent or registrar at
the date of issue.
(b) Two or More Classes or Series. If the shares of the corporation are
classified or if any class of shares has two or more series, there shall appear
on the certificate one of the following:
(1) A statement of the rights, preferences, privileges and restrictions
granted to or imposed upon each class or series of shares authorized to be
issued and upon the holders thereof;
(2) A summary of such rights, preferences, privileges and restrictions
with reference to the provisions of the Articles of Incorporation and any
certificates of determination establishing same; or
(3) A statement setting forth the office or agency of the corporation from
which shareholders may obtain, upon request and without charge, a copy of the
statement mentioned in Subparagraph (1) above.
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(c) Special Restrictions. There shall also appear on the certificate (unless
stated or summarized under Subparagraph (1) or (2) of Subparagraph (b) above)
the statements required by all of the following clauses to the extent
applicable:
(1) The fact that the shares are subject to restrictions upon transfer;
(2) If the shares are assessable, a statement that they are assessable;
(3) If the shares are not fully paid, a statement of the total
consideration to be paid therefor and the amount paid thereon;
(4) The fact that the shares are subject to a voting agreement or an
irrevocable proxy or restrictions upon voting rights contractually imposed by
the corporation;
(5) The fact that the shares are redeemable; and
(6) The fact that the shares are convertible and the period for
conversion.
Section 2.8. Lost, Stolen or Destroyed Certificates. Where a certificate has
been lost, destroyed or wrongfully taken, the corporation may issue a new
certificate in place of the original if the owner: (i) so requests before the
corporation has notice that the certificate has been acquired by a bona fide
purchaser; and (ii) files with the corporation, if so requested by the Board of
Directors, a bond (or other adequate security) sufficient to indemnify it
against any claim that may be made against it (including any expense or
liability) on account of loss, theft or destruction of any such certificate or
the issuance of such new certificate. Except as above provided, no new
certificate for shares shall be issued in lieu of an old certificate unless the
corporation is ordered to do so by the superior court in an action brought under
Section 419(b) of the California General Corporation Law.
Article III. Directors.
Section 3.1 Powers. Subject to the provisions of the California General
Corporation Law and any limitations in the Articles of Incorporation, the
business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board of Directors.
The Board of Directors may delegate the management of the day-to-day operation
of the business of the corporation to a management company or other person,
provided that the business and affairs of the corporation shall be managed and
all corporate powers shall be exercised under the ultimate direction of the
Board of Directors.
Section 3.2. Number of Directors. The Board of Directors shall consist of not
less than three (3) or more than five (5) directors. The exact number of
directors within the limits specified shall be four (4) or such other number as
may be fixed from time to time by the approval of the Board of Directors or the
shareholders. Such indefinite number may be changed, or a definite number fixed
without provision for an indefinite number, by an amendment to these bylaws duly
adopted by the vote or written consent of a majority of the outstanding shares
entitled to vote; provided, however, that a bylaw amendment reducing the fixed
number or the minimum number of directors to a number less than five cannot be
adopted if the votes cast against its adoption at a meeting or the shares not
consenting in the case of action by written consent are equal to more than
16-2/3 percent of the outstanding shares entitled to vote. The stated maximum
number of authorized directors shall in no case be greater than two times the
stated minimum number of directors minus one.
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Section 3.3. Election and Term of Office. The directors shall be elected at each
annual meeting of shareholders. Each director, including a director elected to
fill a vacancy, shall hold office until the expiration of the term for which
elected and until a successor has been elected and qualified.
Section 3.4. Removal.
(a) Removal for Cause. The Board of Directors shall have the power to declare
vacant the office of a director who has been declared of unsound mind by an
order of court or convicted of a felony.
(b) Removal without Cause. Any or all of the directors may be removed without
cause if such removal is approved by the vote of a majority of the outstanding
shares entitled to vote, except that no director may be removed (unless the
entire board is removed) when the votes cast against removal, or not consenting
in writing to such removal, would be sufficient to elect such director if voted
cumulatively at an election at which the same total number of votes were cast
(or, if such action is taken by written consent, all shares entitled to vote
were voted) and the entire number of directors authorized at the time of the
directors' most recent election were then being elected. Any reduction of the
authorized number of directors does not remove any director prior to the
expiration of such director's term of office.
Section 3.5. Vacancies. A vacancy or vacancies in the Board of Directors shall
be deemed to exist (i) in the event of the death, resignation or removal of any
director, (ii) if the Board of Directors by resolution declares vacant the
office of a director who has been declared of unsound mind by an order of court
or convicted of a felony, (iii) if the authorized number of directors is
increased, or (iv) if the shareholders fail, at any meeting of shareholders at
which any director or directors are elected, to elect the number of directors to
be elected at that meeting. Except for a vacancy created by the removal of a
director, which vacancy may be filled only by approval of the shareholders,
vacancies on the Board of Directors may be filled by approval or ratification by
the vote of the Board or, if the number of directors then in office is less than
a quorum, by (a) the unanimous written consent of the directors then in office,
(b) the affirmative vote of a majority of the directors then in office or (c) by
a sole remaining director, and each director so elected shall hold office until
the expiration of the term for which elected and until his successor is elected
and qualified. The shareholders may elect a director at any time to fill any
vacancy not filled by the directors. If any such election is by written consent,
other than to fill a vacancy created by removal, the consent of a majority of
the outstanding shares entitled to vote is required. If any such election is by
written consent to fill a vacancy created by removal, the unanimous consent of
all shares entitled to vote for the election of directors is required.
Section 3.6. Resignation. Any director may resign effective upon giving written
notice to the chairman of the board, the president, the secretary or the Board
of Directors of the corporation, unless the notice specifies a later time for
the effectiveness of such registration. If the registration is effective at a
future time, a successor may be elected to take office when the resignation
becomes effective.
Section 3.7. Meetings of the Board of Directors.
(a) Regular Meetings. Regular meetings of the Board of Directors may be held
without notice if the time and place of such meetings are fixed by these bylaws
or the Board of Directors.
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(b) Annual Meeting. Immediately following each annual meeting of shareholders
the Board of Directors shall hold a regular meeting for the purpose of
organization, election of officers and the transaction of other business. Notice
of such meetings is hereby dispensed with.
(c) Special Meetings; Notices; Waiver of Notice. Special meetings of the Board
of Directors may be called at any time by the chairman of the board or the
president or by any vice president, the secretary or any two directors. Special
meetings shall be held upon four days' notice by first class mail or 48 hours'
notice delivered personally or by telephone or telegraph. Any oral notice given
personally or by telephone may be communicated either to the director or to a
person at the office of the director who the person giving the notice has reason
to believe will promptly communicate it to the director. Notice of a meeting
need not be given to any director who signs a waiver of notice or a consent to
holding the meeting or an approval of the minutes thereof, whether before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to such director. All such waivers,
consents and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting. A notice, or waiver of notice, need not specify
the purpose of any regular or special meeting of the Board of Directors.
(d) Notice of Adjournment. A majority of the directors present, whether or not a
quorum is present, may adjourn any meeting to another time and place. Notice of
the time and place of holding an adjourned meeting need not be given unless the
meeting is adjourned for more than 24 hours, in which case notice of such
adjournment to another time and place shall be given as provided herein prior to
the time of the adjourned meeting to the directors who were not present at the
time of adjournment.
(e) Place of Meeting. Meetings of the Board may be held at any place within or
without the State of California which has been designated in the notice of the
meeting or, if not stated in the notice or there is no notice, then such meeting
shall be held at the principal executive office of the corporation or such other
place designated by resolution of the Board of Directors.
(f) Presence by Conference Telephone Call. Any meeting, regular or special, of
the Board of Directors may be held through use of conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear one another. Such participation constitutes presence in person
at such meeting.
(g) Quorum. A majority of the authorized number of directors constitutes a
quorum of the Board for the transaction of business except to adjourn. Every act
or decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present is the act of the Board of Directors,
subject to the provisions of Sections 310 (entitled "Transactions Between
Corporations and Directors or Corporations Having Interrelated Directors"), 311
(entitled "Executive Committees") and 317(e) (relating to indemnification of
corporate agents) of the California General Corporation Law, other applicable
law and the Articles of Incorporation. A meeting at which a quorum is initially
present may continue to transact business, notwithstanding the withdrawal of
directors, if any action taken is approved by at least a majority of the
required quorum for such meeting.
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Section 3.8. Action Without Meeting. Any action required or permitted to be
taken by the Board of Directors may be taken without a meeting if all members of
the Board of Directors shall individually or collectively consent in writing to
such action. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board of Directors. Such action by written consent shall
have the same force and effect as a unanimous vote of such directors.
Section 3.9. Committees of the Board.
(a) Membership and Authority. The Board of Directors may, by resolution adopted
by a majority of the authorized number of directors, designate one or more
committees, each constituting of two or more directors, to serve at the pleasure
of the Board of Directors. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent
member at any meeting of the committee. The appointment of members or alternate
members of any committee requires the vote of a majority of the authorized
number of directors. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have all the authority of the Board
of Directors, except with respect to:
(1) The approval of any action which also requires, under the California
General Corporation Law, shareholders' approval or approval of the outstanding
shares;
(2) The filling of vacancies on the Board of Directors or in any
committee;
(3) The fixing of compensation of the directors for serving on the Board
of Directors or on any committee;
(4) The amendment or repeal of bylaws or the adoption of new bylaws;
(5) The amendment or repeal of any resolution of the Board of Directors
which by its express terms is not so amendable or repealable;
(6) A distribution to the shareholders of the corporation, except at a
rate or in a periodic amount or within a price range set forth in the
corporation's Articles of Incorporation or determined by the Board of Directors;
and
(7) The appointment of other committees of the Board of Directors or the
members thereof.
(b) Meetings and Action. The provisions of Section 3.9 shall apply also to
committees of the Board of Directors and action by such committees, with such
changes as are necessary to substitute the committee and its members for the
Board of Directors and its members, except that the time of meetings of
committees may be determined either by resolution of the Board of Directors or
by resolution of the committee; and notice of special committee meetings shall
also be given to all alternate members, who shall have the right to attend all
meetings of the committee. The Board of Directors may adopt rules for the
governing of any committee not inconsistent with these bylaws.
Section 3.10. Fees and Compensation of Directors. Directors and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Board of
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Directors. This Section 3.10 shall not be construed to preclude any director
from serving the corporation in any other capacity as an officer, agent,
employee or otherwise and receiving compensation for those services.
Section 3.11. Corporate Loans and Guaranties to Directors, Officers and Others.
(a) The corporation may make a loan of money or property to, or guarantee the
obligation of, any director or officer of the corporation or of its parent if
the transaction, or an employee benefit plan authorizing the loans or guaranties
after disclosure of the right under such a plan to include officers or
directors, is approved by a majority of the shareholders entitled to act
thereon.
(b) The corporation may make loans of money or property to, or guarantee the
obligations of, any officer of the corporation, whether or not a director, or an
employee benefit plan authorizing the loan or guaranty provided that (1) the
Board of Directors determines that such a loan or guaranty or plan may
reasonably be expected to benefit the corporation, (2) the corporation has
outstanding shares held of record by 100 or more persons (determined as provided
in Section 605 of the Code) on the date of approval by the Board of Directors,
and (3) the approval of the Board of Directors is by a vote sufficient without
counting the vote of any interested director or directors.
(c) The corporation shall not make any loan of money or property to, or
guarantee the obligation of, any person upon the security of shares of the
corporation or of its parent if the corporation's recourse in the event of
default is limited to the security for the loan or guaranty, unless the loan or
guaranty is adequately secured without considering these shares, or the loan or
guaranty is approved by a majority of the shareholders entitled to act thereon.
(d) Notwithstanding Subparagraph (a) above, a corporation may advance money to a
director or officer of the corporation or of its parent for any expenses
reasonably anticipated to be incurred in the performance of the duties of the
director or officer, provided that in the absence of the advance the director or
officer would be entitled to be reimbursed for the expenses by the corporation,
its parent, or any subsidiary.
(e) The provisions of Subparagraph (a) above do not apply to the payment of
premiums in whole or in part by a corporation on a life insurance policy on the
life of a director or officer so long as repayment to the corporation of the
amount paid by it is secured by the proceeds of the policy and its cash
surrender value.
(f) This Section 3.11 does not apply to any of the following: (1) any
transaction, plan or agreement permitted under Section 408 of the California
General Corporation Law; or (2) any loan or guaranty made by a corporation that
makes loans or guaranties in the ordinary course of its business if statutes or
regulations pertaining to the corporation expressly regulate the making by the
corporation of loans to its officers or directors or the undertaking of
guaranties of the obligations of its officers or directors.
(g) For the purposes of Subparagraph (a) and (c) of this Section 3.11, "approval
by a majority of the shareholders entitled to act" means either (1) written
consent of a majority of the outstanding shares without counting as outstanding
or consenting any shares owned by any officer or director eligible to
participate in the plan or transaction that is subject to this approval, (2) the
affirmative vote of a majority of the shares
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present and voting at a duly held meeting at which a quorum is otherwise
present, without counting for purposes of the vote as either present or voting
any shares owned by any officer or director eligible to participate in the plan
or transaction that is subject to the approval, or (3) the unanimous vote or
written consent of the shareholders. In the case of a corporation which has more
than one class or series of shares outstanding, the "shareholders entitled to
act" within the meaning of this section includes only holders of those classes
or series entitled under the Articles of Incorporation to vote on all matters
before the shareholders or to vote on the subject matter of this section, and
includes a requirement for separate class or series voting, or for more or less
than one vote per share, only to the extent required by the Articles of
Incorporation.
Article IV. Officers.
Section 4.1. Officers. The officers of the corporation shall consist of a
chairman of the board or a president, or both, a secretary, a chief financial
officer and such additional officers as stated in these bylaws or determined by
the Board of Directors in accordance with Section 4.3 of these bylaws and as may
be necessary to enable the corporation to sign instruments and share
certificates. Any number of offices may be held by the same person.
Section 4.2. Elections. All officers of the corporation, except such officers as
may be otherwise appointed in accordance with Section 4.3, shall be chosen by
the Board of Directors, and serve at the pleasure of the Board of Directors,
subject to the rights, if any, of an officer under any contract of employment.
Section 4.3. Other Officers. The Board of Directors, at its discretion, may
appoint, or empower the president to appoint, one or more vice presidents, one
or more assistant secretaries, a treasurer, one or more assistant treasurers or
such other officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as provided in these bylaws or as the Board of Directors may from time to time
determine.
Section 4.4. Removal. Subject to the rights, if any, of an officer under any
contract of employment, any officer may be removed, either with or without
cause, by the Board of Directors or, except in the case of an officer chosen by
the Board of Directors, by an officer upon whom such power of removal may be
conferred by the Board of Directors.
Section 4.5. Resignation. Any officer may resign at any time by giving written
notice to the Board of Directors or to the president or the secretary of the
corporation without prejudice to the rights, if any, of the corporation under
any contract to which such officer is a party. Any such resignation shall take
effect on the date of receipt of such notice or at any later time specified
therein, and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 4.6. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner
prescribed in these bylaws for regular appointments to such office.
Section 4.7. Chairman of the Board. The chairman of the board, if there shall be
such an officer, shall, if present, preside at all meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned to him by
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the Board of Directors. If there is no president, the chairman of the board
shall in addition be the chief executive officer of the corporation and shall
have the powers and duties prescribed in Section 4.8 below.
Section 4.8. President. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the chairman of the board, if there be such
an officer, the president shall be chief executive officer of the corporation
and shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business and affairs of the
corporation. He shall preside at all meetings of the shareholders and, in the
absence of the chairman of the board, or if there be none, at all meetings of
the Board of Directors. He shall have the general powers and duties of
management usually vested in the office of president of a corporation and shall
have such other powers and duties as may be prescribed by the Board of Directors
or these bylaws.
Section 4.9. Vice Presidents. In the absence or disability of the president, the
vice presidents, if any, in order of their rank as fixed by the Board of
Directors or, if not ranked, a vice president designated by the Board of
Directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors, these bylaws, the president or chairman of the board.
Section 4.10. Secretary. The secretary shall keep or cause to be kept, at the
principal executive office of the corporation or such other place as the Board
of Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the Board of Directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number of shares held by each, the number and date of
certificates evidencing such shares, and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the shareholders and of the Board of Directors required to be given by law or by
these bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody. The secretary shall not be deemed an executive officer of the
corporation and shall be limited in his responsibilities and authority to the
types of ministerial acts described in this Section 4.10 and shall have such
other powers and perform such other duties as may be prescribed by the Board of
Directors or by these bylaws.
Section 4.11. Chief Financial Officer. The chief financial officer shall have
general supervision, direction and control of the financial affairs of the
corporation and shall have such other powers and duties as may be prescribed by
the Board of Directors or these bylaws. In the absence of a named treasurer, the
chief financial officer shall be authorized and empowered to sign as treasurer
in any case where such officer's signature is required. The chief financial
officer shall keep or cause to be kept and maintained
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adequate and correct books and records of accounts of the properties and
business transactions of the corporation, including its assets, liabilities,
receipts, disbursements, gains, losses, capital, retained earnings and shares.
The books of account shall at all reasonable times be open to inspection by any
director.
The chief financial officer shall deposit all moneys and other valuables
in the name and to the credit of the corporation with such depositories as may
be designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or these bylaws.
Article V. Records and Reports.
Section 5.1. Books, Records and Reports.
(a) Books of Account and Record. The corporation shall keep adequate and correct
books and records of account and shall keep minutes of the proceedings of its
shareholders, the Board and committees of the Board and shall keep at its
principal executive office, or at the office of its transfer agent or registrar,
a record of its shareholders, giving the names and addresses of all shareholders
and the number and class of shares held by each. Such minutes shall be kept in
written form. Such other books and records shall be kept either in written form
or in any other form capable of being converted into written form.
(b) Annual Report. The annual report to shareholders referred to in Section
1501(a) of the California General Corporation Law is expressly dispensed with,
but nothing herein shall be interpreted as prohibiting the Board of Directors
from issuing annual or other periodic reports to the shareholders of the
corporation as the Board considers appropriate. In conformity with Section 1501
of the California General Corporation Law, if this corporation has 100 or more
shareholders of record, an annual report shall be sent to the shareholders of
this corporation not later than 120 days after the close of the fiscal year and
at least 15 (or, if sent by third-class mail, 35) days prior to the annual
meeting of shareholders to be held during the next fiscal year. This report
shall contain a balance sheet as of the end of that fiscal year and an income
statement and statement of changes in financial position for that fiscal year,
accompanied by a report of independent accountants or, if there is no such
report, the certificate of an authorized officer of the corporation that such
statements were prepared without audit from the books and records of the
corporation. Such report shall also include such further statements required by
law applicable to the corporation from time to time.
(c) Shareholders' Requests for Financial Reports. If no annual report for the
last fiscal year has been sent to the shareholders, the corporation shall, upon
the written request of any shareholder made more than 120 days after the close
of such fiscal year, deliver or mail to the shareholder making the request
within 30 days thereafter the same financial statements required by Section
1501(a) of the California General Corporation Law for that year. Any shareholder
or shareholders holding at least five percent of the outstanding shares of any
class of the corporation may make a written request to the corporation for an
income statement of the corporation for the three-month, six-month or nine-month
period of the current fiscal year ended more than 30 days prior to the date of
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the request and a balance sheet of the corporation as of the end of the period
and, in addition, if no annual report for the last fiscal year has been sent to
shareholders, the statements referred to in Section 1501(a) of the California
General Corporation Law for the last fiscal year. The statements shall be
delivered or mailed to the person making the request within 30 days after
receipt thereof. A copy of the statements shall be kept on file in the principal
office of the corporation for 12 months and it shall be exhibited at all
reasonable times to any shareholder demanding an examination of the statements
or a copy shall be mailed to such shareholder upon demand.
The quarterly income statements and balance sheets referred to in this
Section 5.1(c) shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that the financial statements were
prepared without audit from the books and records of the corporation.
The corporation also shall, upon the written request of any shareholder,
mail to the shareholder a copy of the last annual, semiannual or quarterly
income statement which it has prepared and a balance sheet as of the end of the
period.
Section 5.2. Rights of Inspection.
(a) By Shareholders.
(1) Record of Shareholders. Any shareholder or shareholders holding at
least five percent in the aggregate of the outstanding voting shares of the
corporation or who hold at least one percent of such voting shares and have
filed a Schedule 14B with the United States Securities and Exchange Commission
relating to the election of directors of the corporation shall have an absolute
right to do either or both of the following: (i) inspect and copy the record of
shareholders' names and addresses and shareholdings during usual business hours
upon five business days' prior written demand upon the corporation or (ii)
obtain from the transfer agent for the corporation, upon written demand and upon
the tender of its usual charges for such a list (the amount of which charges
shall be stated to the shareholder by the transfer agent upon request), a list
of the names and addresses of the shareholders, who are entitled to vote for the
election of directors, and their shareholdings, as of the most recent record
date for which it has been compiled or as of a date specified by the shareholder
subsequent to the date of demand. The list shall be made available on or before
the later of five business days after demand is received or the date specified
therein as the date as of which the list is to be compiled.
The record of shareholders shall also be open to inspection and
copying by a shareholder or holder of a voting trust certificate at any time
during usual business hours, upon written demand on the corporation, for a
purpose reasonably related to such holder's interests as a shareholder or holder
of a voting trust certificate. Any inspection and copying under Section 5.2(a)
may be made in person or by agent or attorney.
(2) Accounting Books and Records. The accounting books and records and
minutes of proceedings of the shareholders, the Board of Directors and the
committees of the Board of Directors shall be open to inspection upon the
written demand on the corporation of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours, for a purpose
reasonably related to such holder's interests as a shareholder or as the holder
of such voting trust certificate. This right of
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<PAGE>
inspection shall also extend to the records of each subsidiary of the
corporation. Such inspection by a shareholder or holder of a voting trust
certificate may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
(3) Bylaws. The corporation shall keep at its principal executive office
in this state, or if its principal executive office is not in this state at its
principal business office in this state, the original or a copy of its bylaws,
as amended to date, which shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
corporation is outside this state and the corporation has no principal business
office in this state the corporation shall upon the written request of any
shareholder furnish to such shareholder a copy of the bylaws as amended to date.
(b) By Directors. Every director of the corporation shall have the absolute
right at any reasonable time to inspect and copy all books, records and
documents of every kind and to inspect the physical properties of the
corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or attorney and the
right of inspection includes the right to copy and make extracts.
Article VI. Miscellaneous.
Section 6.1. Checks, Drafts, Etc. All checks, drafts or other orders for payment
of money, notes or other evidences of indebtedness issued in the name of or
payable to the corporation shall be signed or endorsed by such person or persons
and in such manner as, from time to time, shall be determined by resolution of
the Board of Directors.
Section 6.2. Authority to Execute Contracts. The Board of Directors may
authorize any officer or officers or agent or agents to enter into any contract
or execute any instrument in the name of an on behalf of the corporation, and
such authority may be general or confined to specific instances; and, unless so
authorized by the Board of Directors, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or to any amount.
Section 6.3. Representation of Shares of Other Corporations. The chairman of the
board, if any, the president or any vice president and the secretary or
assistant secretary of the corporation are authorized to vote, represent and
exercise on behalf of the corporation all rights incident to any and all shares
of any other corporation or corporations standing in the name of the
corporation. The authority herein granted to said officers to vote or represent
on behalf of the corporation any and all shares held by the corporation in any
other corporation or corporations may be exercised either by such officers in
person or by any other person authorized so to do by proxy or power of attorney
duly executed by said officers.
Section 6.4. Indemnification and Insurance.
(a) For the purposes of this Section 6.4, "agent" means any person who is or was
a director, officer, employee or other agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise, or was a director, officer, employee or agent of a
foreign or domestic corporation which was a
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<PAGE>
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes, without limitation,
attorneys' fees and any expenses of establishing a right to indemnification
under Subparagraph (d) or (e)(3) of this Section 6.4.
(b) The corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the corporation to procure a judgment in its favor)
by reason of the fact that such person is or was an agent of the corporation,
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best in interests of the corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
(c) The corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that such person is or was an agent of the
corporation, against expenses actually and reasonably incurred by such person in
connection with the defense or settlement of such action if such person acted in
good faith, in a manner such person believed to be in the best interests of the
corporation and with such care, including reasonable inquiry, as an ordinary
prudent person in a like position would use under similar circumstances. No
indemnification shall be made under this Subparagraph (c):
(1) In respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation in the performance of such
person's duty to the corporation, unless and only to the extent that the court
in which such proceeding is or was pending shall determine upon application
that, in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for the expenses which such court shall
determine;
(2) Of amounts paid in settling or otherwise disposing of a threatened or
pending action, with or without court approval; or
(3) Of expenses incurred in defending a threatened or pending action which
is settled or otherwise disposed of without court approval.
(d) To the extent that an agent of the corporation has been successful on the
merits on defense of any proceeding referred to in Subsection (b) or (c) above
or in defense of any claim, issue or matter therein, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.
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<PAGE>
(e) Except as provided in Subsection (d) above, any indemnification shall be
made by the corporation only if authorized in the specific case, upon a
determination that indemnification of the agent is proper in the circumstances
because the agent has met the applicable standard of conduct set forth in
Subsection (b) or (c) above, by:
(1) A majority vote of a quorum consisting of directors who are not
parties to such proceeding;
(2) Approval of the shareholders, with the shares owned by the person to
be indemnified not being entitled to vote thereon; or
(3) The court in which such proceeding is or was pending upon application
made by the corporation or the agent or the attorney or other person rendering
services in connection with the defense, whether or not such application by the
agent, attorney or other person is opposed by the corporation.
(f) Expenses incurred in defending any proceeding may be advanced by the
corporation prior to the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of the agent to repay such amount unless it shall be
determined ultimately that the agent is entitled to be indemnified as authorized
in this section.
(g) The corporation shall have power to purchase and maintain insurance on
behalf of any agent of the corporation against any liability asserted against or
incurred by the agent in such capacity or arising out of the agent's status as
such whether or not the corporation would have the power to indemnify the agent
against such liability under the provisions of this section.
Section 6.5. Employee Stock Purchase Plans. The corporation may adopt and carry
out a stock purchase plan or agreement or stock option plan or agreement
providing for the issue and sale for such consideration as may be fixed of its
unissued share, or of issued shares acquired or to be acquired, to one or more
of the employees or directors of the corporation or a subsidiary or parent
thereof or to a trustee on their behalf and for the payment for such shares in
installments or at one time, and may provide for aiding any such persons in
paying for such shares by compensation for services rendered, promissory notes
or otherwise.
A stock purchase plan or agreement or stock option plan or agreement may
include, among other features, the fixing of eligibility for participation
therein, the class and price of shares to be issued or sold under the plan or
agreement, the number of shares which may be subscribed for, the method of
payment therefor, the reservation of title until full payment therefor, the
effect of the termination of employment, an option or obligation on the part of
the corporation to repurchase the shares upon termination of employment, subject
to the provisions of the California General Corporation Law, restrictions upon
transfer of the shares and the time limits of and termination of the plan.
Section 6.8. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the California General Corporation Law shall govern the
construction of these bylaws. Without limiting the generality of the foregoing,
the masculine gender includes the feminine and neuter, the singular number
includes the plural and the plural number includes the singular, and the term
"person" includes a corporation as well as a natural person.
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<PAGE>
Article VII. Amendments.
Section 7.1. Power of Shareholders. New bylaws may be adopted or these bylaws
may be amended or repealed by the affirmative vote of a majority of the
outstanding shares entitled to vote or by the written consent of such
shareholders, except as otherwise provided by law or by the Articles of
Incorporation.
Section 7.2. Power of Directors. Subject to the right of shareholders as
provided in Section 7.1 to adopt, amend or repeal bylaws, any bylaw may be
adopted, amended or repealed by the Board of Directors other than a bylaw or
amendment thereof changing the authorized number of directors, if such number is
fixed, or the maximum-minimum limits thereof, if an indefinite number.
The undersigned, as the incorporator of Intellichoice, Inc. hereby adopts
the foregoing by laws as the bylaws of said corporation.
Dated: November 30, 1987
/s/ Peter Levy
---------------------------
Peter Levy
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of
Intellichoice, Inc. and that the foregoing bylaws were adopted as the bylaws of
said corporation on the 30 day of November by the Board of Directors of said
corporation.
Dated: November 30, 1987
/s/ Steven Gross
---------------------------
Secretary
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"Article VIII. Indemnification of Directors, Officers,
Employees and Other Agents.
Section 8.1 Indemnification of Directors and Officers. The corporation shall, to
the maximum extent and in the manner permitted by the Code, indemnify each of
its directors and officers against expenses (as defined in Section 317(a) of the
Code), judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding (as defined in Section 317(a)),
arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Article VI, a "director" or "officer" of the
corporation includes any person (i) who is or was a director or officer of the
corporation, (ii) who is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) who was a director of officer of a corporation which
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
Section 8.2 Indemnification of Others. The corporation shall have the power, to
the extent and in the manner permitted by the Code, to indemnify each of its
employees and agents (other than directors and officers) against expenses (as
defined in Section 317(a) of the Code), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding (as
defined in Section 317(a) of the Code), arising by reason of the fact that such
person is or was an agent of the corporation. For purposes of this Article VI,
an "employee" or "agent" of the corporation (other than a director or officer)
includes an persons (i) who is or was an employee or agent of the corporation,
(ii) who is or was servicing at the request of the corporation as an employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was an employee or agent of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor.
Section 8.3 Payment of Expenses in Advance. Expenses incurred in defending any
civil or criminal action or proceeding for which indemnification is required
pursuant to Section 6.1, or for which indemnification is provided pursuant to
Section 6.2 hereof, shall be paid by the corporation in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by or on
behalf of the indemnified party to repay such amount if it shall ultimately be
determined that the indemnified party is not entitled to be indemnified as
authorized in this Article VI. Notwithstanding the foregoing, no advance shall
be made by the corporation if a determination is reasonably and promptly made by
the Board of Directors by a majority vote of a quorum of
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<PAGE>
disinterested directors or by independent legal counsel in a written opinion
that, based upon the facts known to the board or counsel at the time such
determination is made, such person did not act in good faith and in a manner
which the person reasonably believed to be in the best interest of the
corporation, or, with respect to any criminal proceeding, that such person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the board or independent
legal counsel reasonably determines that such person deliberately breached his
duty to the corporation or its shareholders.
Section 8.4 Indemnity Not Exclusive. The indemnification provided by this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
shareholder or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office, to the extent that such additional rights to indemnification are
authorized in the Articles of Incorporation.
Section 8.5 Indemnification Agreements. The corporation is authorized to enter
into indemnification agreements consistent with the provisions of this Article
VI and to the full extent permitted by the Code with any of its directors,
officers, employees or other agents.
Section 8.6 Amendment. The corporation shall not retroactively repeal or amend
this Article VI or any provision hereof, or any other provisions of these bylaws
relating to indemnification, in a way which adversely affects any right or
protection under this Article VI existing at the time of such repeal or
amendment.
Section 8.7 Savings Clause. If this Article VI or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and officer against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, proceeding or investigation, whether
civil, criminal or administrative, and whether internal or external, including a
grand jury proceeding and an action or proceeding brought by or in the right of
the corporation, to the full extent permitted by any applicable portion of this
Article VI that shall not have been invalidated, or by any other applicable
law."
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<PAGE>
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of
IntelliChoice, Inc. and that the foregoing Article VIII was adopted as the
Bylaws of said corporation on 10th day of April, 1989 by the Board of Directors
of said corporation.
DATED: April 10, 1990
/s/ Steven Gross
---------------------------
Steven Gross, Secretary
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<PAGE>
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of
IntelliChoice, Inc. and that the foregoing Article VIII was adopted as the
Bylaws of said corporation on 6th day of January, 1989 by the Board of Directors
of said corporation.
DATED: March 31, 1989
/s/ Steven Gross
---------------------------
Steven Gross, Secretary
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<PAGE>
Exhibit 3.127
FILED
NOV 8 1983
PAUL RIVIERE
SECRETARY OF STATE
By ______________
INSTRUCTIONS: File in DUPLICATE with Paul Riviere, Secretary of State, State
Capitol, Little Rock, Ark. 72201, with payment of fees. Duplicate copy will be
returned to the corporation at the listed address, and must be filed in the
office of the County Clerk in which the corporation's registered office is
located, (on other than Pulaski County) within 60 days after the date of filing
with the Secretary of State.
- --------------------------------------------------------------------------------
STATE OF ARKANSAS -- OFFICE OF THE SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
LITTLE ROCK APARTMENT GUIDE, INC.
- --------------------------------------------------------------------------------
The undersigned, natural persons of the age of twenty-one years or more,
acting as incorporators of a corporation under the Arkansas Business Corporation
Act (Act 576 of 1965,) adopt the following articles of incorporation of such
Corporation:
FIRST: The Name of the Corporation is:
LITTLE ROCK APARTMENT GUIDE, INC.
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(Shall contain the word "Corporation", "Company", or "Incorporated":
or shall contain an abbreviation of one of such words; but the same
may not end with the word "Company" nor the abbreviation "Co." if such
final word or abbreviation is immediately preceeded by "And" or any
symbol for "And".)
SECOND: The period of duration is perpetual
THIRD: The purpose or purposes for which the Corporation is organized are:
To publish, print, bind, sell, deliver and distribute magazines,
pamphlets, directories, leaflets, papers, and to copyright the
articles, stories and discussions appearing therein; to sell
advertising space in such magazines and other publications; and to do
all such other things as may be necessary or advisable to carry on
such business.
<PAGE>
FOURTH: The aggregate number of shares which the corporation shall have the
authority to issue is five hundred (500) shares.
The designation of each class, the number of shares of each class, or
a statement that the shares of any class are without par value, are as
follows:
PAR VALUE PER SHARE OR
NUMBER OF STATEMENT THAT SHARES
SHARES CLASS SERIES (IF ANY) ARE WITHOUT PAR VALUE
- --------------------------------------------------------------------------------
500 Common --- $1.00
The preferences, limitations and relative rights in respect of the
shares of each class, and the variations in the relative rights and preferences
as between series of any preferred or special class in series are as follows:
N/A
(Insert a statement of any authority to be vested in the Board of
Directors to establish series and fix and determine the variations in
the relative rights and preference as between series).
FIFTH: The amount of capital with which this corporation will begin business
is $300.00. This corporation will not transact any business until
there has been paid in for the issuance of shares consideration of the
value of at least three hundred Dollars, ($300.00).
SIXTH: The provisions limiting or denying to shareholders the preemptive
right to acquire additional or treasury shares are:
N/A
SEVENTH: The provisions for the regulation of the internal affairs of this
corporation are:
N/A
<PAGE>
EIGHTH: The address of the initial registered office of this Corporation is:
417 Spring Street Little Rock Arkansas
-------------------------------------------------------------------
Street City State
and the name of its initial registered agent at such address is:
The Corporation Company
NINTH: The number of Directors constituting the initial Board of Directors is
two (2), and they will serve as directors until the first annual
meeting of shareholders or until their successors are elected and
qualified. If the number of initial Board members is either one or
two, then a statement must be included specifying the number to be
elected at the annual meeting, or the special meeting called for that
purpose, of the shareholders next following the time when the shares
become owned of record by more than one or two shareholders.
The number of directors to serve on the Board of Directors elected at
the annual meeting of the shareholders, or the special meeting called
for that purpose, next following the time when the shares become owned
of record by more than one or two shareholders shall not exceed three
(3).
TENTH: The name and address of each incorporator is:
NAME STREET ADDRESS CITY & STATE SHARES
Cynthia Harvey 2000 First Tennessee Bldg. Memphis, TN -0-
Dated: November 2, 1983
SIGNATURE OF INCORPORATORS:
/s/ CYNTHIA HARVEY
----------------------------
CYNTHIA HARVEY
----------------------------
----------------------------
----------------------------
<PAGE>
EX-3.128
BY-LAWS OF
LITTLE ROCK APARTMENT GUIDE, INC.
ARTICLE I.
OFFICES
Section 1. The principal offices of this corporation are 5100 Poplar
Avenue, Memphis, Tennessee. The said principal office may be changed at any time
by appropriate resolution of the Board of Directors. The corporation may have
offices and places of business at such other places within or without the State
of Tennessee as shall be determined by the Board of Directors.
Section 2. The registered office of the corporation for any particular
state may be, but need not be, identical with the principal office of the
corporation in that state, and the address of the registered office may be
changed from time to time by appropriate resolution of the Board of Directors.
ARTICLE II.
SHAREHOLDERS
Section 1. Meetings. All meetings of shareholders shall be held either in
the principal office of the corporation or at any other place in the city of
Memphis, Tennessee.
<PAGE>
Section 2. Annual Meeting. A meeting of the shareholders shall be held in
the principal office of the corporation at 10:00 o'clock in the forenoon on the
first Monday in March, 1984 and on the first Monday in March of each year
thereafter for the purpose of electing directors and for the transaction of any
other business authorized to be transacted by the shareholders. If the appointed
day is a legal holiday the meeting shall be held at the same time on the next
succeeding day not a holiday. In the event that the annual meeting is omitted by
oversight or otherwise on the date herein provided for, the directors shall
cause a meeting in lieu thereof to be held as soon thereafter as conveniently
may be, and any business transacted or elections held at such meeting shall be
as valid as if transacted or held at the annual meeting. Such subsequent meeting
shall be called in the same manner as provided for the annual shareholders
meeting.
Section 3. Special Meetings. Except as otherwise provided by law, special
meetings of the shareholders of this corporation shall be held at such places
and times as may be determined by the President or by a majority of the Board of
Directors, or whenever one or more shareholders who
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<PAGE>
are entitled to vote and who hold at least 10% of the common shares issued and
outstanding shall make written application therefor to the Secretary or an
Assistant Secretary stating the time, place and purpose of the meeting called
for. No business shall be transacted at a special meeting except as stated in
the notice sent to the shareholders, unless by the unanimous consent of the
shareholders, either in person or by proxy, all such stock being represented at
the meeting.
Section 4. Notice of Meetings. Notice of all shareholders' meetings
stating the time, place and the objects for which such meetings are called shall
be given by the President or the Vice-President or the Treasurer or the
Secretary or an Assistant Secretary to each shareholder of record not less than
ten nor more than forty days prior to the date of the meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States Mail
in a sealed envelope with postage thereon prepaid, addressed to the shareholder
at his address as it appears on the stock record books of the corporation,
unless he shall have filed with the Secretary of the corporation a written
request that notice intended for him be mailed to some other address, in which
case it shall be mailed to the address designated in such request.
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<PAGE>
Any meeting of which all shareholders entitled to vote have waived or at
any time shall waive notice in writing shall be a legal meeting for the
transaction of business, notwithstanding that notice has not been given as
hereinbefore provided.
Section 5. Notice of Right to Dissent. If shareholders are to vote at a
meeting on a corporate action which would give rise to a dissenter's right to
payment for his shares in accordance with the Tennessee General Corporation Act,
notice of such meeting shall be given to every shareholder who will be entitled
to dissent from such action and to receive payment for his shares whether or not
entitled to vote thereon. Such notice shall be given in accordance with the
provisions of Section 4 of this Article and shall also contain a statement,
displayed with reasonable prominence, that upon compliance with the Tennessee
General Corporation Act, dissenting shareholders are entitled to be paid the
fair value of their shares as provided in said Act.
Section 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining the shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a
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determination of shareholders for any other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer book shall be
closed for a stated period not to exceed in any case thirty days. If the stock
transfer book shall be closed for the purpose of determining shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than thirty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof.
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Section 7. Voting Lists. The officer or agent having charge of the stock
transfer books for common shares of the corporation shall make, at least ten
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each
shareholder, which list, for a period of ten days prior to such meeting shall be
kept on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall be certified by the corporate officer responsible for its preparation or
by the transfer agent and shall be produced and kept open at the time and place
of the meeting and be subject to the inspection of any shareholder during the
entire time of the meeting. In the event of any challenge to the right of any
person to vote at the meeting, the presiding officer at such meeting may rely on
said list as proper evidence of the right of parties to vote at such meeting.
Section 8. Quorum. Except as may be otherwise provided by law, a majority
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of shareholders. In
the event that less than a majority of the outstanding shares are represented at
any meeting, a majority of the
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shares represented thereat entitled to vote shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of law or of the certificate of incorporation or of these by-laws a larger or
different vote is required, in which case such express provision shall govern
and control the decision of each question.
Section 9. Proxies. Shareholders of record who are entitled to vote may
vote at any meeting either in person or by proxy in writing, which shall be
filed with the Secretary of the meeting before being voted. Such proxy shall
entitle the holders thereof to vote at any adjournment of such meeting, but
shall not be valid after the final adjournment thereof. No proxy shall be valid
after the expiration of eleven months from the date of its execution unless the
shareholder executing it shall have specified therein the length of time it is
to continue in force, which shall be for some limited period.
Section 10. Voting of Shares. Except as otherwise provided in the
certificate of incorporation or these bylaws, each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders.
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Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe, or in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name, if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares may be pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
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Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Section 12. Cumulative Voting. At all elections of directors of the
corporation, every shareholder entitled to vote at such election shall have the
right to vote, in person or by proxy, the number of shares owned by him for as
many persons as there are directors to be elected and for whose election he has
a right to vote, or to cumulate his votes by giving one candidate as many votes
as the number of such directors multiplied by the number of his shares shall
equal, or by distributing such votes on the same principle among any number of
candidates.
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ARTICLE III.
BOARD OF DIRECTORS
Section 1. Number, Tenure and Qualifications. The incorporators shall
constitute the first Board of Directors of this corporation. Thereafter the
number of directors shall be determined and they shall be chosen by ballot
annually by the shareholders at their annual meeting or at any meeting held in
place thereof as provided by law. In the event that the corporation has less
than three shareholders the number of directors shall not be less than the
number of record holders of the corporation's shares. Each director shall serve
until the next annual meeting of the shareholders or until his successor is duly
elected and qualified. Directors shall be of full age and citizens of the United
States, but directors need not be residents of the State of Tennessee nor
shareholders of the corporation.
Section 2. Powers of Directors. The Board of Directors shall have the
entire management of the business of the corporation. In the management and
control of the property, business and affairs of the corporation, the Board of
Directors is hereby vested with all the powers possessed by the corporation
itself, so far as this delegation of authority is not inconsistent with the laws
of the State of Tennessee,
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with the certificate of incorporation of the corporation, or with these
by-laws. The Board of Directors shall have the power to determine what
constitutes net earnings, profits, and surplus, respectively, what amount shall
be reserved for working capital and to establish reserves for any other proper
purpose, and what amount shall be declared as dividends, and such determination
by the Board of Directors shall be final and conclusive. The Board of Directors
shall have the power to declare dividends for and on behalf of this corporation,
which dividends may include or consist of stock dividends.
Section 3. Regular Meetings of the Board. Immediately after such annual
election the newly elected directors may meet at the same place for the purpose
of organization, the election of corporate officers and the transaction of other
business; if a quorum of the directors be then present no prior notice of such
meeting shall be required. Other regular meetings of the Board shall be held at
such times and places as the Board by resolution may determine and specify, and
if so determined no notice thereof need be given, provided that unless all the
directors are present at the meeting at which said resolution is passed, that
the first meeting held pursuant to said resolution shall not be held for at
least five days following the date on which the resolution is passed.
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Section 4. Special Meetings. Special meetings of the Board of Directors
may be held at any time or place whenever called by the President, or the
Vice-President or the Treasurer or the Secretary, or by written request of at
least two directors, notice thereof being given to each director by the
Secretary or other officer calling the meeting, or they may be held at any time
without formal notice provided all of the directors are present or those not
present shall at any time waive or have waived notice thereof.
Section 5. Notice. Notice of any special meetings shall be given at least
five days previously thereto by written notice delivered personally or mailed
to each director at his business address, or by telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company.
Section 6. Quorum. A majority of the members of the Board of Directors as
constituted for the time being shall constitute a quorum for the transaction of
business, but a lesser number may adjourn any meeting and the meeting may be
held as adjourned without further notice. When a quorum is
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present at any meeting, a majority of the members present thereat shall decide
any question brought before such meeting, except as otherwise provided by law or
by these by-laws. The fact that a director has an interest in a matter to be
voted on by the meeting shall not prevent his being counted for purposes of a
quorum.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
including vacancies by virtue of removal for cause, may be filled by the vote of
a majority of the Directors, even though less than a quorum.
Section 8. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as a director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 9. Removal. Any director may be removed without cause by a
majority vote of the shareholders. A director may be removed for cause by a
majority of the entire Board of Directors. Cause shall be defined as the
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final conviction of a felony, declaration of unsound mind by court order,
adjudication of bankruptcy, nonacceptance of office or conduct prejudicial to
the interest of the corporation. Provided, however, that no director may be
removed when the votes cast against his removal would be sufficient to elect him
if voted cumulatively at an election at which the same total number of votes
were cast and the entire board of which he is a member were then being elected.
Section 10. Committees. The majority of the Board of Directors may appoint
an executive committee or such other committees as it may deem advisable,
composed of two or more directors, and may delegate authority to such committees
as is not inconsistent with the Tennessee General Corporation Act. The members
of such committee shall serve at the pleasure of the Board of Directors.
Section 11. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof or shall forward such dissent
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by registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 12. Informal Action by Directors. Any action required to be taken
at a meeting of the Board of Directors, or any other action which may be taken
at a meeting of the Board of Directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the directors entitled to vote with respect to the subject matter thereof.
ARTICLE IV.
WAIVER OF NOTICE
Whenever any notice whatever is required to be given by these by-laws, or
the certificate of incorporation of this corporation, or any other corporation
laws of the State of Tennessee, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Where the person or persons
entitled to such notice sign the minutes of any shareholder's or directors
meeting, which minutes contain the statement that said person or persons
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have waived notice of the meeting, then such person or persons are deemed to
have waived notice in writing.
ARTICLE V.
OFFICERS
Section 1. Number. The officers of the corporation shall be a President,
one or more Vice Presidents (the number thereof to be determined by the Board of
Directors), a Secretary, and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two or more
offices may be held by the same person, except the offices of President and
Secretary.
Section 2. Election and Term of Office. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held in
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected and shall have qualified or until his
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death or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its judgment
the best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the corporation thereunto authorized by the Board
of Directors, certificates for shares of the corporation, any deed, mortgages,
bonds, contracts, or other instruments which the Board of
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Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these by-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. The Vice-Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice-President (or in the
event there be more than one Vice-President, the Vice-Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice-President may sign, with the Secretary
or an Assistant Secretary, certificates for shares of the corporation; and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors'
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meetings in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these by-laws or as
required by law; (c) be custodian of the corporate records and of the seal (if
any) of the corporation and see that said seal is affixed to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (e) sign with the
President, or a Vice-President, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 8. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall: (a) have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all such
moneys in
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the name of the corporation in such banks, trust companies or other depositories
as shall be selected in accordance with the provisions of Article VI of these
by-laws; and (b) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 9. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice-President certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the Board
of Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President or the Board of Directors.
Section 10. Registered Agent. The Board of Directors may appoint a
Registered Agent for the corporation in accordance with the Tennessee General
Corporation Act and may pay
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the agent such compensation from time to time as it may deem appropriate.
ARTICLE VI.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances. Provided, however, that the
corporation shall not make any loan other than a sale on credit in the ordinary
course of business or a life insurance policy loan, either directly or
indirectly, to any director or officer of the corporation except with the
consent of the holders of all the outstanding shares, whether or not such shares
are entitled to vote generally, or with the consent of the holders of a majority
of all the outstanding shares owned or controlled by shareholders other
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than a shareholder for whose benefit such action is being taken.
Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE VII.
SHARES OF STOCK
Section 1. Certificates for Shares. Certificates representing shares of
the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or Vice-President
and by the Secretary or an Assistant Secretary.
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All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the corporation as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Shares of stock may be transferred by
delivery of the certificate accompanied either by an assignment in writing on
the back of the certificate or by a written power of attorney to sell, assign
and transfer the same on the books of the corporation, signed by the person
appearing by the certificate to be the owner of the shares represented thereby,
and shall be transferable on the books of the corporation upon surrender thereof
so assigned or endorsed. The person registered on the books of the corporation
as the owner of any shares of stock shall be entitled to all the rights of
ownership with respect to such
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shares. It shall be the duty of every shareholder to notify the corporation of
his post office address.
ARTICLE VIII.
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay dividends on its outstanding shares in the manner and upon the terms and
conditions provided by the Tennessee General Corporation Act and by its articles
of incorporation.
ARTICLE IX.
FISCAL YEAR
The books of the corporation shall be on a calendar year basis and shall
begin on the 1st day of January and end on the 31st day of December of each
year.
ARTICLE X.
SEAL
This corporation may or may not have a seal and in any event the failure
to affix a corporate seal to any instrument executed by the corporation shall
not affect the validity
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thereof. If a seal is adopted, the seal of this corporation shall include the
following letters cut or engraved thereon:
ARTICLE XI.
AMENDMENTS
The by-laws of this corporation may be altered, amended or repealed and
new by-laws may be adopted at any meeting of the Board of Directors of the
corporation by a majority vote of the directors present at the meeting or at any
meeting of the shareholders by a majority vote of the common stock represented
thereat.
ATTEST:
/s/ [Illegible]
-----------------------
Secretary
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Exhibit 3.129
CHARTER
OF
THE MEMPHIS APARTMENT GUIDE, INC.
K9 1871
The undersigned natural person, having capacity to contract and
acting as the incorporator of a corporation under the Tennessee General
Corporation Act, adopts the following charter for such corporation:
1. The name of the corporation is The Memphis Apartment Guide, Inc.
2. The duration of the corporation is perpetual.
3. The address of the principal office of the corporation in the
State of Tennessee shall be Suite 720, 5100 Poplar Avenue, Memphis, County
of Shelby.
4. The corporation is for profit.
5. The purpose or purposes for which the corporation is organized
are:
To publish, print, bind, sell, deliver and distribute magazines,
pamphlets, directories, leaflets and papers, and to copyright the
articles, stories and discussions appearing therein; to sell
advertising space in such magazines and other publications, and to
do all such other things as may be necessary or advisable to carry
on such business.
6. The maximum number of shares which the corporation shall have the
authority to issue is fifty thousand (50,000) shares, with $1.00 par
value.
<PAGE>
K9 1871
7. The corporation will not commence business until consideration of
One Thousand Dollars ($1,000.00) has been received for issuance of shares.
Dated January 12, 1976.
/s/ Donald A. Malmo
-----------------------------
DONALD A. MALMO, Incorporator
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EX-3.130
BY-LAWS OF
THE MEMPHIS APARTMENT GUIDE, INC.
ARTICLE I.
OFFICES
Section 1. The principal offices of this corporation are Suite 720, 5100
Poplar Avenue, Memphis, Tennessee. The said principal office may be changed at
any time by appropriate resolution of the Board of Directors. The corporation
may have offices and places of business at such other places within or without
the State of Tennessee as shall be determined by the Board of Directors.
Section 2. The registered office of the corporation for any particular
state may be, but need not be, identical with the principal office of the
corporation in that state, and the address of the registered office may be
changed from time to time by appropriate resolution of the Board of Directors.
ARTICLE II.
SHAREHOLDERS
Section 1. Meetings. All meetings of shareholders shall be held either in
the principal office of the corporation or at any other place in the city of
Memphis, Tennessee.
<PAGE>
Section 2. Annual Meeting. A meeting of the shareholders shall be held in
the principal office of the corporation at 10:00 o'clock in the forenoon on the
first Monday in March, 1977 and on the first Monday in March of each year
thereafter for the purpose of electing directors and for the transaction of any
other business authorized to be transacted by the shareholders. If the appointed
day is a legal holiday the meeting shall be held at the same time on the next
succeeding day not a holiday. In the event that the annual meeting is omitted by
oversight or otherwise on the date herein provided for, the directors shall
cause a meeting in lieu thereof to be held as soon thereafter as conveniently
may be, and any business transacted or elections held at such meeting shall be
as valid as if transacted or held at the annual meeting. Such subsequent meeting
shall be called in the same manner as provided for the annual shareholders
meeting.
Section 3. Special Meetings. Except as otherwise provided by law, special
meetings of the shareholders of this corporation shall be held at such places
and times as may be determined by the President or by a majority of the Board of
Directors, or whenever one or more shareholders who
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are entitled to vote and who hold at least 10% of the common shares issued and
outstanding shall make written application therefor to the Secretary or an
Assistant Secretary stating the time, place and purpose of the meeting called
for. No business shall be transacted at a special meeting except as stated in
the notice sent to the shareholders, unless by the unanimous consent of the
shareholders, either in person or by proxy, all such stock being represented at
the meeting.
Section 4. Notice of Meetings. Notice of all shareholders' meetings
stating the time, place and the objects for which such meetings are called shall
be given by the President or the Vice-President or the Treasurer or the
Secretary or an Assistant Secretary to each shareholder of record not less than
ten nor more than forty days prior to the date of the meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States Mail
in a sealed envelope with postage thereon prepaid, addressed to the shareholder
at his address as it appears on the stock record books of the corporation,
unless he shall have filed with the Secretary of the corporation a written
request that notice intended for him be mailed to some other address, in which
case it shall be mailed to the address designated in such request.
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Any meeting of which all shareholders entitled to vote have waived or at
any time shall waive notice in writing shall be a legal meeting for the
transaction of business, notwithstanding that notice has not been given as
hereinbefore provided.
Section 5. Notice of Right to Dissent. If shareholders are to vote at a
meeting on a corporate action which would give rise to a dissenter's right to
payment for his shares in accordance with the Tennessee General Corporation Act,
notice of such meeting shall be given to every shareholder who will be entitled
to dissent from such action and to receive payment for his shares whether or not
entitled to vote thereon. Such notice shall be given in accordance with the
provisions of Section 4 of this Article and shall also contain a statement,
displayed with reasonable prominence, that upon compliance with the Tennessee
General Corporation Act, dissenting shareholders are entitled to be paid the
fair value of their shares as provided in said Act.
Section 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining the shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a
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determination of shareholders for any other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer book shall be
closed for a stated period not to exceed in any case thirty days. If the stock
transfer book shall be closed for the purpose of determining shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than thirty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof.
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Section 7. Voting Lists. The officer or agent having charge of the stock
transfer books for common shares of the corporation shall make, at least ten
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each
shareholder, which list, for a period of ten days prior to such meeting shall be
kept on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall be certified by the corporate officer responsible for its preparation or
by the transfer agent and shall be produced and kept open at the time and place
of the meeting and be subject to the inspection of any shareholder during the
entire time of the meeting. In the event of any challenge to the right of any
person to vote at the meeting, the presiding officer at such meeting may rely on
said list as proper evidence of the right of parties to vote at such meeting.
Section 8. Quorum. Except as may be otherwise provided by law, a majority
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of shareholders. In
the event that less than a majority of the outstanding shares are represented at
any meeting, a majority of the
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shares represented thereat entitled to vote shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of law or of the certificate of incorporation or of these by-laws a larger or
different vote is required, in which case such express provision shall govern
and control the decision of each question.
Section 9. Proxies. Shareholders of record who are entitled to vote may
vote at any meeting either in person or by proxy in writing, which shall be
filed with the Secretary of the meeting before being voted. Such proxy shall
entitle the holders thereof to vote at any adjournment of such meeting, but
shall not be valid after the final adjournment thereof. No proxy shall be valid
after the expiration of eleven months from the date of its execution unless the
shareholder executing it shall have specified therein the length of time it is
to continue in force, which shall be for some limited period.
Section 10. Voting of Shares. Except as otherwise provided in the
certificate of incorporation or these by-laws, each outstanding share entitled
to vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders.
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Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe, or in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name, if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares may be pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
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Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Section 12. Cumulative Voting. At all elections of directors of the
corporation, every shareholder entitled to vote at such election shall have the
right to vote, in person or by proxy, the number of shares owned by him for as
many persons as there are directors to be elected and for whose election he has
a right to vote, or to cumulate his votes by giving one candidate as many votes
as the number of such directors multiplied by the number of his shares shall
equal, or by distributing such votes on the same principle among any number of
candidates.
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ARTICLE III.
BOARD OF DIRECTORS
Section 1. Number, Tenure and Qualifications. The incorporators shall
constitute the first Board of Directors of this corporation. Thereafter the
number of directors shall be determined and they shall be chosen by ballot
annually by the shareholders at their annual meeting or at any meeting held in
place thereof as provided by law. In the event that the corporation has less
than three shareholders the number of directors shall not be less than the
number of record holders of the corporation's shares. Each director shall serve
until the next annual meeting of the shareholders or until his successor is duly
elected and qualified. Directors shall be of full age and citizens of the United
States, but directors need not be residents of the State of Tennessee nor
shareholders of the corporation.
Section 2. Powers of Directors. The Board of Directors shall have the
entire management of the business of the corporation. In the management and
control of the property, business and affairs of the corporation, the Board of
Directors is hereby vested with all the powers possessed by the corporation
itself, so far as this delegation of authority is not inconsistent with the laws
of the State of Tennessee,
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with the certificate of incorporation of the corporation, or with these by-laws.
The Board of Directors shall have the power to determine what constitutes net
earnings, profits, and surplus, respectively, what amount shall be reserved for
working capital and to establish reserves for any other proper purpose, and what
amount shall be declared as dividends, and such determination by the Board of
Directors shall be final and conclusive. The Board of Directors shall have the
power to declare dividends for and on behalf of this corporation, which
dividends may include or consist of stock dividends.
Section 3. Regular Meetings of the Board. Immediately after such annual
election the newly elected directors may meet at the same place for the purpose
of organization, the election of corporate officers and the transaction of other
business; if a quorum of the directors be then present no prior notice of such
meeting shall be required. Other regular meetings of the Board shall be held at
such times and places as the Board by resolution may determine and specify, and
if so determined no notice thereof need be given, provided that unless all the
directors are present at the meeting at which said resolution is passed, that
the first meeting held pursuant to said resolution shall not be held for at
least five days following the date on which the resolution is passed.
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Section 4. Special Meetings. Special meetings of the Board of Directors
may be held at any time or place whenever called by the President, or the
Vice-President or the Treasurer or the Secretary, or by written request of at
least two directors, notice thereof being given to each director by the
Secretary or other officer calling the meeting, or they may be held at any time
without formal notice provided all of the directors are present or those not
present shall at any time waive or have waived notice thereof.
Section 5. Notice. Notice of any special meetings shall be given at least
five days previously thereto by written notice delivered personally or mailed to
each director at his business address, or by telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company.
Section 6. Quorum. A majority of the members of the Board of Directors as
constituted for the time being shall constitute a quorum for the transaction of
business, but a lesser number may adjourn any meeting and the meeting may be
held as adjourned without further notice. When a quorum is
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<PAGE>
present at any meeting, a majority of the members present thereat shall decide
any question brought before such meeting, except as otherwise provided by law or
by these by-laws. The fact that a director has an interest in a matter to be
voted on by the meeting shall not prevent his being counted for purposes of a
quorum.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
including vacancies by virtue of removal for cause, may be filled by the vote of
a majority of the Directors, even though less than a quorum.
Section 8. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as a director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 9. Removal. Any director may be removed without cause by a
majority vote of the shareholders. A director may be removed for cause by a
majority of the entire Board of Directors. Cause shall be defined as the
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final conviction of a felony, declaration of unsound mind by court order,
adjudication of bankruptcy, nonacceptance of office or conduct prejudicial to
the interest of the corporation. Provided, however, that no director may be
removed when the votes cast against his removal would be sufficient to elect him
if voted cumulatively at an election at which the same total number of votes
were cast and the entire board of which he is a member were then being elected.
Section 10. Committees. The majority of the Board of Directors may appoint
an executive committee or such other committees as it may deem advisable,
composed of two or more directors, and may delegate authority to such committees
as is not inconsistent with the Tennessee General Corporation Act. The members
of such committee shall serve at the pleasure of the Board of Directors.
Section 11. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed, to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof or shall forward such dissent
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<PAGE>
by registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 12. Informal Action by Directors. Any action required to be taken
at a meeting of the Board of Directors, or any other action which may be taken
at a meeting of the Board of Directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the directors entitled to vote with respect to the subject matter thereof.
ARTICLE IV.
WAIVER OF NOTICE
Whenever any notice whatever is required to be given by these by-laws, or
the certificate of incorporation of this corporation, or any other corporation
laws of the State of Tennessee, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Where the person or persons
entitled to such notice sign the minutes of any shareholder's or directors
meeting, which minutes contain the statement that said person or persons
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<PAGE>
have waived notice of the meeting, then such person or persons are deemed to
have waived notice in writing.
ARTICLE V.
OFFICERS
Section 1. Number. The officers of the corporation shall be a President,
one or more Vice Presidents (the number thereof to be determined by the Board of
Directors), a Secretary, and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two or more
offices may be held by the same person, except the offices of President and
Secretary.
Section 2. Election and Term of Office. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held in
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected and shall have qualified or until his
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death or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its judgment
the best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the corporation thereunto authorized by the Board
of Directors, certificates for shares of the corporation, any deed, mortgages,
bonds, contracts, or other instruments which the Board of
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Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these by-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. The Vice-Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice-President (or in the
event there be more than one Vice-President, the Vice-Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice-President may sign, with the Secretary
or an Assistant Secretary, certificates for shares of the corporation; and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors'
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meetings in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these by-laws or as
required by law; (c) be custodian of the corporate records and of the seal (if
any) of the corporation and see that said seal is affixed to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (e) sign with the
President, or a Vice-President, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 8. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall: (a) have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all such
moneys in
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the name of the corporation in such banks, trust companies or other depositories
as shall be selected in accordance with the provisions of Article VI of these
by-laws; and (b) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 9. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice-President certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the Board
of Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President or the Board of Directors.
Section 10. Registered Agent. The Board of Directors may appoint a
Registered Agent for the corporation in accordance with the Tennessee General
Corporation Act and may pay
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the agent such compensation from time to time as it may deem appropriate.
ARTICLE VI.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances. Provided, however, that the
corporation shall not make any loan other than a sale on credit in the ordinary
course of business or a life insurance policy loan, either directly or
indirectly, to any director or officer of the corporation except with the
consent of the holders of all the outstanding shares, whether or not such shares
are entitled to vote generally, or with the consent of the holders of a majority
of all the outstanding shares owned or controlled by shareholders other
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than a shareholder for whose benefit such action is being taken.
Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE VII.
SHARES OF STOCK
Section 1. Certificates for Shares. Certificates representing shares of
the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or Vice-President
and by the Secretary or an Assistant Secretary.
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<PAGE>
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the corporation as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Shares of stock may be transferred by
delivery of the certificate accompanied either by an assignment in writing on
the back of the certificate or by a written power of attorney to sell, assign
and transfer the same on the books of the corporation, signed by the person
appearing by the certificate to be the owner of the shares represented thereby,
and shall be transferable on the books of the corporation upon surrender thereof
so assigned or endorsed. The person registered on the books of the corporation
as the owner of any shares of stock shall be entitled to all the rights of
ownership with respect to such
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shares. It shall be the duty of every shareholder to notify the corporation of
his post office address.
ARTICLE VIII.
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay dividends on its outstanding shares in the manner and upon the terms and
conditions provided by the Tennessee General Corporation Act and by its articles
of incorporation.
ARTICLE IX.
FISCAL YEAR
The books of the corporation shall be on a calendar year basis and shall
begin on the 1st day of January and end on the 31st day of December of each
year.
ARTICLE X.
SEAL
This corporation may or may not have a seal and in any event the failure
to affix a corporate seal to any instrument executed by the corporation shall
not affect the validity
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<PAGE>
thereof. If a seal is adopted, the seal of this corporation shall include the
following letters cut or engraved thereon:
ARTICLE XI.
AMENDMENTS
The by-laws of this corporation may be altered, amended or repealed and
new by-laws may be adopted at any meeting of the Board of Directors of the
corporation by a majority vote of the directors present at the meeting or at any
meeting of the shareholders by a majority vote of the common stock represented
thereat.
ATTEST:
/s/ [Illegible]
---------------------
Secretary
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<PAGE>
Exhibit 3.131
1492089
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
January 14 1991
MARCH FONG EU, Secretary of State
ARTICLES OF INCORPORATION
OF
Park Avenue Publishing, Inc.
I. NAME
The name of the corporation is Park Avenue Publishing, Inc.
II. PURPOSE
The purpose of the corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business, or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III. AGENT FOR SERVICE OF PROCESS
The name and address in this state of the corporation's initial agent for
service of process is:
Alberto Lopez
2101 Pomona Blvd.
Pomona, CA 91764
IV. STOCK
The corporation is authorized to issue only one class of shares having a
total number of one million shares.
EXECUTION
IN WITNESS WHEREOF, the undersigned, who is the incorporator of this
incorporation, has executed these Articles of Incorporation on January 4, 1991.
/s/ Alberto Lopez
--------------------------------
Alberto Lopez, Incorporator
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<PAGE>
DECLARATION
I declare that I am the person who executed the above Articles of
Incorporation, and such instrument is my act and deed.
Executed on January 4, 1991, at Pomona, California.
/s/ Alberto Lopez
--------------------------------
Alberto Lopez
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<PAGE>
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
NOV -5 1997
/s/ Bill Jones
BILL JONES, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
PARK AVENUE PUBLISHING, INC.
*********
We, Michealanne Discepolo the Vice President and Ann Riposanu the
Assistant Secretary of PARK AVENUE PUBLISHING, INC., a corporation duly
organized and existing under the laws of State of California, do hereby certify:
1. That they are the Vice President and the Assistant Secretary,
respectively, of PARK AVENUE PUBLISHING, INC., a California corporation
2. That an amendment to the articles of incorporation of this corporation has
been approved by the board of directors.
3. The amendment so approved by the board of directors is as follows:
Article I of the articles of incorporation of this corporation is
amended to read as follows:
"I: That the name of the corporation shall be:
Low Rider Publishing Group, Inc."
4. That the shareholders have adopted said amendment by written consent. That
the wording of said amendment as approved by written consent of the
shareholders is
(CA - 0928 - 1/21/91)
<PAGE>
the same as that set forth above. That said written consent was signed by
the holders of outstanding shares having not less than the minimum number
of required votes of shareholders necessary to approve said amendment in
accordance with Section 902 of the California Corporations Code.
5. That the designation and total number of outstanding shares entitled to
vote on or give written consent to said amendment and the minimum
percentage vote required of each class or series entitled to vote on or
give written consent to said amendment for approval thereof are as
follows:
Designation Number of shares outstanding Minimum percentage vote
entitled to vote or give written required to approve
consent
- ------------------- -------------------------------- ------------------------
Common Stock 60,000 50.1%
6. That the number of shares of each class which gave written consent in
favor if said amendment equaled or exceeded the minimum percentage vote
required of each class entitled to vote, as set forth above.
Each of the undersigned declares under penalty of perjury that the statements
contained in the foregoing certificate are true of their own knowledge.
Executed at 745 Fifth Avenue, New York, NY on September 9, 1997.
/s/ Michealanne Discepolo
-------------------------------------
Michealanne Discepolo, Vice President
/s/ Ann Riposanu
-------------------------------------
Ann Riposanu, Assistant Secretary
[SEAL]
(CA - 0928 - 1/21/91)
<PAGE>
EX-3.132
BYLAWS OF
Park Avenue Publishing, Inc.
ARTICLE I. OFFICES
Principal Executive Office [Corp. Code Sec. 1502(a)]
Section 1.01. The principal executive office of the corporation is located
at 3101 Pomona Blvd., Pomona, CA 91768.
Other Offices
Section 1.02. The corporation may also have offices at such other places,
within or without the State of California, where the corporation is qualified to
do business, as the Board of Directors may from time to time designate or the
business of the corporation may require.
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ARTICLE II. DIRECTORS
Definitions
"Board"
Section 2.01. (a) As used in these Bylaws, the word "Board" means the
Board of Directors of the corporation.
"Directors"
(b) "Directors," as used in these bylaws in relation to any power or duty
requiring collective action, means the Board of Directors of the corporation.
Responsibility of Board [Corp. Code Sec. 300(a)]
Section 2.02. Subject to the provisions of the General Corporation Law
and to any limitations in the Articles of Incorporation relating to action
required to be approved by the shareholders, as that term is defined in
California Corporations Code Section 153, or by the outstanding shares, as that
term is defined in California Corporations Code Section 152, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the Board of Directors. The Board may
delegate the management of the day-to-day operation of the business of the
corporation to a management company or other person provided that the business
and affairs of the corporation shall be managed and all corporate powers shall
be exercised under the ultimate direction of the Board.
Number of Directors [Corp. Code Sec. 212(a)]
Section 2.03. The number of directors of the corporation shall be three.
Election and Term of Office [Corp. Code Sec. 301]
Section 2.04. Directors shall be elected at each annual meeting of
shareholders to hold office until the next annual meeting. Each director,
including a director elected to fill a vacancy (see Sec. 2.07 of these Bylaws),
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
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Resignation [Corp. Code Sec. 305(d)]
Section 2.05. Any director may resign effective on giving written notice
to the Chairman of the Board, the President, the Secretary, or the Board of
Directors of the corporation, unless the notice specifies a later time for the
effectiveness of the resignation. If the resignation is effective at a future
time, a successor may be elected to take office when the resignation becomes
effective.
Vacancies [Corp. Code Secs. 192, 302-304]
When Vacancy Occurs [Corp. Code Sec. 192]
Section 2.06. (a) A vacancy on the Board occurs when any authorized
position of director is not filled by a duly elected director, whether caused by
death, resignation, removal, change in the authorized number of directors (by
the Board or the shareholders), or otherwise.
Declaration of Vacancy [Corp. Code Sec. 302]
(b) The Board may declare vacant the office of a director who has been
declared of unsound mind by order of court or convicted of a felony.
Removal of Directors by Shares [Corp. Code Sec. 303(a)]
(c) Any or all of the directors may be removed without cause if removal is
approved by the outstanding shares, as that term is defined in Section 152 of
the California Corporations Code, subject to the following:
(1) No director may be removed (unless the entire Board is removed) when
the votes cast against removal, or not consenting in writing to that
removal, would be sufficient to elect that director if voted
cumulatively at an election at which the same total number of votes
were cast (or, if action is taken by written consent, all shares
entitled to vote were voted) and the entire number of directors
authorized at the time of the director's most recent election were
then being elected; and
(2) When by the provisions of the Articles the holders of the shares of
any class or series, voting as a class or series, are entitled to
elect one or more directors, any director so selected may be removed
only by the applicable vote of the holders of the shares of that
class or series.
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Removal by Court [Corp. Code Sec. 304]
(d) Shareholders holding at least ten percent of the number of outstanding
shares of any class of the corporation may sue in the superior court of the
county in which the principal executive office of the corporation is located to
remove from office any director in case of fraudulent or dishonest acts or gross
abuse of authority or discretion with reference to the corporation. In such a
case, the corporation must be made a party to the action.
Reduction of Authorized Number of Directors
[Corp. Code Sec. 303(b)]
(e) Any reduction of the authorized number of directors does not remove
any director prior to the expiration of the director's term of office.
Provisions Exclusive [Corp. Code Sec. 303(c)]
(f) Except as provided in paragraphs (a) through (d) of this Section 2.06,
no director may be removed from office prior to the expiration of the director's
term of office.
Filling Vacancies
By Board [Corp. Code Sec. 305(a)]
Section 2.07. (a) Except as otherwise provided in the Articles or in these
Bylaws, and except for a vacancy created by the removal of a director as
provided in Section 2.06, vacancies on the Board may be filled by approval of
the Board pursuant to Section 151 of the Corporations Code, or, if the number of
directors then in office is less than a quorum, by (1) the unanimous written
consent of the directors then in office; (2) the affirmative vote of a majority
of the directors then in office at a meeting held pursuant to notice or waivers
of notice complying with Section 307 of the Corporations Code; or (3) a sole
remaining director.
4
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By Shareholders [Corp. Code Secs. 305(a),(b),603(d)]
(b) Unless the Articles or a bylaw adopted by the shareholders provide
that vacancies occurring in the Board by reason of the removal of directors may
be filled by the Board, those vacancies may be filled only by approval of the
shareholders, as that term is defined in Section 153 of the California
Corporations Code. Moreover, the shareholders may elect a director at any time
to fill any vacancy not filled by the directors. Any election of directors by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote; provided, however, that no director shall be elected by
written consent to fill a vacancy created by removal of any director except by
the unanimous written consent of all shares entitled to vote for the election of
directors.
By Special Meeting [Corp. Code Sec. 305(c)]
(c) If, after the filling of any vacancy by the directors, the directors
then in office who have been elected by the shareholders shall constitute less
than a majority of the directors then in office, any holder or holders of an
aggregate of five (5) percent or more of the total number of shares at the time
outstanding having the right to vote for such directors may call a special
meeting of the shareholders, or apply to the superior court of the county in
which the principal executive office of the corporation is located for an order
that a special meeting be held to elect the entire Board. The term of office of
any director not elected by the shareholders shall terminate on the election of
a successor.
Call of Meetings [Corp. Code Secs. 212(b)(2), 307(a)(1)]
Section 2.08. Meetings of the Board may be called by the Chairman of the
Board, or the President, or any Vice President, or the Secretary, or any two
directors of the corporation.
Place of Meetings [Corp. Code Secs. 212(b)(2), 307(a)(5)]
Section 2.09. Meetings of the Board may be held at any place within or
without California which has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, designated by resolution of
the Board, and if not so designated, then at the principal executive office of
the corporation.
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Time of Regular Meetings [Corp. Code Secs. 212(b)(2), 307(a)(2)]
Section 2.10. Regular meetings of the Board of Directors shall be held on
the second Tuesday of March commencing at the hour of l0:A.M. Should any such
day as herein specified fall on a legal holiday, the meeting scheduled for that
day shall be held at the same hour on the next succeeding day which is not a
legal holiday.
Notice of Meetings [Corp. Code Secs. 113, 118, 212(b)(2), 307(a)(2)]
Section 2.11. Regular meetings of the Board may be held without notice.
Special meetings shall be held on four (4) days' notice by first-class mail,
postage prepaid, or forty-eight (48) hours' notice delivered personally or by
telephone or telegraph. The notice need not specify the purpose of the meeting.
Waiver of Notice [Corp. Code Secs. 212(b)(2), 307(a)(2), (3)]
Section 2.12. Notice of any meeting need not be given to any director who
signs a waiver of notice, or a consent to holding the meeting or an approval of
the minutes thereof, whether before or after the meeting, or who attends the
meeting without protesting, prior to the meeting or at its commencement, the
lack of notice to such director. Any waiver of notice need not specify the
purpose of the meeting. All waivers, consents, and approvals of minutes shall be
filed with the corporate records or made a part of the minutes of the meeting to
which they pertain.
Quorum [Corp. Code Secs. 212(b)(4), 307(a)(7)]
Section 2.13. A majority of the authorized number of directors constitutes
a quorum of the Board for the transaction of business.
Transactions of Board [Corp. Code Sec. 307(a)(8)]
Section 2.14. Except as otherwise provided in the Articles of
Incorporation or in these Bylaws, every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present is the act of the Board, subject to the provisions of Sections 2.23 and
2.28 of these Bylaws.
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Withdrawal of Quorum [Corp. Code Sec. 307(a)(8)]
Section 2.15. Any meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum for
such meetings.
Adjournment [Corp. Code Sec. 307(a)(4)]
Section 2.16. A majority of the directors present, whether or not a quorum
is present, may adjourn any meeting to another time and place. If the meeting is
adjourned for more than twenty-four (24) hours, however, notice of the
adjournment to another time or place must be given prior to the time of the
adjourned meeting to the directors who were not present at the time of the
adjournment.
Section 2.17. [Reserved]
Conduct of Meetings [Corp. Code Sec. 212(b)(2)]
Section 2.18. At every meeting of the Board, the Chairman of the Board or,
in his absence, the President of the corporation or, in his absence, the Vice
President designated by him or, in the absence of such designation, a chairman
chosen by a majority of the directors present shall preside. The Secretary of
the corporation shall act as Secretary of the Board. In the event the Secretary
shall be absent from any meeting, the Chairman may appoint any person to act as
secretary of the meeting.
Telephone Participation [Corp. Code Secs. 212 (b)(2), 307(a)(6)]
Section 2.19. Members of the Board may participate in any meeting through
use of conference telephone or similar communications equipment, whenever such
participation is authorized by resolution adopted by the Board, so long as all
members participating in such meeting can hear one another.
Action Without Meeting [Corp. Code Sec. 307(b)]
Section 2.20. Any action required or permitted to be taken by the Board
may be taken without a meeting, if all members of the Board shall individually
or collectively consent in writing to such action. Such written consent or
consents must be filed with the minutes of the proceedings of the Board. Action
by written consent has the same force and effect as a unanimous vote of the
directors.
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Duties of Directors [Corp. Code Sec. 309]
Section 2.21. (a) Each director shall perform the duties of a director,
including duties as a member of any committee of the Board on which the director
may serve, in good faith, in a manner such director believes to be in the best
interests of the corporation and with such care, including reasonable inquiry,
as an ordinarily prudent person in a like position would use under similar
circumstances.
(b) In performing his or her duties, each director shall be entitled, so
long as in any such case he or she acts in good faith after reasonable inquiry
when the need for it is indicated by the circumstances and without knowledge
that would cause such reliance to be unwarranted, to rely on information,
opinions, reports, or statements, including financial statements and other
financial data, in each case prepared or presented by:
(1) One or more officers or employees of the corporation whom the
director believes to be reliable and competent in the matters
presented;
(2) Counsel, independent accountants, or other persons as to matters
which the director believes to be within such person's professional
or expert competence; or
(3) A committee of the Board on which the director does not serve, as to
matters within its designated authority, which committee the
director believes to merit confidence.
(c) A person who performs the duties of director in accordance with
paragraphs (a) and (b) of this Section 2.21 shall have no liability based on any
alleged failure to discharge the person's obligation as a director.
Compensation [Corp. Code Sec. 212(b)(2)]
Section 2.22. Directors shall receive such compensation for their services
and reimbursement for their expenses as shall be determined from time to time by
resolution of the Board. Any director may serve the corporation in any other
capacity as an officer, agent, employee, or otherwise and receive compensation
therefor.
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Transactions With Corporation [Corp. Code Sec. 310]
Section 2.23. (a) No contract or other transaction between the corporation
and one or more of its directors, or between the corporation and any
corporation, firm or association in which one or more of the directors of this
corporation has a material financial interest, is either void or voidable
because such director or directors or such other corporation, firm, or
association are parties or because such director or directors are present at the
meeting of the Board or Board committee which authorizes, approves, or ratifies
the contract or transaction, if:
(1) The material facts as to the transaction and as to the director's
interest are fully disclosed or known to the shareholders and such
contract or transaction is approved by the shareholders, as that
term is defined in Section 153 of the California Corporations Code,
in good faith, with the shares owned by the interested director or
directors not being entitled to vote thereon; or
(2) The material facts as to the transaction and as to such director's
interest are fully disclosed or known to the Board or Board
committee, and the Board or Board committee authorizes, approves, or
ratifies the contract or transaction in good faith by a vote
sufficient without counting the vote of the interested director or
directors and the contract or transaction is just and reasonable as
to the corporation at the time it is authorized, approved, or
ratified; or
(3) As to contracts or transactions not approved as provided in clauses
(1) and (2) above, of this paragraph (a), the person asserting the
validity of the contract or transaction sustains the burden of
proving that the contract or transaction was just and reasonable as
to the corporation at the time it was authorized, approved, or
ratified.
A mere common directorship does not constitute a material financial
interest within the meaning of the above provisions. Nor is a director
interested within the meaning of the above provisions in a resolution fixing the
compensation of another director as a director, officer, or employee of
corporation, notwithstanding the fact that the first director is also receiving
compensation from the corporation.
(b) No contract or other transaction between the corporation and any
corporation or association of which one or more of the directors of this
corporation are directors is either void or voidable because such director or
directors are present at the Board or Board committee meeting which authorizes,
approves, or ratifies the contract or transaction, if:
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(1) The material facts as to the transaction and as to such director's
other directorship are fully disclosed or known to the Board or
Board committee, and the Board or Board committee authorizes,
approves, or ratifies the contract or transaction in good faith by a
vote sufficient without counting the vote of the common director or
directors or the contract or transactions approved by the
shareholders, as that term is defined in Section 153 of the
California Corporations Code, in good faith; or
(2) As to contracts or transactions not approved as provided in clause
(1) of this paragraph (b), the contract or transaction is just and
reasonable as to the corporation at the time it is authorized,
approved, or ratified.
This provision does not apply to contracts or transactions covered by
paragraph (a) of this Section 2.23.
(c) Interested or common directors may be counted in determining the
presence of a quorum at a meeting of the Board or Board committee which
authorizes, approves, or ratifies a contract or transaction.
Liability of Directors [Corp. Code Sec. 316(a), (b), (e)]
Section 2.24. (a) Subject to the provisions of Section 2.21 of these
Bylaws, directors who approve any of the following corporate actions shall be
jointly and severally liable to the corporation for the benefit of all of the
creditors or shareholders entitled to institute an action under Section 316(c)
of the California Corporations Code:
(1) The making of any distribution to its shareholders, as that term is
defined in Section 166 of the California Corporations Code, to the
extent that it is contrary to the provisions of Sections 500 to 503,
inclusive, of the California Corporations Code.
(2) The distribution of assets to shareholders after institution of
dissolution proceedings of the corporation, if any, without paying
or adequately providing for all known liabilities of the
corporation, excluding any claims not filed by creditors within the
time limit set in the notice given to creditors under the provisions
of Sections 1800 to 2011, inclusive, of the California Corporations
Code.
(3) The making of any loan or guaranty contrary to Section 315 of the
California Corporations Code.
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(b) a director who is present at a meeting of the Board, or any Board
committee, at which action specified in paragraph (a) of this Section 2.24 is
taken and who abstains from voting shall be considered to have approved the
action.
(c) Directors liable under this Section of these Bylaws shall be entitled
to be subrogated to the rights of the corporation:
(1) With respect to clause (1) of paragraph (a) of this Section 2.24,
against shareholders who received the distribution.
(2) With respect to clause (2) of paragraph (a) of this Section 2.24,
against shareholders who received the distribution of assets.
(3) With respect to clause (3) of paragraph (a) of this Section 2.24,
against the person who received the loan or guaranty.
Indemnification [Corp. Code Sec. 317]
Definitions [Corp. Code Sec. 317(a)]
Section 2.25. (a) For the purposes of Sections 2.26-2.32 of these Bylaws,
"agent" means any person who is or was a director, officer, employee, or other
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, or other enterprise.
(b) For the purposes of Sections 2.26-2.32 of these Bylaws, "proceeding"
means any threatened, pending, or completed action or proceeding whether civil,
criminal, administrative, or investigative; and "expenses" include without
limitation attorneys' fees and any expenses of establishing a right to
indemnification under Section 2.27 or Paragraph (d) of Section 2.28.
Power to Indemnify [Corp. Code Sec. 317(b), (c)]
Section 2.26. (a) The corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any proceeding
(other than an action by or in the right of the corporation to procure a
judgement in its favor) by reason of the fact that that person is or was an
agent of the corporation, against expenses, judgements, fines, settlements, and
other amounts actually and reasonably incurred in connection with that
proceeding if the person acted in good faith and in a manner the person
reasonably believed to be in the best interests of the corporation and, in the
case of a criminal proceeding, had no
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reasonable cause to believe the conduct of that person was unlawful. The
termination of any proceeding by judgement, order, settlement, conviction, or on
a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner that the
person reasonably believed to be in the best interests of the corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
(b) The corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action by or in the right of the corporation to procure a judgement in
its favor by reason of the fact that the person is or was an agent of the
corporation, against expenses actually and reasonably incurred by the person in
connection with the defence or settlement of that action if that person acted in
good faith, in a manner such person believed to be in the best interests of the
corporation and its shareholders. No indemnification shall be made for any of
the following:
(1) Any claim, issue, or matter for which any person shall have been
adjudged to be liable to the corporation in the performance of that
person's duty to the corporation and its shareholders, unless and
only to the extent that the court in which the proceeding was or is
pending shall determine on application that, in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for expenses, and then only to the extent that
the court shall determine;
(2) Amounts paid in settling or otherwise disposing of a threatened or
pending action, with or without court approval; or
(3) Expenses incurred in defending a threatened or pending action that
is settled or otherwise disposed of without court approval.
Expenses of Successful Agent [Corp. Code Sec. 317(d)]
Section 2.27. To the extent that an agent of this corporation has been
successful on the merits in the defense of any proceeding referred to in Section
2.26 or in defense of any claim, issue, or matter therein, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.
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Determination That Indemnification Is Proper
[Corp. Code Sec. 317(e)]
Section 2.28. Except as provided in Section 2.27, any indemnification
under Sections 2.26-2.31 of these Bylaws shall be made by the corporation only
if authorized in the specific case, on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Section 2.26 by:
(a) A majority vote of a quorum consisting of directors who are not
parties to that proceeding;
(b) If such a quorum of directors is not obtainable, by independent
legal counsel in a written opinion;
(c) Approval of the shareholders, as that term is defined in Section 153
of the California Corporations Code, with the shares owned by the
person to be indemnified not being entitled to vote thereon; or
(d) The court in which that proceeding is or was pending on application
made by the corporation or the agent or the attorney or other person
rendering services in connection with the defence, whether or not
the application by the agent, attorney, or other person is opposed
by the corporation.
Advance of Expenses [Corp. Code Sec. 317(f)]
Section 2.29. Expenses incurred in defending any proceeding may be
advanced by the corporation prior to the final disposition of that proceeding on
receipt of an undertaking by or on behalf of the agent to repay that amount if
it is determined ultimately that the agent is not entitled to be indemnified as
authorized in Sections 2.26-2.31 of these Bylaws.
Nonexclusive Provisions [Corp. Code Sec. 317(g)]
Section 2.30. The indemnification authorized by Sections 2.26-2.31 of
these Bylaws shall not be deemed exclusive of any additional rights to
indemnification for breach of duty to the corporation and its shareholders while
acting in the capacity of a director or officer of the corporation to the extent
the additional rights to indemnification are authorized in an article provision
adopted pursuant to California Corporations Code Section 204(a)(11). The
indemnification provided by Sections 2.26-2.31 of these Bylaws for acts,
omissions, or transactions while acting in the capacity of, or while serving as,
a director or officer of the corporation but not involving breach of duty to the
corporation and
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its shareholders shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any bylaw, agreement, vote
of shareholders or disinterested directors, or otherwise, to the extent the
additional rights to indemnification are authorized in the Articles.
An Article provision authorizing indemnification "in excess of that
otherwise permitted by Corporations Code Section 317" or "to the fullest extent
permissible under California law" or the substantial equivalent thereof shall be
construed to be both a provision for additional indemnification for breach of
duty to the corporation and its shareholders as referred to in, and with the
limitations required by, California Corporations Code Section 204(a)(11), and a
provision for additional indemnification.
The rights to indemnity hereunder shall continue for a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of the person. Nothing
contained in this Section shall affect any right to indemnification to which
persons other than the directors and officers may be entitled by contract or
otherwise.
Limitation on Indemnification [Corp. Code Sec. 317(h)]
Section 2.31. No indemnification or advance shall be made under Sections
2.26-2.29 of these Bylaws, except as provided in Section 2.27 or Paragraph (d)
of Section 2.28, in any circumstance in which it appears:
(a) That it would be inconsistent with a provision of the Articles, these
Bylaws, a resolution of the shareholders, or an agreement in effect at the time
of the accrual of the alleged cause of action asserted in the proceeding in
which the expenses were incurred or other amounts were paid, that prohibits or
otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed by
a court in approving a settlement.
Insurance [Corp. Code Sec. 317(i)]
Section 2.32. The corporation shall have power to purchase and maintain
insurance on behalf of any agent against any liability asserted against or
incurred by the agent in that capacity or arising out of the agent's status as
an agent, whether or not the corporation would have power to indemnify the agent
against that liability under the provisions of Sections 2.25-2.31 of these
Bylaws.
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The fact that the corporation owns all or a portion of the shares of the
company issuing a policy of insurance shall not affect the corporation's power
to purchase and maintain that insurance in the following circumstances: (1) if
authorized in the corporation's articles, any policy issued is limited to the
extent provided in Corporations Code Section 204(d); or (2) the company issuing
the policy is organized, licensed, and operated in a manner that complies with
the insurance laws and regulations applicable to its jurisdiction of
organization; that company provides procedures for processing claims that do not
permit it to be subject to direct control of the corporation that purchased the
policy; and the policy provides for some manner of risk sharing between the
issuer and purchaser of the policy, and some unaffiliated person or persons.
Risk sharing may be undertaken by providing for more than one unaffiliated owner
of the company issuing the policy, or by providing that a portion of the
coverage furnished will be obtained from some unaffiliated insurer or reinsurer.
Board Committees
Authority to Appoint [Corp. Code Sec. 311]
Section 2.33. (a) The Board may, by resolution adopted by a majority of
the authorized number of directors, designate one or more committees, each
consisting of two or more directors, to serve at the pleasure of the Board. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent member at any meeting of the committee. The
appointment of members or alternate members of a committee shall require the
vote of a majority of the authorized number of directors.
Authority of Committee [Corp. Code Sec. 311]
(b) Any such committee referred to in paragraph (a) of this Section 4.33,
to the extent provided in the Board resolution or in these Bylaws, shall have
all the authority of the Board, except with respect to:
(1) The approval of any action for which the General Corporation Law
also requires shareholders' approval, as that term is defined in
Section 153 of the California Corporations Code, or approval of the
outstanding shares, as that term is defined in Section 152 of the
California Corporations Code.
(2) The filling of vacancies on the Board or in any committee.
(3) The fixing of compensation of the directors for serving on the Board
or on any committee.
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(4) The amendment or repeal of these Bylaws or the adoption of new
bylaws.
(5) The amendment or repeal of any resolution of the Board which by its
express terms is not so amendable or repealable.
(6) A distribution to the shareholders of the corporation, as defined in
Section 166 of the California Corporations Code, except at a rate or
in a periodic amount or within a price range determined by the
Board.
(7) The appointment of other committees of the Board or the members
thereof.
Applicability of Other Sections [Corp. Code Sec. 307(c)]
(c) The provisions of Sections 2.08-2.17, inclusive, and of Sections 2.19
and 2.20 of this Article II apply to such committees, mutatis mutandis.
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ARTICLE III. DETERMINING SHAREHOLDERS OF RECORD
Record Date Fixed by Board [Corp. Code Secs. 212(b)(7), 701(a)]
Section 3.01. (a) In order that the corporation may determine the
shareholders entitled to notice of any meeting or to vote, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than sixty (60) nor less than ten (10) days prior to the date of such meeting
nor more than sixty (60) days prior to any of the other aforementioned actions.
Record Date Not Fixed [Corp. Code Sec. 701(b)]
(b) If no record date is fixed:
(1) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be the close of
business on the business day next preceding the day on which notice
is given or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held.
(2) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting (see Sec.
4.16), when no prior action by the Board has been taken, shall be
the day on which the first written consent is given.
(3) The record date for determining shareholders for any other purpose
shall be the close of business on the day on which the Board adopts
the resolution relating thereto, or the sixtieth (60th) day prior to
the date of such other action, whichever is later.
Record Date for Adjourned Meeting [Corp. Code Sec. 701(c)]
(c) A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board fixes a new record date for the adjourned meeting. The Board
must, however, fix a new record date if the meeting is adjourned for more than
forty-five (45) days from the date set for the original meeting.
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Rights of Shareholders of Record [Corp. Code Sec. 701(d)]
(d) Shareholders at the close of business on the record date are entitled
to notice and to vote or to receive the dividend, distribution, or allotment of
rights, or to exercise the rights, as the case maybe, notwithstanding any
transfer of any shares on the books of the corporation after the record date,
except as otherwise provided in the Articles or by agreement or in the General
Corporation Law.
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ARTICLE IV. SHAREHOLDERS' MEETINGS
Place of Meetings [Corp. Code Secs. 212(b)(2), 600(a)]
Section 4.01. Meetings of shareholders shall be held at any place within
or without the State of California designated in the notice of the meeting or by
resolution of the Board of Directors. In the absence of any such designation or
resolution, shareholders' meetings shall be held at the principal executive
office of the corporation.
Annual Meeting
Time of Meeting; Business Transacted
[Corp. Code Secs. 212(b)(2), (4), 600(b), 601(a)]
Section 4.02. (a) The annual meeting of shareholders shall be held on the
second Tuesday of March of each year, at the hour of 10:30 A.M., provided,
however, that should said day fall on a legal holiday, then at the same time on
the next day thereafter which is not a legal holiday. At such meetings directors
shall be elected, reports on the affairs of the corporation shall be considered,
and any other proper matter may be presented and business transacted which is
within the power of the shareholders.
Failure to Hold [Corp. Code Secs. 177, 600(c)]
(b) If there is a failure to hold the annual meeting for a period of sixty
(60) days after the date designated therefor as provided in paragraph (a) of
this Section 4.02, any shareholder may apply to the superior court of the county
in which the corporation's principal executive office is located for an order
compelling the corporation to hold the meeting. The shares represented at the
meeting so held, either in person or by proxy, and entitled to vote thereat
shall constitute a quorum for the purpose of such meeting, notwithstanding any
provision of the Articles, these Bylaws, or the General Corporation Law to the
contrary.
Notice of Meetings [Corp. Code Secs. 212(b)(2), 601(a)]
Section 4.03. (a) Whenever shareholders are required or permitted to take
any action at a meeting, a written notice of the meeting shall be given to each
shareholder entitled to vote thereat, subject to the provisions of paragraph (f)
of this Section 4.03.
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Method of Giving Notice [Corp. Code Secs. 212(b)(2), 601(b)]
(b) Notice of a shareholders' meeting shall be given either personally or
by mail, postage prepaid, or other means of written communication, addressed to
the shareholder at the address of such shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice; or if no such address appears or is given, at the place where the
principal executive office of the corporation is located or by publication at
least once in a newspaper of general circulation in the county in which the
principal executive office is located. The notice shall be deemed to have been
given at the time when delivered personally or deposited in the mail or sent by
other means of written communication.
If any notice addressed to the shareholder at the address of such
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver it to the shareholder at such
address, all future notices shall be deemed to have been duly given without
further mailing if the same shall be available for the shareholder on written
demand of the shareholder at the principal executive office of the corporation
for a period of one year from the date of the giving of the notice to all other
shareholders.
Time of Notice [Corp. Code Secs. 212(b)(2), 601(a)]
(c) Notice of any meeting of the shareholders shall be sent by first-class
mail to each shareholder entitled thereto not less than ten (10) nor more that
sixty (60) days before the date of the meeting; provided, however, that at any
time that this corporation has outstanding shares held of record by 500 or more
persons (determined as provided in Section 605 of the California Corporations
Code) on the record date for the shareholders' meeting, notice may be sent by
third-class mail if sent not less than 30 days before the date of the meeting.
Contents of Notice [Corp. Code Sec. 601(a), (f)]
(d) The notice of any meeting of the shareholders shall state the place,
date, and hour of the meeting and: (1) in the case of a special meeting, the
general nature of the business to be transacted, and no other business may be
transacted; or (2) in the case of the annual meeting, those matters which the
Board, at the time of the mailing of the notice, intends to present for action
by the shareholders, but any proper matter may be presented at the meeting for
such action, provided, however, that any shareholder approval at a meeting,
other than unanimous approval by those
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entitled to vote, pursuant to Section 310 (relating to contracts and
transactions between the corporation and any director or legal entity in which a
director has a material financial interest (see Sec. 2.23 of these Bylaws)),
Section 902 (relating to amendment of the articles), Section 1201 (relating to
reorganizations), Section 1900 (relating to voluntary dissolution), or Section
2007 (relating to distribution plans on dissolution) of the Corporations Code
shall be valid only if the general nature of the proposal so approved was stated
in the notice of meeting or in any written waiver of notice. The notice of any
meeting at which directors are to be elected must include the names of nominees
intended at the time of the notice to be presented by management for election.
Notice of Adjourned Meeting [Corp. Code Sec. 601(d)]
(e) When a shareholders' meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken, provided,
however, that if the adjournment is for more than forty-five (45) days or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting must be given to each shareholder of record
entitled to vote at the meeting. At the adjourned meeting the corporation may
transact any business which might have been transacted at the original meeting.
Waiver of Notice and Other Defects [Corp. Code Sec. 601(e), (f)]
(f) The transactions of any meeting of shareholders, however called and
noticed and wherever held, are as valid as though had at a meeting duly held
after regular call and notice, if a quorum (see Sec. 4.05 of these Bylaws) is
present either in person or by proxy and if, either before or after the meeting,
each of the persons entitled to vote, not present in person or by proxy, signs a
written waiver of notice, or a consent to the holding of the meeting, or an
approval of the minutes thereof. All such waivers, consents, and approvals must
be filed with the corporate records or made a part of the minutes of the
meeting. Except as provided in Paragraph (d) of this Section 4.03 and unless
otherwise provided in the Articles, neither the business to be transacted nor
the purpose of any regular or special meeting of shareholders need be specified
in any written waiver of notice, consent to the holding of the meeting, or
approval of the minutes of the meeting.
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Attendance by a person at any such meeting also constitutes a waiver of
notice to that person if he or she fails to object at the beginning of the
meeting to the transaction of business because the meeting was not lawfully
called or convened, but such attendance does not constitute a waiver of the
right to object to the consideration of matters required to be included in the
notice but not so included if the objection is expressly made at the meeting.
Calling of Special Meeting [Corp. Code Secs. 177, 212(b)(2), 601(c)]
Section 4.04. (a) On request in writing to the Chairman of the Board, or
the President, or a Vice President, or the Secretary of the corporation by any
person (other than the Board) entitled to call a special meeting of the
shareholders (see paragraph (b) of this Section 4.04), the officer forthwith
must cause notice to be given to the shareholders entitled to vote that a
meeting will be held at a time requested by the person or persons calling the
meeting, not less than thirty-five (35) nor more than sixty (60) days after
receipt of the request. If the notice is not given within twenty (20) days after
receipt of the request, the persons entitled to call the meeting may give the
notice or they may apply to the superior court of the county in which the
principal executive office of the corporation is located or an order, after
notice to the corporation giving it an opportunity to be heard, summarily
ordering the giving of the notice.
Persons Entitled to Call Special Meetings
[Corp. Code Secs. 212(b)(2), 600(d)]
(b) Special meetings of the shareholders may be called by the Board of
Directors, the Chairman of the Board, the President, or the holders of shares
entitled to cast not less than ten (10) percent of the votes at the meeting.
Quorum of Shareholders [Corp. Code Secs. 112, 602(a)]
Section 4.05. (a) A majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum at a meeting of shareholders,
provided, however, that whenever shares are disqualified by the General
Corporations Law from voting on any matter, they shall not be considered
outstanding for the determination of a quorum at any meeting to act on that
matter under any other provision of the General Corporation Law or the Articles
or these Bylaws.
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Loss of Quorum [Corp. Code Sec. 602(b)]
(b) The shareholders present at a duly called or held meeting at which a
quorum is present may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, if any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum.
Adjournment for Lack of Quorum [Corp. Code Sec. 602(c)]
(c) In the absence of a quorum, any meeting of shareholders may be
adjourned from time to time by the vote of a majority of the shares represented
either in person or by proxy, but no other business may be transacted, except as
provided in paragraph (b) of this Section 4.05.
Effect of Vote [Corp. Code Secs. 112, 602(a)]
Section 4.06. If a quorum is present, the affirmative vote of the majority
of the shares represented at the meeting and entitled to vote on any matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by the General Corporation Law or the Articles,
and except as provided in paragraph (a) of Section 4.05 of these Bylaws,
provided, however, that whenever shares are disqualified by the General
Corporation Law from voting on any matter, they shall not be considered
outstanding for the determination of the required vote to approve action on that
matter under any other provision of the General Corporation Law or the Articles
or these Bylaws.
Election of Directors [Corp. Code Sec. 708(c), (e)]
Section 4.07. Elections for directors need not be by ballot unless a
shareholder demands election by ballot at the meeting and before the voting
begins. In any election of directors, the candidates receiving the highest
number of votes of the shares entitled to be voted for them up to the number of
directors to be elected by such shares are elected.
Votes Per Share-Voting of Fractional Shares
[Corp. Code Secs. 112, 407, 700(a)]
Section 4.08. Except as provided in Section 4.09 and except as may
otherwise be provided in the Articles, each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote of
shareholders. A certificate for a fractional share shall, but scrip or warrants
shall not unless otherwise provided therein, entitle the holder to exercise
voting rights.
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Voting Multiple Shares [Corp. Code Sec. 700(b)]
Section 4.09. Any holder of shares entitled to vote on any matter may vote
part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, other than elections to
office, but, if the shareholder fails to specify the number of shares being
voted affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares the shareholder is entitled to
vote.
Cumulative Voting [Corp. Code Sec. 708(a)-(c)]
Section 4.10. Every shareholder entitled to vote at any election of
directors may cumulate votes and give one candidate a number of votes equal to
the number of directors to be elected multiplied by the number of votes to which
the shareholder's shares are entitled, or distribute them on the same principle
among as many candidates as the shareholder thinks fit. But no shareholder shall
be entitled to cumulate votes (i.e., cast for any one or more candidates a
number of votes greater than the number of the shareholder's shares) unless such
candidate's or candidates' names have been placed in nomination prior to the
voting and the shareholder has given notice at the meeting prior to the voting
of the shareholder's intention to cumulate votes. If any one shareholder has
given such notice, all shareholders may cumulate their votes for candidates in
nomination.
Voting of Shares by Fiduciaries, Minors, or Entities
[Corp. Code Secs. 702-704]
Section 4.11. (a) The rights of the persons and entities specified in this
section to vote shares are governed by the provisions of this Section of the
Bylaws.
Personal Representative [Corp. Code Sec. 702(a)]
(b) Except as provided in paragraph (i) of this Section 4.11, shares held
by an administrator, executor, guardian, conservator, or custodian may be voted
by such holder either in person or by proxy, without a transfer of the shares
into the holder's name.
Trustee [Corp. Code Sec. 702(a)]
(c) Shares standing in the name of a trustee may be voted by the trustee,
either in person or by proxy, but no trustee shall be entitled to vote shares so
held without a transfer of them into the trustee's name.
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Receiver [Corp. Code Sec. 702(b)]
(d) Shares standing in the name of a receiver may be voted by the
receiver. Shares held by or under the control of a receiver may be voted by the
receiver without their being transferred into the receiver's name if authority
to so vote them is contained in the court order appointing the receiver.
Pledgee [Corp. Code Sec. 702(c)]
(e) Subject to the provisions of Section 4.12 of these Bylaws and except
where otherwise agreed in writing between the parties, a shareholder whose
shares are pledged shall be entitled to vote such shares until they have been
transferred into the name of the pledgee, and thereafter the pledgee shall be
entitled to vote the shares so transferred.
Minor [Corp. Code Sec. 702(d)]
(f) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the minor,
in person or by proxy, whether or not the corporation has notice, actual or
constructive, or the nonage, unless a guardian of the minor's property has been
appointed and written notice of the appointment given to the corporation.
Corporation [Corp. Code Sec. 703(a)]
(g) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxyholder as the bylaws of
such other corporation may prescribe or, in the absence of such provision, as
the board of directors of such other corporation may determine or, in the
absence of such determination, by the chairman of the board, president, or any
vice president of such other corporation, or by any other person authorized to
do so by the chairman of the board, president, or any vice president of such
other corporation. Shares which are purported to be voted or any proxy purported
to be executed in the name of a corporation (whether or not any title of the
person signing is indicated) shall be presumed to be voted or the proxy executed
in accordance with the foregoing provisions, unless the contrary is shown.
Subsidiary [Corp. Code Sec. 703(b)]
(h) Shares of the corporation owned by any subsidiary of the corporation
shall not be entitled to vote on any matter.
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Corporate Fiduciary [Corp. Code Sec. 703(c)]
(i) Shares held by the corporation in a fiduciary capacity, and shares of
the corporation held in a fiduciary capacity by its subsidiary, if any, shall
not be entitled to vote on any matter, except to the extent that the settlor or
beneficial owner possesses and exercises a right to vote or to give the
corporation binding instructions as to how to vote such shares.
Shares in Names of Two or More Persons [Corp. Code Sec. 704]
(j) If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, husband
and wife as community property, tenants by the entirety, voting trustees,
[persons entitled to vote under a shareholder voting agreement,] or otherwise,
or if two or more persons (including proxyholders) have the same fiduciary
relationship respecting the same shares, unless the Secretary of the corporation
is given written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, their acts with respect to voting shall have the following effect:
(1) If only one votes, such act binds all.
(2) If more than one vote, the act of the majority so voting binds all.
(3) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionately.
If the instrument so filed or the registration of the shares shows that
any such tenancy is held in unequal interests, a majority or even split for the
purpose of the above shall be a majority or even split in interest.
Proxies [Corp. Code Sec. 705]
Section 4.12. (a) Every person entitled to vote shares may authorize
another person or persons to act by proxy with respect to such shares. Except as
otherwise provided by written agreement between the parties, the recordholder of
shares which a person holds as pledgee or otherwise as security or which belong
to another must issue to the pledgor or to the owner of such shares, on demand
therefor and payment of necessary expenses thereof, a proxy to vote or take
other action thereon.
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Presumptive Validity [Corp. Code Sec. 705(a)]
(b) Any proxy purporting to be executed in accordance with this Section
4.12 shall be presumptively valid.
Duration of Proxy [Corp. Code Sec. 705(b)]
(c) No proxy shall be valid after the expiration of eleven (11) months
from the date thereof unless otherwise provided in the proxy. Every proxy
continues in full force and effect until revoked by the person executing it
prior to the vote pursuant thereto, except as provided in paragraphs (f) and (g)
of this Section 4.12. The dates contained on the forms of proxy presumptively
determine the order of execution, regardless of the postmark dates on the
envelopes in which they are mailed.
Death or Incapacity of Maker [Corp. Code Sec. 705(c)]
(d) A proxy is not revoked by the death or incapacity of the maker, unless
(except as provided in paragraph (f) of this Section 4.12), before the vote is
counted, written notice of such death or incapacity is received by the
corporation.
Revocation of Proxy [Corp. Code Secs. 212(b)(3), 705(b)]
(e) Revocation of a proxy is effected by a writing delivered to the
corporation stating that the proxy is revoked or by a subsequent proxy executed
by, or as to any meeting by attendance at such meeting and voting in person by,
the person executing the proxy.
Proxy Providing for Irrevocability [Corp. Code Sec. 705(e)]
(f) A proxy which states that it is irrevocable is irrevocable for the
period specified therein (notwithstanding paragraph (d) of this Section 4.12)
when it is held by any of the following or a nominee of any of the following:
(1) A pledgee.
(2) A person who has purchased or agreed to purchase or holds an option
to purchase the shares or a person who has sold a portion of such
person's shares in the corporation to the maker of the proxy.
(3) A creditor or creditors of the corporation or the shareholder who
extended or continued credit to the corporation or the shareholder
in consideration of the proxy if the proxy states that it was given
in consideration of such extension or continuation of credit and the
name of the person extending or continuing credit.
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(4) A person who has contracted to perform services as an employee of
the corporation, if a proxy is required by the contract of the
employment and if the proxy states that it was given in
consideration of such contract of employment, the name of the
employee, and the period of employment contracted for.
(5) A beneficiary of a trust with respect to shares held by the trust.
In addition, a proxy may be made irrevocable (notwithstanding paragraph
(d) of this Section 4.12) if it is given to secure the performance of a duty or
to protect a title, either legal or equitable, until the happening of events
which, by its terms, discharge the obligations secured by it.
When Irrevocable Proxy Is Revocable [Corp. Code Sec. 705(e), (f)]
(g) Notwithstanding the period of irrevocability specified in the proxy as
provided in paragraph (f) of this Section 4.12, the proxy becomes revocable when
the pledge is redeemed, the option or agreement to purchase is terminated, or
the seller no longer owns any shares of the corporation or dies, the debt of the
corporation or the shareholder is paid, the period of employment provided for in
the contract of employment has terminated or the agreement under section 706 of
the Corporation Code has terminated.
A proxy may be revoked, notwithstanding a provision making it irrevocable,
by a transferee of shares without knowledge of the existence of the provision
unless the existence of the proxy and its irrevocability appears on the
certificate representing such shares.
Form of Proxy or Written Consent [Corp. Code Sec. 604]
(h) Any form of proxy or written consent (see Section 4.16 of these
Bylaws) distributed to ten (10) or more shareholders must, if the outstanding
shares are held of record by one hundred (100) or more persons as determined
under Section 605 of the California Corporations Code, afford an opportunity on
the proxy or form of written consent to specify a choice between approval and
disapproval of each matter or group of related matters intended to be acted on
at the meeting for which the proxy is solicited or by such written consent,
other than elections to office, and must provide, subject to reasonable
specified conditions, that where the person solicited specifies a choice with
respect to any such matter the shares will be voted in accordance therewith.
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In any election of directors, any form of proxy in which the directors to
be voted on are named therein as candidates and which is marked by a shareholder
"withhold" or otherwise marked in a manner indicating that the authority to vote
for the election of directors is withheld shall not be voted either for or
against the election of a director.
Failure to comply with this paragraph (h) does not invalidate any
corporate action taken, but may be the basis for challenging any proxy at a
meeting and any shareholder may sue in the superior court to compel compliance
therewith.
Directors' Determination of Execution and Use of Proxies
[Corp. Code Sec. 212(b)(3)]
(i) The Board of Directors may, in advance of any annual or special
meeting of the shareholders, prescribe additional regulations concerning the
manner of execution and filing of proxies and the validation of the same, which
are intended to be voted at any such meeting.
Voting Trust [Corp. Code Sec. 706(b)]
Section 4.13. (a) Shares may be transferred by written agreement to
trustees in order to confer on them the right to vote and otherwise represent
the shares for such period of time, not exceeding ten (10) years, as may be
specified in the agreement. At any time within two (2) years prior to the time
of expiration of any voting trust agreement as originally fixed or as last
extended as provided in this paragraph, one or more beneficiaries under the
voting trust agreement may, by written agreement and with the written consent of
the voting trustee or trustees, extend the duration of the voting trust
agreement with respect to their shares for an additional period not exceeding
ten (10) years from the expiration date of the trust as originally fixed or as
last extended as provided in this paragraph. A duplicate of the voting trust
agreement and any extension thereof must be filed with Secretary of the
corporation and shall be open to inspection by a shareholder, a holder of a
voting trust certificate, or the agent of either, on the same terms as the
record of shareholders of the corporation is open to inspection.
Effect of Section [Corp. Code Sec. 706(d)]
(b) This section of the Bylaws is not intended to invalidate any voting or
other agreement among shareholders or any irrevocable proxy meeting the
requirements of paragraph (f) of Section 4.12 of these Bylaws.
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Inspectors of Election [Corp. Code Sec. 707]
Appointment [Corp. Code Sec. 707(a)]
Section 4.14. (a) In advance of any meeting of shareholders the Board may
appoint inspectors of election to act at the meeting and any adjournment
thereof. If inspectors of election are not so appointed, or if any persons so
appointed fail to appear on refuse to act, the chairman of any meeting of
shareholders may, and on the request of any shareholder or a shareholder's proxy
must, appoint inspectors of election (or persons to replace those who so fail or
refuse) at the meeting.
Number [Corp. Code Sec. 707(a)]
(b) The number of inspectors shall be either one or three. If the
inspector or inspectors are appointed at a meeting on the request of one or more
shareholders or proxies, the majority of shares represented in person or by
proxy shall determine whether one or three inspectors are to be appointed.
Duties [Corp. Code Sec. 707(b), (c)]
(c) The inspector or inspectors of election shall:
(1) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity, and effect of proxies.
(2) Receive votes, ballots, or consents.
(3) Hear and determine all challenges and questions in any way arising
in connection with the right to vote.
(4) Count and tabulate all votes or consents.
(5) Determine when the polls shall close.
(6) Determine the result of the election.
(7) Do such acts as may be proper to conduct the election or vote with
fairness to all shareholders.
(8) Perform his, her, or their duties impartially, in good faith, to the
best of his, her, or their ability and as expeditiously as is
practical.
Decision, Act, or Certificate [Corp. Code Sec. 707(c)]
(d) If there are three inspectors of election, the decision, act, or
certificate of a majority is effective in all respects as the decision, act, or
certificate of all. Any report or certificate made by the inspectors of election
is prima facie evidence of the facts stated in it.
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Conduct of Meetings [Corp. Code Sec. 212(b)(2)]
Section 4.15. At every meeting of the shareholders, the President of the
corporation, or in his absence the Vice President designated by the President,
or in the absence of such designation a chairman (who shall be one of the Vice
Presidents, if any is present) chosen by a majority in interest of the
shareholders of the corporation present in person or by proxy and entitled to
vote, shall act as chairman. The Secretary of the corporation, or in the
Secretary's absence and Assistant Secretary, if any, shall act as Secretary of
all meetings of the shareholders. In the absence at such meeting of the
Secretary and all Assistant Secretaries, if any, the chairman may appoint
another person to act as secretary for the meeting.
Action Without a Meeting [Corp. Code Sec. 603]
When Authorized [Corp. Code Sec. 603(a), (d)]
Section 4.16. (a) Unless otherwise provided in the Articles, any action
which may be taken at any annual or special meeting of shareholders may be taken
without a meeting and without prior notice, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted, provided, however, that directors may not be
elected by written consent except by the unanimous written consent of all shares
entitled to vote for the election of directors.
Notice of Shareholder Approval [Corp. Code Sec. 603(b)]
(b) Unless the consents of all shareholders entitled to vote have been
solicited in writing, notice to those shareholders entitled to vote who have not
consented in writing must be given as follows:
(1) Notice of any shareholder approval pursuant to Section 310 (relating
to contract or transaction between corporation and its director or
legal entity in which one or more of its directors has a material
financial interest (see sec. 2.23 of these Bylaws)), Section 317
(relating to indemnification by corporation of its director,
officer, employee, or agent arising out of court, administrative, or
investigative proceeding (see secs. 2.25-2.32 of these Bylaws)),
Section 1201 (relating to reorganizations), or Section 2007
(relating to plan of distribution on dissolution) of the California
Corporations Code without a meeting by less than unanimous written
consent must be given at least ten (10)
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days before the consummation of the action authorized by such
approval; and
(2) Prompt notice must be given of the taking of any other corporate
action approved by shareholders without a meeting by less than
unanimous written consent.
Paragraph (b) of Section 4.03 of these Bylaws, relating to the method of
giving notice, applies to the notice provided by this section.
Revocation of Consent [Corp. Code Sec. 603 (c)]
(c) Any shareholder giving a written consent, or the shareholder's
proxyholders, or a transferee of the shares, or a personal representative of the
shareholder, or their respective proxyholders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the corporation, but may not do so thereafter. The
revocation is effective on its receipt by the Secretary of the corporation.
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ARTICLE V. OFFICERS
Number and Titles [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.01. The officers of the corporation shall be a Chairman of the
Board or a President or both a Chairman of the Board and a President, a
Secretary, and a Chief Financial Officer who may also be called Treasurer. The
corporation may also have, at the discretion of the Board, any other officers
that may be appointed in accordance with the provisions of Section 5.03 of this
Article. One person may hold two or more offices. In its discretion, the Board
of Directors may leave unfilled, for any period it may fix, any office except
the offices of Chairman of the Board or President, Secretary, and Chief
Financial Officer.
Appointment [Corp. Code Secs. 212(b)(6), 312(b)]
Section 5.02. The officers of the corporation, except those officers that
are appointed in accordance with the provisions of Sections 5.03 or 5.05 of this
Article, shall be chosen annually by the Board. Each officer shall serve at the
pleasure of the Board, subject to any rights that he or she has under any
employment contract with the corporation, and shall hold office until the
appointment of his or her successor, or until his or her resignation, removal
from office pursuant to Section 5.04, or other disqualification.
Other Officers [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.03. The Board may appoint any officers that may be necessary to
enable the corporation to sign instruments and share certificates including one
or more Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. Each such officer shall hold office for the period, have
the authority, and perform duties that the Board may, by resolution, from time
to time determine.
Removal and Resignation [Corp. Code Secs. 212(b)(6), 312(b)]
Section 5.04. Any officer may be removed, either with or without cause,
subject to any rights of the officer under any employment contract with the
corporation, by the vote of the Board at any regular or special meeting of the
Board, or by the unanimous written consent of the directors then in office
without a meeting. Any officer may resign at any time without prejudice to any
rights of the corporation under any contract to which the officer is a party by
giving written notice to the Chairman of the Board, if there is such an officer,
or to the President, or to the Secretary of the corporation. Any such
resignation shall take effect on the date the notice is received unless a later
effective date is
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specified, in which case the resignation is effective on the specified date.
Unless otherwise specified in the notice, acceptance of the resignation by the
Board shall not be necessary to make it effective.
Vacancies [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.05. If the office of Chairman of the Board, President,
Secretary, or Chief Financial Officer becomes vacant by reason of death,
resignation, removal, or otherwise, the Board shall fill it by appointing a
successor officer [who shall hold the office for the unexpired term]. If any
other office becomes vacant, the Board may, in its discretion, leave it unfilled
for any period that it may fix or it may appoint a successor officer to fill the
vacancy.
Chairman of the Board [Corp. Code Secs. 212(b)(6), 312(a), 416(a)]
Section 5.06. The Chairman of the Board, if there is such an officer,
shall, if present, preside at all meetings of the Board and exercise and perform
any other powers and duties that are assigned to him or her by the Board or
prescribed by law or by these Bylaws. When so directed by the Board, the
Chairman shall, with the Secretary or an Assistant Secretary, if any, or the
Chief Financial Officer or Assistant Treasurer, if any, sign share certificates.
Signatures on the certificates may be facsimile.
President [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.07. Subject to the supervisory powers, if any, that may be given
by the Board to the Chairman of the Board, if there is such an officer, the
President shall be the chief executive officer of the corporation and, except as
otherwise provided in these Bylaws, shall have: (1) general supervision,
direction, and control of the business and officers of the corporation; (2) the
general powers and duties of management usually vested in the office of
President of a corporation; and (3) any other powers and duties prescribed by
the Board or by these Bylaws. Within this authority and in the course of his or
her duties, the President shall:
Meetings
(a) Preside at all meetings of the shareholders, preside at Board Meetings
in the absence of the Chairman of the Board, or if there is none, at all
meetings of the Board, and be ex officio a member of all Board committees.
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Share Certificates [Corp. Code Sec. 416(a)]
(b) Except when otherwise directed by the Board, sign, with the Secretary
or an Assistant Secretary, if any, or the Chief Financial Officer or Assistant
Treasurer, if any, all share certificates of the corporation. Signatures on the
certificates may be facsimile.
Instruments
(c) Sign all corporate instruments on behalf of the corporation as
provided in Section 6.02 of Article VI of these Bylaws.
Hire and Fire Employees
(d) Subject to direction from the Board, appoint and remove, employ and
discharge, and prescribe the duties and fix the compensation of all agents and
employees of the corporation other than the officers. These functions may,
however, be delegated by the President, or the Board, to specified persons in
the various levels of management.
Voting Shares of Other Corporations [Corp. Code Sec. 703(a)]
(e) Unless otherwise directed by the Board and subject to its control,
attend in person and, unless prohibited by law, act and vote, on behalf of this
corporation, at all meetings of the shareholders of any corporation in which
this corporation holds shares.
Vice President [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.08. In the absence or disability of the President, the Vice
President or the Vice Presidents if there are more than one in order of their
rank as fixed by the Board, or if not ranked the Vice President designated by
the Board, shall perform all the duties of the President and shall for this
purpose act within the President's scope of authority. The Vice President or the
Vice Presidents shall have any other powers and perform any other duties
prescribed for them respectively by the Board or by these Bylaws.
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Secretary [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.09. The Secretary shall:
Seal [Corp. Code Sec. 207(a)]
(a) Have custody of the corporate seal and shall affix it in appropriate
cases to all corporate instruments.
Records, Reports, and Statements
(b) Have custody of the records of the corporation and ensure that the
books, reports, statements, certificates, and all other documents and records
required by law are properly kept and filed.
Notices
(c) Ensure that all notices are given in accordance with the provisions of
these Bylaws or as required by law. In case of the Secretary's absence,
disability, or neglect or refusal to act, notice may be given and served or
caused to be served by an Assistant Secretary, if any, by the President or a
Vice President of the corporation, or by the Board of Directors.
Minutes
(d) Act as Secretary at all meetings of shareholders and of the Board and
record, or cause to be recorded, in the minute book all actions taken at those
meetings. In case of the Secretary's absence, disability, neglect of duties, or
refusal to act, this duty may be performed by an Assistant Secretary, if any, or
any other person appointed by the person presiding at the meeting.
Minute Book [Corp. Code Sec. 1500]
(e) Keep a written book of minutes, at the corporation's principal
executive office or other place designated by the Board, of all proceedings of
the corporation's shareholders, Board, and Board committees, including: the time
and place of meeting; whether the meeting was regular or special; the
authorization for any special meeting; the type of notice given, the names of
the persons attending Board and committee meetings; the number of shares present
or represented at shareholder meetings; and the proceedings of the meeting.
Articles of Incorporation [see Corp. Code Sec. 209]
(f) Keep the original or a copy of the Articles of Incorporation,
certified by the Secretary of State, with all amendments in the minute book.
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Bylaws [Corp. Code Sec. 213]
(g) Keep at the corporation's principal executive office the original or a
copy of these Bylaws to date, that shall be open to inspection by the
shareholders at all reasonable times during office hours.
Record of Shareholders [Corp. Code Sec. 1500]
(h) Keep at the corporation's principal executive office or at the office
of its transfer agent or registrar in California a record of the corporation's
shareholders, showing the names and addresses of all shareholders and the number
and class of shares held by each.
Certify Records [Corp. Code Sec. 314]
(i) When requested to do so by the Board, any director individually, a
Board committee, or the President or other officer of this corporation, or when
so required by law, certify as a true copy a copy of the Bylaws of the
corporation, or of the minutes of any meeting of the incorporators,
shareholders, directors, Board committee, or other, or of any resolution adopted
by the Board, a Board committee, or the shareholders. This duty may be performed
by any Assistant Secretary of the corporation.
Share Certificates [Corp. Code Sec. 416(a)]
(j) Sign, with the Chairman of the Board or the Vice Chairman, if any, or
the President or a Vice-President, all share certificates of the corporation.
In lieu of signing by the Secretary, the certificates may be signed by an
Assistant Secretary, if any, or by the Chief Financial Officer or Assistant
Treasurer, if any, of the corporation. Signatures on the certificates may be
facsimile.
Exhibit Record of Shareholders [Corp. Code Sec. 1600(a), (c), (d)]
(k) Make the record of shareholders available during usual business hours
for inspection and copying:
(1) To any shareholder or shareholders who hold at least 5 percent in
the aggregate of the outstanding voting shares of a corporation, or
who hold at least 1 percent of those voting shares and who have
filed a Schedule 14B with the United States Securities and Exchange
Commission relating to the election of directors of the corporation,
on five business days' prior written demand on the corporation; and
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(2) To any shareholder or holder of a voting trust certificate on
written demand on the corporation for a purpose reasonably related
to that holder's interests as a shareholder or holder of a voting
trust certificate.
Any inspection and copying under this paragraph may be made in person or
by agent or attorney.
Exhibit Minutes to Shareholder [Corp. Code Sec. 1601]
(1) On the written demand on the corporation of any shareholder or holder
of a voting trust certificate, make available for inspection at any reasonable
time during usual business hours to that shareholder or holder of such voting
trust certificate for a purpose reasonably related to that holder's interests as
a shareholder or as the holder of that voting trust certificate, or to his or
her agent or attorney, the minutes of any proceedings of the shareholders, the
Board, or Board committee, or any accounting books and records in the
Secretary's custody. This right of inspection includes the right to copy and
make extracts.
Exhibit Records to Director [Corp. Code Sec. 1602]
(m) Make available at any reasonable time to any director who requests, or
to his or her agent or attorney, for inspection all books, records, and
documents of every kind of the corporation that the Secretary is charged by
these Bylaws with maintaining and/or keeping or that are in the Secretary's
custody. This right of inspection includes the right to copy and make extracts.
Other Duties
(n) Perform any and all other functions and duties that may be specified
in other sections of these Bylaws and any other duties that may from time to
time be assigned by the Board.
Absence of Secretary
(o) In case of the Secretary's absence, disability, neglect of duties, or
refusal to act, the Assistant Secretary, or if there is none, the Chief
Financial Officer acting as Assistant Secretary may perform all of the
functions and duties of the Secretary. In case of the absence, disability,
neglect of duties, or refusal to act, of the Assistant Secretary or Chief
Financial Officer, as the case may be, as well as the Secretary, then any person
authorized by the President, Vice President, or Board of Directors shall perform
the functions and duties of the Secretary.
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Assistant Secretary [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.10. If the Board appoints one or more Assistant Secretaries,
then, at the request of the Secretary or in case of the Secretary's absence or
disability, the Assistant Secretary, or, if there is more than one, the
Assistant Secretary designated by the Secretary, shall perform all the duties of
the Secretary, and shall for this purpose act within the Secretary's scope of
authority. The Assistant Secretary or Assistant Secretaries shall also perform
any other duties that from time to time may be assigned to them by the Board or
by the Secretary.
Chief Financial Officer [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.11. The Chief Financial Officer shall:
Funds--Custody and Deposit
(a) Have charge and custody of, and be responsible for, all funds and
securities of the corporation, and deposit all the funds in the name of the
corporation in the banks, trust companies, or other depositaries selected by the
Board.
Funds--Receipt
(b) Receive, and give receipt for, moneys due and payable to the
corporation from any source whatever.
Funds--Disbursement
(c) Disburse or cause to be disbursed, the funds of the corporation as may
be directed by the Board, taking proper vouchers for those disbursements.
Maintain Accounts [Corp. Code Sec. 1500]
(d) Keep and maintain adequate and correct books and records of account
either in written form or in any other form capable of being converted into
written form.
Reports to President and Directors
(e) Render to the President and directors, whenever they request it, an
account of all transactions as Chief Financial Officer and of the financial
condition of the corporation.
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Financial Reports to Shareholders
[Corp. Code Secs. 114, 1501(a),(c),(d)]
(f) Take the following actions with respect to financial reports:
(1) Prepare, or cause to be prepared, the balance sheet, income
statement, and statement of changes in the corporation's financial
position for the fiscal year to be included in the annual report to
shareholders, and either ensure that the statements are accompanied
by a report on them of independent accountants or, if there is no
accountant's report, certify that the statements were prepared
without audit from the books and records of the corporation.
(2) On the written request of any shareholder or shareholders holding at
least 5 percent of the outstanding shares of any class, prepare, or
cause to be prepared, and deliver or mail to the person making the
request within 30 days after the request an income statement of the
corporation for the three-month, six-month, or nine-month period
of the current fiscal year ended more than 30 days prior to the date
of the request and a balance sheet of the corporation as of the end
of that period and, if no annual report for the last fiscal year was
sent to shareholders, the statements required by clause (1) of this
paragraph.
(3) Keep on file in the corporation's principal office for a period of
12 months a copy of the statements referred to in clause (2) of this
paragraph and exhibit them at all reasonable times to any
shareholder demanding an examination of them or mail a copy of them
to that shareholder.
(4) Either cause the quarterly income statements and balance sheets
referred to in clause (2) of this paragraph to be accompanied by the
report on the statements prepared by independent accountants engaged
by the corporation or, if there is no such report, certify that the
statements were prepared without audit from the books and records of
the corporation.
(5) Prepare the financial statements, balance sheets, income statements,
and statements of changes in financial position referred to in this
paragraph, or have them prepared, in accordance with generally
accepted accounting principles.
Exhibit Accounts to Shareholders [Corp. Code Sec. 1601]
(g) On the written demand on the corporation of any shareholder or holder
of a voting trust certificate, exhibit for inspection at any reasonable time
during usual business hours to
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that shareholder or holder of such voting trust certificate for a purpose
reasonably related to that holder's interests as a shareholder or as the holder
of such voting trust certificate, or to his or her agent or attorney any or all
of the accounting books and records of the corporation. This right of inspection
includes the right to copy and make extracts.
Exhibit Accounts to Directors [Corp. Code Sec. 1602]
(h) Exhibit at any reasonable time to any director of the corporation who
so requests, or to his or her agent or attorney, for inspection any and all
books, records, and documents of every kind that the Chief Financial Officer is
charged by these Bylaws with maintaining and/or keeping or that are in the Chief
Financial Officer's custody. This right of inspection includes the right to copy
and make extracts.
Share Certificates [Corp. Code Sec. 416(a)]
(i) Sign, with the Chairman of the Board or Vice Chairman, if any, or the
President or a Vice President, all share certificates of the corporation. In
lieu of signing by the Chief Financial Officer, those certificates may be signed
by an Assistant Treasurer, if any, or by the Secretary or by an Assistant
Secretary, if any, of the corporation. Signatures on the certificates may be
facsimile.
Bond
(j) If required by the Board or the President, give to the corporation a
bond, with one or more sureties or a surety company, in a sum satisfactory to
the Board, for the faithful performance of the duties as Chief Financial Officer
and for the restoration to the corporation, in the event of the Chief Financial
Officer's death, resignation, retirement, or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in his or her
possession or under his or her control belonging to the corporation.
Other Duties
(k) Perform any and all other functions and duties required of the Chief
Financial Officer that may be specified in other sections of these Bylaws and,
in general, perform all the duties incident to the office of Chief Financial
Officer and such other duties as from time to time may be assigned by the Board.
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Absence of Chief Financial Officer
(1) In case of the Chief Financial Officer's absence, disability, refusal
to act, or neglect of duties, the Assistant Treasurer, or if there is none, the
Secretary acting as Assistant Treasurer may perform all of the functions and
duties of the Chief Financial Officer. In case of the absence, disability,
refusal to act, or neglect of duties, of the Assistant Treasurer or Secretary,
as the case may be, as well as of the Chief Financial Officer, then any person
authorized by the President or Vice President or by the Board shall perform the
functions and duties of the Chief Financial Officer.
Assistant Treasurer [Corp. Code Secs. 212(b)(6), 312(a)]
Section 5.12. If the Board appoints one or more Assistant Treasurers they
shall, if so required by the Board, each give a bond for the faithful discharge
of his or her respective duties in the sum, and with the sureties, as the Board
shall require. At the request of the Chief Financial Officer or in the case of
the Chief Financial Officer's absence or disability, the Assistant Treasurer
shall perform all the duties of the Chief Financial Officer and for these
purposes shall act within the Chief Financial Officer's scope of authority. If
there is more than one Assistant Treasurer, the Assistant Treasurer designated
by the Chief Financial Officer, or, if there has been no such designation, the
Assistant Treasurer designated by the Board, shall perform these duties. The
Assistant Treasurer or Assistant Treasurers shall also perform any other duties
that may from time to time be assigned to them by the Board of Directors or by
the Chief Financial Officer.
Compensation [Corp. Code Sec. 212(b)(6)]
Section 5.13. The officers of the corporation shall receive the salaries
and other compensation that are fixed from time to time by the Board, and no
officer shall be prevented from receiving that salary and compensation by reason
of the fact that he or she is also a director of the corporation.
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ARTICLE VI. EXECUTION OF INSTRUMENTS
AND DEPOSIT OF FUNDS
Limitations [see Corp. Code Sec. 313]
Section 6.01. Except as otherwise provided in these Bylaws, the Board may,
by duly adopted resolution, authorize any officer or agent of the corporation to
enter into any contract, or to execute and deliver any instrument, in the name
of and on behalf of this corporation. Authorization may be general or may be
confined to specified instances. Unless expressly authorized, no officer, agent,
or employee shall have any power or authority to bind the corporation by any
contract or engagement, or to pledge its credit, or to render it liable
pecuniarily for any purpose or in any amount.
Execution of Instrument and Papers
[see Corp. Code Secs. 313, 416(a)]
Section 6.02. Unless otherwise expressly required by the Board or by law,
deeds and other conveyances, promissory notes, deeds of trust, mortgages, and
other evidences of indebtedness of the corporation, and share certificates shall
be executed, signed, or endorsed by the Chairman of the Board, if any, or by the
President or a Vice President of the corporation, and by the Chief Financial
Officer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of the corporation. Signatures on share certificates only may be facsimile.
Signing of Checks
Section 6.03. All checks, drafts, or other orders for the payment of money
issued in the name of the corporation shall be signed by the person or persons
and in the manner determined from time to time by resolution of the Board.
Deposit and Withdrawal of Funds
Section 6.04. (a) All funds of the corporation, including all checks,
drafts, or other orders for the payment of money payable to the corporation,
shall be deposited by the Chief Financial Officer from time to time to the
credit of the corporation with any banks, trust companies, or other depositaries
that the Board may select or that may be selected by any Board committee,
officer, or agent of the corporation to whom that power may be delegated from
time to time by the Board. All checks, drafts, or other orders for the payment
of money requiring endorsement by the corporation before deposit shall be
endorsed "for deposit only" by handstamped impression in the name of the
corporation.
(b) The withdrawal of funds from any such accounts may be made only by
check signed as provided in Section 6.03 of this Article.
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ARTICLE VII. ISSUANCE OF SHARES AND
SHARE CERTIFICATES
Authority to Issue [Corp. Code Secs. 207(d), 400(a)]
Section 7.01. (a) The corporation may issue one or more classes or series
of shares or both, with full, limited, or no voting rights and with any other
rights, preferences, privileges, and restrictions that are stated or authorized
in its Articles of Incorporation. No denial of limitation of voting rights
shall, however, be effective unless at the time one or more classes or series of
outstanding shares or debt securities, singly or in the aggregate, are entitled
to full voting rights. No denial or limitation of divided or liquidation rights
shall be effective unless at the time one or more classes or series of
outstanding shares, singly or in the aggregate, are entitled to unlimited
dividend and liquidation rights.
Equality of Rights [Corp. Code Sec. 400(b)]
(b) All shares of any one class shall have the same voting, conversion,
and redemption rights and other rights, preferences, privileges, and
restrictions, unless the class is divided into series. If a class is divided
into series, all the shares of any one series shall have the same voting,
conversion, and redemption rights and other rights, preferences, privileges, and
restrictions.
Consideration [Corp. Code Sec. 409(a)(1), (b), (c)]
(c) Shares may be issued for any consideration that is determined from
time to time by the Board consisting of any or all of the following:
(1) Money paid;
(2) Labor done;
(3) Services actually rendered to the corporation or for its benefit or
in its formation or reorganization;
(4) Debts or securities canceled; and
(5) Tangible or intangible property actually received either by this
corporation or by any wholly owned subsidiary of this corporation.
Neither promissory notes of the purchaser (unless adequately secured by
collateral other than the shares acquired or unless permitted by Section 7.06 of
this Article) nor future services shall constitute payment or part payment of
shares of the corporation.
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When shares are issued for any consideration other than money, the Board
must state by resolution its determination of the fair value of the
consideration to the corporation in monetary terms.
In the absence of fraud in the transaction, the judgement of the directors
as to the value of the consideration for shares shall be conclusive.
Share Dividends; Reclassification of Shares
[Corp. Code Sec. 409(a)(2)]
(d) Shares may also be issued as a share dividend or on a stock split,
reverse stock split, reclassification of outstanding shares into shares of
another class, conversion of outstanding shares into shares of another class,
exchange of outstanding shares for shares of another class, or other change
affecting outstanding shares.
Compliance with Corporate Securities Law
(e) The corporation shall not offer to sell or sell any security issued by
it, whether or not through underwriters, until the offer or sale has been
qualified by the California Commissioner of Corporations as required by the
Corporate Securities Law and the rules and regulations of the Commissioner,
unless the security or transaction is exempted from the qualification and the
applicable statutes and rules and regulations have been complied with.
Payment for Shares [Corp. Code Sec. 410]
(f) Every subscriber to shares and every person to whom shares are
originally issued is liable to the corporation for the full consideration agreed
to be paid for the shares. The full agreed consideration shall be paid prior to
or concurrently with the issuance of the shares, unless the shares are issued as
partly paid pursuant to Section 7.03 of this Article, in which case the
consideration shall be paid in accordance with the agreement of subscription or
purchase.
Shares as Deemed Fully Paid [Corp. Code Sec. 409(b)]
(g) Except as provided in section 7.03 of this Article, shares issued as
provided in paragraphs (c) and (d) of this Section or Section 7.06 of this
Article shall be declared and taken to be fully paid stock and not liable to any
further call, nor shall the holder thereof be liable for any further payments
under the provisions of the General Corporation Law.
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Fractional Shares [Corp. Code Sec. 407]
Authority to Issue
Section 7.02. (a) The corporation may, if the Board so determines, issue
fractions of a share originally or on transfer.
Failure to Issue
(b) If the corporation does not issue fractions of a share, it shall, in
connection with any original issuance of shares:
(1) Arrange for the disposition of fractional interests by those
entitled to them;
(2) Pay in cash the fair value of fractions of a share as of the time
when those entitled to receive the fractions are determined
(provided, however, that the corporation may not pay cash for
fractional shares if that action would result in the cancellation of
more than 10 percent of the outstanding shares of any class); or
(3) Issue scrip or warrants in registered form, as certificated or
uncertificated securities, or in bearer form as certificated
securities, that shall entitle the holder to receive a certificate
for a full share on the surrender of the scrip or warrants
aggregating a full share. Scrip or warrants shall not, however,
unless they provide otherwise, entitle the holder to exercise voting
rights, to receive dividends thereon, or to participate in any of
the assets of the corporation in the event of liquidation.
Partly Paid Shares [Corp. Code Secs. 409(d), 410, 413]
Section 7.03. The corporation may, if the Board so determines, issue the
whole or any part of its shares as partly paid and subject to call for the
remainder of the consideration to be paid for them. If shares are so issued, the
corporation shall, on the declaration of any dividend on fully paid shares,
declare a dividend on partly paid shares of the same class, but only on the
basis of the percentage of the consideration actually paid on them.
A subscriber to partly paid shares is liable to the corporation as
provided in Section 7.01(f) of this Article, but a person holding shares as a
pledgee, executor, administrator, guardian, conservator, trustee, receiver, or
in any representative or fiduciary capacity is not personally liable for any
unpaid balance, although the estate and funds in the hands of the fiduciary or
representative are liable for any unpaid balance of the subscription price and
the shares are subject to sale therefor.
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Options [Corp. Code Sec. 404]
Section 7.04. Either in connection with the issue, subscription, or sale
of any of its shares, bonds, debentures, notes, or other securities, or
independently of the foregoing, the corporation may, if so determined by the
Board, grant options to purchase or subscribe for shares of any class or series
on any terms and conditions that the Board may deem expedient. Option rights may
be transferable or nontransferable and separable or inseparable from other
securities of the corporation, as determined by the Board.
No Preemptive Rights [Corp. Code Sec. 406]
Section 7.05. Unless the Articles provide otherwise, the Board may issue
shares, options, or securities having conversion or option rights without first
offering them to shareholders of any class.
Employee Plans
Authority to Adopt [Corp. Code Secs. 207(f), 408(a)]
Section 7.06. (a) The corporation may, as determined by the Board, and
subject to the approval of the shareholders, as that term is defined in
California Corporations Code Section 153, adopt and carry out a stock purchase
plan or agreement, or stock option plan or agreement providing for the issue and
sale for any consideration that may be fixed of its unissued shares or of issued
shares acquired or to be acquired, to one or more of the employees or directors
of the corporation or of any subsidiary or parent of the corporation or to a
trustee on their behalf and for the payment of those shares in installments or
at one time, and may provide for aiding those persons in paying for those shares
by compensation for services rendered, promissory notes, or otherwise.
Includable Features [Corp. Code Sec. 408(b)]
(b) The plan or agreement may include, among other features, as determined
by the Board, the fixing of eligibility for participating in it; the class and
price of shares to be issued or sold under the plan or agreement; the number of
shares that may be subscribed for; the method of payment for the shares; the
reservation of title until full payment has been made; the effect of the
termination of employment; an option or obligation on the part of the
corporation to repurchase the shares on termination of employment, subject to
California Corporations Code Sections 500-511; restrictions on transfer of
shares; and the time limits of and termination of the plan.
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Certificates of Determination
Execution of Officers' Certificate
[Corp. Code Secs. 173, 401(a)]
Section 7.07. (a) Before the corporation issues any share of any class or
series of which the rights, preferences, privileges, and restrictions, or any of
them, or the number of shares constituting any series or the designation of the
series, are not set forth in the Articles but are fixed in a resolution adopted
by the Board pursuant to authority given in its articles, an officers'
certificated, as that term is defined in California Corporations Code Section
173, setting forth a copy of the resolution and the number of shares of the
class or series, and stating that none of the shares of the class or series has
been issued, shall be executed and filed in the office of the California
Secretary of State.
Change in Rights [Corp. Code Sec. 401(b), (d), (e)]
(b) After any certificate of determination as provided in Paragraph (a) of
this section has been filed in the office of the California Secretary of State,
but before the corporation has issued any shares of the class or series covered
by it, the Board may alter or revoke any right, preference, privilege, or
restriction fixed or determined by the resolution set forth in it by the
adoption of another resolution appropriate for that purpose and the execution
and filing of an officers' certificate settling forth a copy of the resolution
and stating that none of the shares of the class or the series affected has been
issued
After shares of a class or series have been issued, the provisions of the
resolution set forth in a certificate of determination may be amended only by
the adoption and approval of an amendment in accordance with California
Corporations Code Sections 902, 903, or 904, and the filing of a certificate of
amendment in accordance with California Corporations Code Sections 905 and 908.
However, a certificate to increase or decrease the number of shares of a series
also may be filed as permitted by California Corporations Code Section 401(c),
as set forth in Paragraph (c) of this section.
When the Board effects a change in rights, the provision of the original
certificate of determination being amended must be identified in the amendment
in accordance with California Corporations Code Section 907(a).
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Shareholder's Right to Share Certificate
[Corp. Code Sec. 416(a)]
Section 7.08. (a) Every holder of shares in the corporation shall be
entitled to have a certificate signed in the name of the corporation by the
Chairman of the Board, if any, or the President or a Vice President and by The
Chief Financial Officer or an Assistant Treasurer, or the Secretary or any
Assistant Secretary of the corporation, certifying the number of shares and the
class or series of shares owned by the shareholder. Any or all of the signatures
on the certificate may be facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed on a
certificate shall have ceased to be an officer, transfer agent, or registrar
before that certificate is issued, the certificate may be issued by the
corporation with the same effect as if that person were an officer, transfer
agent, or registrar at the date of issue.
Fractional Shares [Corp. Code Sec. 407]
(b) If the corporation issues fractions of a share originally or on
transfer, it shall issue certificates for those shares as provided in paragraph
(a) of this section. A certificate for a fractional share shall entitle the
holder to exercise voting rights, to receive dividends thereon, and to
participate in any of the assets of the corporation in the event of liquidation.
Partly Paid Shares [Corp. Code Sec. 409(d)]
(c) If the corporation issues partly paid shares, it shall issue
certificates for those shares as provided in paragraph (a) of this section.
Contents of Certificate [Corp. Code Secs. 409(d), 417, 418(a), (c), (d)]
Section 7.09. (a) The certificates shall contain the matter specified in
Section 7.08(a) of this Article. In addition, if the shares of the corporation
are classified or if any class of shares has two or more series, there shall
appear on the certificate one of the following:
(1) A statement of the rights, preferences, privileges, and restrictions
granted to or imposed on each class or series of shares authorized
to be issued and on the holders thereof.
(2) A summary of the rights, preferences, privileges, and restrictions
with reference to the provisions of the Articles of Incorporation
and any certificates of determination establishing those rights and
restrictions.
(3) A statement setting forth the office or agency of the
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corporation from which shareholders may obtain, on request and
without charge, a copy of the statement referred to in clause (1) of
this paragraph.
(b) There shall also appear on the certificate (unless stated or
summarized under clause (1) or clause (2) of paragraph (a) of this section the
statements required by all of the following clauses to the extent applicable:
(1) The fact that the shares are subject to restrictions on transfer.
(2) If the shares are assessable or are not fully paid, a statement that
they are assessable or a statement of the total amount of
consideration to be paid and the amount paid, as required by
Corporations Code Section 409 (d).
(3) The fact that the shares are subject to a voting agreement under
California Corporations Code Section 706(a) or an irrevocable proxy
under California Corporations Code Section 705(e) or restrictions on
voting rights contractually imposed by the corporation.
(4) The fact that the shares are redeemable.
(5) The fact that the shares are convertible and the period for
conversion.
Exchange of Certificates
On Amendment of Articles or Otherwise
[Corp. Code Sec. 422(a)]
Section 7.10. (a) If the Articles are amended in any way affecting the
statements contained in the certificates for outstanding shares, or it becomes
desirable for any reason, in the discretion of the Board of Directors, to cancel
any outstanding certificate for shares and issue a new certificate therefor
conforming to the rights of the holder, the Board may order any holders of
outstanding certificates for shares to surrender and exchange them for new
certificates within a reasonable time to be fixed by the Board.
Contents of Order [Corp. Code Sec. 422(b)]
(b) The order may provide that a holder of any certificates so ordered to
be surrendered is not entitled to vote or to receive dividends or exercise any
of the other rights of shareholders until the holder has complied with the
order, but the order operates to suspend those rights only after notice and
until compliance. The duty of surrender of any outstanding certificates may also
be enforced by the corporation by civil action.
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Lost, Stolen, or Destroyed Certificate; Issuance of New
Certificate [Corp. Code Sec. 419(a)]
Section 7.11. (a) The corporation may issue a new share certificate or a
new certificate for any other security in the place of any certificate therefore
issued by it, alleged to have been lost, stolen, or destroyed. The corporation
may require the owner of the lost, stolen, or destroyed certificate, or the
owner's legal representative, to give the corporation a bond (or other adequate
security) sufficient to indemnify it against any claim that may be made against
it (including any expense or liability) on account of the alleged loss, theft,
or destruction of any certificate or the issuance of a new certificate.
Purchase by Bona Fide Purchaser
[Com. Code Sec. 8405(3)]
(b) If after a new security has been issued for a lost, destroyed, or
stolen security, a bona fide purchaser of the original security presents it for
registration or transfer, the corporation must register the transfer unless
registration would result in overissue, in which event the corporation's
liability is that set forth in the last paragraph of Section 8.03 of Article
VIII of these Bylaws. In addition to any rights on the indemnity bond, the
corporation may recover the new security from the person to whom it was issued
or any person taking under him or her except a bona fide purchaser.
Alternative System in Lieu of Certificates
[Corp. Code Sec. 416(b)]
Section 7.12. Notwithstanding the provisions of paragraph (a), Section
7.08, of this Article VII, the corporation may adopt a system of issuance,
recordation, and transfer of its shares by electronic or other means not
involving any issuance of certificates, including provisions for notice to
purchasers in substitution for the required statements on the certificates under
paragraphs (a) and (b) of Section 7.09 of this Article VII, which system has
been approved by the United States Securities and Exchange Commission, or which
is authorized in any statute of the United States, or is in accordance with
Division 8 of the California Commercial Code.
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ARTICLE VIII. TRANSFER OF SHARES
Duty of Corporation [Com. Code Sec. 8401(1)]
Section 8.01. When a security in registered form is presented to the
corporation with a request to register transfer, the corporation is under a duty
to register the transfer as required if:
(a) The security is indorsed by the appropriate person or persons;
(b) Reasonable assurance is given that those indorsements are genuine and
effective;
(c) The corporation has no duty to inquire into adverse claims or has
discharged any such duty; and
(d) Any applicable law relating to the collection of taxes has been
complied with.
Nobility of Corporation
Registration of Transfer [Com. Code Sec. 8404(2)]
Section 8.02. (a) Except as otherwise provided in any law relating to the
collection of taxes, the corporation is not liable to the owner or any other
person suffering loss as a result of the registration of a transfer of a
security if:
(1) There were on or with the security the necessary indorsements; and
(2) The corporation had no duty to inquire into adverse claims or has
discharged any such duty.
Failure to Notify Corporation of Lost, Destroyed, or Stolen
Security [Com. Code Sec. 8405(1)]
(b) Where a security has been lost, apparently destroyed, or wrongfully
taken and the owner fails to notify the corporation of that fact within a
reasonable time after he or she has notice of it and the corporation registers a
transfer of the security before receiving such notification, the owner is
precluded from asserting against the corporation any claim for registering the
transfer or any claim to a new security.
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Liability of Corporation [Com. Code Secs. 8104, 8404(2)]
Section 8.03. Where the corporation has registered a transfer of a
security to a person not entitled to it, the corporation on demand must deliver
a like security to the true owner unless:
(a) The registration was pursuant to paragraph (a) of Section 8.02 of this
Article VIII;
(b) The owner is precluded from asserting any claim for registering the
transfer as provided in paragraph (c) of Section 8.02 of this Article VIII; or
(c) Such delivery would result in overissue.
In this latter case, if an identical security which does not constitute an
overissue is reasonably available for purchase, the person entitled to such
issue may compel the corporation to purchase and deliver it to him or her
against surrender of the security, if any, which he or she holds; or if such a
security is not available for purchase, the person entitled to such issue may
recover from the corporation the purchase price such person or the last
purchaser for the value paid for it with interest from the date of the demand.
Liability on Transfer of Partly Paid Shares
Good Faith Purchaser [Corp. Code Sec. 411]
Section 8.04. (a) A transferee of shares for which the full agreed
consideration has not been paid to the corporation, who acquired them in good
faith, without knowledge that they were not paid in full or to the extent stated
on the certificate representing them, is liable only for the amount shown by the
certificate to be unpaid on the shares represented thereby, until transferee
transfers the shares to one who becomes liable therefor. The liability of any
holder of such shares who derives title through such a transferee and who is not
a party to any fraud affecting the issue of the shares is the same as that of
the transferee through whom title was derived.
Purchase With Knowledge [Corp. Code Sec. 412]
(b) Every transferee of partly paid shares who acquired them under a
certificate showing the fact of part payment, and every transferee of such
shares (other than a transferee who derives title through a holder in good faith
without knowledge and who is not party to any fraud affecting the issue of such
shares) who acquired them with actual knowledge that the full agreed
consideration had not been paid to the extent stated on the certificate
therefor, is personally liable to the corporation for
53
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installments of the amount unpaid becoming due until the shares are transferred
to one who becomes liable therefor.
Transferor [Corp. Code Sec. 411, 412]
(c) In either case mentioned in paragraph (a) or (b) of this Section 8.04,
the transferor shall remain personally liable for the unpaid consideration if so
provided in the certificate or agreed on in writing.
54
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ARTICLE IX. CORPORATE RECORDS,
REPORTS, AND SEAL
Minutes of Meetings [Corp. Code Sec. 1500]
Section 9.01. The corporation shall keep minutes in written form of the
proceedings of its shareholders, Board, and Board committees.
Books and Records of Account [Corp. Code Sec. 1500]
Section 9.02. The corporation shall keep adequate and correct books and
records of account either in written form or in any other form capable of being
converted into written form.
Record of Shareholders [Corp. Code Sec. 1500]
Section 9.03. The corporation shall keep at its principal executive
office, or at the office of its transfer agent or registrar, a record of its
shareholders, giving the names and addresses of all shareholders and the number
and class of shares held by each. Such record must be kept either in written
form or in any other form capable of being converted into written form.
Shareholders' Rights to Inspect Record of Shareholders
by Written Demand of Holders of Specified Percentage
of Shares [Corp. Code Sec. 1600(a)]
Section 9.04. (a) A shareholder or shareholders holding at least five (5)
percent in the aggregate of the outstanding shares of the corporation shall have
an absolute right to:
(1) Inspect a copy of the record of shareholders' names and addresses
and shareholdings during usual business hours on five (5) business
days' prior written demand on the corporation; and
(2) Obtain from the corporation's transfer agent, on written demand and
on the tender of its usual charges for such a list (the amount of
which charges shall be stated to the shareholder by the transfer
agent on request), a list of shareholders' names and addresses, who
are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which it has
been compiled or as of a date specified by the shareholders
subsequent to the date of the demand. The list must be made
available on or before the later of five (5) business days after the
demand is received or the date specified therein as the date as of
which the list is to be compiled. The corporation shall have the
responsibility to cause its transfer agent to comply with this
requirement.
55
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By Written Demand of Any Shareholder
[Corp. Code Sec. 1600(c)]
(b) The record of shareholders shall also be open to inspection and
copying by any shareholder at any time during usual business hours on written
demand on the corporation, for a for purpose reasonably related to such holder's
interests as a shareholder.
Inspection by Agent or Attorney [Corp. Code Sec. 1600(d)]
(c) Any inspection and copying under this Section 9.04 may be made in
person or by agent or attorney.
Shareholders' Rights to Inspect Books of Account and
Minutes [Corp. Code Sec. 1601]
Section 9.05. The accounting books and records and minutes of proceedings
of the shareholders, Board, and Board committees of this corporation shall be
open to inspection on the written demand on the corporation of any shareholder
[or holder of a voting trust certificate] at any reasonable time during business
hours, for a purpose reasonably related to such holder's interest as a
shareholder. Such inspection may be made in person or by agent or attorney, and
the right of inspection includes the right to copy and make extracts.
Inspection by Directors [Corp. Code Sec. 1602]
Section 9.06. Every director of this corporation shall have the absolute
right at any reasonable time to inspect and copy all books, records, and
documents of every kind and to inspect the physical properties of this
corporation. The inspection may be made in person or by agent or attorney and
the right of inspection includes the right to copy and make extracts.
Annual Report
Section 9.07. (a) An annual report shall be prepared.
When Required [Corp. Code Secs. 113, 601(a), 1501(a)]
(b) The Board of Directors shall cause an annual report to be sent by
first-class mail, postage prepaid, to the shareholders not later than 120 days
after the close of the fiscal year and at least 15 days prior to the annual
meeting of shareholders to be held during the next fiscal year; provided,
however, that the annual report may be sent by third-class mail if it is sent to
shareholders at least 35 days prior to the annual meeting.
56
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Contents [Corp. Code Sec. 15O1(a),(b)]
(c)(1) The annual report shall contain a balance sheet as of the end of
the fiscal year and an income statement and statement of changes in financial
position for the fiscal year, accompanied by any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without an audit
from the books and records of the corporation.
(2) In addition, if the corporation is either not subject to the reporting
requirements of Section 13 of the Securities Exchange Act of 1934, or is
exempted from the reporting requirements by Section 12(g)(2) of that Act, the
annual report shall also describe briefly both of the following:
(i) Any transaction (excluding compensation of officers and directors)
during the previous fiscal year involving an amount in excess of
$40,000 (other than contracts let at competitive bid or services
rendered at prices regulated by law) to which the corporation [or
its parent or subsidiary] was a party and in which any director or
officer of the corporation [or of a subsidiary] or [(if known to the
corporation or its parent or subsidiary)] any holder of more than 10
percent of the outstanding voting shares of the corporation had a
direct or indirect material interest, naming the person and stating
the person's relationship to the corporation, the nature of the
person's interest in the transaction and, if practicable, the amount
of the interest; provided, that in the case of a transaction with a
partnership of which the person is a partner, only the interest of
the partnership need be stated; and provided further that no such
report need be made in the case of transactions approved by the
shareholders, as that term is defined in California Corporations
Code Section 153 (see Sec. 2.23 of these Bylaws).
(ii) The amount and circumstances of any indemnification or advances
aggregating more than ten thousand dollars paid during the fiscal
year to any officer or director of the corporation pursuant to
California Corporations Code Section 317 (see Secs. 2.25-2.31 of
these Bylaws); provided, that no such report need be made in the
case of indemnification approved by the shareholders, as that term
is defined in California Corporations Code Section 153, under
California Corporations Code Section 317 (e)(3)(see Sec. 2.28 of
these Bylaws).
57
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Special Financial Statements to Shareholders
[Corp. Code Sec. 1501(c),(d)]
Section 9.08. (a) Any shareholder or shareholders holding at least 5
percent of the outstanding shares of any class of this corporation may make a
written request to the corporation for an income statement of the corporation
for the three-month, six-month, nine-month period of the current fiscal year
ended more than 30 days prior to the date of the request and a balance sheet of
the corporation as of the end of that period and, in addition, if no annual
report for the last fiscal year has been sent to shareholders, the statements
referred to in clause (1) of paragraph (c) of Section 9.07 of this Article IX
for the last fiscal year. The statement must be delivered or mailed to the
person making the request within 30 days thereafter. A copy of the statements
shall be kept on file in the principal office of the corporation for 12 months
and they shall be exhibited at all reasonable times to any shareholder demanding
an examination of them or a copy shall be mailed to that shareholder.
(b) The quarterly income statements and balance sheets referred to in this
Section 9.08 shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that those financial statements were
prepared without audit from the books and records of the corporation.
Fiscal Year
Section 9.09. The fiscal year of the corporation shall begin on the first
day of January and end on the last day of December each year.
Corporate Seal [Corp. Code Sec. 207(a)]
Section 9.10. The Board shall adopt a corporate seal which shall be in the
following form and design:.
The Secretary of the corporation shall have custody of the seal and affix
it in appropriate cases to all corporate documents. Failure to affix the seal
does not, however, affect the validity of any instrument.
58
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ARTICLE X. CERTIFICATION, INSPECTION,
AND AMENDMENT OF BYLAWS
Inspection and Certification of Bylaws
[Corp. Code Secs. 213, 314]
Section 10.01. The corporation shall keep at its principal executive
office in California the original or a copy of its Bylaws as amended to date,
which shall be open to inspection by the shareholders at all reasonable times
during office hours. The original or a copy of the Bylaws certified to be a true
copy by a person purporting to be the Secretary or an Assistant Secretary of the
corporation is prima facie evidence of the adoption of such bylaws and of the
matters stated in them.
Adoption, Amendment, Repeal of Bylaws by Shareholders
[Corp. Code Secs. 207(b), 211, 212]
Section 10.02. These Bylaws may, from time to time and at any time, be
amended or repealed, and new or additional bylaws adopted, by approval of the
outstanding shares of the corporation, as that term is defined in Section 152 of
the California Corporations Code, provided, however, that such bylaws may not
contain any provision in conflict with law or with the Articles of Incorporation
of the corporation and, provided further, that a bylaw reducing the number of
directors to a number less than five (5)(see Section 2.03 of Article II of these
Bylaws) cannot be adopted if the votes cast against its adoption at a meeting of
shareholders or the shares not consenting in the case of action by written
consent are equal to more than sixteen and two-thirds (16 2/3) percent of the
outstanding shares entitled to vote.
Adoption, Amendment, Repeal of Bylaws by Directors
[Corp. Code Secs. 211, 212]
Section 10.03. Subject to the right of the outstanding shares to adopt,
amend, or repeal bylaws (see Sec. 10.02 of these Bylaws) and to any restrictions
imposed by the Articles on the power of the Board to adopt, amend, or repeal
bylaws, these Bylaws may, from time to time and at any time, be amended or
repealed, and new or additional bylaws adopted, by approval of the Board of
Directors, provided, however, that such bylaws may not contain any provision in
conflict with law or with the Articles and, provided further, that after shares
are issued any bylaw changing the number or directors or changing from a fixed
to a variable Board may be adopted only by approval of the outstanding shares.
59
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ARTICLE XI. CONSTRUCTION OF BYLAWS
Section 11.01. Unless otherwise stated in these Bylaws or unless the
context otherwise requires, the definitions contained in the General Corporation
Law shall govern the construction of these Bylaws. Without limiting the
generality of the foregoing, the masculine gender includes the feminine and the
neuter, one singular number includes the plural and the plural number includes
the singular, and the word "person" includes a corporation or other entity as
well as a natural person.
CERTIFICATE OF SECRETARY [Corp. Code Sec. 314]
I, the undersigned, do hereby certify:
1. That I am the Secretary of Park Avenue Publishing, Inc., a California
corporation; and
2. That the foregoing Bylaws, consisting of eleven articles and 60 pages,
constitute the Bylaws of said corporation as duly approved at a meeting of the
Board of Directors duly held on 25 day of January, 1991, at Pomona., CA.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of the corporation on 25 day of January, 1991.
/s/ Enedina L. Lopez
-------------------------------
Enedina L. Lopez, Secretary
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TABLE OF CONTENTS
ARTICLE I. OFFICES ........................................................ 1
Principal Executive Office ........................................... 1
Other Offices ........................................................ 1
ARTICLE II. DIRECTORS ..................................................... 2
Definitions .......................................................... 2
"Board" ......................................................... 2
"Directors" ..................................................... 2
Responsibility of Board .............................................. 2
Number of Directors .................................................. 2
Election and Term of Office .......................................... 2
Resignation .......................................................... 3
Vacancies ............................................................ 3
When Vacancy occurs ............................................. 3
Declaration of Vacancy .......................................... 3
Removal of Directors by Shares .................................. 3
Removal by Court ................................................ 4
Reduction of Authorized Number of Directors ..................... 4
Provisions Exclusive ............................................ 4
Filling Vacancies .................................................... 4
By Board ........................................................ 4
By Shareholders ................................................. 5
By Special Meeting .............................................. 5
Call of Meetings ..................................................... 5
Place of Meetings .................................................... 5
Time of Regular Meetings ............................................. 6
Notice of Meetings ................................................... 6
Waiver of Notice ..................................................... 6
Quorum ............................................................... 6
Transactions of Board ................................................ 6
Withdrawal of Quorum ................................................. 7
Adjournment .......................................................... 7
Conduct of Meetings .................................................. 7
Telephone Participation .............................................. 7
Action Without Meeting ............................................... 7
Duties of Directors .................................................. 8
Compensation ......................................................... 8
Transactions With Corporation ........................................ 9
Liability of Directors ............................................... 10
Indemnification ...................................................... 11
Definitions ..................................................... 11
Power to Indemnify ................................................... 11
Expenses of Successful Agent ......................................... 12
Determination That Indemnification Is Proper ......................... 13
Advance of Expenses .................................................. 13
Nonexclusive Provisions .............................................. 13
Limitation on Indemnification ........................................ 14
Insurance ............................................................ 14
61
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Board Committees ..................................................... 15
Authority to Appoint ............................................ 15
Authority of Committee .......................................... 15
Applicability of Other Sections ................................. 16
ARTICLE III. DETERMINING SHAREHOLDERS OF RECORD ........................... 17
Record Date Fixed by Board ...................................... 17
Record Date Not Fixed ........................................... 17
Record Date for Adjourned Meeting ............................... 17
Rights of Shareholders of Record ................................ 18
ARTICLE IV. SHAREHOLDERS' MEETINGS ........................................ 19
Place of Meetings .................................................... 19
Annual Meeting ....................................................... 19
Time of Meeting; Business Transacted ............................ 19
Failure to Hold ................................................. 19
Notice of Meetings ................................................... 19
Method of Giving Notice ......................................... 20
Time of Notice .................................................. 20
Contents of Notice .............................................. 20
Notice of Adjourned Meeting ..................................... 21
Waiver of Notice and Other Defects .............................. 21
Calling of Special Meeting ........................................... 22
Persons Entitled to Call Special Meetings ....................... 22
Quorum of Shareholders ............................................... 22
Loss of Quorum .................................................. 23
Adjournment for Lack of Quorum .................................. 23
Effect of Vote ....................................................... 23
Election of Directors ................................................ 23
Votes Per Share--Voting of Fractional Shares ......................... 23
Voting Multiple Shares ............................................... 24
Cumulative Voting .................................................... 24
Voting of Shares by Fiduciaries, Minors, or Entities ................. 24
Personal Representative ......................................... 24
Trustee ......................................................... 24
Receiver ........................................................ 25
Pledgee ......................................................... 25
Minor ........................................................... 25
Corporation ..................................................... 25
Subsidiary ...................................................... 25
Corporate Fiduciary ............................................. 26
Shares in Names of Two or More Persons .......................... 26
Proxies .............................................................. 26
Presumptive Validity ............................................ 27
Duration of Proxy ............................................... 27
Death or Incapacity of Maker .................................... 27
Revocation of Proxy ............................................. 27
Proxy Providing for Irrevocability .............................. 27
When Irrevocable Proxy Is Revocable ............................. 28
62
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Form of Proxy or Written Consent ................................. 28
Directors' Determination of Execution and Use of Proxies ......... 29
Voting Trust .......................................................... 29
Effect of Section ................................................ 29
Inspectors of Election ................................................ 30
Appointment ...................................................... 30
Number ........................................................... 30
Duties ........................................................... 30
Decision, Act, or Certificate .................................... 30
Conduct of Meetings ................................................... 31
Action Without a Meeting .............................................. 31
When Authorized .............................................. 31
Notice of Shareholder Approval ............................... 31
Revocation of Consent ........................................ 32
ARTICLE V. OFFICERS ....................................................... 33
Number and Titles ..................................................... 33
Appointment ........................................................... 33
Other Officers ........................................................ 33
Removal and Resignation ............................................... 33
Vacancies ............................................................. 34
Chairman of the Board ................................................. 34
President ............................................................. 34
Meetings ......................................................... 34
Share Certificates ............................................... 35
Instruments ...................................................... 35
Hire and Fire Employees .......................................... 35
Voting Shares of Other Corporations .............................. 35
Vice President ........................................................ 35
Secretary ............................................................. 36
Seal ............................................................. 36
Records, Reports, and Statements ................................. 36
Notices .......................................................... 36
Minutes .......................................................... 36
Minute Book ...................................................... 36
Articles of Incorporation ........................................ 36
Bylaws ........................................................... 37
Record of Shareholders ........................................... 37
Certify Records .................................................. 37
Share Certificates ............................................... 37
Exhibit Record of Shareholders ................................... 37
Exhibit Minutes to Shareholder ................................... 38
Exhibit Records to Director ...................................... 38
Other Duties ..................................................... 38
Absence of Secretary ............................................. 38
Assistant Secretary ................................................... 39
Chief Financial Officer ............................................... 39
Funds--Custody and Deposit ....................................... 39
Funds--Receipt ................................................... 39
Funds--Disbursement .............................................. 39
Maintain Accounts ................................................ 39
63
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Reports to President and Directors ............................... 39
Financial Reports to Shareholders ................................ 40
Exhibit Accounts to Shareholders ................................. 40
Exhibit Accounts to Directors .................................... 41
Share Certificates ............................................... 41
Bond ............................................................. 41
Other Duties ..................................................... 41
Absence of Chief Financial Officer ............................... 42
Assistant Treasurer ................................................... 42
Compensation .......................................................... 42
ARTICLE VI. EXECUTION OF INSTRUMENTS AND DEPOSIT OF FUNDS ................ 43
Limitations ........................................................... 43
Execution of Instrument and Papers .................................... 43
Signing of Checks ..................................................... 43
Deposit and Withdrawal of Funds ....................................... 43
ARTICLE VII. ISSUANCE OF SHARES AND SHARE CERTIFICATES ................... 44
Authority to Issue .................................................... 44
Equality of Rights ............................................... 44
Consideration .................................................... 44
Share Dividends; Reclassification of Shares ...................... 45
Compliance with Corporate Securities Law ......................... 45
Payment for Shares ............................................... 45
Shares as Deemed Fully Paid ...................................... 45
Fractional Shares ..................................................... 46
Authority to Issue ............................................... 46
Failure to Issue ................................................. 46
Partly Paid Shares .................................................... 46
Options ............................................................... 47
No Preemptive Rights .................................................. 47
Employee Plans ........................................................ 47
Authority to Adopt ............................................... 47
Includable Features .............................................. 47
Certificates of Determination ......................................... 48
Execution of Officers' Certificate ............................... 48
Change in Rights ................................................. 48
Shareholder's Right to Share Certificate .............................. 49
Fractional Shares ................................................ 49
Partly Paid Shares ............................................... 49
Contents of Certificate ............................................... 49
Exchange of Certificates .............................................. 50
On Amendment of Articles or Otherwise ............................ 50
Contents of Order ................................................ 50
Lost, Stolen, or Destroyed Certificate; Issuance of New Certificate ... 51
Purchase by Bona Fide Purchaser .................................. 51
Alternative System in Lieu of Certificates ............................ 51
64
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ARTICLE VIII. TRANSFER OF SHARES ......................................... 52
Duty of Corporation ................................................... 52
Nobility of Corporation ............................................... 52
Registration of Transfer ......................................... 52
Failure to Notify Corporation of Lost, Destroyed, or
Stolen Security .................................................. 52
Liability of Corporation .............................................. 53
Liability on Transfer of Partly Paid Shares ........................... 53
Good Faith Purchaser ......................................... 53
Purchase With Knowledge ...................................... 53
Transferor ................................................... 54
ARTICLE IX. CORPORATE RECORDS, REPORTS, AND SEAL .......................... 55
Minutes of Meetings ................................................... 55
Books and Records of Account .......................................... 55
Record of Shareholders ................................................ 55
Shareholders' Rights to Inspect Record of Shareholders by
Written Demand of Holders of Specified Percentage of Shares ...... 55
By Written Demand of Any Shareholder ......................... 56
Inspection by Agent or Attorney .............................. 56
Shareholders' Rights to Inspect Books of Account and Minutes .......... 56
Inspection by Directors ............................................... 56
Annual Report ......................................................... 56
When Required .................................................... 56
Contents ......................................................... 57
Special Financial Statements to Shareholders .......................... 58
Fiscal Year ........................................................... 58
Corporate Seal ........................................................ 58
ARTICLE X. CERTIFICATION, INSPECTION, AND AMENDMENT OF BYLAWS ............ 59
Inspection and Certification of Bylaws ................................ 59
Adoption, Amendment, Repeal of Bylaws by Shareholders ................. 59
Adoption, Amendment, Repeal of Bylaws by Directors .................... 59
ARTICLE XI. CONSTRUCTION OF BYLAWS ....................................... 60
Certificate of Secretary .............................................. 60
65
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CONFIDENTIAL
EXHIBIT 3.133
RESTATED
ARTICLES OF INCORPORATION
OF
PICTORIAL, INC.
This corporation ("Corporation") is governed by the applicable provisions
of the Indiana Business Corporation Law (the "Act").
ARTICLE I
NAME
The name of the Corporation is Pictorial, Inc.
ARTICLE II
PURPOSES
The purposes for which the Corporation is formed are to conduct and
transact any and all lawful business for which corporations may be incorporated
under the Act.
ARTICLE III
SHARES
SECTION 3.1. NUMBER. The total number of shares which the Corporation is
authorized to issue is twenty-five thousand (25,000) shares.
SECTION 3.2. CLASSES. There shall be one (1) class of shares of the
Corporation, which shall be designated as "Common Shares".
SECTION 3.3. RELATIVE RIGHTS, PREFERENCES, LIMITATIONS AND RESTRICTIONS OF
SHARES.
(a) COMMON SHARES. There shall be two series of Common Shares, with no par
value, subject to the following limitations:
(i) Two Thousand (2,000) Common Shares shall have general voting
rights as to all matters ("Voting Common Shares"); and
(ii) Twenty-three thousand (23,000) Common Shares shall have no voting
rights, except as may be required by the Act ("Non-Voting Common
Shares").
<PAGE>
CONFIDENTIAL
SECTION 3.4. Voting Rights of Certain Common Shares. Each holder of Voting
Common Shares shall be entitled to one (1) vote for each Voting Common Share
owned of record on the books of the Corporation on each matter submitted to a
vote of the holders of Common Shares. No holder of Non-Voting Common Shares
shall be entitled to vote on any matters submitted to a vote of the holders of
the Common Shares.
ARTICLE IV
REGISTERED OFFICE AND REGISTERED AGENT
SECTION 4.1. Registered Office. The post office address of the principal
office of the Corporation is 8081 Zionsville Road, Indianapolis, Indiana 46268.
SECTION 4.2. Registered Agent. The name and address of the Resident Agent
in charge of the Corporation's principal office is Alexander C. Lange, 8081
Zionsville Road, Indianapolis, Indiana 46268.
ARTICLE V
INDEMNIFICATION
SECTION 5.1. Rights to Indemnification and Advancement of Expenses.
(a) The Corporation shall indemnify as a matter of right every person made
a party to a proceeding because such person is or was
(i) a member of the Board of Directors of the Corporation,
(ii) an officer of the Corporation, or
(iii) while a director or officer of the Corporation, serving at the
Corporation's request as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise, whether for
profit or not,
(each an "Indemnitee") against all liability incurred by such person in
connection with the proceeding; provided that it is determined in the specific
case that indemnification of such person is permissible in the circumstances
because such person has acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that the person's conduct was unlawful. The
Corporation shall pay for or reimburse the reasonable expenses incurred by an
Indemnitee in connection with any such proceeding in advance of final
disposition thereof in accordance with the procedures and subject to the
conditions specified in the Act. The Corporation
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shall indemnify as a matter of right an Indemnitee who is wholly successful, on
the merits or otherwise, in the defense of any such proceeding, against
reasonable expenses incurred by the Indemnitee in connection with the proceeding
without the requirement of a determination as set forth in the first sentence of
this paragraph.
(b) Any indemnification made hereunder shall be made at the discretion of
the Corporation, but only if the Board of Directors, acting by a quorum
consisting of directors who are not parties to or who have been wholly
successful with respect to such claim, action, suit, or proceeding, shall find
that a director, officer, employee or agent has met the standards of conduct set
forth in section (a).
(c) The indemnification provided under this Article shall apply to any
proceeding arising from acts or omissions occurring before or after the adoption
of this Article.
SECTION 5.2. Other Rights Not Affected. Nothing contained in this Article
shall limit or preclude the exercise or be deemed exclusive of any right under
the law, by contract or otherwise, relating to indemnification of or advancement
of expenses to any individual who is or was a director, officer, employee or
agent of the Corporation, or the ability of the Corporation to otherwise
indemnify or advance expenses to any such individual. It is the intent of this
Article to provide indemnification to directors and officers to the fullest
extent now or hereafter permitted by law consistent with the terms and
conditions of this Article. Therefore, indemnification shall be provided in
accordance with this Article irrespective of the nature of the legal or
equitable theory upon which a claim is made, including without limitation
negligence, breach of duty, mismanagement, corporate waste, breach of contract,
breach of warranty, strict liability, violation of federal or state securities
laws, violation of the Employee Retirement Income Security Act of 1974, as
amended, or violation of any other state or federal laws.
SECTION 5.3. Definitions. For purposes of this Article:
(a) The term "director" means an individual who is or was a member of the
Board of Directors of the Corporation or an individual who, while a director of
the Corporation, is or was serving at the Corporation's request as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise, whether for profit or not. A director is considered to be serving an
employee benefit plan at the Corporation's request if the director's duties to
the Corporation also impose duties on, or otherwise involve services by, the
director to the plan or to participants in or beneficiaries of the plan. The
term "director" includes, unless the context requires otherwise, the estate or
personal representative of a director.
(b) The term "expenses" includes all direct and indirect costs (including
without limitation counsel fees, retainers, court costs, transcripts, fees of
experts, witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, all other
disbursements or out-of-pocket expenses) actually incurred in connection with
the investigation,
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defense, settlement or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Article, applicable law or otherwise.
(c) The term "liability" means the obligation to pay a judgment,
settlement, penalty, fine, excise tax (including an excise tax assessed with
respect to an employee benefit plan), or reasonable expenses incurred with
respect to a proceeding.
(d) The term "party" includes an individual who was, is or is threatened to
be made a named defendant or respondent in a proceeding.
(e) The term "proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal.
This instrument was prepared by Kristine M. Camron, Attorney at Law, ICE MILLER
DONADIO & RYAN, One American Square, Box 82001, Indianapolis, Indiana
46282-0002.
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AMENDED AND RESTATED BYLAWS
of
PICTORIAL, INC.
ARTICLE I
Records Pertaining to Share Ownership
Section 1.1. Recognition of Shareholders. Pictorial, Inc. (the
"Corporation") is entitled to recognize a person registered on its books as the
owner of shares of the Corporation as having the exclusive right to receive
dividends and to vote those shares, notwithstanding any other person's equitable
or other claim to, or interest in, those shares.
Section 1.2. Transfer of Shares. Shares are transferable only on the books
of the Corporation, subject to any transfer restrictions imposed by the Articles
of Incorporation, these Bylaws, or an agreement among shareholders and the
Corporation. Shares may be so transferred upon presentation of the certificate
representing the shares, endorsed by the appropriate person or persons, and
accompanied by (a) reasonable assurance that those endorsements are genuine and
effective, and (b) a request to register the transfer. Transfers of shares are
otherwise subject to any applicable provisions of the Indiana Business
Corporation Law (the "Act") and Article 8 of the Indiana Uniform Commercial
Code.
Section 1.3. Certificates. Each shareholder is entitled to a certificate
signed (manually or in facsimile) by the President or a Vice President and the
Secretary or an Assistant Secretary, setting forth (a) the name of the person to
whom issued, (b) the number of shares of stock in the Corporation owned by the
Shareholder, (c) that such shares have no par value, and (d) that such shares
have been fully paid and are not liable to any further call or assessment. The
Board of Directors shall prescribe the form of the certificate.
Section 1.4. Lost or Destroyed Certificates. A new certificate may be
issued to replace a lost or destroyed certificate. Unless waived by the Board of
Directors, the shareholder in whose name the certificate was issued shall make
an affidavit or affirmation of the fact that his certificate is lost or
destroyed, shall advertise the loss or destruction in such manner as the Board
of Directors may require, and shall give the Corporation a bond of indemnity in
the amount and form which the Board of Directors may prescribe.
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ARTICLE II
Meetings of the Shareholders
Section 2.1. Annual Meetings. Annual meetings of the shareholders shall be
held on the first Tuesday in September of each year, or on such other date as
may be designated by the Board of Directors.
Section 2.2. Special Meetings. Special meetings of the shareholders may be
called by the President or by the Board of Directors. Special meetings of the
shareholders shall be called upon delivery to the Secretary of the Corporation
of one or more written demands for a special meeting of the shareholders
describing the purposes of that meeting and signed and dated by the holders of
at least 25% of all the votes entitled to be cast on any issue proposed to be
considered at that meeting.
Section 2.3. Notice of Meetings. The Corporation shall deliver or mail
written notice stating the date, time, and place of any shareholders' meeting
and, in the case of a special shareholders' meeting or when otherwise required
by law, a description of the purposes for which the meeting is called, to each
shareholder of record entitled to vote at the meeting, at such address as
appears in the records of the Corporation and at least ten (10), but no more
than sixty (60) days before the date of the meeting. A shareholders' meeting
shall be held at such place, either in or out of the State of Indiana, as may be
specified by the Board of Directors in the respective notice for such meeting.
Section 2.4. Waiver of Notice. A shareholder may waive notice of any
meeting, before or after the date and time of the meeting as stated in the
notice, by delivering a signed waiver to the Corporation for inclusion in the
minutes. A shareholder's attendance at any meeting, in person or by proxy (a)
waives objection to lack of notice or defective notice of the meeting, unless
the shareholder at the beginning of the meeting objects to holding the meeting
or transacting business at the meeting, and (b) waives objection to
consideration of a particular matter at the meeting that is not within the
purposes described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
Section 2.5. Record Date. The Board of Directors may fix a record date,
which may be a future date, for the purpose of determining the shareholders
entitled to notice of a shareholders meeting, to demand a special meeting, to
vote, or to take any other action. A record date may not exceed fifty (50) days
before the meeting or action requiring a determination of shareholders. If the
Board of Directors does not fix a record date, the record date shall be the 30th
day prior to the date of the meeting or other action.
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Section 2.6. Voting at Meetings.
(a) Voting Rights. Except as may be otherwise provided in the Articles of
Incorporation, every shareholder of the Corporation shall at all meetings of the
Shareholders have the right to one (1) vote for each share standing in the
shareholder's name on the books of the Corporation. Such vote may be exercised
in person or by proxy. At any meeting of the shareholders, an affirmative vote
of a majority of all of the shares issued and outstanding shall be necessary to
adopt or approve any action of the shareholders unless otherwise provided in the
Articles of Incorporation, these Bylaws, or by law.
(b) Voting by Proxy. A shareholder may appoint a proxy to vote or
otherwise act for the shareholder pursuant to a written appointment form
executed by the shareholder or the shareholder's duly authorized
attorney-in-fact. An appointment of a proxy is effective when received by the
Secretary or other officer or agent of the Corporation authorized to tabulate
votes. The general proxy of a fiduciary is given the same effect as the general
proxy of any other shareholder. A proxy appointment is valid for 11 months
unless otherwise expressly stated in the appointment form.
(c) Voting Lists. After a record date for a shareholders' meeting has been
fixed, the Secretary shall prepare an alphabetical list of all shareholders
entitled to notice of the meeting, showing the address and number of shares held
by each shareholder. The list shall be kept on file at the principal office of
the Corporation or at a place identified in the meeting notice in the city where
the meeting will be held. The list shall be available for inspection and copying
by any shareholder entitled to vote at the meeting, or by the shareholder's
agent or attorney authorized in writing, at any time during regular business
hours, beginning five (5) business days before the date of the meeting through
the meeting. The list shall also be made available to any shareholder, or to the
shareholder's agent or attorney authorized in writing, at the meeting and any
adjournment thereof. Failure to prepare or make available a voting list with
respect to any shareholder's meeting shall not affect the validity of any action
taken at such meeting.
(d) Quorum; Approval. At any meeting of shareholders, a majority of the
votes entitled to be cast on a matter at the meeting, represented in person or
by proxy, constitutes a quorum. If a quorum is present when a vote is taken,
action on a matter is approved if the votes cast in favor of the action exceed
the votes cast in opposition to the action, unless a greater number is required
by law, the Articles of Incorporation, or these Bylaws.
(e) Action by Consent. Any action required or permitted to be taken at a
shareholders' meeting may be taken without a meeting if the action is taken by
all the shareholders entitled to vote on the action. The action must be
evidenced by one or more written consents describing the action taken, signed by
all the shareholders entitled to vote on the action, and delivered to the
Corporation for inclusion in the minutes. If not otherwise determined pursuant
to Section 5 of this Article II, the record date for determining shareholders
entitled to take action without a meeting is the date the first shareholder
signs the consent to such action.
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Section 2.7. Presence. Any or all shareholders may participate in any
annual or special shareholders' meeting by, or through the use of, any means of
communication by which all shareholders participating may simultaneously hear
each other during the meeting. A shareholder so participating is deemed to be
present in person at the meeting.
Section 2.8. Place of Meetings. Meetings of the shareholders of the
Corporation shall be held at such place, either in or out of the State of
Indiana, as may be specified by the Board of Directors.
ARTICLE III
Board of Directors
Section 3.1. Powers and Duties. All corporate powers are exercised by or
under the authority of, and the business and affairs of the Corporation are
managed under the direction of, the Board of Directors, unless otherwise
provided in the Articles of Incorporation.
Section 3.2. Number and Terms of Office: Qualifications. The Board of
Directors shall be composed of three (3) members. The Board of Directors may
establish a variable range for the size of the Board of Directors, which shall
not be less than three (3) members nor more than five (5) members, and
thereafter, the number of directors may be fixed or changed from time to time by
the Board of Directors within the variable range. In the absence of a bylaw
fixing a variable range for the Board of Directors, the number shall be three
(3). Directors are elected at each annual shareholders' meeting and serve for a
term expiring at the following annual shareholders' meeting. A director who has
been removed pursuant to Section 3 of this Article III ceases to serve
immediately upon removal; otherwise, a director whose term has expired continues
to serve until a successor is elected and qualified or until there is a decrease
in the number of directors. A person need not be a shareholder or an Indiana
resident to qualify to be a director.
Section 3.3. Removal. Any director may be removed with or without cause by
action of the shareholders taken at any meeting the notice of which states that
one of the purposes of the meeting is removal of the director.
Section 3.4. Vacancies. If a vacancy occurs on the Board of Directors,
including a vacancy resulting from an increase in the number of directors, the
Board of Directors may fill the vacancy. If the directors remaining in office
constitute fewer than a quorum of the Board, the directors remaining in office
may fill the vacancy by the affirmative vote of a majority of those directors.
Any director elected to fill a vacancy holds office until the next annual
meeting of the shareholders and until a successor is elected and qualified.
Section 3.5. Annual Meetings. Unless otherwise agreed by the Board of
Directors, the annual meeting of the Board of Directors shall be held
immediately following the annual meeting of the shareholders, at the place where
the meeting of shareholders was held, for the purpose of
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organization, election of officers and consideration of any other business which
may be brought before the meeting. Notice is not necessary for any annual
meeting.
Section 3.6. Regular and Special Meetings. Regular meetings of the Board
of Directors may be held pursuant to a resolution of the Board of Directors
establishing a method for determining the date, time, and place of those
meetings. Notice is not necessary for any regular meeting. Special meetings of
the Board of Directors may be held upon the call of the Chairman of the Board,
President, Vice-President, or any two (2) members of the Board of Directors of
the Corporation. The person or persons calling such meeting shall, or cause the
Secretary of the Corporation to, give twenty-four (24) hours' written or oral
notice specifying the date, time, and place of the meeting. Notice of a special
meeting may be waived in writing before or after the time of the meeting.
Attendance at or participation in a meeting waives any required notice of the
meeting, unless at the beginning of the meeting (or promptly upon the director's
arrival) the director objects to holding the meeting or transacting business at
the meeting and does not thereafter vote for or assent to action taken at the
meeting. A waiver must be signed by the director entitled to the notice and
filed with the minutes of the meeting.
Section 3.7. Quorum. A quorum for the transaction of business at any
meeting of the Board of Directors consists of a majority of the number of
directors specified in Section 2 of this Article III. If a quorum is present
when a vote is taken, action on a matter is approved if the action receives the
affirmative vote of a majority of the directors present.
Section 3.8. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting if
the action is taken by all directors then in office. The action must be
evidenced by one or more written consents describing the action taken, signed by
each director, and included in the minutes. Action of the Board of Directors
taken by consent is effective when the last director signs the consent, unless
the consent specifies a prior or subsequent effective date.
Section 3.9. Committees. The Board of Directors may create one or more
committees and appoint members of the Board of Directors to serve on them. Each
committee may have one or more members, who serve at the pleasure of the Board
of Directors. The creation of a committee and appointment of members to it must
be approved by the greater of (i) a majority of all the directors in office when
the action is taken, or (ii) the number of directors required under Section 7 of
this Article III to take action. All rules applicable to action by the Board of
Directors apply to committees and their members. The Board of Directors may
specify the authority that a committee may exercise; however, a committee may
not (a) authorize distributions, except a committee may authorize or approve a
reacquisition of shares if done according to a formula or method prescribed by
the Board of Directors, (b) approve or propose to shareholders action that must
be approved by shareholders, (c) fill vacancies on the Board of Directors or on
any of its committees, (d) amend the Articles of Incorporation, (e) adopt,
amend, or repeal these Bylaws, (f) approve a plan of merger not requiring
shareholder approval, or (g) authorize or approve the issuance or sale or a
contract for the sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or
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series of shares, except the Board of Directors may authorize a committee to so
act within limits prescribed by the Board of Directors.
Section 3.10. Presence. The Board of Directors may permit any or all
directors to participate in any annual, regular, or special meeting by any means
of communication by which all directors participating may simultaneously hear
each other during the meeting. A director so participating is deemed to be
present in person at the meeting. A quorum for any meeting so held shall be
computed on the basis of all persons in voice contact with each other. Any
meeting so held shall be a formal meeting of the Board of Directors for all
purposes, and any business may be transacted at such meeting that could be
transacted if the directors were assembled in the presence of each other.
Section 3.11. Compensation. Each director shall receive such compensation
for service as a director as may be fixed by the Board of Directors. Until such
time as the Board of Directors shall choose to act on this matter, members of
the Board of Directors shall receive no compensation for acting in such
capacity.
ARTICLE IV
Officers
Section 4.1. Officers. At its annual meeting, the Board of Directors shall
elect a President, Vice President, Secretary, and Treasurer, and may at its
option elect one or more such assistants and other officers as it may decide
upon. The same individual may simultaneously hold more than one office.
Section 4.2. Terms of Office. Officers are elected at each annual meeting
of the Board of Directors and serve for a term expiring at the following annual
meeting of the Board of Directors. An officer who has been removed pursuant to
Section 4 of this Article IV ceases to serve as an officer immediately upon
removal; otherwise, an officer whose term has expired continues to serve until a
successor is elected and qualified.
Section 4.3. Vacancies. If a vacancy occurs among the officers, the Board
of Directors may fill the vacancy. Any officer elected to fill a vacancy holds
office until the next annual meeting of the Board of Directors and until a
successor is elected and qualified.
Section 4.4. Removal. Any officer may be removed at any time by majority
vote of the entire Board of Directors.
Section 4.5. Compensation. Each officer shall receive such compensation
for service in office as may be fixed by the Board of Directors.
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Section 4.6. The Chairman of the Board. If the Board of Directors so
chooses, it may elect a Chairman of the Board, who shall be chosen from among
the Directors, and who if present, presides at all of the meetings of the Board
of Directors, and shall, in general, perform all duties incident to the office
of Chairman of the Board and such other duties as, from time to time, may be
assigned to him by the Board of Directors.
Section 4.7. President. The President shall be the Chief Executive and
Operating Officer of the Corporation and is responsible for managing and
supervising the affairs and personnel of the Corporation, subject to the general
control of the Board of Directors. The President presides at all meetings of
shareholders and directors. The President has such other powers and duties as
the Board of Directors may from time to time prescribe.
Section 4.8. The Executive Vice-President. The Executive Vice-President,
if elected, shall perform all duties incumbent upon the President during the
absence or disability of the President, and perform such other duties as this
Code of Bylaws may require, or the Board of Directors may prescribe.
Section 4.9. Vice President. The Vice President shall perform all the
duties incumbent upon, the President during the President's absence or
disability. The Vice President has such other powers and duties as the Board of
Directors may from time to time prescribe. If the Board of Directors shall elect
more than one (1) Vice President, their right to act during the absence or
disability of the President shall be in the order designated by the Board of
Directors.
Section 4.10. The Secretary is responsible for (a) attending all meetings
of the shareholders and the Board of Directors, (b) preparing true and complete
minutes of the proceedings of all meetings of the shareholders, the Board of
Directors, and all committees of the Board of Directors, (c) maintaining and
safeguarding the books (except books of account) and records of the Corporation,
and (d) authenticating the records of the Corporation. If required, the
Secretary attests the execution of deeds, leases, agreements, powers of
attorney, certificates representing shares of the Corporation, and other
official documents by the Corporation. The Secretary serves all notices of the
Corporation required by law, the Board of Directors, or these Bylaws. The
Secretary has such other duties as the Board of Directors may from time to time
prescribe.
Section 4.11. Treasurer. The Treasurer is responsible for (a) keeping
correct and complete books of account which show accurately at all times the
financial condition of the Corporation, (b) safeguarding all funds, notes,
securities, and other valuables which may from time to time come into the
possession of the Corporation, and (c) depositing all funds of the Corporation
with such depositories as the Board of Directors shall designate. The Treasurer
shall furnish at meetings of the Board of Directors, or when otherwise
requested, a statement of the financial condition of the Corporation. The
Treasurer has such other duties as the Board of Directors may from time to time
prescribe.
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Section 4.12. Assistant Officers. The Board of Directors or the President
may from time to time designate and elect assistant officers who shall have such
powers and duties as the officers whom they are elected to assist specify and
delegate to them, and such other powers and duties as the Board of Directors or
the President may from time to time prescribe. An Assistant Secretary may,
during the absence or disability of the Secretary, discharge all
responsibilities imposed upon the Secretary of the Corporation, including,
without limitation, attest the execution of all documents by the Corporation.
ARTICLE V
Miscellaneous
Section 5.1. Records. The Corporation shall keep as permanent records
minutes of all meetings of the shareholders, the Board of Directors, and all
committees of the Board of Directors, and a record of all actions taken without
a meeting by the shareholders, the Board of Directors, and all committees of the
Board of Directors. The Corporation or its agent shall maintain a record of the
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders, in alphabetical order showing the number of
shares held by each. The Corporation shall maintain its records in written form
or in a form capable of conversion into written form within a reasonable time.
The Corporation shall keep a copy of the following records at its principal
office: (a) the Articles of Incorporation then currently in effect, (b) the
Bylaws then currently in effect, (c) all resolutions adopted by the Board of
Directors with respect to one or more classes or series of shares and fixing
their relative rights, preferences, and limitations, if shares issued pursuant
to those resolutions are outstanding, (d) minutes of all shareholders' meetings,
and records of all actions taken by shareholders without a meeting, for the past
3 years, (e) all written communications to shareholders generally during the
past 3 years, including annual financial statements furnished upon request of
the shareholders, (f) a list of the names and business addresses of the current
directors and officers, and (g) the most recent annual report filed with the
Indiana Secretary of State.
Section 5.2. Execution of Contracts and Other Documents. Unless otherwise
authorized or directed by the Board of Directors, all written contracts and
other documents entered into by the Corporation and all checks, drafts, and
bills of exchange, and orders for payment of money in the ordinary course of
business of the Corporation, shall be executed on behalf of the Corporation by
the President or Vice President, and, if required, attested by the Secretary or
an Assistant Secretary.
Section 5.3. Accounting Year. The accounting year of the Corporation shall
begin on January 1st of each year and shall end on December 31st immediately
following.
Section 5.4. Corporate Seal. The Corporation has no seal.
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ARTICLE VI
Amendment
These Bylaws may be amended or repealed only by the Board of Directors.
The affirmative vote of a majority of all the directors is necessary to amend or
repeal these Bylaws.
The foregoing Code of Bylaws of the
Corporation were duly adopted by the Board
of Directors of the Corporation on 10th Day
of November, 1997.
/s/ Alexander C. Lange, Secretary
--------------------------------
Alexander C. Lange, Secretary
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Exhibit 3.135
785031
ENDORSED
FILED
In the office of the Secretary of State
in the State of California
AUG 28 1976
MARCH FONG EU, Secretary of State
By Irene Sanchez
Deputy
ARTICLES OF INCORPORATION
OF
PLAZA PUBLISHING COMPANY
FIRST: The name of this corporation is Plaza Publishing Company.
SECOND: The purposes of the corporation are:
A. Primarily to engage in the specific business of publishing books,
magazines, articles, periodicals and other printed matter.
B. To produce, purchase, or otherwise acquire all or specified
rights in manuscripts, articles and other materials of any and every kind and to
print, publish, distribute, market, or sell at wholesale and retail, license or
otherwise dispose of manuscripts, articles, books, magazines, periodicals and
printed matter.
C. To engage in any business, whether related or unrelated to those
described in clauses A and B of this Article, that may from time to time be
authorized or approved by the Board of Directors of this Corporation.
<PAGE>
D. To act as principal, agent, partner or joint venturer or in any
other legal capacity whenever deemed advisable by the Board of Directors.
E. To do business anywhere in the world.
F. To have and to exercise all the rights and powers that are now or
may hereafter be granted to a corporation by law.
C. To establish and carry out, alter or amend such systems, plans,
or trusts for providing pensions for employees, officers and directors of the
corporation as the Board of Directors may determine and so as to be a business
expense of the corporation, with or without contributions from the
beneficiaries.
H. To provide, alter, or amend such methods or plans for employees,
officers, and directors to participate in the profits of the corporation as the
Board of Directors may determine, including profit sharing plans and stock
purchase plans with restricted stock options.
The above purposes are not limited by reference to or inference from one
another. Each clause is to be construed as a separate statement conferring
independent purposes and powers on the corporation. The foregoing shall be
construed as objects and powers, and the enumeration thereof shall not be held
to limit or restrict, in any manner, the general powers now or hereafter
conferred on this Corporation by the Laws of the State of California.
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THIRD: The county in the State of California where the principal office
for the transaction of the business of this corporation is to be located is
Orange County.
FOURTH: The number of directors of the corporation is four (4). This
number can be changed by a By-Law adopted by the shareholders of the
corporation.
The names and addresses of the persons who are appointed to act as
the first directors are as follows:
Tolman Geffs Jack C. Polley
4230 Park Newport, #207 20 Dogwood South
Newport Beach, CA 92660 Irvine, CA 92664
Lorna Ziler Polley Richard J. Schwarzstein
20 Dogwood South 441 El Bosque
Irvine, CA 92664 Laguna Beach, CA 92651
FIFTH: The corporation is authorized to issue only one class of shares of
stock. The total number of shares that the corporation is authorized to issue is
One Hundred Thousand (100,000). The aggregate par value of the shares is One
Hundred Thousand Dollars ($100,000), and the par value of each share is One
Dollar ($1). No distinction shall exist between the shares of the corporation
nor between the holders thereof.
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SIXTH: By-Laws of the corporation may be adopted, amended; or repealed by
the vote or written assent of the shareholders entitled to exercise a majority
of the voting power of the corporation, or, subject to the right of the
shareholders to adopt, amend, or repeal By-Laws, by the vote or written assent
of a majority of the members of the Board of Directors, and not otherwise.
IN WITNESS WHEREOF, the undersigned who are the incorporators and
the above named first directors of this corporation, have executed these
Articles of Incorporation on 18th day of August, 1976.
/s/ Tolman Geffs /s/ Jack C. Polley
- ------------------------------ ------------------------------
Tolman Geffs Jack C. Polley
/s/ Lorna Ziler Polley /s/ Richard J. Schwarzstein
- ------------------------------ ------------------------------
Lorna Ziler Polley Richard J. Schwarzstein
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We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true of our own
knowledge.
Dated: June 2, 1983.
/s/ Tolman Geffs
-----------------------------------
Tolman F. Geffs, President
/s/ Richard J. Schwarzstein
-----------------------------------
Richard J. Schwarzstein,
Secretary
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this 1st day of August, 1976, before me, the undersigned, a Notary
Public in and for said County and State, personally appeared Richard J.
Schwarzstein, known to me to be the persons who executed the foregoing Articles
of Incorporation and acknowledged to me that he executed the same.
WITNESS my hand and offical seal.
OFFICIAL SEAL
[SEAL] SUSAN L. DAVIS /s/ Susan L. Davis
NOTARY PUBLIC CALIFORNIA -----------------------------
[Illegible], OFFICE IN Notary Public in and for said
ORANGE COUNTY Country and State
My Commission Expires November 25, 1978
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this 20th day of August, 1976, before me, the undersigned, a Notary
Public in and for said County and State, personally appeared Tolman Geffs, Lorna
Ziler Polley, and Jack C. Polley, known to me to be the person(s) who executed
the foregoing Articles of Incorporation and acknowledged to me that they
executed the same.
WITNESS my hand and official seal.
/s/ Richard J. Schwarzstein
-----------------------------
Notary Pubflc in and for said
County and State
OFFICIAL SEAL
[SEAL] RICHARD J. SCHWARZSTEIN
NOTARY PUBLIC CALIFORNIA
[Illegible], OFFICE IN
ORANGE COUNTY
My Commission Expires October 8, 1978
-5-
<PAGE>
ENDORSED
FILED
In the Office of the Secretary of State
of the State of California
APR 26 1983
MARCH FONG EU, Secretary of State
By JAMES E. HARRIS
Deputy
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
PLAZA PUBLISHING COMPANY
Tolman Geffs and Richard J. Schwarzstein certify that:
1. They are the president and secretary of Plaza Publishing Company, a
California Corporation.
2. The "FIRST" paragraph of the Articles of Incorporation of this Corporation
is amended to read as follows:
"FIRST: The name of this Corporation is PLAZA COMMUNICATIONS, INC."
3. The "FIFTH" paragraph of the Articles of Incorporation of this Corporation
is amended to read as follows:
"FIFTH: This Corporation is authorized to issue only one class of
shares of stock, designated "Common Stock" and the total number of
shares which this Corporation is authorized to issue is 10 million
(10,000,000) . The aggregate par value of the shares is 10 million
($10,000,000) dollars, and the par value of each share is one dollar
($1.00). No distinction shall exist between the shares of the
Corporation nor between the holders thereof."
4. The foregoing amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
5. The foregoing amendment of Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section
902 of the Corporations Code. The total number of outstanding shares of
the Corporation is 1,000. The number of shares voting in favor of the
amendment equaled or exceeded the vote required. The percentage vote
required was more than 50%.
/s/ Tolman Geffs, President
----------------------------------
Tolman Geffs, President
/s/ Richard J. Schwarzstein, Secretary
----------------------------------
Richard J. Schwarzstein, Secretary
<PAGE>
We further declare under penalty of perjury under the laws of the state of
California that the matters set forth in this certificate are true of our own
knowledge.
Date: April 22, 1983
/s/ Tolman Geffs, President
----------------------------------
Tolman Geffs, President
/s/ Richard J. Schwarzstein, Secretary
----------------------------------
Richard J. Schwarzstein, Secretary
<PAGE>
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
JUN 3 1983
MARCH FONG EU, Secretary of State
By JAMES E. HARRIS
Deputy
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
PLAZA COMMUNICATIONS, INC.
Tolman F. Geffs and Richard J. Schwarzstein certify that:
1. They are the President and Secretary of Plaza Coimmunications, Inc., a
California corporation.
2. The SECOND paragraph of the Articles of Incorporation of this Corporation is
amended to read as follows:
"SECOND: The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California, other than the banking business, the trust
company business, or the practice of a profession permitted to be
incorporated by the California Corporations Code."
3. The FOURTH paragraph of the Articles of Incorporation of this Corporation
shall be striken from the Articles.
4. The FIFTH paragraph of the Articles of Incorporation of this Corporation is
amended to read as follows:
"FIFTH: This Corporation is authorized to issue only one class of shares
of stock, designated "Common Stock" and the total number of shares which
this Corporation is authorized to issue is 10 million (10,000,000). No
distinction shall exist between the shares of the Corporation nor between
the holders thereof. Upon amendment of this article to read as herein set
forth, each outstanding share is split up and converted into 2525 shares."
5. The Articles of Incorporation of this Corporation are amended by adding a
paragraph SEVENTH to read as follows:
"SEVENTH: This Corporation elects to be governed by all of the provisions
of the General Corporation Law of 1977 not otherwise applicable to it
under the provisions of ss 2300-2319 of the California Corporations Code."
6. The foregoing amendment of the Articles of Incorporation has been approved by
the Board of Directors.
<PAGE>
7. The Corporation has only one' class of shares outstanding. The amendment adds
a paragraph whereby the Corporation elects to be governed by all of the
provisions of the General Corcoration Law of 1977, and makes no change in the
Articles of Incorporation other than to conform the statement of purposes and
powers to subdivision (b) of Section 202 of the Corporation Code, to delete any
reference to par value, to delete any statements regarding the number of
directors, to delete the names and addresses of the first directors, and to
effect a stock split, and is an amendment that may be adopted by the Board alone
pursuant to Sections 2302, 902(c) and 902(d) of the California Corporations
Code.
/s/ Tolman Geffs, President
----------------------------------
Tolman Geffs, President
/s/ Richard J. Schwarzstein, Secretary
----------------------------------
Richard J. Schwarzstein, Secretary
<PAGE>
Exhibit 3.136
RESTATED
BY-LAWS OF
PLAZA COMMUNICATIONS, INC.
ARTICLE I. OFFICES
Section 1.01 Principal Office
The principal office for the transaction of the business of the
corporation is hereby fixed and located at 18818 Teller Ave. Irvine, County of
Orange, State of California. The Board of Directors is hereby granted full power
and authority to change the principal office from one location to another.
ARTICLE II. SHAREHOLDERS' MEETINGS
Section 2.01 Place of Meetings
All the meetings of the shareholders shall be held at the principal
office of the corporation in the State of California, or any other place within
this State, as may be designated for that purpose from time to time by the Board
of Directors.
Section 2.02 Time of Annual Meeting
The annual meetings of the shareholders shall be held on the first
convenient business day in the second or third week of December.
Section 2.03 Notice of Annual Shareholders' Meetings
(a) Notice of annual meetings of shareholders shall be sent in
writing to shareholders of record as specified by the Board of Directors
together with proxy statements and annual reports as least 15 days prior to the
annual meeting.
<PAGE>
Notice of Special Meetings
(b) Notice of special meetings of shareholders, specifying the
place, the day and hour of the meeting, and the general nature of the business
to be transacted, and any matters that may be required by law, the Articles of
Incorporation, or these By-laws, shall be given in writing to each shareholder
entitled to vote at the meeting at least ten (10) days, but not more than sixty
(60) days, before the date of the meeting either personnally or by mail or other
means of written communication, addressed to the shareholder at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. Notice of adjourned meetings is not necessary unless the
meeting is adjourned for forty-five (45) days or more, in which case notice of
the adjourned meeting shall be given as in the case of any special meeting.
Entry of Notice
(c) Whenever any shareholder entitled to a vote has been absent from
any meeting of shareholders, whether annual or special, an entry in the minutes
to the effect that notice has been duly given shall be sufficient evidence that
due notice of such meeting was given to such shareholder, as required by law and
the By-laws of the corporation.
Section 2.04 Special Meetings
Special meetings of the shareholders for any purpose or purposes
whatsoever may be called at any time by the president, chairman of the board, or
by the Board of Directors, or by any two or more directors, or by one or more
shareholders holding not less than one-tenth (1/10) of the voting power of the
corporation.
Section 2.05 Quorum
The presence in person or by proxy of the holders of a majority of
the shares entitled to vote at any meeting of shareholders shall constitute a
quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the the shares required to constitute a
quorum.
Section 2.06 Voting
The shareholders entitled to vote at any meeting of shareholders
shall be determined in accordance with the
<PAGE>
provisions of Section 2.10 of this Article II, subject to the provisions of
Sections 702 to 704, inclusive, of the Corporations code of California (relating
to voting shares held by a fiduciary, in the name of a corporation, or in joint
ownership). The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder before the voting has begun. On any matter other than elections of
directors, any shareholder may vote part of the shares in favor of the proposal
and refrain from voting the remaining shares or vote them against the proposal,
but, if the shareholder fails to specify the number of shares which the
shareholder is voting affirmatively, it will be conclusively presumed that the
shareholder's approving vote is with respect to all shares that the shareholder
is entitled to vote. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote on any
matter (other than election of directors) shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is required by
California General Corporation Law or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to cumulate votes (i.e., cast for any one or more
candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or distribute the
shareholder's votes on the same principle among any or all of the candidates, as
the shareholder thinks fit. The candidates receiving the highest number of
votes, up to the number of directors to be elected, shall be elected.
Section 2.07 Proxies
Every person entitled to vote for directors or on any other matter
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation. A proxy shall be deemed signed if the shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission, or otherwise) by the shareholder or the shareholder's attorney in
fact. A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the person executing it,
before the vote pursuant to that proxy, by a writing delivered to
<PAGE>
the corporation stating that the proxy is revoked, or by a subsequent proxy
executed by, or attendance at the meeting and voting in person by, the person
executing the proxy; or (ii) written notice of the death or incapacity of the
maker of that proxy is received by the corporation before the vote pursuant to
that proxy is counted; provided, however, that no proxy shall be valid after the
expiration of eleven (11) months from the date of the proxy, unless otherwise
provided in the proxy. The revocability of a proxy that states on its face that
it is irrevocable shall be governed by the provisions of Sections 705 (e) and
705 (f) of the Corporations Code of California.
Section 2.08 Consent of Absentees or Waiver of Notice
No defect in the calling or noticing of a shareholder's meeting will
affect the validity of any action at the meeting if a quorum was present, and if
each shareholder not present in person or by proxy signs a written waiver of
notice, consent to the holding of the meeting, or approval of the minutes,
either before or after the meeting, and such waivers, consents, or approvals are
filed with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver
of notice of that meeting, except when the person objects, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened, and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters not included in
the notice of the meeting if that objection is expressly made at the meeting.
Section 2.09 Action Without Meeting
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted. In the case of
election of directors, such a consent shall be effective only if signed by the
holders of all outstanding shares entitled to vote for the election of
directors; provided, however, that a director may be elected at any time to fill
a vacancy on the board of directors that has not been filled by the directors,
by the written consent of the holders of a majority of the outstanding shares
entitled to vote for the election of directors. All such consents shall be filed
with the secretary of the corporation and shall be maintained in the corporate
records.
<PAGE>
Any shareholder giving a written consent, or the shareholder's proxy holders, or
a transferee of the shares or a personal representative of the shareholder or
their respective proxy holders, may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all shareholders
shall not have been received, the secretary shall give prompt notice of the
corporate action approved by the shareholders without a meeting. This notice
shall be given in the manner specified in Section 2.03 if this Article. In the
case of approval of (i) contracts or transactions in which a director has a
direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (ii) indemnification of agents of the
corporation, pursuant to Section 317 of that Code, (iii) a reorganization of the
corporation, pursuant to Section 1201 of that Code, and (iv) a distribution
other than in accordance with the rights of outstanding preferred shares,
pursuant to Section 2007 of that Code, the notice shall be given at least ten
(10) days before the consummation of any action authorized by that approval.
Section 2.10 Record Date
For purposes of determining the shareholders entitled to notice of
any meeting or to vote or entitled to give consent to corporate action without a
meeting, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days before the date of
any such action without a meeting, and in this event only shareholders of record
on the date so fixed are entitled to notice and to vote or to give consents, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the
California General Corporation Law.
If the board of directors does not fix a record date:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceeding the day on which notice is given
or, if notice is waived, at the close of business on the business day next
preceeding the day on which the meeting is held.
(b) The record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken,
<PAGE>
shall be the day on which the first written consent is given, or (ii) when prior
action of the board has been taken, shall be at the close of business on the day
on which the board adopts the resolution relating to that action, or the
sixtieth (60) day before the date of such other action, whichever is later.
Section 2.11 Inspectors of Election
In connection with any election of shareholders, the board may
appoint inspectors of election to act at the meeting and any adjournment thereof
in accordance with the requirements of the California Corporations Law.
ARTICLE III. DIRECTORS
Section 3.01 Powers
The directors shall act only as a board and an individual director
shall have no power as such. All corporate powers of the corporation shall be
exercised by, or under authority of, and the business and affairs of the
corporation shall be controlled by the Board of Directors, subject, however, to
such limitations as are imposed by law, the Articles of Incorporation, or these
Bylaws, as to actions to be authorized or approved by the shareholders. The
Board of Directors may, by contract or otherwise, give general or limited or
special power and authority to the officers and employees of the corporation to
transact the general business, or any special business, of the corporation, and
may give powers of attorney to agents of the corporation to transact any special
business requiring such authorization.
Section 3.02 Number and Qualification of Directors
The authorized number of directors shall be three (3)* until changed
by a duly adopted amendment to the articles of incorporation or by an amendment
to this by-law adopted by the vote or written consent of holders of a majority
of the outstanding shares entitled to vote; provided, however, that an amendment
reducing the number of directors to a number less than five (5) cannot be
adopted if the votes cast against its adoption at a meeting, or the shares not
consenting in the case of action by written consent, are equal to more than
16-2/3% of the outstanding shares entitled to vote. Directors need not be share
holders.
*Five (5) adopted April 21, 1983
<PAGE>
Section 3.03 Election and Term of Office
The directors shall be elected annually by the shareholders entitled
to vote, and shall hold office for one year and until their respective
successors are elected, or until their death, resignation or removal.
Section 3.04 Vacancies
Vacancies in the Board of Directors may be filled by a majority of
the remaining directors, though less than a quorum, or by a sole remaining
director, and each director so elected shall hold office until his successor is
elected at an annual meeting of shareholders or at a special meeting called for
that purpose. The shareholders may elect a director at any time to fill any
vacancy not filled by the directors.
If the Board of Directors accepts the resignation of a director
tendered to take effect at a future time, the board, or the shareholders, shall
have power to elect a successor to take office when the resignation shall become
effective.
No reduction of the number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 3.05 Removal of Directors
The entire Board of Directors or any individual director may be
removed from office in the manner provided by law.
Section 3.06 Place of Meetings
All meetings of the Board of Directors shall be held at the
principal office of the corporation or at such place within or without the State
as may be designated from time to time by resolution of the board or by written
consent of all the members of the board. Any meeting, regular or special, may be
held by conference telephone or similar communication equipment, so long as all
directors participating in the meeting can hear one another, and all such
directors shall be deemed to be present in person at the meeting.
Section 3.07 Regular Meetings
Regular meetings of the Board of Directors shall be held on such day
or days as the Board of Directors shall determine by resolution. Such regular
meetings may be held without notice.
<PAGE>
Section 3.08 Annual Meetings
Annual meetings of the Board of Directors shall be held, without
call or notice, immediately following each annual meeting of the shareholders of
this corporation.
Section 3.09 Special Meetings
Special meetings of the Board of Directors for any purpose or
purposes may be called at any time by the chairman of the board or the president
or any vice president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally, or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before
the time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
Section 3.10 Quorum
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.12 of this Article III. Every act or decision done or made by a majority of
the directors present at a meeting duly held at which a quorum is present shall
be regarded as the act of the board of directors, subject to the provisions of
Section 310 of the Corporations Code of California (as to approval of contracts
or transactions in which a director has a director or indirect material
financial interest), Section 311 of that Code (as to appointment of committees,
and Section 317(e) of that Code (as to indemnification of directors). A meeting
at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, if any action taken is approved by
at least a majority of the required quorum for that meeting.
<PAGE>
Section 3.11 Board Action Without Meeting
Any action required or permitted to be taken by the Board of
Directors, may be taken without a meeting, and with the same force and effect as
a unanimous vote of directors, if all members of the Board shall individually or
collectively consent in writing to such action and if such written consents
shall be filed with the minutes of the proceedings of the Board. Any certificate
or other document filed under any provision of this Article which relates to
action so taken shall state that the action was taken by unanimous written
consent of the Board of Directors without a meeting, and that the By-laws
authorize the directors to so act, and such statement shall be prima facie
evidence of such authority.
Section 3.12 Adjournment Notice
A quorum of the directors may adjourn any directors' meeting to meet
again at a stated day and hour. Notice of the time and place of holding an
adjourned meeting need not be given to absent directors if the time and place is
fixed at the meeting adjourned, unless the meeting is adjourned for more than
twenty-four (24) hours, in which case notice of the time and place shall be
given before the time of the adjourned meeting, in the manner specified in
Section 3.09 of this Article III, to the directors who were not present at the
time of the adjournment. In the absence of a quorum, a majority of the directors
present at any directors' meeting, either regular or special, may adjourn from
time to time until the time fixed for the next regular meeting of the Board.
Section 3.13 Conduct of Meetings
The Chairman of the Board or President, of in their absence, any
director selected by the directors present shall preside at meetings of the
Board of Directors. The secretary of the corporation, or in his absence, any
person appointed by the presiding officer, shall act as secretary of the Board
of Directors.
Section 3.14 Waiver of Notice
The transaction of any meeting of the board of directors, however,
called and noticed or wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice if a quorum is present and if,
either before or after the meeting, each of the directors not present signs a
written waiver of notice, a consent to holding the meeting or as approval of the
minutes. The waiver of notice or consent need not specify
<PAGE>
the purpose of the meeting. All such waivers, consents, and approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
Notice of a meeting shall also be deemed given to any director who attends the
meeting without protesting before or at its commencement, the lack of notice to
that director.
Section 3.15 Compensation
Directors and members of committees may receive such compensation,
if any, for their services, and such reimbursement for expenses, if any, as may
be fixed or determined by resolution of the Board. This section 3.15 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee, or otherwise, and receiving
compensation for those services.
Section 3.16 Indemnification of Directors, Officers, Employees, and Other Agents
The corporation shall, to the maximum extent permitted by the
California General Corporation Law, indemnify each of its agents against
expenses, judgments, fines, settlements and other proceedings arising by reason
of the fact any such person is or was an agent of the corporation. For purposes
of this Section, an "agent" of the corporation includes any person who is or was
a director, officer, employee, or other agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, or was a director, officer, employee, or agent of a corporation
which was a predecessor corporation of the corporation or of another enterprise
at the request of such predecessor corporation.
ARTICLE IV. COMMITTEES
Section 4.01 Committees of Directors
The board of directors may, by resolution adopted by a majority of
the authorized number of directors, designate one or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent member at any meeting of the committee. Any
committee, to the extent provided in the resolution of the board, shall have all
the authority of the board, except with respect to:
<PAGE>
(a) the approval of any action which, under the General
Corporation Law of California, also requires shareholders' approval or approval
of the outstanding shares;
(b) the filling of vacancies on the board of directors or in
any committee;
(c) the fixing of compensation of the directors for serving on
the board or on any committee;
(d) the amendment or repeal of by-laws or the adoption of new
by-laws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation,
except at a rate or in a periodic amount or within a price range determined by
the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members of these committees.
Section 4.02 Meeting and Action of Committees
Meetings and action of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these By-laws,
Sections 3.06 (place of meetings), 3.07 (regular meetings), 3.09 (special
meetings and notice), 3.10 (quorum), 3.14 (waiver of notice), 3.12 (adjournment)
and (notice of adjournment), and 3.11 (action without meeting), with such
changes in the context of those By-laws as are necessary to substitute the
committee and its members for the board of directors and its members, except
that the time of regular meetings of committees may be determined either by
resolution of the board of directors or by resolution of the committee; special
meetings of committees may also be called by resolution of the board of
directors; and notice of special meetings of committees shall also be given to
all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these By-laws.
ARTICLE V. OFFICERS
Section 5.01 Titles and Appointment
The officers of the corporation shall be a president, one or more
vice-presidents, a secretary, a chief financial officer
<PAGE>
and such assistants and other officers, including Chairman of the Board, as the
Board of directors shall from time to time determine. Any number of offices may
be held by one person, and any office, except president, chairman of the board,
if any, secretary and a chief financial officer, may be left unfilled for any
period in the discretion of the Board of Directors. All officers shall be
elected by and hold office at the pleasure of the Board of Directors, which
shall fix the compensation and tenure of all officers. A vacancy in any office
because of death, resignation, removal, disqualification or any other cause
shall be filled in the manner prescribed in the By-laws for regular
appointments to such office.
Section 5.02 Chairman of the Board
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may be from time to time assigned to him by the
board of directors or prescribed by the by-laws. If there is no president, the
chairman of the board shall in addition be the chief executive officer of the
corporation and shall have the powers and duties prescribed in this Section for
the President.
Section 5.03 President
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence of the
chairman of the board, or if there be none, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the board of directors or the
by-laws.
Section 5.04 Vice-President
The vice-president, or the vice-presidents in the order of their
seniority, if the corporation shall have any, may assume and perform the dutied
of the president in the absence or disability of the president or whenever the
office of president is vacant, and shall perform such other duties and have such
other powers as the Board of Directors or the president shall designate from
time to time.
<PAGE>
Section 5.05 Secretary
The secretary shall see that all notices are duly given in
accordance with the provisions of these By-laws or as required by laws; shall
keep the minutes of all proceedings or meetings of shareholders and of the Board
of Directors, and any committees thereof; keep, or cause to be kept, at the
principal office or at the office of the corporation's transfer agent, if any, a
share register, or a duplicate share register, showing the names of the
shareholders and their addresses; the number and classes of shares held by each;
the number and date of certificates issued for the same; the number and date of
cancellation of every certificate surrendered for cancellation; keep the seal
of the corporation in safe custody; and shall perform such other duties as are
incident to his office or as are assigned to him by the Board of Directors or by
the president.
Section 5.06 Chief Financial Officer
The chief financial officer shall receive and have custody of all
funds and securities of the corporation; shall deposit all monies and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the Board of Directors; disburse the funds
of the corporation as may be ordered by the Board of Directors; shall keep
adequate and correct books and records of account of the corporation's
properties and business transactions of the corporation, including the accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares; and shall render to the president and directors,
whenever they request it, an account of all his transactions as as chief
financial officer and of the financial condition of the corporation. The books
of accounts shall at all reasonable times be open for inspection by any
director.
Section 5.07 Checks and Drafts
All checks, drafts or other orders for payment of money, notes or
other evidences of indebtedness issued in the name of or payable to the
corporation, shall be signed or endorsed by such person or persons and in such
manner as, from time to time, shall be determined by resolution of the Board of
Directors.
<PAGE>
ARTICLE VI.
EXECUTION AND FILING OF INSTRUMENTS AND OTHER DOCUMENTS
Section 6.01 Execution of Instruments
The Board of Directors may, in its discretion, determine the method
and designate the signatory officer or officers, or other persons, to execute
any corporate instrument or document, or to sign the corporate name without
limitation, except where otherwise provided by law, and such execution or
signature shall be binding upon the corporation.
Section 6.02 Seal
The corporation shall adopt and use a corporate seal consisting of a
circle setting forth on its circumference the name of the corporation and
showing the state and date of incorporation.
Section 6.03 Annual Statement of General Information
The corporation shall, during the period commencing on March 1 and
ending on August 31 in each year, file with the Secretary of the State of
California, on the prescribed form, a statement setting forth the authorized
number of directors, the names and complete business or residence addresses of
all incumbent directors, the names and complete business or residence addresses
of the chief executive officer, secretary, and chief financial officer, the
street address of its principal executive office or principal business office in
this state, and the general type of business constituting the principal
business activity of the corporation, together with a designation of the agent
of the corporation for the purpose of service of process, all in compliance with
Section 1502 of the Corporations Code of California.
ARTICLE VII. ISSUANCE AND TRANSFER OF SHARES
Section 7.01 Certificates for Paid and Unpaid Shares
Certificates for shares of the corporation shall be issued when
fully paid, and maybe issued prior to full payment under such restrictions as
the Board of Directors may deem proper.
<PAGE>
Section 7.02 Share Certificates
The certificates shall be in such form and device as shall be
provided by the Board of Directors and shall fully comply with the provisions of
the Corporations Code of the State of California. The certificates shall be
signed by the chairman of the board, president, or the vice-president, and by
the secretary, or assistant secretary, or chief financial officer, and the seal
of the corporation shall be affixed thereto. Any and all of the signatures on
the certificate may be facsimile.
Section 7.03 Replacement of Certificates
No new certificates shall be issued until the former certificate for
the shares represented thereby shall have been surrendered and canceled, except
in the case of lost or destroyed certificates for which the Board of Directors
may order new certificates to be issued upon such terms, conditions, and
guarantees as the Board may see fit to impose, including the filing of
sufficient indemnity, if required by the Board.
Section 7.04 Transfer of Shares
Shares of the corporation may be transferred by endorsement by the
signature of the owner, his agent, attorney, or legal representative, and the
delivery of the certificate; but such transfer is not valid, except as to the
parties thereto, until the same is so entered upon the books of the corporation
so as to show the names of the parties by whom and to whom transferred, the
number of the certificate, and the number or designation of the shares and the
date of the transfer, and until the old certificates are surrendered and
canceled, and any such transfer shall be subject to any restriction by any state
or federal law or regulation applicable thereto. The transferee in any transfer
of shares shall be deemed to have full notice of, and to consent to, the
By-laws of the corporation to the same extent as if he had signed a written
assent thereto. The Board of Directors may appoint one or more transfer agents
or transfer clerks, and one or more registrars, which shall be an incorporated
bank or trust company, either domestic or foreign, who shall be appointed at
such times and places as the requirements of the corporation may necessitate and
the Board of Directors may designate.
<PAGE>
ARTICLE VIII.
RECORDS AND REPORTS AND VOTING OF OTHER SHARES
Section 8.01 Inspection of Books and Records
All books and records, provided for by statute, including the
By-laws, shall be open to inspection of the directors and shareholders from time
to time and to the extent expressly provided by statute, and not otherwise.
Section 8.02 Annual Report
The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly dispensed with, but nothing
herein shall be interpreted as prohibiting the board of directors from issuing
annual or other periodic reports to the shareholders of the corporation as they
consider appropriate.
Section 8.03 Financial Statements
A copy of any annual financial statement and any income statement of
the corporation for each quarterly period of each fiscal year, and any
accompanying balance sheet of the corporation as of the end of each such period,
that has been prepared by the corporation shall be kept on file in the principal
executive office of the corporation for twelve (12) months and each such
statement shall be exhibited at all reasonable times to any shareholder
demanding an examination of any such statement or a copy shall be mailed to any
such shareholder.
If a shareholder or shareholder holding at least five percent (5%)
if the outstanding shares of any class of stock of the corporation makes a
written request to the corporation for an income statement of the corporation
for the three-month, six- month or nine-month period of the then current
fiscal year ended more than thirty (30) days before the date of the request, and
a balance sheet of the corporation as of the end of that period, the chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
<PAGE>
The corporation shall also, on the written request of any
shareholder, mail to the shareholder a copy of the last annual, semi-annual, or
quarterly income statement which it has prepared, and a balance sheet as of the
end of that period.
The quarterly income statements and balance sheets referred to in
this section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
Section 8.04 Representation of Shares of Other Corporations
The chairman of the board, the president, or any vice-president, or
any other person authorized by resolution of the board of directors or by any of
the foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporation may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
ARTICLE IX. AMENDMENT OF BY-LAWS
Section 9.01 Amendment of By-laws by Shareholders and Directors
The By-laws, and every part thereof, may from time to time and at any
time, be amended, altered, repealed, and new or additional By-laws may be
adopted as follows: (1) By the vote of the shareholders entitled to exercise a
majority of the voting power of the corporation or by the written assent of such
shareholders; or (2) subject to such right of shareholders, by a majority vote
of the directors present at any meeting of the Board at which a quorum is
present, provided, however, that the Board of Directors may not adopt a By-law
or amendment thereof changing the authorized number of directors.
<PAGE>
CERTIFICATE OF SECRETARY
I certify that:
I am the Secretary of Plaza Publishing Company.
The foregoing By-laws, consisting of seventeen (17) pages, are the
By-laws of the corporation adopted by the Board of Directors on December 17,
1987.
Dated: December 17, 1987
/s/ Kathleen Blank
---------------------------------
Kathleen Blank (Secretary)
<PAGE>
EXHIBIT 3.137
CERTIFICATE OF INCORPORATION
OF
QWIZ ACQUISITION CORPORATION
The undersigned, in order to form a corporation for the purpose
hereinafter stated, under and pursuant to the provisions of the Delaware General
Corporation Law, hereby certifies that:
FIRST: The name of the Corporation is QWIZ Acquisition Corporation.
SECOND: The registered office and registered agent of the Corporation is
The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle
County, Delaware, 19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock that the Corporation is
authorized to issue is 1,000 shares of Common Stock, par value $0.01 each.
FIFTH: The name and address of the incorporator is Beverly C. Chell, 745
Fifth Avenue, New York, New York 10151.
SIXTH: The Board of Directors of the Corporation, acting by majority vote,
may alter, amend or repeal the By-Laws of the Corporation.
SEVENTH: Except as otherwise provided by the Delaware General Corporation
Law as the same exists or may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. Any repeal or
modification of this Article SEVENTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, the undersigned has signed this certificate of
Incorporation on February 27, 1997.
/s/ Beverly C. Chell
---------------------------
Beverly C. Chell
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:30 PM 02/27/1997
971066616 - 2723189
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:01 PM 05/22/1997
971169364 - 2723189
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
QWIZ ACQUISITION CORPORATION
*******
Pursuant to Section 242 of the General Corporation
Law of the State of Delaware
Qwiz Acquisition Corporation, a corporation organized and existing under
and by virtue of the Delaware General Corporation Law (hereinafter called the
"Corporation").
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation, by unanimous
written consent of its members, filed with the minutes of the Board duly adopted
resolutions setting forth a proposed amendment to the Certificate of
Incorporation of said Corporation, declaring said amendment to be advisable and
proposing such amendment to the sole stockholder of the Corporation for such
stockholder's consideration. The resolution setting forth the proposed amendment
as follows:
"RESOLVED, that the Board of Directors hereby deems it advisable and
in the best interests of the Corporation and its stockholders that the
Certificate of Incorporation of the Corporation (the "Charter") be amended
by deleting Article FIRST thereof in its entirety and by substituting, in
lieu of said Article, the following new Article:
FIRST: The name of the Corporation is Qwiz, Inc.; and
RESOLVED, that the foregoing amendment to the Charter be, and the
same hereby is, approved and adopted, subject to the approval of such
amendment by the sole stockholder of the Corporation; and further
RESOLVED, that the submission of the foregoing amendment for
approval by the sole stockholder of the Corporation be, and the same
hereby is, approved."
<PAGE>
SECOND: That thereafter, by written consent filed with the minutes
of the Corporation, the sole stockholder approved said amendment as
adopted by the Board of Directors.
THIRD: That the above amendment was duly adopted in accordance with
the provisions of Section 242 General Corporation law of the State of
Delaware.
IN WITNESS WHEREOF, said Qwiz Acquisition Corporation has caused
this certificate to be signed by Curtis A. Thompson, Vice President and
attested by Beverly C. Chell, Secretary this 22nd day of May, 1997.
Qwiz Acquisition Corporation
By: /s/ Curtis A. Thompson
------------------------------
Curtis A. Thompson
Vice President
ATTEST:
By: /s/ Beverly C. Chell
------------------------------
Beverly C. Chell
Secretary
<PAGE>
EXHIBIT 3.138
QWIZ ACQUISITION CORPORATION
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders of
the Corporation shall be held at such place either within or without the State
of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of stockholders
shall be held, at a date, time and place fixed by the Board of Directors and
stated in the notice of meeting, to elect a Board of Directors and to transact
such other business as may properly come before the meeting. Special meetings of
the stockholders may be called by the President for any purpose and shall be
called by the President or Secretary if directed by the Board of Directors or
requested in writing by the holders of not less than 25% of the capital stock of
the Corporation. Each such stockholder request shall state the purpose of the
proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10 and
not more than 60 days before each meeting of stockholders, written notice of the
time, date and place of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of record,
present in person or by proxy, of a majority of the Corporation's issued and
outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
ARTICLE II
DIRECTORS
<PAGE>
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of three
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by the Board of
Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Director shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution adopted
by a majority of the whole Board, designate one or more committees, including,
without limitation, an Executive Committee, to have and exercise such power and
authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another Director to act at the
meeting in place of any such absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Secretary,
a Treasurer and such other additional officers with such titles as the Board of
Directors shall determine, all of which shall be chosen by and shall serve at
the pleasure of the Board of Directors. Such officers shall have the usual
powers and shall perform all the usual duties incident to their respective
offices. All officers shall be subject to the supervision and direction of the
Board of Directors. The authority, duties or responsibilities of any officer of
the Corporation may be suspended by the President with or without cause. Any
officer elected or appointed by the Board of Directors may be removed by the
Board of Directors with or without cause.
<PAGE>
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation Law,
the Corporation shall indemnify any current or former Director or officer of the
Corporation and may, at the discretion of the Board of Directors, indemnify any
current or former employee or agent of the Corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding brought by or in the right of the Corporation or otherwise, to which
he was or is a party by reason of his current or former position with the
Corporation or by reason of the fact that he is or was serving, at the request
of the Corporation, as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of Incorporation
or these By-Laws require notice to be given to any Director or stockholder, such
notice may be given in writing by mail, addressed to such Director or
stockholder at his address as it appears in the records of the Corporation, with
postage thereon prepaid. Such notice shall be deemed to have been given when it
is deposited in the United States mail. Notice to Directors may also be given by
telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors
<PAGE>
EXHIBIT 3.139
RESTATED ARTICLES OF INCORPORATION
OF
BOWHUNTER MAGAZINE, INC.
ARTICLE I
The name of this Corporation is Bowhunter Magazine, Inc.
ARTICLE II
The registered office of this Corporation is located at c/o C T Corporation
System, 1635 Market Street, Philadelphia. PA 19103.
ARTICLE III
This Corporation shall be organized on a stock share basis. This
Corporation is authorized to issue an aggregate total of 1,000 shares, all of
which shall be designated Common Stock, having a par value of $.01 per share.
ARTICLE IV
This Corporation is incorporated under the provisions of the Business
Corporation Law of 1988.
ARTICLE V
No shareholder of this Corporation shall have any cumulative voting rights.
ARTICLE VI
No shareholder of this Corporation shall have any preemptive rights to
subscribe for, purchase or acquire any shares of the Corporation of any class,
whether unissued or now or hereafter authorized, or any obligations or other
securities convertible into or exchangeable for any such shares.
ARTICLE VII
The name of the directors of the Corporation are James A. Alcott, David C.
Cox and Christopher M. Little.
ARTICLE VIII
No director of this Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty by such director as a
<PAGE>
director unless (i) the director has breached or failed to perform the duties of
his office under the Pennsylvania Statutes; and (ii) the breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness. This
Article shall not apply to: (A) the responsibility or liability of a director
pursuant to any criminal statute; or (B) the liability of a director for the
payment of taxes pursuant to Federal, State or local law.
<PAGE>
EXHIBIT 3.140
BY-LAWS
of
BOWHUNTER MAGAZINE, INC.
TABLE OF CONTENTS
Section Page
- ------- ----
SHAREHOLDERS 1
- ------------
1.01 Place of Meetings
1.02 Regular Meetings
1.03 Special Meetings
1.04 Meetings Held Upon Shareholder Demand 1
1.05 Adjournments 2
1.06 Notice of Meetings 2
1.07 Waiver of Notice 2
1.08 Quorum; Acts of Shareholders 2
1.09 Voting Rights 2
1.10 Proxies 3
1.11 Action Without a Meeting 3
DIRECTORS 3
- -----
2.01 Number; Qualifications 3
2.02 Term 3
2.03 Vacancies 3
2.04 Place of Meetings 4
2.05 Regular Meetings 4
2.06 Special Meetings 4
2.07 Waiver of Notice; Previously Scheduled Meetings 4
2.08 Quorum; Acts of Board 4
2.09. Electronic Communications 5
2.10 Absent Directors 5
2.11 Action Without a Meeting 5
2.12 Committees 5
2.13 Special Litigation Committee 6
2.14 Compensation 6
2.15 Limitation on Liability 6
6
OFFICERS
- --------
3.01 Number and Designation 6
3.02 President 7
3.03 Vice Presidents 7
3.04 Secretary
3.05 Treasurer 7
3.06 Authority and Duties 7
3.07 Term 8
3.08 Salaries 8
-i-
<PAGE>
Section Page
- ------- ----
INDEMNIFICATION 8
- --------------
4.01 Indemnification 8
4.02 Insurance 8
SHARES 8
- ---
5.01 Certificated Shares 8
5.02 Declaration of Dividends and Other Distributions 9
5.03 Transfer of Shares 9
5.04 Record Date 9
MISCELLANEOUS 9
- -------
6.01 Execution of Instruments 9
6.02 Advances 10
6.03 Corporate Seal 10
6.04 Fiscal Year 10
6.05 Amendments 10
This Table of Contents is not part of the By-Laws of the Corporation. It
is intended merely to aid in the utilization of the By-Laws.
- ii -
<PAGE>
BY-LAWS
of
BOWHUNTER MAGAZINE, INC.
SHAREHOLDERS
Section 1.01 Place of Meetings. Each meeting of the shareholders shall be
held at the principal executive office of the Corporation or at such other place
as may be designated by the Board of Directors or the President; provided,
however, that any meeting called by or at the demand of a shareholder or
shareholders shall be held in the county where the principal executive office of
the Corporation is located.
Section 1.02 Regular Meetings. Annual meetings of the shareholders may be
held on an annual or other less frequent basis as determined by the Board of
Directors; provided, however, that if a regular meeting has not been held during
the immediately preceding 18 months, a shareholder or shareholders may demand a
regular meeting of shareholders by written demand given to the President of the
Corporation. At each regular meeting the shareholders shall elect qualified
successors for directors who serve for an indefinite term or whose terms have
expired or are due to expire within six months after the date of the meeting and
may transact any other business, provided, however, that no business with
respect to which special notice is required by law shall be transacted unless
such notice shall have been given.
Section 1.03 Special Meetings. A special meeting of the shareholders may be
called for any purpose or purposes at any time by the President; by the Board of
Directors; or by one or more shareholders holding not less than 20 percent of
the voting power of all shares of the Corporation entitled to vote, who shall
demand such special meeting by written notice given to the President of the
Corporation specifying the purposes of such meeting.
Section 1.04 Meetings Held Upon Shareholder Demand. Within 30 days of
receipt of a demand by the President from any shareholder or shareholders
entitled to call a meeting of the shareholders, it shall be the duty of the
Board of Directors of the Corporation to cause a special or regular meeting of
shareholders, as the case may be, to be duly called and held on notice no later
than 60 days after receipt of such demand. If the Board of Directors fails to
cause such a meeting to be called and held as required by this Section the
shareholder or shareholders making the demand may call the meeting by giving
notice as provided in Section 1.06 hereof at the expense of the Corporation.
<PAGE>
Section 1.05 Adjournments. Any meeting of the shareholders may be adjourned
from time to time to another date, time and place. If any meeting of the
shareholders is so adjourned, no notice as to such adjourned meeting need be
given if the date, time and place at which the meeting will be reconvened are
announced at the time of adjournment.
Section 1.06 Notice of Meetings. Except as otherwise specified in Section
1.05 or required by law, written notice of each meeting of the shareholders,
stating the date, time and place and, in the case of a special meeting, the
purpose or purposes, shall be given at least five days and not more than 60 days
prior to the meeting to every holder of shares entitled to vote at such meeting.
The business transacted at a special meeting of shareholders is limited to the
purposes stated in the notice of the meeting.
Section 1.07 Waiver of Notice. A shareholder may waive notice of the date,
time, place and purpose or purposes of a meeting of shareholders. A waiver of
notice by a shareholder entitled to notice is effective whether given before, at
or after the meeting, and whether given in writing, orally or by attendance.
Attendance by a shareholder at a meeting is a waiver of notice of that meeting,
unless the shareholder objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or convened,
or, objects before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.
Section 1.08 Quorum: Acts of Shareholders. The holders of a majority of the
voting power of the shares entitled to vote at a shareholders meeting are a
quorum for the transaction of business. If a quorum is present when a duly
called or held meeting is convened, the shareholders present may continue to
transact business until adjournment, even though the withdrawal of a number of
the shareholders originally present leaves less than the proportion or number
otherwise required for a quorum. Except as otherwise required by law or
specified in the Articles of Incorporation of the Corporation, the shareholders
shall take action by the affirmative vote of the holders of a majority of the
voting power of the shares present and entitled to vote at a duly held meeting
of shareholders.
Section 1.09 Voting Rights. Subdivision 1. A shareholder shall have one
vote for each share held which is entitled to vote. Except as otherwise required
by law, a holder of shares entitled to vote may vote any portion of the shares
in any way the shareholder chooses. If a shareholder votes without designating
the proportion or number of shares voted in a particular way, the shareholder is
deemed to have voted all of the shares in that way.
-2-
<PAGE>
Subdivision 2. The Board may fix a date not more than 90 days before the
date of a meeting of shareholders as the date for the determination of the
holders of shares entitled to notice of and entitled to vote at the meeting.
When a date is so fixed, only shareholders on that date are entitled to notice
of and permitted to vote at that meeting of shareholders.
Section 1.10 Proxies. A shareholder may cast or authorize the casting of a
vote by filing a written appointment of a proxy with an officer of the
Corporation at or before the meeting at which the appointment is to be
effective.
Section 1.11 Action Without a Meeting. Any action required or permitted to
be taken at a meeting of the shareholders of the Corporation may be taken
without a meeting by written action signed by all of the shareholders entitled
to vote on that action. The written action is effective when it has been signed
by all of those shareholders, unless a different effective time is provided in
the written action.
DIRECTORS
Section 2.01 Number; Qualifications. Except as authorized by the
shareholders pursuant to a shareholder control agreement or unanimous
affirmative vote, the business and affairs of the Corporation shall be managed
by or under the direction of a Board of one or more directors. Directors shall
be natural persons. The shareholders at each regular meeting shall determine the
number of directors to constitute the Board, provided that thereafter the
authorized number of directors may be increased by the shareholders or the Board
and decreased by the shareholders. Directors need not be shareholders.
Section 2.02 Term. Each director shall serve for an indefinite term that
expires at the next regular meeting of the shareholders. A director shall hold
office until a successor is elected and has qualified or until the earlier
death, resignation, removal or disqualification of the director.
Section 2.03 Vacancies. Vacancies on the Board of Directors resulting from
the death, resignation, removal or disqualification of a director may be filled
by the affirmative vote of a majority of the remaining members of the Board,
though less than a quorum. Vacancies on the Board resulting from newly created
directorships may be filled by the affirmative vote of a majority of the
directors serving at the time such directorships are created. Each person
elected to fill a vacancy shall hold office until a qualified successor is
elected by the shareholders at the next regular meeting or at any special
meeting duly called for that purpose.
-3-
<PAGE>
Section 2.04 Place of Meetings. Each meeting of the Board of Directors
shall be held at the principal executive office of the Corporation or at such
other place as may be designated from time to time by a majority of the members
of the Board.
Section 2.05 Regular Meetings. Regular meetings of the Board of Directors
for the election of officers and the transaction of any other business shall be
held without notice at the place of and immediately after each regular meeting
of the shareholders.
Section 2.06 Special Meetings. A special meeting of the Board of Directors
may be called for any purpose or purposes at any time by any member of the Board
by giving not less than five days' notice to all directors of the date, time and
place of the meeting, provided that when notice is mailed, at least four days'
notice shall be given. The notice need not state the purpose of the meeting.
Section 2.07 Waiver of Notice; Previously Scheduled Meetings. Subdivision
1. A director of the Corporation may waive notice of the date, time and place of
a meeting of the Board. A waiver of notice by a director entitled to notice is
effective whether given before, at or after the meeting, and whether given in
writing, orally or by attendance. Attendance by a director at a meeting is a
waiver of notice of that meeting, unless the director objects at the beginning
of the meeting to the transaction of business because the meeting is not
lawfully called or convened and thereafter does not participate in the meeting.
Subdivision 2. If the day or date, time and place of a Board meeting have
been provided herein or announced at a previous meeting of the Board, no notice
is required. Notice of an adjourned meeting need not be given other than by
announcement at the meeting at which adjournment is taken of the date, time and
place at which the meeting will be reconvened.
Section 2.08 Quorum; Acts of Board. The presence in person of a majority of
the directors currently holding office shall be necessary to constitute a quorum
for the transaction of business. In the absence of a quorum, a majority of the
directors present may adjourn a meeting from time to time without further notice
until a quorum is present. If a quorum is present when a duly held meeting is
convened, the directors present may continue to transact business until
adjournment, even though the withdrawal of a number of the directors originally
present leaves less than the proportion or number otherwise required for a
quorum. Except as otherwise required by law or specified in the Articles of
Incorporation of the Corporation, the Board shall take action by the affirmative
vote of a majority of the directors present at a duly held meeting.
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Section 2.09 Electronic Communications. A conference among directors by any
means of communication through which the directors may simultaneously hear each
other during the conference constitutes a Board meeting, if the same notice is
given of the conference as would be required for a meeting, and if the number of
directors participating in the conference would be sufficient to constitute a
quorum at a meeting. A director may participate in a Board meeting not described
in the immediately preceding sentence by any means of communication through
which the director, other directors so participating and all directors
physically present at the meeting may simultaneously hear each other during the
meeting. Participation in a meeting by any means referred to in this Section
2.09 constitutes presence in person at the meeting.
Section 2.10 Absent Directors. A director of the Corporation may give
advance written consent or opposition Lo a proposal to be acted on at a Board
meeting. If the director is not present at the meeting, consent or opposition to
a proposal does not constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall be counted as a vote in
favor of or against the proposal and shall be entered in the minutes or other
record of action at the meeting, if the proposal acted on at the meeting is
substantially the same or has substantially the same effect as the proposal to
which the director has consented or objected.
Section 2.11 Action Without a Meeting. An action required or permitted to
be taken at a Board meeting may be taken without a meeting by written action
signed by all of the directors. The written action is effective when signed by
all of the directors, unless a different effective time is provided in the
written action.
Section 2.12 Committees. Subdivision 1. A resolution approved by the
affirmative vote of a majority of the Board may establish committees having the
authority of the Board in the management of the business of the Corporation only
to the extent provided in the resolution. Committees shall be subject at all
times to the direction and control of the Board, except as provided in Section
2.13.
Subdivision 2. A committee shall consist of one or more natural persons,
who shall be directors of the Corporation, appointed by affirmative vote of a
majority of the directors present at a duly held Board meeting.
Subdivision 3. Section 2.04 and Sections 2.06 to 2.11 hereof shall apply to
committees and members of committees to the same extent as those sections apply
to the Board and directors.
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Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.
Section 2.13 Special Litigation Committee. Pursuant to the procedure set
forth in Section 2.12, the Board may establish a committee composed of one or
more independent directors or other independent persons to determine whether it
is in the best interests of the Corporation to pursue a particular legal right
or remedy of the Corporation and whether to cause, to the extent permitted by
law, the dismissal or discontinuance of a particular proceeding that seeks to
assert a right or remedy on behalf of the Corporation. The committee, once
established, is not subject to the direction or control of, or termination by,
the Board. A vacancy on the committee may be filled by a majority vote of the
remaining committee members. The good faith determinations of the committee are
binding upon the Corporation and its directors, officers and shareholders to the
extent permitted by law. The committee terminates when it issues a written
report of its determinations to the Board.
Section 2.14 Compensation. The Board may fix the compensation, if any, of
directors.
Section 2.15 Limitation on Liability. No director of this Corporation shall
be personally liable to the Corporation or its shareholders for monetary
damages for breach of fiduciary duty by such director as a director unless (i)
the director has breached or failed to perform the duties of his office under
the Pennsylvania Statutes; and (ii) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. This by-law shall not apply
to: (A) the responsibility or liability of a director pursuant to any criminal
statute: or (B) the liability of a director for the payment of taxes pursuant to
Federal, State or local law.
OFFICERS
Section 3.01 Number and Designation. The Corporation shall have one or more
natural persons exercising the functions of the offices of President, Treasurer
and Secretary. The Board of Directors may elect or appoint such other officers
or agents as it deems necessary for the operation and management of the
Corporation, with such powers, rights, duties and responsibilities as may be
determined by the Board, including, without limitation, one or more Vice
Presidents, each of whom shall have the powers, rights, duties and
responsibilities set forth in these By-Laws unless otherwise determined by the
Board. Any of the offices or functions of those offices may be held by the same
person.
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Section 3.02 President. Unless provided otherwise by a resolution adopted
by the Board of Directors, the President (a) shall have general active
management of the business of the Corporation; (b) shall, when present, preside
at all meetings of the shareholders and Board of Directors; (c) shall see that
all orders and resolutions of the Board are carried into effect; (d) may
maintain records of and certify proceedings of the Board and shareholders; and
(e) shall perform such other duties as may from time to time be assigned by the
Board of Directors.
Section 3.03 Vice Presidents. Any one or more Vice Presidents, if any, may
be designated by the Board of Directors as Executive Vice Presidents or Senior
Vice Presidents. During the absence or disability of the President, it shall be
the duty of the highest ranking Executive Vice President, and, in the absence of
any such Vice President, it shall be the duty of the highest ranking Senior Vice
President or other Vice President, who shall be present at the time and able to
act, to perform the duties of the President. The determination of who is the
highest ranking of two or more persons holding the same office shall, in the
absence of specific designation of order of rank by the Board of Directors, be
made on the basis of the earliest date of appointment or election, or, in the
event of simultaneous appointment or election, on the basis of the longest
continuous employment by the Corporation.
Section 3.04 Secretary. The Secretary, unless otherwise determined by the
Board, shall attend all meetings of the shareholders and all meetings of the
Board of Directors, shall record or cause to be recorded all proceedings thereof
in a book to be kept for that purpose, and may certify such proceedings. Except
as otherwise required or permitted by law or by these By-Laws, the Secretary
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the Board of Directors.
Section 3.05 Treasurer. The Treasurer shall perform such duties as
may from time to time be assigned by the Board of Directors.
Section 3.06 Authority and Duties. In addition to the foregoing authority
and duties, all officers of the Corporation shall respectively have such
authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.
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<PAGE>
Section 3.07 Term. Subdivision 1. All officers of the Corporation shall
hold office until their respective successors are chosen and have qualified or
until their earlier death, resignation or removal.
Subdivision 2. An officer may resign at any time by giving written notice
to the Corporation. The resignation is effective without acceptance when the
notice is given to the Corporation, unless a later effective date is specified
in the notice.
Subdivision 3. An officer may be removed at any time, with or without
cause, by a resolution approved by the affirmative vote of a majority of the
directors present at a duly held Board meeting.
Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in the
office of President shall, be filled for the unexpired portion of the term by
the Board.
Section 3.08 Salaries. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors or by the President if authorized by
the Board.
INDEMNIFICATION
Section 4.01 Indemnification. The Corporation shall indemnify such persons,
for such expenses and liabilities, in such manner, under such circumstances, and
to such extent, as required or permitted by the Pennsylvania Business
Corporation Law, as amended from time to time, or as required or permitted by
other provisions of law.
Section 4.02 Insurance. The Corporation may purchase and maintain insurance
on behalf of any person in such person's official capacity against any liability
asserted against and incurred by such person in or arising from that capacity,
whether or not the Corporation would otherwise be required to indemnify the
person against the liability.
SHARES
Section 5.01 Certificated Shares. Subdivision 1. The shares of the
Corporation shall be certificated shares. Each holder of duly issued
certificated shares is entitled to a certificate of shares.
Subdivision 2. Each certificate of shares of the Corporation shall be
signed by the President or any Vice
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<PAGE>
president, and the Treasurer, or the Secretary or any Assistant Secretary, but
when a certificate is signed by a transfer agent or a registrar, the signature
of any such officer upon such certificate may be a facsimile, engraved or
printed. If a person signs or has a facsimile signature placed upon a
certificate while an officer, transfer agent or registrar of the Corporation,
the certificate may be issued by the Corporation, even if the person has ceased
to serve in that capacity before the certificate is issued, with the same effect
as if the person had that capacity at the date of its issue.
Subdivision 3. A certificate representing shares issued by the Corporation
shall, if the Corporation is authorized to issue shares of more than one class
or series, set forth upon the face or back of the certificate, or shall state
that the Corporation will furnish to any shareholder upon request and without
charge, a full statement of the designations, preferences, limitations and
relative rights of the shares of each class or series authorized to be issued,
so far as they have been determined, and the authority of the Board to determine
the relative rights and preferences of subsequent classes or series.
Section 5.02 Declaration of Dividends and Other Distributions. The Board of
Directors shall have the authority to declare dividends and other distributions
upon the shares of the Corporation to the extent permitted by law.
Section 5.03 Transfer of Shares. Shares of the Corporation may be
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. In the case of certificated shares, shares
shall be transferred only upon surrender and cancellation of certificates for a
like number of shares. The Board of Directors, however, may appoint one or more
transfer agents and registrars to maintain the share records of the Corporation
and to effect transfers of shares.
Section 5.04 Record Date. The Board of Directors may fix a time, not
exceeding 90 days preceding the date fixed for the payment of any dividend or
other distribution, as a record date for the determination of the shareholders
entitled to receive payment of such dividend or other distribution, and in such
case only shareholders of record on the date so fixed shall be entitled to
receive payment of such dividend or other distribution, notwithstanding any
transfer of any shares on the books of the Corporation after any record date so
fixed.
MISCELLANEOUS
Section 6.01 Execution of Instruments. Subdivision 1. All deeds, mortgages,
bonds, checks, contracts and other
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instruments pertaining to the business and affairs of the Corporation shall be
signed on behalf of the Corporation by the president or any Vice President, or
by such other person or persons as may be designated from time to time by the
Board of Directors.
Subdivision 2. If a document must be executed by persons holding different
offices or functions and one person holds such offices or exercises such
functions, that person may execute the document in more than one capacity if the
document indicates each such capacity.
Section 6.02 Advances. The Corporation may, without a vote of the
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.
Section 6.03 Corporate Seal. This Corporation shall have no seal.
Section 6.04 Fiscal Year. The fiscal year of the Corporation shall end on
the Saturday nearest the last day of March.
Section 6.05 Amendments. The Board of Directors shall have the power to
adopt, amend or repeal the By-Laws of the Corporation, subject to the power of
the shareholders to change or repeal the same, provided, however, that the Board
shall not adopt, amend or repeal any By-Law fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling vacancies
in the Board, or fixing the number of directors or their classifications,
qualifications or terms of office, but may adopt or amend a By-Law that
increases the number of directors.
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:30 PM 12/11/1997
971425420 - 2832296
CERTIFICATE OF INCORPORATION
OF
CANOE & KAYAK. INC.
The undersigned incorporator, being a person 18 years of age or older, in
order to form a corporate entity under Delaware General Corporation Law, hereby
sets forth the following Certificate of Incorporation:
ARTICLE I
The name of this Corporation is Canoe & Kayak, Inc.
ARTICLE II
The address of the registered office of this Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801, located in New Castle County
The registered agent at that address is The Corporation Trust Company.
ARTICLE III
The purpose of this Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
The total number of shares of stock which this Corporation has the
authority to issue is 10,000 shares, all of which shall be designated Common
Stock, with a par value of $.01 per share.
ARTICLE V
The name and mailing address of the incorporator of this Corporation is:
Laura S. Carlson
FAEGRE & BENSON LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-3901
ARTICLE VI
Except as may otherwise be provided by law, the books of the Corporation
may be kept outside of the State of Delaware at such place or places as the
Board of Directors may designate.
<PAGE>
ARTICLE VII
The following individual is hereby appointed as the first sole Director of
the Corporation, to serve until the first meeting of shareholders of the
Corporation and until his successor is duly elected and qualified:
James J. Viera
Elections of Directors need not be by written ballot unless the By-Laws of
the Corporation shall so provide.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to adopt, amend or repeal by-laws
of the Corporation, without any action on the part of the stockholders. The
by-laws made by the directors may be adopted, amended or repealed by the
stockholders. Any specific provision in the by-laws regarding amendment thereof
shall be controlling.
ARTICLE IX
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article shall
not eliminate or limit the liability of a director to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of Delaware or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
IN WITNESS WHEREOF. I have hereunto set my hand this 11th day of December,
1997
/s/ Laura S. Carlson
------------------------------
Laura S. Carlson, Incorporator
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BY-LAWS
OF
CANOE & KAYAK, INC.
ARTICLE I
OFFICERS
Section 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. The annual meeting of stockholders for the election of directors
and the transaction of other business shall be held annually at such place
either within or without the State of Delaware as shall be designated by the
board of directors and stated in the notice of the meeting. Special meetings of
stockholders for any purpose or purposes may be held at such time and place,
within or without the State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on such date and
at such time as shall be designated from time to time by the board of directors
and stated in the notice of the meeting, at which stockholders shall elect a
board of directors and transact such other business as may properly be brought
before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten or more than sixty days before the date of the
meeting, except as otherwise required by law.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of such stockholder.
<PAGE>
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten or more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting, except as
otherwise required by law.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote at a meeting, whether present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote at such meeting, whether present in person or represented by proxy, shall
have the power to adjourn the meeting from time to time without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the voting power of the stock present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes or of the
certificate of incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy
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for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be effective for more than three years from its
date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by
or under the direction of a board of one or more directors. The stockholders at
their annual meeting shall determine the number of directors to constitute the
board for the next year, provided that thereafter the authorized number of
directors may be increased by the stockholders or the board and decreased by the
stockholders. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and each director
elected shall hold office until his or her successor is elected and qualified or
until his or her earlier resignation or removal. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
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Meetings of the Board of Directors
Section 3. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 4. The first meeting of each newly elected board of directors shall
be held immediately after the annual meeting of stockholders and at the same
place, and no notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided that a quorum
shall be present. In the event that such meeting is not held at that time and
place, the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board of
directors, or as shall be specified in a written waiver signed by all of the
directors.
Section 5. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 6. Special meetings of the board may be called by the president on
three days' notice to each director, either personally, by telephone, by mail,
by telegram or by any other means of communication; special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of one or more of the directors.
Section 7. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors, the directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 8. Any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 9. Members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment in which all persons participating in the meeting can
hear each other, and such participation in a meeting shall constitute presence
in person at the meeting.
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Committees of Directors
Section 10. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each consisting of one or
more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he, she or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, but no such committee shall have the power or authority to amend
the certificate of incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommend to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amend the by-laws of the corporation; and, unless the resolution of the board
designating the committee expressly so provides, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of stock
or to adopt a certificate of ownership and merger pursuant to the Delaware
General Corporation Law. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Compensation of Directors
Section 12. The board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Removal of Directors
Section 13. Unless otherwise restricted by law, any director or the entire
board of directors may be removed, with or without cause, by the holders of a
majority of the stock issued and outstanding and entitled to vote at an election
of directors.
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ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of statute, certificate of
incorporation or by-laws, notice is required to be given to any stockholder, it
shall not be construed to require personal notice but shall mean such notice as
may be given in writing, by mail, addressed to such stockholder, at such
stockholder's address as it appears on the records of the corporation, with
postage thereon prepaid, and such notice shall be deemed to have been given at
the time when the same shall have been deposited in the United States mail.
Section 2. Whenever any notice is required to be given under the provisions
of statute, certificate of incorporation or by-laws, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or a committee of directors need be specified in any
written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall include a president, a secretary and a treasurer. The board
of directors may also choose a chairman of the board, one or more vice
presidents and one or more assistant secretaries and assistant treasurers. Any
number of offices may be held by the same person, unless the certificate of
incorporation or these by-laws provide otherwise.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a secretary and a treasurer
and such other officers as it deems necessary or appropriate.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary or appropriate, and such officers shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.
6
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Section 4. The salaries of all officers and agents of the corporation shall
be fixed by or in the manner prescribed by the board of directors.
Section 5. Each officer of the corporation shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation may or, in the
case of the president, secretary or treasurer, shall, be filled by the board of
directors.
The President
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors (unless a chairman of the board is currently holding office, in which
event the chairman of the board shall preside at such meetings), shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried out and
put into effect.
Section 7. The president shall execute bonds, mortgages and other
contracts, except where required or permitted by law to be otherwise signed and
executed and except where signing and execution thereof shall be expressly
delegated by the board of directors to some other officer or agent of the
corporation or except as otherwise permitted in Section 8 hereof.
Section 8. In the absence of the president or in the event of his or her
inability to act, the chairman of the board or the vice president, if any (or if
there is more than one vice president, the vice presidents in the order
designated by the directors, or in the absence of any designation, then in the
order of their election), shall perform the duties of the president, and when so
acting, shall have all the powers of and shall be subject to all the
restrictions upon the president. The vice presidents, if any, shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe.
The Secretary and Assistant Secretaries
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He or she shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision he or she shall be.
Section 10. In the absence of the secretary or in the event of his or her
inability to act, the assistant secretary, if any (or if there is more than one,
the assistant secretaries in the order designated by the directors, or in the
absence of any designation, then in the order of their election),
7
<PAGE>
shall perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
The Treasurer and Assistant Treasurers
Section 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all money
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. The treasurer shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his or her transactions as treasurer and of the financial condition of the
corporation.
Section 13. In the absence of the treasurer or in the event of his or her
inability to act, the assistant treasurer, if any (or if there is more than one,
the assistant treasurers in the order designated by the directors, or in the
absence of any designation then in the order of their election), shall perform
the duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of the corporation by, the chairman
of the board of directors or the president or a vice president and by the
treasurer or an assistant treasurer or the secretary or an assistant secretary
of the corporation, certifying the number of shares owned by such person in the
corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor and the amount
paid thereon shall be specified.
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate or certificates which the corporation shall issue to
represent such class or series of stock, provided that, except as otherwise
provided in Section 202 of the Delaware
8
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General Corporation Law, or any successor provisions enacted from time to time
to time, in lieu of the foregoing requirements, there may be set forth on the
face or back of the certificate or certificates which the corporation shall
issue to represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, designation, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
Lost Certificates
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or such
owner's legal representative, to give the corporation a bond sufficient to
indemnify it against any claim that may be made against the corporation on
account of the alleged loss, theft or destruction of any such certificate or
certificates or the issuance of such new certificate or certificates.
Transfer of Stock
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Fixing Record Date
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, to express consent to corporate action in writing without a
meeting, to receive payment of any dividend or other distribution or allotment
of any rights, or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the board of
directors may fix, in advance, a record date, which shall be not more than sixty
or less than ten
9
<PAGE>
days before the date of such meeting, or more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Registered Stockholders
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Delaware
General Corporation Law.
ARTICLE VII
GENERAL PROVISIONS
Dividends
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions (if any) of the certificate of incorporation, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
directors shall deem in the best interests of the corporation, and the directors
may modify or abolish any such reserve in the manner in which it was created.
Checks
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
Fiscal Year
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
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ARTICLE VIII
INDEMNIFICATION
Section 1. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation) by
reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that such person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, shall not, of itself, create a presumption that such person had
reasonable cause to believe that such conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation by reason of the fact that
such person is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, provided, however,
that no indemnification shall be made with respect to any claim, issue or matter
as to which such person shall have been adjudged liable to the corporation,
except to the extent that the Court of Chancery of the State of Delaware (or the
court in which such action or suit was brought) determines that despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity for such expenses as such Court of Chancery or other court deems
proper.
Section 3. To the extent that a directoror officer has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections (1) or (2) of this by-law, or in defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith.
11
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Section 4. Any indemnification under Sections (1) or (2) of this by-law
(unless ordered by a court) shall be made by the corporation only upon a
determination that indemnification of the director or officer is proper in the
circumstances because he or she has met the applicable standards of conduct set
forth in said Sections (1) and (2). Such determination shall be made (1) by the
board of directors of the corporation by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel (who may be
regular counsel for the, corporation) in a written opinion, or (3) by the
stockholders of the corporation.
Section 5. Expenses incurred by any person who may have a right of
indemnification under these by-laws in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the corporation
pursuant to these by-laws.
Section 6. The indemnification and advancement of expenses provided by, or
granted pursuant to, these by-laws are (a) in addition to and independent of and
shall not be deemed exclusive of any other rights of any person under any
certificate of incorporation, articles of incorporation, articles of
association, by-law, agreement, vote of stockholders or disinterested directors,
or otherwise, (b) apply both to such person's action in an official capacity and
to action in another capacity while holding such office, (c) shall continue for
a person who has ceased to be a director or officer and (d) shall inure to the
benefit of the heirs, executors and administrators of such a person; provided
however that any indemnification realized other than under these by-laws shall
apply as a credit against any indemnification provided by these by-laws.
Section 7. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of these
by-laws or of applicable law, if and whenever the board of directors of the
corporation deems it in the best interests of the corporation to do so.
12
<PAGE>
Section 8. For the purposes of these by-laws and indemnification hereunder,
any person who is or was a director or officer of any other corporation of which
the corporation owns or controls or at the time in question owned or controlled
directly or indirectly a majority of the shares of stock entitled to vote for
election of directors of such other corporation shall be conclusively presumed
to be serving or have served as such director or officer at the request of the
corporation.
Section 9. The corporation may provide indemnification under these by-laws
to any employee or agent of the corporation or of any other corporation of which
the corporation owns or controls or at the time in question owned or controlled
directly or indirectly a majority of the shares of stock entitled to vote for
election of directors or to any director, officer, employee or agent of any
other corporation, partnership, joint venture, trust or other enterprise in
which the corporation has or at the time had an interest as an owner, creditor
or otherwise, if and whenever the board of directors of the corporation deems it
in the best interests of the corporation to do so.
Section 10. The corporation may, to the fullest extent permitted by
applicable law from time to time in effect, indemnify any and all persons whom
the corporation shall have power to indemnify under such law from and against
any and all of the expenses, liabilities or other matters referred to in or
covered by said law, if and whenever the board of directors of the corporation
deems it to be in the best interests of the corporation to do so.
ARTICLE IX
SEAL
The corporation shall have no seal.
ARTICLE X
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the board of directors.
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 06:10 PM 08/14/1997
971273104 - 2779755
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
================================================================================
Climbing Acquistion Company
- --------------------------------------------------------------------------------
a corporation organized and existing under and by virtue of the Central
Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Climbing Acquistion
Company
- --------------------------------------------------------------------------------
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Article thereof numbered "Article I" so that, as amended, said
Article shall be and read as follows:
The name of this Corporation is Climbing, Inc.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said Climbing Acquistion Company
has caused the certificate to be signed by
James J. Viera, its Vice President
and William R. Busch, Jr., its Secretary,
this 14th day of August, 1997.
By: /s/ JAMES J. VIERA
-----------------------------
Vice President
James J. Viera
Attest: /s/ WILLIAM R. BUSCH, JR.
-------------------------
Secretary
William R. Busch, Jr.
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:51 AM 07/30/1997
971253740 - 2779755
CERTIFICATE OF INCORPORATION
OF
CLIMBING ACQUISITION COMPANY
The undersigned incorporator, being a person 18 years of age or older, in
order to form a corporate entity under Delaware General Corporation Law, hereby
sets forth the following Certificate of Incorporation;
ARTICLE I
The name of this Corporation is Climbing Acquisition Company.
ARTICLE II
The address of the registered office of this Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801, located in New Castle County.
The registered agent at that address is The Corporation Trust Company.
ARTICLE II
The purpose of this Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE lV
The total number of shares of stock which this Corporation has the
authority to issue is 10,000 shares, all of which shall be designated Common
Stock, with a par value of $.01 per share.
ARTICLE V
The name and mailing address of the incorporator of this Corporation is:
Barbara H. Brown
FAEGRE & BENSON LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-3901
ARTICLE VI
Except as may otherwise be provided by law, the books of the Corporation
may be kept outside of the State of Delaware at such place or places as the
Board of Directors may designate.
<PAGE>
ARTICLE VII
The following individual is hereby appointed as the first sole Director of
the Corporation, to serve until the first meeting of shareholders of the
Corporation and until his successor is duly elected and qualified:
James J. Viera
Elections of Directors need not be by written ballot unless the By-Laws of
the Corporation shall so provide.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to adopt, amend or repeal by-laws
of the Corporation, without any action on the part of the stockholders. The
by-laws made by the directors may be adopted, amended or repealed by the
stockholders. Any specific provision in the by-laws regarding amendment thereof
shall be controlling.
ARTICLE IX
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article shall
not eliminate or limit the liability of a director to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of Delaware or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of July,
1997.
/s/ BARBARA H. BROWN
------------------------------
Barbara H. Brown, Incorporator
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<PAGE>
BY-LAWS
OF
CLIMBING ACQUISITION COMPANY
ARTICLE I
OFFICES
Section 1. The corporation shall maintain a registered office and
registered agent within the State of Delaware at such place as may be designated
from time to time by the board of directors.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. An annual meeting of stockholders for the election of directors
and the transaction of such other business as may properly be brought before the
meeting shall be held each year on such date and at such time and place, either
within or without the State of Delaware, as shall be designated by the board of
directors.
Section 2. Written notice of each annual meeting stating the place, date
and hour of the meeting shall be given not less than ten or more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting, except as otherwise required by law.
Section 3. Except as otherwise provided by the certificate of
incorporation, special meetings of the stockholders, for any purpose or
purposes, may be called by the president, and shall be called by the president
or secretary at the request in writing of a majority of the board of directors.
Any special meeting of stockholders shall be held on such date and at such time
and place, either within or without the State of Delaware, as shall be
determined by the officer calling the same or, if the meeting is being held at
the written request of a majority of the board of directors and such request
specifies the date, time and place of such meeting, on the date and at the time
and places specified in such request.
Section 4. Written notice of each special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called shall be given not less than ten or more than sixty days before the date
of the meeting to each stockholder entitled to vote at such meeting, except as
otherwise required by law.
Section 5. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 6. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of
<PAGE>
shares registered in the name of such stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and except the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 7. At each meeting of stockholders, the holders of a majority of
the voting power of the stock entitled to vote at the meeting, whether present
in person or represented by proxy, shall constitute a quorum for the
transaction of business, except as otherwise provided by statute or by the
certificate of incorporation.
Section 8. Stockholders shall have the power at any meeting, by the vote of
the holders of a majority of the voting power of the stock present in person or
represented by proxy at such meeting and entitled to vote, to adjourn the
meeting from time to time to a later date or hour or to another place, whether
or not a quorum shall be present or represented at such meeting. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting, Otherwise, notice of any adjourned meeting need
not be given if the date, time and place thereof are announced at the meeting at
which the adjournment is taken.
Section 9. At each meeting of stockholders for the election of directors at
which a quorum is present or represented a plurality of the votes cast shall be
sufficient to elect such directors. All other questions brought before any
meeting of stockholders at which a quorum is present or represented shall be
decided by the vote of the holders of a majority of the voting power of the
stock present in person or represented by proxy at the meeting and entitled to
vote on the subject matter, unless the question is one upon which, by express
provision of the statutes or of the certificate of incorporation, a different
vote is required, in which case such express provision shall govern and control
the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation,
and subject to the provisions of statute and these bylaws providing for the
fixing of record dates, each stockholder shall be entitled at every meeting of
the stockholders to one vote for each share of capital stock held by such
stockholder.
Section 11. Each stockholder entitled to vote at a meeting of stockholders
or to express consent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by proxy, but no
proxy shall be effective for more than three years from its date, unless the
proxy provides for a longer period.
Section 12. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the corporation in the manner required by
law. Every such written consent shall bear the date of signature of each
stockholder who signs the consent and no such written consent shall be effective
to take the
-2-
<PAGE>
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered to the corporation in the manner required by law,
written consents signed by a sufficient number of stockholders to take such
action are delivered to the corporation in the manner required by law. Prompt
notice of the taking of any corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing and who, if the action had been taken at a meeting, would
have been entitled to notice of the meeting if the record date for such meeting
had been the date that written consents signed by a sufficient number of
stockholders were delivered to the corporation in the manner required by law.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by
or under the direction of a board of one or more directors. The stockholders at
their annual meeting shall determine the number of directors to constitute the
board for the next year, provided that thereafter the authorized number of
directors may be increased by the stockholders or the board and decreased by the
stockholders. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article III, and each
director elected shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Directors need not
be stockholders.
Section 2. Vacancies (whether existing or to take effect at a future date)
and newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director, and any director
so chosen shall hold office until the next election of directors and until his
or her successor is duly elected and shall qualify, or until his or her earlier
resignation, removal or replacement. If there are no directors in office, then
an election of directors may be held in the manner provided by statute. If, at
the time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
of the total number of shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Meetings of the Board of Directors
Section 3. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 4. Regular meetings of the board of directors may be held without
notice on such date and at such time and place as shall be determined from time
to time by the board.
Section 5. Special meetings of the board may be called by the president on
not less than three days' notice to each director, either personally, by
telephone, by mail, by telegram or by any other means of communication, and
special meetings shall be called by the president or secretary in like manner
and on like notice at the written request of one or more of the directors.
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<PAGE>
Section 6. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business. The act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors unless the certificate of incorporation shall require
the vote of a greater number. If a quorum shall not be present at any meeting of
the board of directors, the directors present may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 7. Any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 8.Members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment in which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at the
meeting.
Committees of Directors
Section 9. The board of directors may designate one or more committees,
each consisting of one or more of the directors of the corporation. The board
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he, she or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided by resolution of the board of
directors, shall have and may exercise all the powers and authority of the board
of directors in the management of the business and affairs of the corporation,
but no such committee shall have the power or authority to approve or adopt, or
recommend to the stockholders, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to the stockholders for
approval, or to adopt, amend or repeal these by-laws. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors.
Section 10. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Compensation of Directors
Section 11. The board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
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<PAGE>
Removal of Directors
Section 12. Unless otherwise restricted by law, any director or the entire
board of directors may be removed, with or without cause, by the holders of a
majority of the shares issued and outstanding and entitled to vote at an
election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of statute, certificate of
incorporation or by-laws, notice is required to be given to any stockholder, it
shall not be consumed to require personal notice but shall mean such notice as
may be given in writing, by mail, addressed to such stockholder, at such
stockholder's address as it appears on the records of the corporation, with
postage thereon prepaid, and such notice shall be deemed to have been given at
the time when the same shall have been deposited in the United States mail.
Section 2. Whenever any notice is required to be given under the provisions
of statute, certificate of incorporation or by-laws, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or a committee of directors need be specified in any
written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall include a president, a secretary and a treasurer. The board
of directors may also choose a chairman of the board, one or more vice
presidents and one or more assistant secretaries and assistant treasurers. Any
number of offices may be held by the same person, unless the certificate of
incorporation provides otherwise.
Section 2. The board of directors may appoint such other officers as it
shall deem necessary or appropriate, and such officers shall exercise such
powers and perform such duties as shall be determined from time to time by the
board.
Section 3. The salaries of all officers of the corporation shall be fixed
by or in the manner prescribed by the board of directors.
Section 4. Each officer of the corporation shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer elected or appointed by the board of directors may be
removed at any time by a vote of the board of directors. Any vacancy occurring
in any office of the corporation may, or, in the case of the president,
secretary or treasurer, shall, be filled by the board of directors.
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<PAGE>
The President and Vice Presidents
Section 5. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors (unless a chairman of the board is currently holding office, in which
event the chairman of the board shall preside at such meetings), shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried out and
put into effect.
Section 6. The president shall execute bonds, mortgages and other
contracts, except where required or permitted by law to be otherwise signed and
executed, except where signing and execution thereof shall be expressly
delegated by the board of directors to some other officer of the corporation and
except as otherwise permitted by Section 7 of this Article V.
Section 7. In the absence of the president or in the event of his or her
inability to act, the vice president, if any (or if there is more than one vice
president, the vice presidents in the order designated by the directors or, in
the absence of any designation, then in the order of their election), shall
perform the duties of the president, and when so acting, shall have all the
powers of and shall be subject to all the restrictions upon the president. The
vice presidents, if any, shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
The Secretary and Assistant Secretaries
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
such meetings in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He or she shall give, or cause
to be given, notice of all meetings of the stockholders and special meetings of
the board of directors, and shall perform such other duties as may be prescribed
by the board of directors or president, under whose supervision he or she shall
be.
Section 9. In the absence of the secretary or in the event of his or her
inability to act, the assistant secretary, if any (or if there is more than one,
the assistant secretaries in the order designated by the directors or, in the
absence of any designation, then in the order of their election), shall perform
the duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
The Treasurer and Assistant Treasurers
Section 10. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all money
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. The treasurer shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his or her transactions as treasurer and of the financial condition of the
corporation.
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<PAGE>
Section 12. In the absence of the treasurer or in the event of his or her
inability to act, the assistant treasurer, if any (or if there is more than one,
the assistant treasurers in the order designated by the directors or, in the
absence of any designation, then in the order of their election), shall perform
the duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of the corporation by, the chairman
of the board of directors or the president or a vice president and by the
treasurer or an assistant treasurer or the secretary or an assistant secretary
of the corporation, representing the number of shares owned by such person in
the corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor and the amount
paid thereon shall be specified.
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate or certificates which the corporation shall issue
to represent such class or series of stock, provided that, except as otherwise
provided in Section 202 of the Delaware General Corporation Law, or any
successor provisions enacted from time to time, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate or
certificates which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designation, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
Lost Certificates
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or such
owner's legal representative, to give the corporation a bond sufficient to
indemnify it against any claim that may be made against the corporation on
account of the alleged loss, theft or destruction of any such certificate or
certificates or the issuance of such new certificate or certificates.
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<PAGE>
Transfer of Stock
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Fixing Record Date
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, to express consent to corporate action in writing without a
meeting, to receive payment of any dividend or other distribution or allotment
of any rights, or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the board of
directors may fix a record date, which record date shall be, in the case of a
meeting of stockholders or any adjournment thereof, not more than sixty or less
than ten days before the date of such meeting, in the case of any consent to
corporate action in writing without a meeting, not more than ten days after the
date upon which the resolution fixing the record date is adopted by the board of
directors, and, in the case of any other action, not more than sixty days prior
to such action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting, In no event shall any record date fixed by the
board of directors pursuant to this Section 5 precede the date upon which the
resolution fixing the record date is adopted by the board of directors.
Registered Stockholders
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Delaware
General Corporation Law.
ARTICLE VII
GENERAL PROVISIONS
Dividends
Section 1. Subject to any restrictions contained in the certificate of
incorporation, the board of directors of the corporation may declare and pay
dividends upon the shares of capital stock of the corporation to the extent
permitted by law. Dividends may be paid cash, in property, or in shares of the
capital stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
directors shall deem in the best
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<PAGE>
interests of the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
Checks
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
Fiscal Year
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
ARTICLE VIII
IDEMNIFICATION
Section 1. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation) by
reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that such person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, shall not, of itself, create a presumption that such person had
reasonable cause to believe that such conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that such person is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation; provided, however, that no indemnification shall be made with
respect to any claim, issue or matter as to which such person shall have been
adjudged liable to the corporation, except to the extent that the Court of
Chancery of the State of Delaware (or the court in which such action or suit was
brought) determines that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses as such Court of Chancery or other court deems
proper.
Section 3. To the extent that a director or officer has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 1 or 2 of this Article VIII, or in defense of any
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<PAGE>
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith.
Section 4. Any indemnification under Section 1 or 2 of this Article VIII
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director
or officer is proper in the circumstances because he or she has met the
applicable standards of conduct set forth in said Sections 1 and 2. Such
determination shall be made (a) by a majority vote of the directors who were not
parties to such action, suit or proceeding, even though less than a quorum, or
(b) if there are no such directors, or if such directors so direct, by
independent legal counsel (who may be regular counsel for the corporation) in a
written opinion, or (c) by the stockholders of the corporation.
Section 5. Expenses (including attorney's fees) incurred by any director or
officer of the corporation in defending a civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation pursuant to this Article VIII.
Section 6. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII (a) shall not be deemed exclusive of any
other rights of any person under any certificate of incorporation, articles of
incorporation, articles of association, by-laws, agreement, vote of stockholders
or disinterested directors, or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such office
(provided that any indemnification realized other than under this Article VIII
shall apply as a credit against any indemnification provided by this Article
VIII), (b) shall continue for a person who has ceased to be a director or
officer and (c) shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 7. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
Article VIII or of applicable law, if and whenever the board of directors of the
corporation deems it in the best interests of the corporation to do so.
Section 8. For purposes of this Article VIII and indemnification hereunder,
any person who is or was a director or officer of any other corporation of which
the corporation owns or controls or at the time in question owned or controlled
directly or indirectly a majority of the shares of stock entitled to vote for
election of directors shall be conclusively presumed to be serving or have
served as such director or officer at the request of the corporation.
Section 9. The corporation may, to the fullest extent permitted by
applicable law from time to time in effect, indemnify any and all persons whom
the corporation shall have power to indemnify under such law from and against
any and all of the expenses, liabilities or other matters referred to in or
covered by said law, if and whenever the board of directors of the corporation
deems it to be in the best interests of the corporation to do so.
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<PAGE>
ARTICLE IX
SEAL
The corporation shall have no seal.
ARTICLE X
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the board of directors.
<PAGE>
FILING #0001588605 PG 03 OF 03 VOL B-00047
FILED 02/08/1996 08:30 AM PAGE 01615
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
Exhibit 3.145
ARTICLE I
The name of Corporation is Cowles Business Media, Inc.
ARTICLE II
The purpose of this Corporation is to engage in any lawful act of activity
for which corporations may be organized under the Connecticut Stock Corporation
Act.
ARTICLE III
This Corporation shall have one class of stock, designated as common stock,
with 5,000 shares authorized, par value $1.00 per share.
ARTICLE IV
Each outstanding share of common stock shall be entitled to one vote.
ARTICLE V
The minimum amount of stated capital with which this Corporation shall
commence business is $1,000.00.
ARTICLE VI
(a) No shareholder of this Corporation shall have any cumulative voting
rights.
(b) No shareholder of this Corporation shall have any preemptive rights to
subscribe for, purchase or acquire any shares of the Corporation of any class,
whether unissued or now or hereafter authorized.
ARTICLE VII
No director of this Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of duty by such
director as a director to the extent that damages are in excess of the
compensation received by such director for serving the Corporation during the
year of the violation; provided, however, that this article shall not eliminate
or limit the liability of a director to the extent provided by applicable law if
such breach (i) involved a knowing and culpable violation of law by the
director, (ii) enabled the director or an associate, as defined in the
Connecticut Stock Corporation Act, section 33-374d, subd. (3), to receive an
improper personal economic gain, (iii) showed a lack of good faith and a
conscious disregard for the duty of the director to the Corporation under
circumstances in which the director was aware that his or her conduct or
omission created an unjustifiable risk of serious injury to the Corporation,
(iv) constituted a sustained and unexcused pattern of inattention that amounted
to an abdication of the director's duty to the Corporation, or (v) created
liability under the Connecticut Stock Corporation Act, section 33-321. No
amendment to or repeal of this article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal."
<PAGE>
STATE OF CONNECTICUT } SS HARTFORD
OFFICE OF THE SECRETARY OF THE STATE }
I hereby certify that this is a true copy of record
in this office
In Testimony whereof, I have hereunto set my hand,
and affixed the Seal of said State, at Harford,
this 10th day of March A.D. 1998
/s/ Miles S. Rapoport
---------------------
SECRETARY OF STATE
<PAGE>
RESTATED BY-LAWS
of
HANSON PUBLISHING GROUP, INC.
TABLE OF CONTENTS
Section Page
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SHAREHOLDERS 1
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1.01 Place of Meetings
1.02 Regular Meetings
1.03 Special Meetings
1.04 Meetings Held Upon Shareholder Demand
1.05 Adjournments
1.06 Notice of Meetings; Business Transacted
1.07 Waiver of Notice
1.08 Quorum; Acts of Shareholders
1.09 Voting Rights
1.10 Proxies
1.11 Action Without a Meeting
DIRECTORS 3
- ---------
2.01 Number; Qualifications
2.02 Tenant
2.03 Vacancies
2.04 Place of Meetings
2.05 Regular Meetings
2.06 Special Meetings
2.07 Waiver of Notice; Previously Scheduled Meetings
2.08 Quorum; Acts of Board
2.09 Electronic Communications
2.10 Absent Directors
2.11 Action Without a Meeting
2.12 Committees
2.13 Removal of Directors
2.14 Compensation
OFFICERS 6
- --------
3.01 Number and Designation
3.02 Chief Executive Officer
3.03 Chief Operating Officer
3.04 Chief Financial Officer
3.05 President
3.06 Vice Presidents
3.07 Secretary
3.08 Treasurer
3.09 Authority and Duties
3.10 Term
3.11 Salaries
3.12 Notice of Changes in Directors and Officers
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<PAGE>
Section Page
- ------- ----
INDEMNIFICATION 7
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4.01 Indemnification
4.02 Insurance
4.03 Other Corporations
SHARES 8
- ------
5.01 Certificated Shares
5.02 Declaration of Dividends and Other Distributions
5.03 Transfer of Shares
5.04 Record Date
MISCELLANEOUS 9
- -------------
6.01 Execution of Instruments
6.02 Advances
6.03 Corporate Seal
6.04 Fiscal Year
6.05 Amendments
Table of Contents is not part of the By-Laws of the Corporation It is
intended merely to aid in the utilization of the By-Laws.
-ii-
<PAGE>
RESTATED BY-LAWS
of
HANSON PUBLISHING GROUP, INC.
SHAREHOLDERS
------------
Section 1.01 . Place of Meetings. Each meeting of the shareholders shall be
held at the principal executive office of the Corporation or at such other place
as may be designated by the Board of Directors, Chief Executive Officer or Chief
Operating Officer; provided, however, that any meeting called by or at the
demand of a shareholder or shareholders shall be held in the county where the
principal executive office of the Corporation is located.
Section 1.02. Regular Meetings. Regular meetings of the shareholders shall
be held on an annual basis at a date and time determined by the Board of
Directors; provided, however, that if a regular meeting has not been held during
the immediately preceding 15 months, a substitute annual meeting may be called
in the same manner as in the case of a special meeting.
Section 1.03 Social Meetings. A special meeting of the shareholders may be
called for any purpose or purposes at any time by the President or Chief
Executive Officer, by the Board of Directors or by one or more shareholders
holding not less than ten percent of the voting power of all shares of the
Corporation entitled to vote, who shall demand such special meeting by written
notice given to the President or Chief Executive Officer of the Corporation
specifying the purposes of such meeting.
Section 1.04 Meetings Held Upon Shareholder Demand. After the President or
Chief Executive Officer of the Corporation receives a demand from any
shareholder or shareholders entitled to call a meeting of the shareholders, the
President shall call a special or regular meeting of shareholders, as the case
may be, to be held no later than fifteen days after such demand has been
received for the purposes specified in such demand, and shall give notice
thereof as provided herein.
Section 1.05 Adjournments. Any meeting of the shareholders may be adjourned
from time to time to another date, time and place by the holders of a majority
of the voting power of the shares entitled to vote represented at the meeting.
If any meeting of the shareholders is so adjourned, no notice as to such
adjourned meeting need be given if the date, time and place at which the meeting
will be reconvened are announced at the time of adjournment.
Section 1.06 Notice of Meetings; Business Transacted. Written notice of
each meeting of the shareholders, stating the date, time any place and, in the
case of a special meeting, the purpose or purposes, shall be given at least
seven days and not more than fifty days prior to the meeting to every holder of
shares entitled to vote at such meeting. The business transacted at a special
meeting of shareholders is limited to the purposes stated in the notice of the
meeting. Any matter relating to the affairs of the Corporation may be brought up
for action at an annual meeting of shareholders, provided, however, that unless
stated in the notice of the meeting, (1) no by-law may be brought up for
adoption, amendment or repeal,
<PAGE>
and (2) no matter, other than election of directors, may be brought up which
expressly requires the vote of shareholders pursuant to the Connecticut Stock
Corporation Act (the "Act").
Section 1.07 Waiver and Notice. A shareholder may waive notice of the date,
time, place and purpose or purposes of a meeting of shareholders. A waiver of
notice by a shareholder entitled to notice is effective whether given before, at
or after the meeting, and whether given in writing or by attendance. Attendance
by a shareholder at a meeting is a waiver of notice of that meeting, unless the
shareholder objects prior to or at the commencement of the meeting to the
transaction of business because the meeting is not lawfully called or convened
due to a lack of proper notice.
Section 1.08 Quorum; Acts of Shareholders. The holders of a majority of the
voting power of the shares entitled to vote at a shareholders' meeting are a
quorum for the transaction of business. If a quorum is present when a duly
called or held meeting is convened, the shareholders present may continue to
transact business until adjournment, even though the withdrawal of a number of
the shareholders originally present leaves less than the proportion or number
otherwise required for a quorum. Except as otherwise required by law or
specified in the Certificate of Incorporation of the Corporation, the
shareholders shall take action by the affirmative vote of the holders of a
majority of the voting power of the shares present and entitled to vote at a
duly held meeting of shareholders.
Section 1.09 Voting Rights. Subdivision 1. Each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of shareholders unless and except to the extent that voting
rights of shares of any class are specified, increased, limited or denied by the
Certificate of Incorporation of the Corporation. Except as otherwise required by
law, a holder of shares entitled to vote may vote any portion of such shares in
any way the shareholder chooses. If a shareholder votes without designating the
proportion or number of shares voted in a particular way, the shareholder is
deemed to, have voted all of the shares in that way.
Subdivision 2. The Board of Directors may fix a date not more than seventy
days and not less than ten days before the date of a meeting of shareholders as
the date for the determination of the holders of shares entitled to notice of
and entitled to vote at the meeting. When a date is so fixed, only shareholders
on that date are entitled to notice of and permitted to vote at that meeting of
shareholders.
Section 1.10 A shareholder may cast or authorize the casting of a vote by
filing a written appointment of a proxy, signed and dated, with an officer of
the Corporation at or before the meeting at which the appointment is to be
effective. Such proxy shall be invalid after eleven months from its date of
execution unless it specifies the length of time for which it is to continue in
force or limits its use to a particular meeting not yet held.
Section 1.11 Action Without a Meeting. Any action required or permitted to
be taken at a meeting of the shareholders of the Corporation may be taken
without a meeting by written consent, setting forth the action so taken or to be
taken, signed by all of the shareholders entitled to vote
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on that action, or by their duly authorized attorneys. The written action is
effective when it has been signed by all of those shareholders, unless a
different effective time is provided in the written action. All such
resolutions, waivers, consents and approvals shall be recorded in the minute
books of the Corporation.
DIRECTORS
Section 2.01 Number; Qualifications. Except as provided in the certificate
of incorporation, the business, property and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors. Directors shall be
natural persons. The Corporation shall have a Board of Directors not less than
three or more than seven directors. However, if at any time there are less than
three shareholders, the minimum number of directors shall be the same as the
number of shareholders. The number of directors shall be determined, within the
limits stated above, from time to time, by the shareholders entitled to vote.
Directors need not be shareholders or residents of Connecticut.
Section 2.02 Term. Each director shall serve for a term that expires at the
next annual meeting of the shareholders. A director shall hold office until a
successor is elected and has qualified or until the earlier death, resignation,
removal or disqualification of the director.
Section 2.03 Vacancies. Vacancies on the Board of Directors resulting from
the death, resignation, removal or disqualification of a director may be filled
by the affirmative vote of a majority of the remaining members of the Board,
though less than a quorum. Vacancies on the Board resulting from newly created
directorships may be filled by the affirmative vote of a majority of the
directors serving at the time such directorships are created. Each person
elected to fill a vacancy shall hold office until a qualified successor is
elected by the shareholders at the next regular meeting or at any special
meeting duly called for that purpose.
Section 2.04 Place of Meetings. Each meeting of the Board of Directors
shall be held at the principal executive office of the Corporation or at such
other place as may be designated from time to time by a majority of the members
of the Board.
Section 2.05 Regular Meetings. Regular meetings of the Board of Directors
for the election of officers and the transaction of any other business shall be
held without notice at the place determined by a majority of the members of the
Board.
Section 2.06 Special Meetings. A special meeting of the Board of Directors
may be called for any purpose or purposes at any time by any member of the Board
by giving not less than two days' notice to all directors of the date, time and
place of the meeting, provided that when notice is mailed, at least four days'
notice shall be given. The notice need not state the purpose of the meeting.
Section 2.07 Waiver of Notice; Previously Scheduled Meetings. Subdivision
1. A director of the Corporation may waive notice of the date, time and place of
a meeting of the Board of Directors. A waiver of notice
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by a director entitled to notice is effective whether given before, at or after
the meeting, and whether given in writing, orally or by attendance. Attendance
by a director at a meeting is a waiver of notice of that meeting, unless the
director objects at the beginning of the meeting to the transaction of business
because the meeting is not lawfully called or convened due to a lack of proper
notice.
Subdivision 2. If the day or date, time and place of a Board of Directors
meeting have been provided herein or announced at a previous meeting of the
Board, no notice is required. Notice of an adjourned meeting need not be given
other than by announcement at the meeting at which adjournment is taken of the
date, time and place at which the meeting will be reconvened.
Section 2.08 Quorum; Acts of Board. The presence in person of a majority of
the directors currently holding office shall be necessary to constitute a quorum
for the transaction of business. In the absence of a quorum, a majority of the
directors present may adjourn a meeting from time to time without further notice
until a quorum is present. If a quorum is present when a duly held meeting is
convened, the directors present may continue to transact business until
adjournment, even though the withdrawal of a number of the directors originally
present leaves less than the proportion or number otherwise required for a
quorum. Except as otherwise required by law or specified in the Certificate of
Incorporation of the Corporation, the Board of Directors shall take action by
the affirmative vote of a majority of the directors present at a duly held
meeting.
Section 2.09 Electronic Communications. A conference among directors by any
means of communication through which the directors may simultaneously hear each
other during the conference constitutes a Board of Directors meeting or a
meeting of a committee of the Board of Directors, if the same notice is given of
the conference as would be required for a meeting, and if the number of
directors participating in the conference would be sufficient to constitute a
quorum at a meeting. A director may participate in a Board meeting not described
in the immediately preceding sentence by any means of communication through
which the director, other directors so participating and all directors
physically present at the meeting may simultaneously hear each other during the
meeting. Participation in a meeting by any means referred to in this Section
2.09 constitutes presence in person at the meeting.
Section 2.10 Absent Directors. A director of the Corporation may give
advance written consent or opposition to a proposal to be acted on at a Board of
Directors meeting. If the director is not present at the meeting, consent or
opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected.
Section 2.11 Action Without a Meeting. Any action required or permitted to
be taken at a Board of Directors meeting or at a meeting of a committee of the
Board of Directors may be taken without a meeting by
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written consent signed by all of the directors, if the number of such directors
or members signing constitutes a quorum for such action, and such action shall
be a valid corporate action as though it had been authorized at a meeting of the
Board of Directors or committee, as the case may be. The written action is
effective when signed by the required number of directors, unless a different
effective time is provided in the written action. When written action is
permitted to be taken by less than all directors, all directors shall be
notified immediately of its text and effective date. The secretary shall file
such consents with the minutes of the meetings of the Board of Directors.
Section 2.12 Committees. Subdivision 1. A resolution approved by the
affirmative vote of a majority of the Board of Directors may establish
committees having the authority of the Board in the management of the business
of the Corporation only to the extent provided in the resolution. Committees
shall be subject at all times to the direction and control of the Board.
Subdivision 2. A committee shall consist of one or more natural persons,
who shall be directors, appointed by affirmative vote of a majority of the
directors present at a duly held Board of Directors meeting.
Subdivision 3. Sections 2.04 to 2.11 hereof shall apply to committees and
members of committees to the same extent as those sections apply to the Board of
Directors.
Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee.
Section 2.13 Removal of Directors. Any one or more directors may be removed
either with or without cause at any time, by a vote of the shareholders holding
a majority of the stock entitled to vote at any special meeting called for this
purpose. When any director is removed at any special meeting, a new director may
be elected at the same meeting of the shareholders for the unexpired term of the
director removed. If the shareholders fail to elect a person to fill the
unexpired term of the director removed, such unexpired term shall be considered
a vacancy on the board which may be filled by the remaining director or
directors as provided above.
Section 2.14 Compensation. The Board of Directors may fix the compensation,
if any, of directors.
OFFICERS
Section 3.01 Number and Designation. The Board of Directors shall elect a
President, such Vice Presidents as may be deemed necessary or appropriate in its
discretion, a Treasurer and a Secretary, and it shall elect or appoint, from
time to time, such other officers and assistant officers as may be deemed
necessary or appropriate in its discretion. Any two or more offices may be held
by the same person, except the offices of President and Secretary.
Section 3.02 Chief Executive Officer. Unless otherwise determined by the
Board of Directors, the Chief Executive Officer (a) shall,
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when present, preside at all meetings of the Board of Directors; (b) shall see
that all orders and resolutions of the Board are carried into effect; (c) may
maintain records of and certify proceedings of the Board and shareholders; and
(d) shall perform such other duties as may be prescribed by the Board of
Directors from time to time.
Section 3.03 Chief Operating Officer. Unless otherwise determined by the
Board of Directors, the Chief Operating Officer shall have general active
management of the Corporation, may supervise all operating aspects of the
Corporation and shall perform such other duties as may be prescribed by the
Board of Directors from time to time.
Section 3.04 Chief Financial Officer. Unless otherwise determined by the
Board of Directors, the Chief Financial Officer (a) shall keep accurate
financial records for the Corporation; (b) shall deposit all monies, drafts and
checks in the name of and to the credit of the Corporation in such banks and
depositories as the Board shall designate from time to time; (c) shall endorse
for deposit all notes, checks and drafts received by the Corporation as ordered
by the Board, making proper vouchers therefor; (d) shall disburse corporate
funds and issue checks and drafts in the name of the Corporation, as ordered by
the Board; (e) shall render to the Chief Executive Officer or Chief Operating
Officer and the Board, whenever requested, an account of all of such officer's
transactions as Chief Financial Officer and of the financial condition of the
Corporation; and (f) shall perform such other duties as may be prescribed by the
Board or the Chief Operating Officer from time to time.
Section 3.05 President. Unless otherwise determined by the Board of
Directors, the President shall be the Chief Executive Officer or Chief Operating
Officer of the Corporation. The President shall perform such duties as may be
prescribed by the Board from time to time, including presiding at all meetings
of the shareholders and, in the absence of the Chairman of the Board, at
meetings of the Board.
Section 3.06 Vice Presidents. Any one or more Vice Presidents, if any, may
be designated by the Board as Executive Vice Presidents or Senior Vice
Presidents. During the absence or disability of the President, it shall be the
duty of the highest ranking Executive Vice President, and, in the absence of any
such Vice President, it shall be the duty of the highest ranking Senior Vice
President or other Vice President, who shall be present at the time and able to
act, to perform the duties of the President. The determination of who is the
highest ranking of two or more persons holding the same office shall, in the
absence of specific designation of order of rank by the Board, be made on the
basis of the earliest date of appointment or election, or, in the event of
simultaneous appointment or election, on the basis of the longest continuous
employment by the Corporation.
Section 3.07 Secretaries. Unless otherwise determined by the Board of
Directors, the Secretary shall attend all meetings of the shareholders and all
meetings of the Board, shall record or cause to be recorded all proceedings
thereof in a book to be kept for that purpose, and may certify such proceedings.
Except as otherwise required or permitted by law or by these By-Laws, the
Secretary shall give or cause to be given notice of all meetings of the
shareholders and all meetings of the Board.
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Section 3.08 Treasurer. Unless otherwise determined by the Board of
Directors, the Treasurer shall be the Chief Financial Officer of the
Corporation. If an officer other than the Treasurer is designated Chief
Financial Officer, the Treasurer shall perform such duties as may from time to
time be assigned by the Board.
Section 3.09 Authority and Duties. In addition to the foregoing authority
and duties, all officers of the Corporation shall respectively have such
authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.
Section 3.10 Term. Subdivision 1. All officers of the Corporation shall
hold office until their respective successors are chosen and have qualified or
until their earlier death, resignation or removal.
Subdivision 2. An officer may resign at any time by giving written notice
to the Corporation. The resignation is effective without acceptance when the
notice is given to the Corporation, unless a later effective date is specified
in the notice.
Subdivision 3. An officer may be removed at any time, with or without
cause, by a resolution approved by the affirmative vote of a majority of the
directors present at a duly held Board of Directors meeting.
Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may be filled for the unexpired portion
of the term by the Board of Directors.
Section 3.11 Salaries. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors or by the Chief Executive Officer if
authorized by the Board.
Section 3.12 Notice of Changes in Directors and Officers. Whenever a
director or officer of the Corporation (a) ceases to be in office because of
death, resignation, removal, disqualification or otherwise, or (b) is appointed
or elected to the Board of Directors or to hold a corporate office, such
director or officer or the Corporation shall file as a matter of public record,
within 90 days following the date of such cessation, appointment or election, a
notice with the Secretary of State of the State of Connecticut. Such notice
shall be executed and filed as provided in Section 33-285 of the Act and shall
set forth (a) the name of the Corporation, (b) the name of the director or
officer to which the notice relates, (c) his or her respective office or former
office, and (d) the respective date when he or she was appointed or elected or
ceased to be in office.
INDEMNIFICATION
Section 4.01 Indemnification. The Corporation shall indemnify such persons,
for such expenses and liabilities, in such manner, under such
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circumstances, and to such extent, as required or permitted by Section 33-320a
of the Act, as amended from time to time, or as required or permitted by other
provisions of law.
Section 4.02 Insurance. The Corporation may purchase and maintain insurance
on behalf of any person in such person's official capacity against any liability
asserted against and incurred by such person in or arising from that capacity,
whether or not the Corporation would otherwise be required to indemnify the
person against the liability.
Section 4.03 Other Corporations. Unless otherwise determined by the Board
of Directors, the President or such other officer of the Corporation duly
authorized by the President, shall have full power and authority on behalf of
the Corporation to attend and to vote at any meeting of the shareholders of any
corporation of which the Corporation may hold stock, and may exercise on behalf
of the Corporation any and all of the rights and powers incident to the
ownership of such stock at any such meeting, and shall have power and authority
to execute and deliver proxies and consents on behalf of the Corporation in
connection with the exercise of the rights and powers incident to the ownership
of such stock.
SHARES
Section 5.01 Certificated Shares. Subdivision 1. The shares of the
Corporation shall be certificated shares. Each holder of duly issued
certificated shares is entitled to a certificate of shares.
Subdivision 2. Each certificate of shares of the Corporation shall be
signed by the Chief Executive Officer, the President or any Vice President, and
the Chief Financial Officer, the Secretary or any. Assistant Secretary, but when
a certificate is signed by a transfer agent or a registrar, the signature of any
such officer upon such certificate may be a facsimile, engraved or printed. If a
person signs or has a facsimile signature placed upon a certificate while an
officer, transfer agent or registrar of the Corporation, the certificate may be
issued by the Corporation, even if the person has ceased to serve in that
capacity before the certificate is issued, with the same effect as if the person
had that capacity at the date of its issue.
Subdivision 3. A certificate representing shares issued by the Corporation
shall, if the Corporation is authorized to issue shares of more than one class
or series, set forth upon the face or back of the certificate, or shall state
that the Corporation will furnish to any shareholder upon request and without
charge, a full statement of the designations, preferences, limitations and
relative rights of the shares of each class or series authorized to be issued,
so far as they have been determined, and the authority of the Board of Directors
to determine the relative rights and preferences of subsequent classes or
series.
Section 5.02 Declaration of Dividends and Other Distributions. The Board of
Directors shall have the authority to declare dividends and other distributions
upon the shares of the Corporation to the extent permitted by law.
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Section 5.03 Transfer of Shares. Shares of the Corporation may be
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. Shares shall be transferred only upon
surrender and cancellation of certificates for a like number of shares. The
Board of Directors, however, may appoint one or more transfer agents and
registrars to maintain the share records of the Corporation and to effect
transfers of shares.
Section 5.04 Record Date. The Board of Directors may fix a time, not
exceeding sixty days preceding the date fixed for the payment of any dividend or
other distribution, as a record date for the determination of the shareholders
entitled to receive payment of such dividend or other distribution, and in such
case only shareholders of record on the date so fixed shall be entitled to
receive payment of such dividend or other distribution, notwithstanding any
transfer of any shares on the books of the Corporation after any record date so
fixed.
MISCELLANEOUS
Section 6.01 Execution of Instruments. Subdivision 1. All deeds, mortgages,
bonds, checks, contracts and other instruments pertaining to the business and
affairs of the Corporation shall be signed on behalf of the Corporation by the
Chief Executive Officer, or the Chief Operating Officer, or the President, or
any Vice President, or by such other person or persons as may be designated from
time to time by the Board of Directors.
Subdivision 2. If a document must be executed by persons holding different
offices or functions and one person holds such offices or exercises such
functions, that person may execute the document in more than one capacity if the
document indicates each such capacity.
Section 6.02 Advances. The Corporation may, without a vote of the
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.
Section 6.03 Corporate Seal. The Corporation shall have no seal.
Section 6.04 Fiscal Year. The fiscal year of the Corporation shall end on
the Saturday nearest the last day of March of each year.
Section 6.05 Amendments. The Board of Directors shall have the power to
adopt, amend or repeal the By-Laws of the Corporation, subject to the power of
the shareholders to change or repeal the same, provided, however, that no By-Lay
prescribing the vote required to amend the By-Laws or any provisions thereof
shall be amended by a lesser vote.
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AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
COWLES MAGAZINES INC.
ARTICLE I
The name of the corporation (hereinafter called the "Corporatiion" is:
Cowles Enthusiast Media. Inc.
ARTICLE II
The location and address of the registered office of the Corporation in the
Commonwealth is: c/o CT Corporation System, 1635 Market Street, Philadelphia,
Pennsylvania 19103. CT Corporation System is in the business of maintaining
registered offices in the Commonwealth for corporations and other associations.
ARTICLE III
The Corporation is incorporated under the provisions of the Pennsylvania
Business Corporation Law of 1988.
ARTICLE IV
The Corporation is authorized to issue an aggregate total of 100,000
shares, all of which shall he designated common stock, having a par value of
$.01 per share.
ARTICLE V
A director of the Corporation shall not be liable to the Corporation or
it's shareholders for monetary damages for breach of fiduciary duty as a
director, except as provided by applicable law (i) for any breach of the
director's duty of loyalty to the Corporation or its shareholders; (ii) for acts
or omissions not in good faith or that involved intentional misconduct or a
knowing violation of law; (iii) under sections 513 and 1713 of the Pennsylvania
Business Corporation Law of 1983; (iv) for any transaction from which the
director derived an improper personal benefit; or (v) for any act or omission
occurring prior to the date when this provision becomes effective.
<PAGE>
BY-LAWS OF
HISTORICAL TIMES, INC.
(the "Corporation")
(as adopted on March 22, 1985)
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Location of Meetings. All meetings of shareholders shall be held
at such place within or without the Commonwealth of Pennsylvania as may be from
time to time fixed by the Board of Directors or as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof or at the
Corporation's registered office in Harrisburg, Pennsylvania, if not so fixed or
stated.
Section 2. Annual Meetings. Annual meetings of shareholders shall be held
on the second Monday of each year, or if such day is a legal holiday, then on
the next following business day, at 10:00 a.m., or at such other date or time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting, at which meeting the shareholders shall elect a Board
of Directors and transact such other business as may properly be brought before
the meeting.
Section 3. Special Meetings. Special meetings of shareholders may be called
by the Chairman, the President, the Board of Directors or one or more
shareholders holding not less than 20 percent of the outstanding stock of the
Corporation entitled to vote at such meeting. Upon the written request of any
person or persons who have duly called a special meeting, the Secretary of
<PAGE>
the Corporation shall fix the date of the meeting, which shall not be more than.
60 days after receipt of the request, and shall give due notice of the meeting.
Section 4. Notice of Meetings. Written notice of every shareholders'
meeting stating the place, day and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be delivered not less than ten or more than sixty days before the date of the
meeting in accordance with Article V.
Section 5. Business of Meetings. At an annual meeting of shareholders, any
matter relating to the affairs of the Corporation, whether or not stated in the
notice of meeting, may be brought up for action (unless otherwise provided by
law). Unless the holders of a majority of the issued and outstanding shares of
voting capital stock of the Corporation are present and specifically agree
thereto in writing, no matter that was not stated in a notice of special meeting
of shareholders shall be brought up for action at such a special meeting.
Section 6. Organization. At every meeting of the shareholders, the Chairman
of the Board, if there be one, or in the case of vacancy in office or absence of
the Chairman of the Board, one of the following officers present in the order
stated: the President, the Vice Presidents in their order of seniority, or a
Chairman chosen by the shareholders entitled to cast a majority of the votes
which all shareholders present in person or by proxy are entitled to cast, shall
act as Chairman, and the
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Secretary, or, in the absence of the Secretary, an Assistant
Secretary, or in the absence of both the Secretary and Assistant
Secretaries, a person appointed by the Chairman, shall act as Secretary.
Section 7. Quorum. The presence in person or by proxy of shareholders
entitled to cast at least a majority of the votes which all shareholders are
entitled to cast on a particular matter shall constitute a quorum for the
purpose of considering such matter, except as otherwise provided by law, by the
Articles of Incorporation or by these By-laws. Treasury shares shall not be
counted in determining the total number of outstanding shares for voting
purposes at any given time. If a quorum shall not be present, the shareholders
present in person or represented by proxy shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present. In no event shall the election of the
Board of Directors take place at a meeting at which less than a quorum is
present.
Section 8. Required Vote. Unless otherwise prescribed by law, the Articles
of Incorporation or these By-laws, if a quorum is present, the affirmative vote
of a majority of the shares of stock represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders.
Section 9. Voting Rights. Except as otherwise provided by law, the Articles
of Incorporation or these By-laws, each
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outstanding share of stock having voting power shall be entitled to one vote on
each matter submitted to a vote at a meeting of shareholders. Treasury shares
shall not be voted, directly or indirectly, at any meeting of shareholders. A
shareholder may vote either in person or by a proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact and filed with the
Secretary of the Corporation.
Section 10. Election of Directors. In each election of directors, every
shareholder entitled to vote shall have the right to multiply the number of
votes to which he is entitled by the total number of directors to be elected in
the same election by the holders of the class or classes of shares of which his
shares are a part, and he may cast the whole number of such votes for one
candidate or he may distribute them among any two or more candidates. The
candidates receiving the highest number of votes from each class or group of
classes entitled to elect directors separately up to the number of directors to
be elected in the same election by such class or group of classes shall be
elected.
Section 11. Consent of Shareholders in Lieu of Meeting. Any action which
may be taken at a meeting of the shareholders or of a class of shareholders of
the Corporation may be taken without a meeting if a consent or consents in
writing, setting forth the action so taken, shall be signed by all the
shareholders who would be entitled to vote at a meeting of the shareholders or
of a class of shareholders for such purpose and shall be filed with the
Secretary of the Corporation.
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If the Articles of Incorporation so provide any action (except any action
with respect to an amendment of Articles or plan under which a class or classes
of shareholders are by statute entitled to claim the right to valuation of and
payment for their shares) which may be taken at a meeting of shareholders or of
a class of shareholders may be taken without a meeting, if a consent or consents
in writing to such action, setting forth the action so taken, shall be signed by
shareholders entitled to cast two thirds of the total number of votes which all
shareholders of the Corporation or of a class of shareholders are entitled by
the Articles to cast upon such action and shall be filed with the Secretary of
the Corporation. Such action shall not become effective until after at least ten
days' written notice of such action shall have been given to each shareholder of
record entitled to vote thereon. Treasury shares shall not be counted in
connection with the expression of consent or dissent to corporate action in
writing without a meeting.
Section 12. Participation by Telephone. One or more shareholders may
participate in a meeting of the shareholders by means of a conference telephone
or other similar communications equipment by means of which all persons
participating in the meeting can hear each other.
<PAGE>
ARTICLE II
DIRECTORS
Section 1. Number; Term of Office. The business and affairs of the
Corporation shall be managed by a Board of Directors of not less than three and
not more than nine in number. The number of directors shall be fixed by vote of
the shareholders represented at the annual meeting.
The Board of Directors shall be elected at the annual meeting of
shareholders, and each director so elected shall serve until his successor shall
have been elected and qualified or until his earlier resignation or removal.
Section 2. Qualification. All directors of the corporation shall be natural
persons of full age, but need not be residents of Pennsylvania or shareholders
of the corporation.
Section 3. Removal of Directors. Except as otherwise prescribed by law or
the Articles of Incorporation, any director or the entire Board of Directors may
be removed with or without cause by the holders of a majority of the shares then
entitled to vote at an election of directors; provided, however, that no
individual director shall be removed, unless the entire Board shall .be removed,
if the votes of a sufficient number of shares are cast against the resolution
for his removal, which, if cumulatively voted at an annual election of
directors, would be sufficient to elect one or more directors to the Board. The
vacancy in the Board of Directors caused by such removal may be filled by the
shareholders at the time of removal.
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Section 4. Vacancies. Unless filled by the shareholders as provided in
Article II, Section 3 of these By-laws, any vacancy occurring in the Board of
Directors, including any directorship to be filled by reason of an increase in
the number of directors, may be filled by the affirmative vote of a majority of
the shareholders entitled to vote at the next annual meeting or, if the number
of directors falls below the minimum stated in section 1, at a special meeting
called by one remaining member of the Board. Notice of said meeting shall be
given in accordance with Article I, Section 4 and Article V. A director elected
to fill a vacancy shall serve until the next election of directors by the
shareholders, either, at the next annual meeting or at a special meeting duly
called for that purpose, and until the election and qualification of his
successor.
Section 5. Compensation of Directors. The Board of Directors, irrespective
of any personal interest of any of its members, shall have authority to
establish reasonable compensation of directors for services rendered to the
Corporation as directors, officers or otherwise.
ARTICLE III
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Location of Meetings. Meetings of the Board of Directors,
regular or special, may be held either within or without the Commonwealth of
Pennsylvania.
-7-
<PAGE>
Section 2. First Meeting of New Board. The first meeting of each newly
elected Board of Directors shall be held immediately following the annual
meeting of shareholders at the place where such annual meeting is held. Such
meeting shall be designated as the annual meeting of the Board of Directors, and
no notice of such meeting shall be necessary to the newly elected directors in
order legally to constitute the meeting, provided a quorum shall be present.
Alternatively, the new Board of Directors may convene at such place and time as
shall be fixed by the consent in writing of all of its members.
Section 3. Regular Meetings. Regular meetings of the Board of Directors may
be held with such frequency and at such time and place as shall from time to
time be determined by the Board. If the Board has so fixed the frequency, time
and place of regular meetings, no further notice thereof shall be necessary.
Section 4. Special Meetings. Upon the written request of any two directors,
special meetings of the Board of Directors may be called by the Chairman or, in
his absence, by the President or, in the absence of both, by the Secretary. Five
days' written notice, if given by mail, or two days' written notice if given by
any other means, must be given to each director in accordance with Article V.
Section 5. Quorum. A majority of the total number of directors in office
shall constitute a quorum for the transaction of business. If a quorum shall not
be present at any meeting of directors, the directors present may adjourn the
meeting from
--8--
<PAGE>
time to time until a quorum shall be present, giving notice of the time and
place at which the meeting will be reconvened by announcement at the adjourned
meeting and by telephone to directors not present at the adjourned meeting.
Section 6. Required Vote. The vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the act of a greater number is required by law, the Articles of
Incorporation or these By-laws.
Section 7. Action by Consent. Any action required or permitted to be taken
at a meeting of directors or of a committee thereof may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed by
all directors or all members of the committee, as the case may be, and filed
with the Secretary of the Corporation.
Section 8. Participation by Telephone. One or more members of the Board of
Directors or a committee thereof may participate in a meeting of the Board or
committee by means of a conference telephone or other similar communications
equipment by means of which all persons participating in the meeting can hear
each other.
Section 9. Interested Directors or Officers; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other Corporation, partnership,
association, or other organization in which one or more of its directors or
officers are
--9--
<PAGE>
directors or officers, or have a financial interest, shall be void or voidable
solely for such reason, or solely because the director or officer is present at
or participates in the meeting of the Board which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if:
(1) The material facts as to such interest and as to the contract or
transaction are disclosed or are known to o the Board of Directors and the
Board in good faith authorizes the contract or transaction by a vote
sufficient for such purpose without counting the vote of the interested
director or directors; or
(2) The material facts as to such interest and as to the contract or
transaction are disclosed or are known to the shareholders entitled to
vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the shareholders; or
(3) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified, by the Board of Directors
or the shareholders.
Interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors which authorizes a contract
or transaction specified in this Section.
<PAGE>
ARTICLE IV
COMMITTEES
Section .1. Election. The Board of Directors, by resolution adopted by a
majority of the full Board, may designate one or more committees, each committee
to consist of two or more directors of the Corporation. Any such committee, to
the extent provided by resolution of the Board of Directors, shall have and may
exercise all authority of the Board of Directors in the management of the
Corporation, except as otherwise required by law.
Section 2. Minutes. All such committees shall keep regular minutes of their
proceedings and report the same to the Board when required.
ARTICLE V
NOTICES
Section 1. Required Notices. Whenever under the provisions of applicable
law, the Articles of Incorporation or these By-laws any written notice is
required to be given to any director or shareholder, such notice shall be
delivered either personally or by first class mail or telegram, charges prepaid,
addressed to such director or shareholder at his address as it appears on the
records of the Corporation. If the notice is sent by mail or by telegraph, such
notice shall be deemed to be delivered when deposited in the United States mail
or with a telegraph office
--11--
<PAGE>
for transmission. Notices given by any other means shall be deemed delivered
when received by the addressee.
Section 2. Waiver of Notice. Whenever under the provisions of applicable
law, the Articles of Incorporation or these By-laws, any notice is required to
be given to any director or shareholder, a written waiver thereof signed by the
person or persons entitled to such notice, either before or after the time
stated therein, shall be deemed the equivalent to the giving of such notice.
Except in the case of a special meeting of shareholders, neither the business to
be transacted at nor the purpose of such meeting need be specified in the waiver
of notice of such meeting.
ARTICLE VI
OFFICERS
Section 1. Offices; Election; Term. Except as otherwise provided by law,
the Articles of Incorporation or these By-laws, the officers of the Corporation
shall be chosen by the Board of Directors and shall be a Chairman of the Board,
a President, one or more Vice Presidents and/or Assistant Vice Presidents, a
Secretary and/or Assistant Secretaries, and a Treasurer and/or Assistant
Treasurer. Except as otherwise provided by law, any person may hold more than
one office. Officers shall hold office until their respective successors have
been elected and shall have qualified or until their earlier resignation or
removal, and if the Board of Directors shall fail in any year or years to meet
--12--
<PAGE>
and elect officers, the officers last elected shall continue to hold office.
Section 2. Additional Officers and Agents. The Board of Directors may
appoint such other officers, including assistant secretaries and assistant
treasurers, and agents as it shall deem necessary. Such officers and agents
shall hold their respective offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by
resolution of the Board of Directors.
Section 3. Salaries. The salaries of all officers of the Corporation shall
be fixed by the Board of Directors.
Section 4. Removal; Vacancies. Any officer or agent may be removed by the
Board at any time with or without cause by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the Corporation
may be filled by the Board of Directors.
Section 5. Chairman of the Board. The Chairman, who shall be elected from
among the directors, shall preside at all meetings of the shareholders and the
Board of Directors at which he shall be present.
The Chairman shall be responsible for the formation of corporate policies,
which policies shall be subject to his sole approval. From time to time, written
statements of the policies as articulated by the Chairman shall be presented to
the Board for its information and comment. The Chairman shall disseminate
corporate policies to the chief executive officer for execution.
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<PAGE>
He shall review and approve all plans and financing of capital expenditures and
shall sign all certificates of shares of stock of the Corporation.
The Chairman shall be an ex officio member of all other committees of the
Corporation.
The Chairman shall advise and consult with the President of the Corporation
and the chief executive officers of all subsidiaries and divisions of the
Corporation.
The Chairman shall be responsible for the formulation and maintenance of
policies which shall promote and augment good relationships between the
Corporation, its subsidiaries and divisions and the communities, markets and
areas in which they conduct business to insure the maintenance of a strong
corporate image.
The Chairman shall review and approve the hiring, compensation, profit
sharing and fringe benefits provided to the President.
The Chairman shall have such other duties as from time to time may be
prescribed by the Board of Directors.
Section 6. President. The President shall be, under the direction of the
Board of Directors, the chief executive officer of the Corporation and shall
have general charge and management of the Corporation's affairs and business and
shall perform such duties and exercise such powers as may be assigned to or
vested in him by these By-laws and the Board of Directors. He shall execute all
authorized contracts in the name of the Corporation.
--14--
<PAGE>
In the absence of the Treasurer, he shall have authority to sign checks, drafts,
notes and orders for the payment of money. Subject to the approval of the Board
of Directors, he shall have the power to appoint such officers as he shall deem
appropriate or necessary from time to time, and he shall appoint and discharge
other employees and agents of the Corporation.
Section 7. Vice President. The Vice President, or if there shall be more
than one, the vice presidents in the order determined by the Board of Directors,
shall, in the absence or disability of the President, perform the duties and
exercise the powers of the President. Each Vice President shall perform such
other duties and have such other powers as the Chairman, the President or the
Board of Directors may from time to time prescribe.
Section 8. Secretary and Assistant Secretary. The Secretary shall attend
all meetings of shareholders and the Board of Directors and shall record the
proceedings of such meetings in books to be kept for that purpose and shall
perform like duties for any committee of directors when requested. He shall
give, or cause to be given, proper notice of all meetings of shareholders and
shall perform such duties as may be prescribed by the Board of Directors or the
Chairman or the President, under whose supervision he shall be. He shall have
custody of the corporate seal of the Corporation, and he shall have authority to
affix it to any instrument requiring it, and when so affixed it may be
<PAGE>
attested by his signature. He shall have charge of the share certificates book,
any transfer books or share ledgers and such other books and papers as the Board
of Directors may order. He shall keep at the registered office of the
Corporation a copy of the By-laws, including all amendments or alterations
thereto to date, certified to by him, and a share register, giving the names of
the shareholders in alphabetical order, and showing their respective addressees,
the number and classes of shares held by each, the number and date of
certificates issued for the shares and the number and date of cancellation of
every certificate surrendered for cancellation. The Assistant Secretary, or if
there shall be more than one, the assistant secretaries in the order determined
by the Board of Directors, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers (including affixation of the
corporate seal) of the secretary and shall perform such other duties and have
such other powers as the Chairman or the President or the Board of Directors may
from time to time prescribe.
Section 9. Treasurer and Assistant Treasurer. The Treasurer shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board of Directors. He shall sign all checks, drafts, notes and orders for the
payment of money, and he shall
--16--
<PAGE>
disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Chairman, the President and the Board of Directors, at its regular meetings,
or when the Board of Directors so requires, an account of all his transactions
as Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, he shall give the Corporation a bond in such sum with
surety or sureties as shall be satisfactory to the Board of Directors for the
faithful performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation. The
Assistant Treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the Board of Directors, shall, in the
absence or disability of the Treasurer perform the duties and exercise the power
of the Treasurer and shall perform such other duties and have such other powers
as the Chairman or the President or the Board of Directors may from time to time
prescribe.
ARTICLE VII
CERTIFICATES FOR SHARES
Section 1. Issuance of Shares. The capital stock, including authorized but
previously unissued shares as well as treasury
--17--
<PAGE>
shares, may be issued for such consideration, not less than the par value
thereof in the case of previously unissued shares having par value, as shall be
fixed from time to time by the Board of Directors.
Section 2. Form of Certificates. The shares of stock of the Corporation
shall be represented by certificates signed by the Chairman and by the Treasurer
and shall be sealed with the seal of the Corporation or a facsimile thereof.
Section 3. Lost Certificates. The Board of Directors may direct that a new
certificate be issued in place of any certificate previously issued by the
Corporation which is alleged to have been lost, stolen or destroyed. When
authorizing the issuance of a new certificate, the Board of Directors, in its
discretion and as a condition precedent to the issuance thereof, may require the
owner of such lost, stolen or destroyed certificate to give the Corporation a
bond sufficient to protect the Corporation from any claim that may be made
against it with respect to any such certificate alleged to have been lost,
stolen or destroyed.
Section 4. Transfers of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate representing shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, a new certificate shall be issued to the person entitled
thereto, the old certificate shall be cancelled, and the transaction shall be
recorded upon the books of the Corporation. No transfer shall
--18--
<PAGE>
be made inconsistent with the provisions of the Uniform Commercial Code, 13 Pa.
Cons. Stat. ss. 8101, et seq., and its amendments and supplements.
Section 5. Closing of Transfer Books. The Board of Directors may fix a
date, not more than fifty days prior to the date of any meeting of shareholders
or the date fixed for the payment of any dividend or distribution or the date
for the allotment of rights or the date when any change or conversion or
exchange of shares will be made or go into effect, as a record date for the
determination of the shareholders entitled to notice of, or to vote at, any such
meeting or entitled to receive payment of any such dividend or distribution or
to receive any such allotment of rights or to exercise the rights in respect to
any such change, conversion or exchange of shares. In such case, only such
shareholders as shall be shareholders of record on the date so fixed shall be
entitled to notice of, or to vote at, such meeting or to receive payment of such
dividend or to receive such allotment of rights or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
Corporation after any record date fixed as aforesaid. If no record date is fixed
for the determination of shareholders entitled to receive notice of, or vote at,
a shareholders' meeting, transferees of shares which are transferred on the
books of the Corporation within ten days next preceding the date of such meeting
shall not be entitled to notice of or to vote at such meeting.
--19--
<PAGE>
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
Section 1. Indemnification of Authorized Representatives in Third Party
Proceedings. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (hereinafter "authorized representative"),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal third party action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any third party action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any
--20--
<PAGE>
criminal third party action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
Section 2. Indemnification of Authorized Representatives in Corporate
Proceedings. The Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor or investigative proceedings by the Corporation by reason of the fact
that he is or was an authorized representative against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the court of common pleas of the
county in which the registered office of the Corporation is located or the court
in which such action or suit was pending shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the court of common pleas or such other court shall deem proper.
-21-
<PAGE>
Section 3. Mandatory Indemnification of Authorized Representatives. To the
extent that an authorized representative of the corporation has been successful
on the merits or otherwise in defense of any third party or corporate proceeding
or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses actually and reasonably incurred by such person in
connection therewith.
Section 4. Determination of Entitlement to Indemnification. Any
indemnification under this Article (unless ordered by a court) shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification of the authorized representative is proper in the
circumstances because he has met the applicable standard of conduct set forth in
the appropriate section of this Article. Such determination shall be made:
(1) By the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or
(2) If such a quorum is not obtainable, or, even if obtainable, a
majority vote of a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or
(3) By the shareholders.
--22--
<PAGE>
ARTICLE IX
GENERAL PROVISIONS
Section 1. Fiscal Year. The fiscal year of Corporation shall commence on
January 1 of each year.
Section 2. Seal. The seal of the Corporation shall be circular in form and
shall contain the words: "HISTORICAL TIMES, INC." and in the center the words
and figures "INCORPORATED PENNSYLVANIA 1960."
Section 3. By-law Amendments. These By-laws may be altered, amended, or
repealed or new By-laws may be adopted by the vote of a majority of the
shareholders present at any annual or special meeting called for the purpose of
amending, altering, or repealing By-laws or the adoption of new By-laws. Notice
of any such special meeting shall be given at least two weeks prior to the date
thereof. With respect to those matters which are not by statute reserved
exclusively to the shareholders, the Board of Directors, by the affirmative vote
of at least two-thirds of the directors, may likewise amend, alter or repeal
By-laws and may adopt new By-laws in place thereof at a regular meeting or a
special meeting, written notice of the purpose of which shall have been given at
least two weeks prior to the date thereof. Such proposed amendment, repeal or
new By-laws, or a summary thereof, shall be set forth in any notice of such
meeting, whether annual, regular or special.
<PAGE>
HISTORICAL TIMES, INC.
UNANIMOUS WRITTEN ACTION OF SOLE SHAREHOLDER
AND DIRECTORS
Cowles Media Company, owner of all of the issued and outstanding stock of
Historical Times, Inc. (the "Corporation"), and the undersigned individuals,
being all of the directors of the Corporation, hereby authorize and adopt the
following resolutions, effective for all periods ending on or after December 31,
1986.
RESOLVED, that Article IX, Section 1 of the By-laws of the
Corporation is hereby amended and restated so as to read in
its entirely:
"The fiscal year of the Corporation shall
end on the Saturday nearest the last day of
March of each year."
RESOLVED FURTHER, that the officers of the Corporation, and
each of them, are authorized and directed to take any and
all action which may be necessary or advisable to implement
the foregoing resolution.
RESOLVED FURTHER, that the Unanimous Written Action by which
the foregoing resolutions are adopted may be executed in
counterparts, all of which shall constitute a single action
and document.
Date: June 19, 1987
COWLES MEDIA COMPANY
By: /s/ [ILLEGIBLE]
--------------------
Its: Vice President
--------------------
/s/ DAVID C. COX
- -------------------- -------------------------
David C. Cox, Director Warren B. Syer, Director
/s/ JAMES A. ALCOTT
- -------------------- ---------------------------
James A. Alcott, Director Robert H. Fowler, Director
/s/ JOHN S. COLE
- --------------------
John S. Cole, Director
<PAGE>
COWLES MAGAZINES, INC.
WRITTEN ACTION OF SOLE STOCKHOLDER
Cowles Media Company, sole stockholder of Cowles Magazines, Inc., a Pennsylvania
corporation (the "Corporation'), hereby adopts the following resolution:
RESOLVED, that Section 2 of ARTICLE IX of the By-Laws of the Corporation is
hereby amended so as to read in its entirety as follows:
"Section 2. Seal. The Corporation shall have no seal."
IN WITNESS WHEREOF, Cowles Media Company has executed this Written Action of
Sole Stockholder effective this 8th day of September , 1988.
COWLES MEDIA COMPANY
By: /s/ [ILLEGIBLE]
--------------------
Its: Vice President
--------------------
<PAGE>
EMPIRE PRESS, INC.
ARTICLES OF AMENDMENT
(1) The name of this corporation is Empire Press, Inc.
(2) The following amendment to the Articles of Incorporation has been
adopted by the written action of the sole shareholder of the Corporation on
January 7, 1994: adopted by January.
RESOLVED, that Article I has been amended to read in its
entirety:
"ARTICLE I"
The name of this corporation is Cowles History Group, Inc."
EMPIRE PRESS INC.
By: /s/ JAMES J. VIERA
--------------------
James J. Viera
Its: Vice President
--------------------
<PAGE>
EMPIRE PRESS, INC.
The undersigned, pursuant to Chapter 9 of Title 13.1 of the Code of
Virginia, states as follows:
ARTICLE I
The name of this Corporation is Empire Press. Inc.
ARTICLE II
This Corporation is authorized to issue an aggregate total of 1,000 shares,
all of which shall be designated Common Stock, having a par value of $.0l per
share.
ARTICLE III
This Corporation's initial registered office address is 5511 Staples Mill
Road, Richmond, VA 23228 and the registered office is located in the County of
Henrico.
ARTICLE IV
The name of this Corporation's initial registered agent, whose business
office is identical with the above registered office, is Edward R. Parker.
The initial registered agent is an individual who is a resident of Virginia
and a member of the Virginia State Bar.
ARTICLE V
The name and address of the incorporator of this Corporation is as follows:
Carmen M. Evers
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
ARTICLE VI
No shareholder of this Corporation shall have any cumulative voting rights.
ARTICLE VII
No shareholder of this Corporation shall have any preemptive rights to
subscribe for, purchase or acquire any shares of this Corporation of any class,
whether unissued or now or hereafter authorized, or any obligations or other
securities convertible into or exchangeable for any such shares.
<PAGE>
The names of the first directors of this Corporation are:
David C. Cox
Christopher M. Little
James A. Alcott
ARTICLE IX
Any action required or permitted to be taken at a meeting of the Board of
Directors of this Corporation not needing approval by the shareholders under
Virginia Stock Corporation Act, may be taken by written action signed by the
number of directors that would be required to take such action at a meeting of
the Board of Directors at which all directors are present.
ARTICLE X
No director of this Corporation shall be personally liable to this
Corporation or its shareholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article shall
not eliminate or limit the liability of a director to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to this
Corporation or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Title 13.1-section 697 of the Code of Virginia, (iv) for any transaction from
which the director derived an improper personal benefit or (v) for any act or
omission occurring prior to the effective date of this Article. No amendment to
or repeal of this Article shall apply to or have any effect on the liability or
alleged liability of any director of this Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of
December, 1991
/s/ CARMEN R. EVERS
--------------------
Carmen R. Evers
Incorporator
--2--
<PAGE>
BY-LAWS
OF
EMPIRE PRESS, INC.
TABLE OF CONTENTS
Section
SHAREHOLDERS 1
- ------------
1.01 Place of Meetings 1
1.02 Regular Meetings 1
1.03 Special Meetings 1
1.04 Meetings Held Upon Shareholder Demand 1
1.05 Adjournments 2
1.06 Notice of Meetings 2
1.07 Waiver of Notice 2
1.08 Quorum; Acts of Shareholders 2
1.09 Voting Rights 2
1.10 Proxies 3
1.11 Action Without a Meeting 3
DIRECTORS 3
- ---------
2.01 Number; Qualifications 3
2.02 Term 3
2.03 Vacancies 3
2.04 Place of Meetings 4
2.05 Regular Meetings 4
2.06 Special Meetings 4
2.07 Waiver of Notice; Previously Scheduled Meetings 4
2.08 Quorum; Acts of Board 4
2.09 Electronic Communications 5
2.10 Absent Directors 5
2.11 Action Without a Meeting 5
2.12 Committees 5
2:13 Special Litigation Committee 6
2.14 Compensation 6
OFFICERS 6
- --------
3.01 Number and Designation 6
3.02 President 6
3.03 Vice Presidents 6
3.04 Secretary 7
3.05 Treasurer 7
3.06 Authority and Duties 7
3.07 Term 7
3.08 Salaries 8
- i -
<PAGE>
INDEMNIFICATION 8
- ---------------
4.01 Indemnification 8
4.02 Insurance 8
SHARES 8
- ------
5.01 Certificated Shares 8
5.02 Declaration of Dividends and Other Distributions 9
5.03 Transfer of Shares 9
5.04 Record Date 9
MISCELLANEOUS 9
- -------------
6.01 Execution of Instruments 9
6.02 Advances 9
6.03 Corporate Seal 10
6 04 Fiscal Year 10
6.05 Amendments 10
This Table of Contents is not part of the By-laws of the Corporation. It
is intended merely to aid in the utilization of the By-laws.
-ii-
<PAGE>
BY-LAWS
of
EMPIRE PRESS, INC.
SHAREHOLDERS
Section 1.01 Place of Meetings. Each meeting of the shareholders shall be
held at the principal executive office of the Corporation or at such other place
as may be designated by the Board of Directors or the President; provided,
however, that any meeting called by or at the demand of a shareholder or
shareholders shall be held in the county where the principal executive office of
the Corporation is located.
Section 1.02 Regular Meetings. Annual meetings of the shareholders may be
held on an annual or other less frequent basis as determined by the Board of
Directors; provided, however, that if a regular meeting has not been held during
the immediately preceding 15 months, a shareholder or shareholders holding three
percent or more of the voting power of all shares entitled to vote may demand a
regular meeting of shareholders by written demand given to the President of the
Corporation. At each regular meeting the shareholders shall elect qualified
successors for directors who serve for an indefinite term or whose terms have
expired or are due to expire within six months after the date of the meeting and
may transact any other business, provided, however, that no business with
respect to (which special notice is required by law shall be transacted unless
such notice shall have been given.
Section 1.03 Special Meetings. A special meeting of the shareholders may be
called for any purpose or purposes at any time by the President; by the Board of
Directors; or by one or more shareholders holding not less than ten percent of
the voting power of all shares of the Corporation entitled to vote, who shall
demand such special meeting by written notice given to the President of the
Corporation specifying the purposes of such meeting.
Section 1.04 Meetings Held Upon Shareholder Demand. Within 30 days of
receipt of a demand by the President from any shareholder or shareholders
entitled to call a meeting of the shareholders, it shall be the duty of the
Board of Directors of the Corporation to cause a special or regular meeting of
shareholders, as the case may be, to be duly called and held on notice no later
than 90 days after receipt of such demand. If the Board of Directors fails to
cause such a meeting to be called and held as required by this Section, the
shareholder or shareholders making the demand may call the meeting by giving
notice as provided in Section 1.06 hereof at the expense of the Corporation.
<PAGE>
Section 1.05 Adjournments. Any meeting of the shareholders may be adjourned
from time to time to another date, time and place. If any meeting of the
shareholders is so adjourned, no notice as to such adjourned meeting need be
given if the date, time and place at which the meeting will be reconvened are
announced at the time of adjournment.
Section 1.06 Notice of Meetings. Except as otherwise specified in Section
1.05 or required by law, written notice of each meeting of the shareholders,
stating the date, time and place and, in the case of a special meeting, the
purpose or purposes, shall be given at least ten days and not more than 60 days
prior to the meeting to every holder of shares entitled to vote at such meeting.
The business transacted at a special meeting of shareholders is limited to the
purposes stated in the notice of the meeting.
Section 1.07 Waiver of Notice. A shareholder may waive notice of the date,
time, place and purpose or purposes of a meeting of shareholders. A waiver of
notice by a shareholder entitled to notice is effective whether given before, at
or after the meeting, and whether given in writing, orally or by attendance.
Attendance by a shareholder at a meeting is a waiver' of notice of that meeting,
unless the shareholder objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or convened,
or objects before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.
Section l.O8 Quorum; Acts of Shareholders. The holders of a majority of the
voting power of the shares entitled to vote at a shareholders meeting are a
quorum for the transaction of business. If a quorum is present when a duly
called or held meeting is convened, the shareholders present may continue to
transact business until adjournment, even though the withdrawal of a number of
the shareholders originally present leaves less than the proportion or number
otherwise required for a quorum. Except as otherwise required by law or
specified in the Articles of Incorporation of the Corporation, the shareholders
shall take action by the affirmative vote of the holders of a majority of the
voting power of the shares present and entitled to vote at a duly held meeting
of shareholders.
Section l.09 Voting Rights. Subdivision 1. A shareholder shall have one
vote for each share held which is entitled to vote. Except as otherwise required
by law, a holder of shares entitled to vote may vote any portion of the shares
in any way the shareholder chooses. If a shareholder votes without designating
the proportion or number of shares voted in a particular way, the shareholder is
deemed to have voted all of the shares in that way.
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<PAGE>
Subdivision 2. The Board may fix a date not more than 70 days before the
date of a meeting of shareholders as the date for the determination of the
holders of shares entitled to notice of and entitled to vote at the meeting.
When a date is so fixed, only shareholders on that date are entitled to notice
of and permitted to vote at that meeting of shareholders. If a meeting is
adjourned to a date more than 120 days after the original meeting, a new record
date shall be fixed by the Board.
Section 1.10 Proxies. A shareholder may cast or authorize the casting of a
vote by filing a written appointment of a proxy with an officer of the
Corporation at or before the meeting at which the appointment is to be
effective.
Section 1.11 Action Without a Meeting. Any action required or permitted to
be taken at a meeting of the shareholders of the Corporation may be taken
without a meeting by written action signed by all of the shareholders entitled
to vote on that action. The written action is effective when it has been signed
by all of those shareholders, unless a different effective time is provided in
the written action.
DIRECTORS
Section 2.01 Number; Qualifications. Except as authorized by the
shareholders pursuant to a shareholder control agreement or unanimous o
affirmative vote, the business and affairs of the Corporation shall be managed
by or under the direction of a Board of one or more directors. Directors shall
be natural persons. The shareholders at each regular meeting shall determine the
number of directors to constitute the Board, provided that thereafter the
authorized number of directors may be increased by the shareholders or the Board
and decreased by the shareholders. Directors need not be shareholders.
Section 2.02 Term. Each director shall serve for an indefinite term that
expires at the next regular meeting of the shareholders. A director shall hold
office until a successor is elected and has qualified or until the earlier
death, resignation, removal or disqualification of the director.
Section 2.03 Vacancies. Vacancies on the Board of Directors resulting from
the death, resignation, removal or disqualification of a director may be filled
by the affirmative vote of a majority of the remaining members of the Board,
though less than a quorum. Vacancies on the Board resulting from newly created
directorships may be filled by the affirmative vote of a majority of the
directors serving at the time such directorships are created. Each person
elected to fill a vacancy shall hold office until a qualified successor is
elected by the shareholders at the next regular meeting or at any special
meeting duly called for that purpose.
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<PAGE>
Section 2.04 Place of Meetings. Each meeting of the Board of Directors
shall be held at the principal executive office of the Corporation or at such
other place as may be designated from time to time by a majority of the members
of the Board.
Section 2.05 Regular Meetings. Regular meetings of the Board of Directors
for the election of officers and the transaction of any other business shall be
held without notice at the place of and immediately after each regular meeting
of the shareholders.
Section 2.06 Special Meetings. A special meeting of the Board of Directors
may be called for any purpose or purposes at any time by any member of the Board
by giving not less than two days' notice to all directors of the date, time and
place of the meeting, provided that when notice is mailed, at least four days'
notice shall be given. The notice need not state the purpose of the meeting.
Section 2.07 Waiver of Notice; Previously Scheduled Meetings. Subdivision
1. A director of the Corporation may waive notice of the date, time and place of
a meeting of the Board. A waiver of notice by a director entitled to notice is
effective whether given before, at or after the meeting, and whether given in
writing, orally or by attendance. Attendance by a director at a meeting is a
waiver of notice of that meeting, unless the director objects at the beginning
of the meeting to the transaction of business because the meeting is not
lawfully called or convened and thereafter does not participate in the meeting.
Subdivision 2. If the day or date, time and place of a Board meeting have
been provided herein or announced at a previous meeting of the Board, no notice
is required. Notice of an adjourned meeting need not be given other than by
announcement at the meeting at which adjournment is taken of the date, time and
place at which the meeting will be reconvened.
Section 2.O8 Quorum. Acts of Board. The presence in person of a majority of
the directors currently holding office shall be necessary to constitute a quorum
for the transaction of business. In the absence of a quorum, a majority of the
directors present may adjourn a meeting from time to time without further notice
until a quorum is present. If a quorum is present when a duly held meeting is
convened, the directors present may continue to transact business until
adjournment, even though the withdrawal of a number of the directors originally
present leaves less than the proportion or number otherwise required for a
quorum. Except as otherwise required by law or specified in the Articles of
Incorporation of the Corporation, the Board shall take action by the affirmative
vote of a majority of the directors present at a duly held meeting.
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<PAGE>
Section 2.O9 A conference among directors by any means of communication
through which the directors may simultaneously hear each other during the
conference constitutes a Board meeting, if the same notice is given of the
conference as would be required for a meeting, and if the number of directors
participating in the conference would be sufficient to constitute a quorum at `a
meeting. A director may participate in a Board meeting not described in the
immediately preceding sentence by any means of communication through which the
director, other directors so participating and all directors physically present
at the meeting may simultaneously hear each other during the meeting.
Participation in a meeting by any means referred to in this Section 2.09
constitutes presence in person at the meeting.
Section 2.10 Absent Directors. A director of the Corporation may give
advance written consent or opposition to a proposal to be acted on at a Board
meeting. If the director is not present at the meeting, consent or opposition to
a proposal does not constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall be counted as a vote in
favor of or against the proposal and shall be entered in the minutes or other
record of action at the meeting, if the proposal acted on at the meeting is
substantially the same or has substantially the same effect as the proposal to
which the director has consented or objected.
Section 2.11 Action Without a Meeting. An action required or permitted to
be taken at a Board meeting may be taken without a meeting by written action
signed by all of the directors. The written action is effective when signed by
the last director, unless a different effective time is provided in the written
action.
Section 2.12 Committees. Subdivision 1. A resolution approved by the
affirmative vote of a majority of the Board may establish committees having the
authority of the Board in the management of the business of the Corporation only
to the extent provided in the resolution. Committees shall be subject at all
times to the direction and control of the Board, except as provided in Section
2.13.
Subdivision 2. A committee shall consist of two or more natural persons,
who need not be directors, appointed by affirmative vote of a majority of the
directors present at a duly held Board meeting.
Subdivision 3. Section 2.04 and Sections 2.06 to 2.11 hereof shall apply to
committees and members of committees to the same extent as those sections apply
to the Board and directors.
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<PAGE>
Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.
Section 2.13 Special Litigation Committee. Pursuant to the procedure set
forth in Section 2.12, the Board may establish a committee composed of one or
more independent directors or other independent persons to determine whether it
is in the best interests of the Corporation to pursue a particular legal right
or remedy of the Corporation and whether to cause, to the extent permitted by
law, the dismissal or discontinuance of a particular proceeding that seeks to
assert a right or remedy on behalf of the Corporation. The committee, once
established, is not subject to the direction or control of, or termination by,
the Board. A vacancy on the committee may be filled by a majority vote of the
remaining committee members. The good faith determinations of the committee are
binding upon the Corporation and its directors, officers and shareholders to
the extent permitted by law. The committee terminates when it issues a written
report of its determinations to the Board.
Section 2.14 Compensation. The Board may fix the compensation, if any, of
directors.
OFFICERS
Section 3.01 Number and Designation. The o Corporation shall have a
president and a secretary and such other officers as the Board of Directors deem
necessary for the operation and management of the Corporation, with such
powers, rights, duties and responsibilities as may be determined by the Board,
including, without limitation, one or more Vice Presidents and a Treasurer, each
of whom shall have the powers, rights, duties and responsibilities set forth in
these By-laws unless otherwise determined by the Board. Any of the offices or
functions of those offices may be held by the same person.
Section 3.02 President. Unless provided otherwise by a resolution adopted
by the Board of Directors, the President (a) shall have general active
management of the business of the Corporation; (b) shall, when present, preside
at all meetings of the shareholders and Board of Directors; (c) shall see that
all orders and resolutions of the Board are carried into effect; (d) may
maintain records of and certify proceedings of the Board and shareholders; and
(e) shall perform such other duties as may from time to time be assigned by the
Hoard of Directors.
Section 3.03 Vice Presidents. Any one or more Vice Presidents, if any, may
be designated by the Board of Directors as Executive Vice Presidents or Senior
Vice Presidents. During the absence or disability of the President, it shall be
the duty of the highest ranking Executive Vice President, and, in the
--6--
<PAGE>
absence of any such Vice President, it shall be the duty of the highest ranking
Senior Vice President or other Vice President, who shall be present at the time
and able to act, to perform the duties of the President. The determination of
who is the highest ranking of two or more persons holding the same office shall,
in the absence of specific designation of order of rank by the Board of
Directors, be made on the basis of the earliest date of appointment or election,
or, in the event of simultaneous appointment or election, on the basis of the
longest continuous employment by the Corporation.
Section 3.04 Secretary. Secretary, unless otherwise determined by the
Board, shall attend all meetings of the shareholders and all meetings of the
Board of Directors, shall record or cause to be recorded all proceedings thereof
in a book to be kept for that purpose, and may certify such proceedings. Except
as otherwise required or permitted by law or by these By-laws, the Secretary
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the Board of Directors.
Section 3.05 Treasurer. The Treasurer shall perform such duties as may from
time to time be assigned by the Board of Directors.
Section 3.06 Authority and Duties. In addition to the foregoing authority
and duties, all officers of the Corporation shall respectively have such
authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.
Section 3.07 Term. Subdivision 1. All officers of the Corporation shall
hold office until their respective successors are chosen and have qualified or
until their earlier death, resignation or removal.
Subdivision 2. An officer may resign at any time by giving written notice
to the Corporation. The resignation is effective without acceptance when the
notice is given to the Corporation, unless a later effective date is specified
in the notice.
Subdivision 3. An officer may be removed at any time, with or without
cause, by a resolution approved by the affirmative vote of a majority of the
directors present at a duly held Board meeting.
--7--
<PAGE>
Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in the
office of President shall, be filled for the unexpired portion of the term by
the Board.
Section 3.08 Salaries. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors or by the President if authorized by
the Board.
INDEMNIFICATION
Section 4.01 Indemnification. The Corporation shall indemnify such persons,
for such expenses and liabilities, in such manner, under such circumstances, and
to such extent, as required or permitted by the Virginia Stock Corporation Act,
as amended from time to time, or as required or permitted by other provisions of
law.
Section 4.02 Insurance. The Corporation may purchase and maintain insurance
on behalf of any person in such person's official capacity against any liability
asserted against and incurred by such person in or arising from that capacity,
whether or not the Corporation would otherwise be required to indemnify the
person against the liability.
SHARES
Section 5.01 Certificated Shares. Subdivision 1. The shares of the
Corporation shall be certificated shares. Each holder of duly issued
certificated shares is entitled to a certificate of shares.
Subdivision 2. Each certificate of shares of the Corporation shall be
signed `by the President or any Vice President, and the Secretary or any
Assistant Secretary, but when a certificate is signed by a transfer agent or a
registrar, the signature of any such officer may be a facsimile, engraved or
printed. If a person signs or has a facsimile signature placed upon a
certificate while an officer, transfer agent or registrar of the Corporation,
the certificate may be issued by the Corporation, even if the person has ceased
to serve in that capacity before the certificate is issued, with the same effect
as if the person had that capacity at the date of its issue.
Subdivision 3. A certificate representing shares issued by the Corporation
shall, if the Corporation is authorized to issue shares of more than one class
or series, set forth upon the face or back of the certificate, or shall state
that the Corporation will furnish to any shareholder upon request and without
charge, a full statement of the designations, preferences, limitations and
relative rights of
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<PAGE>
the shares of each class or series authorized to be issued, so far as they have
been determined, and the authority of the Board to determine the relative rights
and preferences of subsequent classes or series.
Section 502 Declaration of Dividends and Other Distributions. The Board of
Directors shall have the authority to declare dividends and other distributions
upon the shares of the Corporation to the extent permitted by law.
Section 5.03 Transfer of Shares. Shares of the Corporation may be
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. Shares shall be transferred only upon
surrender and cancellation of certificates for a like number of shares. The
Board of Directors, however, may appoint one or more transfer agents and
registrars to maintain the share records of the Corporation and to effect
transfers of shares.
Section 5.04 Record Date. The Board of Directors may fix a time, not
exceeding 60 days preceding the date fixed for the payment of any dividend or
other distribution, as a record date for the determination of the shareholders
entitled to receive payment of such dividend or other distribution, and in such
case only shareholders of record on the date so fixed shall be entitled to
receive payment of such dividend or other distribution, notwithstanding any
transfer of any shares on the books of the Corporation after any record date so
fixed.
MISCELLANEOUS
Section 6.01 Execution of Instruments. Subdivision 1. All deeds, mortgages,
bonds, checks, contracts and other instruments pertaining to the business and
affairs of the Corporation shall be signed on behalf of the Corporation by the
President, or any Vice President, or by such other person or persons as may be
designated from time to time by the Board of Directors.
Subdivision 2. If a document must be executed by persons holding different
offices or functions and one person holds such offices or exercises such
functions, that person may execute the document in more than one capacity if the
document indicates each such capacity.
Section 6.02 Advances. The Corporation may, without a vote of the
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.
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<PAGE>
Section 6.03 Corporate Seal. The Corporation shall have no corporate seal.
Section 6.04 Fiscal Year. The fiscal year of the Corporation shall end on
the Saturday nearest the last day of March.
Section 6.05 Amendments. The Board of Directors shall have the power to
adopt, amend or repeal the By-Laws of the Corporation, subject to the power of
the shareholders to change or repeal the same, provided, however, that the Board
shall not adopt, amend or repeal any By-Law fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling vacancies
in the Board, or fixing the number of directors or their classifications,
qualifications or terms of office, but may adopt or amend a By-Law that
increases the number of directors.
<PAGE>
CERTIFICATE OF AMENDMENT
STOCK CORPORATION
Office of the Secretary of the State
30 Trinity Street / P.O. Box 150470 / Hartford, CT 06115-0470 /new/l-97
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Space For Office Use Only
FILING 0001687629 PG 01 OF 02 VOL B-00108
FILED 01/15/1997 01:00 PM PAGE 03312
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
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1. NAME OF CORPORATION:
Simba Information, Inc.
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2. THE CERTIFICATE OF INCORPORATION IS (check A., B. or C.):
x A. AMENDED.
- ---
B. AMENDED AND RESTATED.
- ---
C. RESTATED.
- ---
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3. TEXT OF EACH AMENDMENT (RESTATEMENT:
RESOLVED, that the Certificate of Incorporation of the Corporation be
amended to read in its entirety as follows:
"1. The name of the Corporation is Cowles/Simba Information, Inc."
(Please reference an 8 1/2 X 11 attachment if additional space is needed)
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<PAGE>
[ILLEGIBLE]
CERTIFICATE OF INCORPORATION
OF
SIMBA INFORMATION, INC.
The undersigned incorporator hereby forms a corporation under the
Stock Corporation Act of the State of Connecticut (the "Act"), as follows:
1. The name of the corporation is Simba Information, Inc.
2. The nature of he business to be transacted, or the purposes to be
promoted or carried out by the corporation, are as follows:
To engage in any lawful act or business for which corporations
may be formed under the Act.
3. The designation of each class of shares, the authorized number of
shares of each such class, and the par value of each share thereof, are as
follows:
One class of five thousand (5,000) authorized shares of common
stock, without par value.
4. The terms, limitations and relative rights and preferences of each
class of shares and series, if any, or an express grant of authority to the
board of directors pursuant to Section 33-341(b) of the Act as follows:
Common Stock. Only one class of stock is authorized and all shares
thereof shall have equal rights. Each holder of record of common stock
shall be entitled to one vote for each share held. There are no limitations
on shares of common stock of the corporation.
5. The minimum amount of stated capital with which the corporation
shall commence business is one thousand dollars ($1,000.00).
6. The corporation is to have perpetual existence
Dated at Bridgeport, Connecticut, this 22nd day of September, 1989.
I hereby declare, under the penalties of false statement, that the
statements made in the foregoing certificate are true.
/s/ ANDREA KONCEVICH
----------------------
Andrea Koncevich
Sole Incorporator
Rec to: Cohen & Wolf, PD
P.O. Box 1821
Bridgeport, Ct.
<PAGE>
Exhibit 3.152
BY-LAWS
OF
SIMBA INFORMATION, INC.
ARTICLE I
MEETING OF SHAREHOLDERS
SECTION 1. Annual Meeting. A meeting of shareholders shall be held
annually for the election of directors and the transaction of such other
business as may properly come before the meeting on the second Tuesday in March
in each and every year, unless such day shall fall on a legal holiday, in which
case such meeting shall be held on the next succeeding business day, at 10:00
a.m. local time where the meeting is to be held.
SECTION 2. Special Meetings. Special meetings of the shareholders for any
purpose may be called by the Board of Directors or the President, and shall be
called by the President at the written request of the holders of record of not
less than one-tenth of the voting power of all outstanding shares of the
Corporation entitled to vote at such meeting. Special meetings shall be held at
such time as may be fixed in the call and stated in the notice of meeting or
waiver thereof. At any such special meeting only such business may be transacted
as is related to the purposes set forth in the notice of meeting.
SECTION 3. Place of Meetings. Meetings of shareholders shall be held at
such place, within or without the State of Connecticut or the United States of
America, as may be fixed in the call and notice of meeting or waiver thereof.
<PAGE>
SECTION 4. Notice of Meetings. Notice of each meeting of shareholders
shall be given in writing and shall state the place, date and hour of the
meeting and, in the case of special meetings, (i) the purpose or purposes for
which the meeting is called and (ii) at whose direction the notice is being
issued.
A copy of the notice of any meeting shall be given, personally or by mail,
not less than seven nor more than fifty days before the date of the meeting, to
each shareholder entitled to vote at such meeting. If mailed, notice is given
when deposited in the United States mail, postage prepaid.
SECTION 5. Waiver of Notice. Notice of any meeting need not be given to
any shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting. The attendance of any shareholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
SECTION 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividends, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, seventy days. If the stock
transfer books shall be closed
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<PAGE>
for the purpose of determining shareholders entitled to notice of or to vote at
a meeting of shareholders, such books shall be closed for at least ten full days
immediately preceding such meeting. In lieu of closing stock transfer books, the
Board of Directors may fix in advance a date as the record date of any such
determination of shareholders, such date in any case to be not more than seventy
days and, in case of a meeting of shareholders, not less than ten full days
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed and no
record date is fixed for a determination of shareholders entitled to notice of
or to vote at a meeting of shareholders or a determination of shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for determination of shareholders. When a determination of shareholders entitled
to vote at any meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment thereof. A record
date, or date for closing the stock transfer books, is effective as of the close
of business on such date unless another hour is designated by the resolution of
the Board of Directors.
SECTION 7. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the Corporation
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<PAGE>
shall make a complete list of the shareholders entitled to vote at each meeting
of shareholders or any adjournment thereof, arranged in alphabetical order with
the address of and the number of shares by each. Such list or other equivalent
record shall, for a period of five days prior to such meeting, be kept on file
at the principal office of the Corporation or at the office or place of business
of a transfer agent in this state and shall be subject to inspection by any
shareholder during usual business hours for any proper purpose. Such list or
other equivalent record shall also be produced and kept at the time and place of
the meeting and shall be subject for any such proper purpose to such inspection
during the whole time of the meeting.
SECTION 8. Qualification of Voters. Except as may otherwise be provided in
the Certificate of Incorporation, every shareholder of record shall be entitled
at every meeting of shareholders to one vote for every share standing in his
name on the record of shareholders.
Shares of the Corporation standing in the name of another domestic or
foreign corporation of any type or kind may be voted by such officer, agent or
proxy as the by-laws or similar regulations of such corporation may provide, or
in the absence of such provision, as the Board of Directors of such corporation
may determine.
Treasury shares shall not be shares entitled to vote or to be counted in
determining the total number of outstanding shares of the Corporation.
4
<PAGE>
SECTION 9. Quorum. At any meeting of the shareholders the presence, in
person or by proxy, of the holders of a majority of the shares entitled to vote
thereat shall constitute a quorum for the transaction of any business except
where a greater number is otherwise provided by law. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal of
any shareholders. A majority of the shareholders present, in person or by proxy,
may adjourn the meeting despite the absence of a quorum.
SECTION 10. Proxies. Every shareholder entitled to vote at a meeting of
shareholders, to waive notice of such meeting or to express consent or dissent
without meeting may authorize another person or persons in writing to act for
him by proxy. Every proxy must be signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven
months from the date thereof unless otherwise provided in the proxy, provided in
no event shall a proxy be valid after ten years from its date of execution.
Every proxy shall be revocable at the pleasure of the shareholder executing it,
except as otherwise provided therein and as permitted by law. The attendance at
any meeting by the shareholder who shall have previously given a proxy
applicable thereto shall not, as such, have the effect of revoking the proxy.
The Corporation may treat any proxy as not revoked and in full force and effect
until it receives a duly executed instrument revoking it or a proxy bearing a
later date
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<PAGE>
or, in the event of death or incapacity of the shareholder executing the same,
written notice of such death or incapacity.
SECTION 12. Action Without a Meeting. Whenever the shareholders are
required or permitted to take any action by vote, such action may be taken
without a meeting on written consent, setting forth the action so taken, signed
by the holders of all outstanding shares entitled to vote thereon.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 1. Power of Board and Qualification of Directors. The business,
properties and affairs of the Corporation shall be managed by or under the
direction of the Board of Directors, each of whom shall be at least eighteen
years of age.
SECTION 2. Number of Directors. The number of directors constituting the
entire Board of Directors shall be such number not less than three nor more than
nine as may be fixed from time to time by resolution adopted by the shareholders
or by the Board. In the absence of such resolution, the number of
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** AMENDED - SEE RIDER A ATTACHED
6
<PAGE>
directors shall be the number of directors elected at the preceding annual
meeting of shareholders. The reduction of the number of directors shall not
remove any director in office or shorten his term. When all of the shares are
owned by less than three shareholders, the number of directors may be less than
three but not less than the number of shareholders.
SECTION 3. Election and Term of Directors. At each annual meeting of
shareholders, directors shall be elected to hold office until the next annual
meeting. Each director shall hold office until the expiration of the term for
which he is elected, and until his successor has been elected and qualified.
SECTION 4. Resignations. Any director of the Corporation may resign at any
time by giving written notice to the Board of Directors or to the President or
the Secretary of the Corporation. Such resignation shall take effect at the time
specified therein; and unless otherwise specified therein the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 5. Removal of Directors. Any or all of the directors may be
removed with or without cause and with or without notice or hearing by
vote of the shareholders.
SECTION 6. Newly Created Directorships and Vacancies. Newly created
directorships resulting from an increase in the number of directors by
resolution adopted by the shareholders or the Board of Directors, shall
be filled by vote of the shareholders. Vacancies occurring in the Board
of Directors for
7
<PAGE>
any other reason whatsoever, including the removal of directors without cause,
shall be filled by vote of the shareholders. A director elected to fill a
vacancy or a newly created directorship shall be elected to hold office until
the next annual meeting of shareholders, and until his successor has been
elected and qualified.
SECTION 7. Executive and Other Committees of Directors. The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an executive committee and other committees to
serve at the pleasure of the Board of Directors, each consisting of two or more
directors. The Board of Directors may designate one or more directors as
alternate members of any such committee, who may replace any absent member or
members at any meeting of such committee.
The designation of such executive committee or other committee shall not
operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law. The executive committee, when the Board of
Directors is not in session, shall have and may exercise all of the authority of
the Board of Directors except to the extent, if any, that such authority shall
be limited by these By-Laws, by the resolution appointing the executive
committee or by law. Each such other committee shall have and may exercise such
powers as may be authorized in the resolution appointing such other committee
and permitted by law. Neither the executive committee nor such other
8
<PAGE>
committees shall have the authority of the Board of Directors with respect to
amending the certificate of incorporation, adopting a plan of merger or
consolidation, recommending to the shareholders a voluntary dissolution of the
Corporation or a revocation thereof, or amending the By-Laws of the
Corporation.
SECTION 8. Compensation of Directors. The Board of Directors shall have
authority to fix the compensation of directors for services in any capacity, or
to allow a fixed sum plus expenses, if any, for attendance at meetings of the
Board or of committees of directors.
ARTICLE III.
MEETINGS OF THE BOARD
SECTION 1. Directors' Meetings. A regular meeting of the Board of
Directors shall be held immediately following the annual meeting of the
shareholders, and at such other times as the Board of Directors may determine.
Regular meetings of the Board of Directors may be held with or without notice at
such times and places, within or without the State of Connecticut or the United
States of America, as may from time to time be fixed by the Board. Special
meetings of the Board of Directors may be held at any time and place, within or
without the State of Connecticut or the United States of America, upon the call
of the President by oral, telegraphic or written notice, or sent by other public
instrumentality, duly given to or sent or mailed to each director by an officer
of the Corporation not less than forty-eight (48) hours before such meeting. The
notice shall state the place,
9
<PAGE>
date and hour of the meeting and indicate at whose direction the notice is being
issued. Such notice shall be deemed given, if mailed, three days after being
deposited in the United States mail, postage prepaid, or if oral, telegraphic or
by other public instrumentality or method of delivery, when received or when
deposited with the telegraph company or other public instrumentality, as the
case may be. Special meetings shall be called by the President upon the written
request of any two directors or of one director if there shall be less than
three directors.
SECTION 2. Waiver of Notice. Notice of a special meeting or of a regular
meeting of the Board of Directors need not be given to any director who submits
a signed waiver of notice whether before or after the meeting, or who attends
the meeting without protesting, prior thereto or at its commencement, the lack
of notice to him.
A notice, or waiver of notice, need not specify the purpose or purposes of
any special meeting or regular meeting of the Board of Directors.
SECTION 3. Quorum; Action by the Board; Adjournment. At all meetings of
the Board of Directors, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business, except that when the number
of directors constituting the whole Board of Directors shall be an even number,
one-half of that number shall constitute a quorum,
10
<PAGE>
provided that a quorum shall be not less than two (unless there is only one
directorship).
The vote of a majority of the directors present at a meeting at the time
of the vote, if a quorum is then present, shall be the act of the Board of
Directors, except as may be otherwise specifically provided by the Certificate
of Incorporation, by these By-Laws or by law.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting to another time and place.
SECTION 4. Action Without a Meeting. Any action required or permitted to
be taken by the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board of Directors or of the committee consent
in writing to the adoption of a resolution authorizing the action, provided that
the number of directors then in office or serving on such committee and taking
such action shall constitute a quorum for such action. Such resolution and the
written consent thereto by the members of the Board of Directors or the
committee shall be filed with the minutes of the proceedings of the Board of
Directors or the committee.
SECTION 5. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors or any committee thereof at
which action on any corporate matter is taken shall be presumed to have assented
to the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with
11
<PAGE>
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
SECTION 6. Conference Telephone. Any one or more members of the Board of
Directors or any committee thereof may participate in a meeting of the Board of
Directors or the committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
ARTICLE IV.
OFFICERS
SECTION 1. Officers. The officers of the Corporation shall be elected or
appointed by the Board of Directors and shall be a President, Treasurer and a
Secretary. The Board of Directors may also elect or appoint, from time to time,
one or more Assistant Treasurers, one or more Vice Presidents, one or more
Assistant Secretaries and such other officers with such duties as may be
delegated to them, as the Board of Directors may determine. The officers of the
Corporation need not be directors, and any one person may hold two or more
offices, provided that the offices of President and Secretary shall not be held
by the same person.
SECTION 2. Term of Office; Removal. Each officer shall hold office at the
pleasure of the Board of Directors for such
12
<PAGE>
term as may be prescribed by the Board of Directors and until his successor has
been elected or appointed and qualified. Any officer may be removed by the Board
of Directors with or without cause. The removal of an officer without cause
shall be without prejudice to his contract rights, if any. The election or
appointment of an officer shall not of itself create contract rights. Vacancies
among the officers by reason of death, resignation, removal or other causes
shall be filled by the Board of Directors.
SECTION 3. Powers and Duties. The officers of the Corporation shall each
have such powers and authority and perform such duties in the management of the
property and affairs of the Corporation as are imposed by these By-Laws and from
time to time prescribed by the Board of Directors. To the extent not so imposed
or prescribed, the officers of the Corporation shall each have such powers and
authority and perform such duties in the management of the affairs and property
of the Corporation, subject to the control of the Board of Directors, as
generally pertain to their respective offices.
Securities of other corporations held by the Corporation may be voted on
behalf of the Corporation by any officer designated by the Board of Directors
and, in the absence of any such designation, by the President, any Vice
President, the Secretary or the Treasurer.
The Board may require any officer to give security for the faithful
performance of his duties.
13
<PAGE>
SECTION 4. President. The President shall preside at all meetings of the
Board of Directors and shareholders. He shall be the Chief Executive Officer of
the Corporation and shall have general charge and direction of the business of
the Corporation subject to the control of the Board of Directors.
SECTION 5. Vice-Presidents. The Vice-President, if any, or, if there
shall be more than one, the Vice-Presidents in the order of seniority or in any
other order determined by the Board of Directors shall, in the event of the
absence or disability of the President, perform the duties and exercise the
powers of the President. The Vice-President or Vice-Presidents shall assist the
President in the performance of his duties.
SECTION 6. Treasurer. The Treasurer, if any, shall keep the fiscal
accounts of the Corporation, including an account of all moneys received or
disbursed. At intervals of not more than twelve (12) months, he shall prepare or
have prepared for the Corporation a balance sheet showing the financial
condition of the Corporation as of a date not more than four (4) months prior
thereto, and a profit and loss statement respecting its operation for the twelve
(12) months preceding such date. The balance sheet and the profit and loss
statement shall be deposited at the principal office of the Corporation and
shall be kept by the Corporation for at least ten (10) years from such date. In
addition, within thirty (30) days after the preparation of each such balance
sheet and profit and loss statement, the Corporation shall mail a copy thereof
to each shareholder of
14
<PAGE>
record. He may endorse for and on behalf of the Corporation, checks, notes and
other obligations and shall deposit the same and all moneys and valuables in the
name of, and to the credit of the Corporation in such banks and depositories as
the Board of Directors shall designate. The Treasurer shall have custody of and
shall have the power to endorse for transfer on behalf of the Corporation,
stock, securities or other investment instruments owned by the Corporation.
SECTION 7. Assistant Treasurer. The Assistant Treasurer, if any, shall
assist the Treasurer in the performance of his duties and shall carry out the
duties of the Treasurer whenever the Treasurer is unable to perform such duties.
SECTION 8. Secretary. The Secretary shall keep the minutes of the meetings
of shareholders and the Board of Directors and shall give notice of all such
meetings as required in these By-Laws. He shall have custody of the seal of the
Corporation and all books, records and papers of the Corporation, except those
in the custody of the Treasurer or some other person authorized to have custody
and possession thereof by a resolution of the Board of Directors.
SECTION 9. Assistant Secretary. The Assistant Secretary, if any, shall
assist the Secretary in the performance of his duties and shall carry out the
duties of the Secretary whenever the Secretary is unable to perform such duties.
SECTION 10. Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors from
15
<PAGE>
time to time, or by the President, if the Board of Directors shall delegate the
authority to fix compensation of officers to the President. No officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
ARTICLE V.
INDEMNITY
SECTION 1. Indemnification of Shareholders, Officers, Directors and
Certain Other Parties. The Corporation shall be bound by and comply with the
provisions of Section 33-320a of the Connecticut Stock Corporation Act,
pertaining to indemnification of corporate shareholders, officers, directors,
employees, agents and eligible outside parties (as defined in said Section).
ARTICLE VI.
SHARE CERTIFICATES
SECTION 1. Form of Share Certificates. The shares of the stock of the
Corporation shall be represented by certificates, in such form as the Board of
Directors may from time to time prescribe, signed by the President or a Vice
President and the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and shall be sealed with the seal of the Corporation or a
facsimile thereof. All certificates shall be consecutively numbered and the name
of the person owning the shares represented thereby and the number of such
shares and the date of issue shall be entered upon the Corporation's books.
16
<PAGE>
SECTION 2. Registration of Transfers. Shares of the stock of the
Corporation shall be transferable upon the books of the Corporation, only by the
person specified in the certificate representing such shares or by special
indorsement to be entitled to such shares, or by the duly authorized attorney or
legal representative of such person. A new certificate shall be issued to the
purchaser or assignee upon surrender of the original share certificate properly
endorsed.
In case of loss or destruction of a share certificate, another may be
issued in its place upon proof of loss or destruction and the giving of such
security as shall be satisfactory to the Board of Directors.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
SECTION 1. Corporate Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the state and year of its incorporation and shall
be in such form as the Board of Directors may from time to time determine.
SECTION 2. Fiscal Year. The fiscal year of the Corporation shall be the
twelve months ending December 31 or such other period as may be fixed by
resolution of the Board of Directors.
SECTION 3. Checks and Notes. All checks or demands for money and notes or
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such officer or officers or other person or persons as shall
be thereunto authorized from time to time by the Board of Directors.
17
<PAGE>
ARTICLE VIII.
AMENDMENTS
The foregoing is a true copy of the By-Laws of Simba Information, Inc.,
adopted by the incorporator and ratified by the Board of Directors as of the
22nd day of September, 1989.
/s/ Joyce A. Brigish
-----------------------------------
Joyce A. Brigish
Secretary
- ----------
** AMENDED - SEE RIDER A ATTACHED
18
<PAGE>
SIMBA INFORMATION, INC.
BY-LAWS, RIDER A
ARTICLE I
"SECTION 11. Voting. Directors shall be elected by a majority
of the votes cast by the shareholders entitled to vote in the election, in
person or by proxy, at a meeting of shareholders when a quorum is present.
Whenever any corporate action, other than the election of directors, is to
be taken by a vote of shareholders, it shall, except as otherwise required
by law or the Certificate of Incorporation, be authorized by a majority of
the votes cast in person or by proxy at a meeting when a quorum is
present."
ARTICLE VIII
"SECTION 1. Power to Amend. These By-Laws may be amended,
altered or repealed, and new By-Laws may be adopted, in accordance with
the Certificate of Incorporation. Any notice of a meeting of shareholders
at which these By-Laws are to be amended, altered or repealed or at which
new By-Laws are to be adopted, shall include a specific description
notice of such proposed action."
<PAGE>
COWLES/SIMBA INFORMATION, INC. BY-LAWS
(as amended September 25, 1997)
ARTICLE VII
SECTION 1. Corporate Seal. The Corporation shall have no corporate seal.
SECTION 2. Fiscal Year. The fiscal year of the Corporation shall be the
twelve months ending each year on the Saturday nearest to the last day of March
or such other period as may be fixed by resolution of the Board of Directors.
<PAGE>
Exhibit 3.153
AMENDED ARTICLES OF INCORPORATION
OF
HHP, INC.
FIRST: The undersigned incorporator, Carmen N. Evers (whose address is
Faegre & Benson, 2200 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota 55402), being at least 18 years of age, hereby forms a corporation
under the laws of the State of Maryland.
SECOND: The name of the corporation is Cumberland Publishing, Inc.
THIRD: The purpose for which the corporation is formed is the publication
and sales of magazines and related products.
FOURTH: The post office address of the principal office of the corporation
in Maryland is 32 South Street, Baltimore, Maryland 21202.
FIFTH: The name and post office address of the resident agent of the
corporation in Maryland are Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202.
SIXTH: The authorized capital stock of the corporation is 1,000 shares of
common stock, par value $.01 per share.
SEVENTH: The number of directors of the corporation shall initially be
three and may be increased or decreased pursuant to the bylaws of the
corporation. The initial directors are:
James A. Alcott
David C. Cox
Christopher N. Little
IN WITNESS WHEREOF, I have executed these Articles and acknowledge the
same to be my act.
Signature:
/s/ Carmen M. Evers, Incorporator
-----------------------------------
Carmen M. Evers, Incorporator
Return to:
Carmen M. Evers
Faegre & Benson
2200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
<PAGE>
AMENDED ARTICLES OF INCORPORATION
OF
HHP, INC.
FIRST: The undersigned incorporator, Carmen N. Evers (whose address is
Faegre & Benson, 2200 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota 55402), being at least 18 years of age, hereby forms a corporation
under the laws of the State of Maryland.
SECOND: The name of the corporation is HHP, Inc.
THIRD: The purpose for which the corporation is formed is the publication
and sales of magazines and related products.
FOURTH: The post office address of the principal office of the corporation
in Maryland is 32 South Street, Baltimore, Maryland 21202.
FIFTH: The name and post office address of the resident agent of the
corporation in Maryland are Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202.
SIXTH: The authorized capital stock of the corporation is 1,000 shares of
common stock, par value $.01 per share.
SEVENTH: The number of directors of the corporation shall initially be
three and may be increased or decreased pursuant to: the bylaws of the
corporation. The initial directors are:
James A. Alcott
David C. Cox
Christopher N. Little
IN WITNESS WHEREOF, I have executed these Articles and acknowledge the
same to be my act.
Signature:
/s/ Carmen M. Evers, Incorporator
-----------------------------------
Carmen M. Evers, Incorporator
Return to:
Carmen M. Evers
Faegre & Benson
2200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
<PAGE>
Exhibit 3.154
BY-LAWS
of
CUMBERLAND PUBLISHING, INC.
TABLE OF CONTENTS
Section Page
------- ----
SHAREHOLDERS 1
1.01 Place of Meetings 1
1.02 Regular Meetings 1
1.03 Special Meetings 1
1.04 Meetings Held Upon Shareholder Demand 1
1.05 Adjournments 1
1.06 Notice of Meetings 2
1.07 Waiver of Notice 2
1.08 Quorum; Acts of Shareholders 2
1.09 Voting Rights 2
1.10 Proxies 3
1.11 Action Without a Meeting 3
DIRECTORS 3
2.01 Number; Qualifications 3
2.02 Term 3
2.03 Vacancies 3
2.04 Place of Meetings 3
2.05 Regular Meetings 4
2.06 Special Meetings 4
2.07 Waiver of Notice; Previously Scheduled Meetings 4
2.08 Quorum; Acts of Board 4
2.09 Electronic Communications 5
2.10 Absent Directors 5
2.11 Action Without a Meeting 5
2.12 Committees 5
2.13 Special Litigation Committee 6
2.14 Compensation 6
OFFICERS 6
3.01 Number and Designation 6
3.02 President 6
3.03 Vice Presidents 7
3.04 Secretary 7
3.05 Treasurer 7
3.06 Authority and Duties 7
3.07 Term 7
3.08 Salaries 8
- i -
<PAGE>
Section Page
------- ----
INDEMNIFICATION 8
4.01 Indemnification 8
4.02 Insurance 8
SHARES 8
5.01 Certificated Shares 8
5.02 Declaration of Dividends and Other Distributions 9
5.03 Transfer of Shares 9
5.04 Record Date 9
MISCELLANEOUS 9
6.01 Execution of Instruments 9
6.02 Advances 9
6.03 Corporate Seal 10
6.04 Fiscal Year 10
6.05 Amendments 10
This Table of Contents is not part of the By-Laws of the
Corporation. It is intended merely to aid in the utilization of the
By--Laws.
- ii -
<PAGE>
BY-LAWS
of
CUMBERLAND PUBLISHING. INC.
SHAREHOLDERS
Section 1.01 Place of Meetings. Each meeting of the shareholders
shall be held at the principal executive office, of the Corporation or at such
other place as may be designated by the Board of Directors or the President;
provided, however, that any meeting called by or at the demand of a shareholder
or shareholders shall be held in the county where the principal executive
office of the Corporation is located.
Section 1.02 Regular Meetings. Annual meetings of the shareholders
may be held on an annual or other less frequent basis as determined by the Board
of Directors. At each regular meeting the shareholders shall elect qualified
successors for directors who serve for an indefinite term or whose terms have
expired or are due to expire within six months after the date of the meeting and
may transact any other business, provided, however, that no business with
respect to which special notice is required by law shall be transacted unless
such notice shall have been given.
Section 1.03 Special Meetings. A special meeting of the shareholders
may be called for any purpose or purposes at any time by the President; by the
Board of Directors or any person specified by the Board of Directors; or by one
or more shareholders holding not less than 25 percent of the voting power of all
shares of the Corporation entitled to vote, who shall demand such special
meeting by written notice given to the President of the Corporation specifying
the purposes of such meeting.
Section 1.04 Meetings Held Upon Shareholder Demand. Within 30 days
of receipt of a demand by the President from any shareholder or shareholders
entitled to call a meeting of the shareholders, it shall be the duty of the
Board of Directors of the Corporation to cause a special or regular meeting of
shareholders, as the case may be, to be duly called and held on notice not less
than 10 or more than 90 days after receipt of such demand. If the Board of
Directors fails to cause such a meeting to be called and held as required by
this Section, the shareholder or shareholders making the demand may call the
meeting by giving notice as provided in Section 1.06 hereof at the expense of
the Corporation.
Section 1.05 Adjournments. Any meeting of the shareholders may be
adjourned from time to time to another date, time and place. If any meeting of
the shareholders is so adjourned, no notice as to such adjourned meeting need be
given
<PAGE>
if the date, time and place at which the meeting will be reconvened are
announced at the time of adjournment.
Section 1.06 Notice of Meetings. Except as otherwise specified in
Section 1.05 or required by law, written notice of each meeting of the
shareholders, stating the date, time and place and, in the case of a special
meeting, the purpose or purposes, shall be given at least ten days and not more
than 90 days prior to the meeting to every holder of shares entitled to vote at
such meeting. The business transacted at a special meeting of shareholders is
limited to the purposes stated in the notice of the meeting.
Section 1.07 Waiver of Notice. A shareholder may waive notice of the
date, time, place and purpose or purposes of a meeting of shareholders. A waiver
of notice by a shareholder entitled to notice is effective whether given before,
at or after the meeting, and whether given in writing, orally or by attendance.
Attendance by a shareholder at a meeting is a waiver of notice of that meeting,
unless the shareholder objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or convened,
or objects before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.
Section 1.08 Quorum: Acts of Shareholders. The holders of a majority
of the voting power of the shares entitled to vote at a shareholders meeting are
a quorum for the transaction of business. If a quorum is present when a duly
called or held meeting is convened, the shareholders present may continue to
transact business until adjournment, even though the withdrawal of a number of
the shareholders originally present leaves less than the proportion or number
otherwise required for a quorum. Except as otherwise required by law or
specified in the Articles of Incorporation of the Corporation, the shareholders
shall take action by the affirmative vote of the holders of a majority of the
voting power of the shares present and entitled to vote at a duly held meeting
of shareholders.
Section 1.09 Voting Rights. Subdivision 1. A shareholder shall have
one vote for each share held which is entitled to vote. Except as otherwise
required by law, a holder of shares entitled to vote may vote any portion of the
shares in any way the shareholder chooses. If a shareholder votes without
designating the proportion or number of shares voted in a particular way, the
shareholder is deemed to have voted all of the shares in that way.
Subdivision 2. The Board may fix a date not more than 90 days before
the date of a meeting of shareholders as the date for the determination of the
holders of shares entitled to
-2-
<PAGE>
notice of and entitled to vote at the meeting. When a date is so fixed, only
shareholders on that date are entitled to notice of and permitted to vote at
that meeting of shareholders.
Section 1.10 Proxies. A shareholder may cast or authorize the
casting of a vote by filing a written appointment of a proxy with an officer of
the Corporation at or before the meeting at which the appointment is to be
effective.
Section 1.11 Action Without a Meeting. Any action required or
permitted to be taken at a meeting of the shareholders of the Corporation may be
taken without a meeting by written action signed by all of the shareholders
entitled to vote on that action. The written action is effective when it has
been signed by all of those shareholders, unless a different effective time is
provided in the written action.
DIRECTORS
Section 2.01 Number; Qualifications. The business and affairs of the
Corporation shall be managed by or under the direction of a Board of three or
more directors, provided that if there is stock outstanding and so long as there
are less than three shareholders, the number of directors may be less than three
but not less than the number of shareholders. Directors shall be natural
persons. The shareholders at each regular meeting shall determine the number of
directors to constitute the Board, provided that thereafter the authorized
number of directors may be increased by the shareholders or the Board and
decreased by the shareholders. Directors need not be shareholders.
Section 2.02 Term. Each director shall serve for an indefinite term
that expires at the next regular meeting of the shareholders. A director shall
hold office until a successor is elected and has qualified or until the earlier
death, resignation, removal or disqualification of the director.
Section 2.03 Vacancies. Vacancies on the Board of Directors
resulting from the death, resignation, removal or disqualification of a director
may be filled by the affirmative vote of a majority of the remaining members of
the Board, though less than a quorum. Vacancies on the Board resulting from
newly created directorships may be filled by the affirmative vote of a majority
of the directors serving at the time such directorships are created. Each person
elected to fill a vacancy shall hold office until a qualified successor is
elected by the shareholders at the next regular meeting or at any special
meeting duly called for that purpose.
Section 2.04 Place of Meetings. Each meeting of the Board of
Directors shall be held at the principal executive
-3-
<PAGE>
office of the Corporation or at such other place as may be designated from time
to time by a majority of the members of the Board.
Section 2.05 Regular Meetings. Regular meetings of the Board of
Directors for the election of officers and the transaction of any other business
shall be held without notice at the place of and immediately after each regular
meeting of the shareholders.
Section 2.06 Special Meetings. A special meeting of the Board of
Directors may be called for any purpose or purposes at any time by any member of
the Board by giving not less than two days' notice to all directors of the date,
time and place of the meeting, provided that when notice is mailed, at least
four days, notice shall be given. The notice need not state the purpose of the
meeting.
Section 2.07 Waiver of Notice; Previously Scheduled Meetings.
Subdivision 1. A director of the Corporation may waive notice of the date, time
and place of a meeting of the Board. A waiver of notice by a director entitled
to notice is effective whether given before, at or after the meeting, and
whether given in writing, orally or by attendance. Attendance by a director at a
meeting is a waiver of notice of that meeting, unless the director objects at
the beginning of the meeting to the transaction of business because the meeting
is not lawfully called or convened and thereafter does not participate in the
meeting.
Subdivision 2. If the day or date, time and place of a Board meeting
have been provided herein or announced at a previous meeting of the Board,
no notice is required. Notice of an adjourned meeting need not be given other
than by announcement at the meeting at which adjournment is taken of the date,
time and place at which the meeting will be reconvened.
Section 2.08 Quorum; Acts of Board. The presence in person of a
majority of the directors currently holding office shall be necessary to
constitute a' quorum for the transaction of business. In the absence of a
quorum, a majority of the directors present may adjourn a meeting from time to
time without further notice until a quorum is present. If a quorum is present
when a duly held meeting is convened, the directors present may continue to
transact business until adjournment, even though the withdrawal of a number of
the directors originally present leaves less than the proportion or number
otherwise required for a quorum. Except as otherwise required by law or
specified in the Articles of Incorporation of the Corporation, the Board shall
take action by the affirmative vote of a majority of the directors present at a
duly held meeting.
-4-
<PAGE>
Section 2.09 Electronic Communications. A conference among directors
by any means of communication through which the directors may simultaneously
hear each other during the conference constitutes a Board meeting, if the same
notice is given of the conference as would be required for a meeting, and if the
number of directors participating in the conference would be sufficient to
constitute a quorum at a meeting. A director may participate in a Board meeting
not described in the immediately preceding sentence by any means of
communication through which the director, other directors so participating and
all directors physically present at the meeting may simultaneously hear each
other during the meeting. Participation in a meeting by any means referred to in
this Section 2.09 constitutes presence in person at the meeting.
Section 2.10 Absent Directors. A director of the Corporation may
give advance written consent or opposition to a proposal to be acted on at a
Board meeting. If the director is not present at the meeting, consent or
Opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected.
Section 2.11 Action Without a Meeting. An action required or
permitted to be taken at a Board meeting may be taken without a meeting by
written action signed by all of the directors. The written action is effective
when signed by the required number of directors, unless a different effective
time is provided in the written action.
Section 2.12 Committees. Subdivision 1. A resolution approved by the
affirmative vote of a majority of the Board may establish committees having the
authority of the Board in the management of the business of the Corporation only
to the extent provided in the resolution. Committees shall be subject at all
times to the direction and control of the Board, except as provided in Section
2.13.
Subdivision 2. A committee shall consist of two or more natural
persons who are directors, appointed by affirmative vote of a majority of the
directors present at a duly held Board meeting.
Subdivision 3. Section 2.04 and Sections 2.06 to 2.11 hereof shall
apply to committees and members of committees to the same extent as those
sections apply to the Board and directors.
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Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.
Section 2.13 Special Litigation Committee. Pursuant to the procedure
set forth in Section 2.12, the Board may establish a committee composed of one
or more independent directors or other independent persons to determine whether
it is in the best interests of the Corporation to pursue a particular legal
right or remedy of the Corporation and whether to cause, to the extent permitted
by law, the dismissal or discontinuance of a particular proceeding that seeks
to assert a right or remedy on behalf of the Corporation. The committee, once
established, is not subject to the direction or control of, or termination by,
the Board. A vacancy on the committee may be filled by a majority vote of the
remaining committee members. The good faith determinations of the committee are
binding upon the Corporation and its directors, officers and shareholders to the
extent permitted by law. The committee terminates when it issues a written
report of its determinations to the Board.
Section 2.14 Compensation. The Board may fix the compensation, if
any, of directors.
OFFICERS
Section 3.01 Number and Designation. The Corporation shall have one
or more natural persons exercising the functions of the offices of President,
Secretary and Treasurer. The Board of Directors may elect or appoint such other
officers or agents as it deems necessary for the operation and management of the
Corporation, with such powers, rights, duties and responsibilities as may be
determined by the Board, including, without limitation one or more Vice
Presidents, each of whom shall have the powers, rights, duties and
responsibilities set forth in these By-Laws unless otherwise determined by the
Board. Any of the offices or functions of those offices may be held by the same
person, provided that a person may not serve concurrently as President and Vice
President of the same corporation.
Section 3.02 President. Unless provided otherwise by a resolution
adopted by the Board of Directors, the President (a) shall have general active
management of the business of the Corporation; (b) shall, when present, preside
at all meetings of the shareholders and Board of Directors; (c) shall see that
all orders and resolutions of the Board are carried into effect; (d) may
maintain records of and certify proceedings of the Board and shareholders; and
(e) shall perform such other duties as may from time to time be assigned by the
Board of Directors.
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Section 3.03 Vice Presidents. Any one or more Vice presidents, if
any, may be designated by the Board of Directors as Executive Vice Presidents or
Senior Vice Presidents. During the absence or disability of the President, it
shall be the duty of the highest ranking Executive Vice President, and, in the
absence of any such Vice President, it shall be the duty of the highest ranking
Senior Vice President or other Vice President, who shall be present at the time
and able to act, to perform the duties of the President. The determination of
who is the highest ranking of two or more persons holding the same office shall,
in the absence of specific designation of order of rank by the Board of
Directors, be made on the basis of the earliest date of appointment or election,
or, in the event of simultaneous appointment or election, on the basis of the
longest continuous employment by the Corporation.
Section 3.04 Secretary. The Secretary, unless otherwise determined
by the Board, shall attend all meetings of the shareholders and all meetings of
the Board of Directors, shall record or cause to be recorded all proceedings
thereof in a book to be kept for that purpose, and may certify such proceedings.
Except as otherwise required or permitted by law or by these By-Laws, the
Secretary shall give or cause to be given notice of all meetings of the
shareholders and all meetings of the Board of Directors.
Section 3.05 Treasurer. The Treasurer shall perform such duties as
may from time to time be assigned by the Board of Directors.
Section 3.06 Authority and Duties. In addition to the foregoing
authority and duties, all officers of the Corporation shall respectively have
such authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.
Section 3.07 Term. Subdivision 1. All officers of the Corporation
shall hold office until their respective successors are chosen and have
qualified or until their earlier death, resignation or removal.
Subdivision 2. An officer may resign at any time by giving written
notice to the Corporation. The resignation is effective without acceptance when
the notice is given to the Corporation, unless a later effective date is
specified in the notice.
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Subdivision 3. An officer may be removed at any time, with or
without cause, by a resolution approved by the affirmative vote of a majority of
the directors present at a duly held Board meeting.
Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in
the office of Chief Executive Officer or Chief Financial Officer shall, be
filled for the unexpired portion of the term by the Board.
Section 3.05 Salaries. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors or by the President if
authorized by the Board.
INDEMNIFICATION
Section 4.01 Indemnification. The Corporation shall indemnify such
persons, for such expenses and liabilities, in such manner, under such
circumstances, and to such extent, as required or permitted by the Maryland
General Corporation Law, as amended from time to time, or as required or
permitted by other provisions of law.
Section 4.02 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person in such person's official capacity against any
liability asserted against and incurred by such person in or arising from that
capacity, whether or not the Corporation would otherwise be required to
indemnify the person against the liability.
SHARES
Section 5.01 Certificated Shares. Subdivision 1. The shares of the
Corporation shall be certificated shares. Each holder of duly issued
certificated shares is entitled to a certificate of shares.
Subdivision 2. Each certificate of shares of the Corporation shall
be signed by the President or any Vice President, and the Secretary or any
Assistant Secretary, but when a certificate is signed by a transfer agent or a
registrar, the signature of any such officer upon such certificate may be a
facsimile, engraved or printed. It a person signs or has a facsimile signature
placed upon a certificate while an officer, transfer agent or registrar of the
Corporation, the certificate may be issued by the Corporation, even if the
person has ceased to serve in that capacity before the certificate is issued,
with the same effect as if the person had that capacity at the date of its
issue.
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Subdivision 3. A certificate representing shares issued by the
Corporation shall, if the Corporation is authorized to issue shares of more than
one class or series, set forth upon the face or back of the certificate, or
shall state that the Corporation will furnish to any shareholder upon request
and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class or series authorized
to be issued, so far as they have been determined, and the authority of the
Board to determine the relative rights and preferences of subsequent classes or
series.
Section 5.02 Declaration of Dividends and Other Distributions. The
Board of Directors shall have the authority to declare dividends and other
distributions upon the shares of the Corporation to the extent permitted by law.
Section 5.03 Transfer of Shares. Shares of the Corporation may be
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. In the case of certificated shares, shares
shall be transferred only upon surrender and cancellation of certificates for a
like number of shares. The Board of Directors, however, may appoint one or more
transfer agents and registrars to maintain the share records of the Corporation
and to effect transfers of shares.
Section 5.04 Record Date. The Board of Directors may fix a time, not
exceeding 90 days preceding the date fixed for the payment of any dividend or
other distribution, as a record date for the determination of the shareholders
entitled to receive payment of such dividend or other distribution, and in such
case only shareholders of record on the date so fixed shall be entitled to
receive payment of such dividend or other distribution, notwithstanding any
transfer of any shares on the books of the Corporation after any record date so
fixed.
MISCELLANEOUS
Section 6.01 Execution of Instruments. All deeds, mortgages, bonds,
checks, contracts and other instruments pertaining to the business and affairs
of the Corporation shall be signed on behalf of the Corporation by the
President, or any Vice President, or by such other person or persons as may be
designated from time to time by the Board of Directors.
Section 6.02 Advances. The Corporation may, without a vote of the
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.
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Section 6.04 Corporate Seal. The Corporation shall have no corporate
seal.
Section 6.04 Fiscal Year. The fiscal year of the Corporation shall
end on the Saturday nearest the last day of March.
Section 6.05 Amendments. The Board of Directors shall have the power
to adopt, amend or repeal the By-Laws of the Corporation, subject to the power
of the shareholders to change or repeal the same, provided, however, that the
Board shall not adopt, amend or repeal any By-Law fixing a quorum for meetings
of shareholders, prescribing procedures for removing directors or filling
vacancies in the Board, or fixing the number of directors or their
classifications, qualifications or terms of office, but may adopt or amend a
By-Law that increases the number of directors.
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<PAGE>
Exhibit 3.155
ARTICLES OF INCORPORATION
OF
HORSE & RIDER, INC.
The undersigned incorporator, being a natural person 18 years of age
or older, in order to form a corporate entity under California Statutes, General
Corporation Law, hereby adopts the following Articles of Incorporation:
ARTICLE I
The name of this Corporation is Horse & Rider, Inc.
ARTICLE II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
The name of this corporation's initial agent for service of process
in the State of California is: C T CORPORATION SYSTEM.
ARTICLE IV
This Corporation is authorized to issue an aggregate total of 1,000
shares, all of which shall be designated Common Stock, having a par value of
$1.00 per share.
ARTICLE V
The name and address of the incorporator of this Corporation is as
follows:
Amy Tomczyk
2200 Harvest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
ARTICLE VI
No shareholder of this Corporation shall have any preemptive rights
to subscribe for, purchase or acquire any shares of the Corporation of any
class, whether unissued or now or hereafter authorized, or any obligations or
other securities convertible into or exchangeable for any such shares.
<PAGE>
ARTICLE VII
Any action required or permitted to be taken at a meeting of the
Board of Directors of this Corporation not needing approval by the shareholders
under California Corporations Code, may be taken by written action signed by the
number of directors that would be required to take such action at a meeting of
the Board of Directors at which all directors are present.
ARTICLE VIII
The liability of the directors of this Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of
September, 1991.
/s/ Amy Tomczyk
------------------------------
Amy Tomczyk, Incorporator
[SEAL]
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<PAGE>
Exhibit 3.156
BYLAWS
OF
HORSE & RIDER, INC.
a California corporation
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I -- Applicability
Section 1. Applicability of Bylaws. 1
ARTICLE II-- Offices
Section 1. Principal Offices. 1
Section 2. Change in Location or 1
Number of Offices.
ARTICLE III -- Meetings of Shareholders
Section 1. Place of Meetings. 1
Section 2. Annual Meetings. 1
Section 3. Special Meetings. 2
Section 4. Notice of Annual, Special 2
or Adjourned Meetings.
Section 5. Record Date 4
Section 6. Quorum 5
Section 7. Adjournment 5
Section 8. Validation of Actions Taken 5
at Defectively Called,
Noticed or Held Meetings.
Section 9. Voting for Election 6
of Directors.
Section 10. Proxies. 6
Section 11. Action by Written Consent. 7
ARTICLE IV -- Directors
Section 1. Number of Directors. 8
Section 2. Election of Directors. 8
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Page
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Section 3. Term of Office. 8
Section 4. Vacancies. 8
Section 5. Removal. 9
Section 6. Resignation. 9
Section 7. Fees and Compensation. 9
ARTICLE V - Committees of the Board of Directors.
Section 1. Designation of Committees. 10
Section 2. Powers of Committees. 10
ARTICLE VI -- Meetings of the Board of Directors and Committees
Thereof.
Section 1. Place and Meetings. 10
Section 2. Annual Meetings. 11
Section 3. Other Regular Meetings. 11
Section 4. Special Meetings. 11
Section 5. Notice of Special Meetings. 11
Section 6. Waivers, Consents and Approvals. 11
Section 7. Quorum; Action at Meetings.
Telephone Meetings. 12
Section 8. Adjournment. 12
Section 9. Action Without a Meeting. 12
Section 10. Meetings of and Action by
Committees. 12
ARTICLE VII - Officers
Section 1. Officers. 12
Section 2. Election of Officers. 13
Section 3. Subordinate Officers, Etc. 13
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Page
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Section 4. Removal and Resignation. 13
Section 5. Vacancies. 13
Section 6. Chairman of the Board. 13
Section 7. President. 14
Section 8. Vice President. 14
Section 9. Secretary. 14
Section 10. Chief Financial Officer. 14
ARTICLE VIII - Records and Reports
Section 1. Minute Book. 15
Section 2. Share Register. 15
Section 3. Books and Records of Account. 15
Section 4. Bylaws. 15
Section 5. Inspection of Records. 16
Section 6. Annual Report to Shareholders. 16
ARTICLE IX -- Miscellaneous
Section 1. Checks, Drafts, Etc. 16
Section 2. Contracts, Etc.-- How Executed. 16
Section 3. Certificates of Stock. 16
Section 4. Lost Certificates. 17
Section 5. Representation of Shares of 17
Other Corporations.
Section 6. Construction and Definitions. 17
Section 7. Indemnification of Corporate
Agents; Purchase of Liability
Insurance. 17
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Page
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ARTICLE X -- Corporate Seal
Section 1. Corporate Seal. 19
ARTICLE XI - Fiscal Year
Section 1. Fiscal Year. 19
ARTICLE XII - Amendments
Section 1. Amendments. 19
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<PAGE>
BYLAWS
OF
HORSE & RIDER, INC.
a California corporation
ARTICLE I
Applicability
Section 1. Applicability of Bylaws. These Bylaws govern, except as
otherwise provided by statute or its Articles of Incorporation, the management
of the business and the conduct of the affairs of the Corporation.
ARTICLE II
Offices
Section 1. Principal Offices. The Board of Directors shall fix the
location of the principal executive office of the Corporation at any place
within or outside the State of California. If the principal executive office is
located outside this state, and the Corporation has one or more business offices
in this state, the Board of Directors shall designate a principal business
office in the State of California.
Section 2. Change in Location or Number of Offices. The Board of
Directors may change any office from one location to another or eliminate any
office or offices.
ARTICLE III
Meetings of Shareholders
Section 1. Place of Meetings. Meetings of the shareholders shall be
held at any place within or without the State of California designated by the
Board of Directors, or, in the absence of such designation, at the principal
executive office of the Corporation.
Section 2. Annual Meetings. Annual meetings of the shareholders
shall be held by the Corporation at a date and time designated by the Board of
Directors. Directors shall be elected at each annual meeting and any other
proper business may be transacted thereat.
<PAGE>
Section 3. Special Meetings.
(a) Special meetings of the shareholders may be called by the Board
of Directors, the Chairman of the Board and the President or by the shareholders
upon the request of the holders of shares entitled to cast not less than 10
percent of the votes at such meeting.
(b) Any request for the calling of a special meeting of the
shareholders shall (1) be in writing, (2) specify the date and time thereof,
which date shall be not less than 35 nor more than 60 days after receipt of the
request, (3) specify the general nature of the business to be transacted thereat
and (4) be given either personally or by first-class mail, postage prepaid, or
other means of written communication to the Chairman of the Boards President,
any Vice President or Secretary of the Corporation. The officer receiving a
proper request to call a special meeting of the shareholders shall cause notice
to be given pursuant to the provisions of Section 4 of this Article III to the
shareholders entitled to vote thereat that a meeting will be held at the date
and time specified by the person or persons calling the meeting. If notice is
not given within 20 days of the receipt of the request, the shareholders making
the request may give notice of such meeting so long as the notice given complies
with the other provisions of this subsection.
(c) No business may be transacted at a special meeting unless the
general nature thereof was stated in the notice of such meeting.
Section 4. Notice of Annual, Special or Adjourned Meetings.
(a) Whenever any meeting of the shareholders is to be held, a
written notice of such meeting shall be given in the manner described in
subdivision (d) of this section not less than 10 nor more than 60 days before
the date thereof to each shareholder entitled to vote thereat. The notice shall
state the place, date and hour of the meeting and (1) in the case of a special
meeting, the general nature of the business to be transacted or (2) in the case
of the annual meeting, those matters which the Board of Directors, at the time
of the giving of the notice, intends to present for action by the shareholders.
The notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees who, at the time of the notice, management
intends to present for election.
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(b) Any proper matter may be presented at an annual meeting for
action. However, any action to approve (1) a contract or transaction in which a
director has a direct or indirect financial interest under Section 310 of the
California Corporations Code (the "Code"), (2) an amendment of the Articles of
Incorporation under Section 902 of the Code, (3) a reorganization of the
Corporation under Section 1201 of the Code, (4) a voluntary dissolution of the
Corporation under Section 1900 of the Code, or (5) a distribution in dissolution
(other than in accordance with the rights of outstanding preferred shares) under
Section 2007 of the Code may be taken only if the notice of the meeting states
the general nature of the matter to be approved.
(c) Notice need not be given of an adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken,
except that if the adjournment is for more than 45 days or if after the
adjournment a new record date is provided for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at that meeting.
(d) Notice of any meeting of the shareholders shall be given
personally, by first class mail, or by telegraph or other written communication,
addressed to the shareholder at his address appearing on the books of the
Corporation or given by him to the Corporation for the purpose of notice; or if
no such address appears or is given, at the place where the principal executive
office of the Corporation is located or by publication at least once in a
newspaper of general circulation in the county in which the principal executive
office is located. Notice shall be deemed to have been given at the time when
delivered personally to the recipient, deposited in the mail, delivered to a
common carrier for transmission to the recipient or sent by other means of
written communication. An affidavit of the mailing or other means of giving
notice may be executed by the Secretary, assistant secretary or any transfer
agent of the Corporation giving the notice and shall be prima facie evidence of
the giving of the notice. Such affidavits shall be filed and maintained in the
minute books of the Corporation.
(e) If any notice or report addressed to the shareholder at his
address appearing on the books of the Corporation is returned to the Corporation
by the United States Postal Service marked to indicate that the United States
Postal Service is unable to deliver the notice or report to the shareholder at
such address, all future notices or reports shall be deemed to have been duly
given without further mailing if the same shall be available for the shareholder
upon his
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written demand at the principal executive office of the Corporation for a period
of one year from the date of the giving of the notice or report to all other
shareholders.
Section 5. Record Date.
(a) The Board of Directors may fix a time in the future as a record
date for determination of the shareholders who are (1) entitled to receive
notice of any meeting or to vote thereat, (2) entitled to give written consent
to any corporate action without a meeting, (3) entitled to receive payment of
any dividend or other distribution or allotment of any rights or (4) entitled to
exercise any rights in respect of any other lawful action. The record date so
fixed shall be not more than 60 or less than 10 days prior to the date of any
meeting of the shareholders, or more than 60 days prior to any other action.
(b) In the event no record date is fixed:
(1) The record date for determining the shareholders entitled
to notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held.
(2) The record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors has been taken, shall be the day on which the
first written consent is given.
(3) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto, or the 60th day prior to the
date of such other action, whichever is later.
(c) Notwithstanding any transfer of any shares on the books of the
Corporation after the record date, only shareholders of record on the close of
business on the record date are entitled to receive notice and to vote, to give
written consent, to receive a dividend, distribution or allotment of rights or
to exercise rights, as the case may be.
(d) A determination of shareholders of record entitled to receive
notice of or to vote at a meeting of shareholders shall apply to any adjournment
of the meeting unless the Board of Directors fixes a new record date for the
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adjourned meeting, but the Board shall fix a new record date if the meeting is
adjourned for more than 45 days from the date set for the original meeting.
Section 6. Quorum.
(a) A majority of the shares entitled to vote at a meeting of the
shareholders, represented in person or by proxy, shall constitute a quorum for
the transaction of business thereat.
(b) The shareholders present at a duly called or held meeting at
which a quorum is present may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, if any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum.
Section 7. Adjournment. Any meeting of the shareholders may be
adjourned from time to time whether or not a quorum is present by the vote of a
majority of the shares represented thereat either in person or by proxy. At the
adjourned meeting the Corporation may transact any business which might have
been transacted at the original meeting.
Section 8. Validation of Actions Taken at Defectively Called,
Noticed or Held Meetings.
(a) The transactions of any meeting of the shareholders, however
called and noticed and wherever held, are as valid as though had at a meeting
duly held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, each of the persons
entitled to vote thereat, not present in person or by proxy, signs a written
waiver of notice or a consent to the holding of the meeting or an approval of
the minutes thereof. Any written waiver of notice shall comply with subdivision
(f) of Section 601 of the Code. All such waivers, consents and approvals shall
be filed with the corporate records or made a part of the minutes of the
meeting.
(b) Attendance of a person at a meeting shall constitute a waiver of
notice of and presence at such meeting, except (1) when the person objects, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened and (2) that attendance at a meeting
is not a waiver of any right to object to the consideration of any matter
required by the Code to be included in the notice but not so included, if such
objection is expressly made at the meeting.
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Section 9. Voting for Election of Directors.
(a) Except as provided in subdivision (c) of this section, the
affirmative vote of the majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute at least a majority of the required quorum) shall be the act of
the shareholders, unless the vote of a greater number is required by law or the
Articles of Incorporation.
(b) No shareholder of this Corporation shall have any cumulative
voting rights.
(c) Elections for directors may be by voice vote or by ballot unless
any shareholder entitled to vote demands election by ballot at the meeting prior
to the voting, in which case the vote shall be by ballot.
(d) In any election of directors, the candidates receiving the
highest number of affirmative votes of the shares entitled to be voted for them
up to the number of directors to be elected by such shares are elected as
directors.
Section 10. Proxies.
(a) Every person entitled to vote shares may authorize another
person or persons to act with respect to such shares by a written proxy signed
by him or his attorney-in-fact and filed with the Secretary of the Corporation.
A proxy shall be deemed signed if the shareholder's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission or
otherwise) by him or his attorney-in-fact.
(b) Any validly executed proxy, except a proxy which is irrevocable
pursuant to subdivision (c) of this Section 10, shall continue in full force and
effect until the expiration of the term specified therein or upon its earlier
revocation by the person executing it prior to the vote pursuant thereto (1) by
a writing delivered to the Corporation stating that it is revoked, (2) by
written notice of the death of the person executing the proxy, delivered to the
Corporation, (3) by a subsequent proxy executed by the person executing the
prior proxy and presented to the meeting or (4) as to any meeting, by attendance
at such meeting and voting in person by the person executing the proxy. No proxy
shall be valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. The date contained on the form of proxy shall
be deemed to be the date of its execution.
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(c) A proxy which states that it is irrevocable is irrevocable for
the period specified therein subject to the provisions of subdivisions (e) and
(f) of Section 705 of the Code.
Section 11. Action by Written Consent.
(a) Subject to subdivisions (b) and (c) of this section, any action
which may be taken at any annual or special meeting of the shareholders may be
taken without a meeting, without a vote and without prior notice, if a consent
in writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes which would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. All such consents shall be
filed with the Secretary of the Corporation and maintained with the corporate
records.
(b) Except for the election of a director by written consent to fill
a vacancy on the Board of Directors (other than a vacancy created by removal),
directors may be elected by written consent only by the unanimous written
consent of all shares entitled to vote for the election of directors. In the
case of an election of a director by written consent to fill a vacancy (other
than a vacancy created by removal), any such election requires the consent of a
majority of the outstanding shares entitled to vote for the election of
directors.
(c) Unless the consents of all shareholders entitled to vote have
been solicited in writing, the Secretary of the Corporation shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
This notice shall be given in the manner specified in subdivision (d) of Section
4 of this Article III. In the case of approval of (1) contracts or transactions
in which a director has a direct or indirect financial interest under Section
310 of the Code, (2) indemnification of agents of the Corporation under Section
317 of the Code, (3) a reorganization of the Corporation under Section 1201 of
the Code, or (4) a distribution in dissolution (other than in accordance with
the rights of outstanding preferred shares) under Section 2007 of the Code,
notice of such approval shall be given at least ten (10) days before the
consummation of any action authorized by that approval.
(d) Any shareholder giving a written consent, or his proxyholder,
or a transferee of the shares or a personal representative of the shareholder or
their respective proxyholders, may revoke the consent by a writing received by
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the Corporation prior to the time that written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary of
the Corporation, but may not do so thereafter. Such revocation is effective upon
its receipt by the Secretary of the Corporation.
ARTICLE IV
Directors
Section 1. Number of Directors.
(a) The authorized number of Directors shall be not less than one
(1) nor more than ten (10). The exact number of directors shall be fixed from
time to time, within the limits specified in this subdivision, by an amendment
of subdivision (b) of this section adopted by the Board of Directors.
(b) The exact number of directors shall be three (3) until changed
as provided in subdivision (a) of this section.
(c) The maximum or minimum authorized number of directors may only
be changed by an amendment of this Section 1 or of the Articles of Incorporation
approved by the vote or written consent of a majority of the outstanding shares
entitled to vote.
Section 2. Election of Directors. Directors shall be elected at each
annual meeting of the shareholders.
Section 3. Term of Office. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which he is elected and until a successor has been elected and qualified.
Section 4. Vacancies.
(a) A vacancy on the Board of Directors exists whenever any
authorized position of director is not then filled by a duly elected director,
whether caused by death, resignation, removal, change in the authorized number
of directors or otherwise.
(b) Except for a vacancy created by the removal of a director,
vacancies on the Board of Directors may be filled by a majority of the directors
then in office, or, if the number of directors then in office is less than a
quorum, by (1) the unanimous written consent of the directors then in office,
(2) the affirmative vote of the majority of the directors then in office at a
meeting held pursuant to notice or waivers of
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notice or (3) by a sole remaining director. A vacancy created by the removal of
a director shall be filled only by a person elected by a majority of the
shareholders entitled to vote at a duly held meeting at which there is a quorum
present or by the unanimous written consent of the holders of the outstanding
shares entitled to vote at such a meeting.
(c) The shareholders may elect a director at any time to fill any
vacancy not filled by the directors.
Section 5. Removal.
(a) The Board of Directors may declare vacant the office of a
director who has been declared of unsound mind by an order of court or convicted
of a felony.
(b) Any or all of the directors may be removed without cause if such
removal is approved by a majority of the outstanding shares entitled to vote;
provided, however, if the Corporation's Articles of Incorporation provide that
the shareholders of any class or series, voting as a class or series, are
entitled to elect one or more directors, any director so elected may be removed
only by the applicable vote of the shareholders of such class or series.
(c) Any reduction of the authorized number of directors does not
remove any director prior to the expiration of his term of office.
(d) A director may not be removed prior to the expiration of his
term of office except as provided in this section and except as ordered by the
superior court of the proper county at the suit of shareholders of at least 10
percent of the outstanding shares of any class.
Section 6. Resignation. Any director may resign effective upon
giving written notice to the Chairman of the Board, the President, the Secretary
or the Board of Directors of the Corporation, unless the notice specifies a
later time for the effectiveness of such resignation. If the resignation is
effective at a future time, a successor may be elected to take office when the
resignation becomes effective.
Section 7. Fees and Compensation. Directors may be paid for their
services in such capacity a sum in such amounts, at such times and upon such
conditions as may be determined from time to time by resolution of the Board of
Directors and may be reimbursed for their expenses, if any, for attendance at
each meeting of the Board. No such payments shall preclude any director from
serving the Corporation in any other capacity and receiving compensation in any
manner therefor.
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ARTICLE V
Committees of the Board of Directors
Section 1. Designation of Committees. The Board of Directors may, by
resolution adopted by a majority of the authorized number of directors,
designate (a) one or more committees, each consisting of two or more directors
and (b) one or more directors as alternate members of any committee, who may
replace any absent member at any meeting thereof. Any member or alternate member
of a committee shall serve at the pleasure of the Board.
Section 2. Powers of Committees. Any committee, to the extent
provided in the resolution of the Board of Directors designating such committee,
shall have all the authority of the Board, except with respect to:
(a) The approval of any action for which the Code also requires any
action by the shareholders;
(b) The filling of vacancies on the Board or in any committee
thereof;
(c) The fixing of compensation of the directors for serving on the
Board or on any committee thereof;
(d) The amendment or repeal of these Bylaws or the adoption of new
bylaws;
(e) The amendment or repeal of any resolution of the Board which by
its express terms is not so amendable or repealable;
(f) A distribution to the shareholders of the Corporation, except at
a rate, in a periodic amount or within a price range determined by the Board of
Directors; or
(g) The designation of other committees of the Board or the
appointment of members or alternate members thereof.
ARTICLE VI
Meetings of the Board of Directors
and Committees Thereof
Section 1. Place and Meetings. Regular meetings of the Board of
Directors shall be held at any place within or without the State of California
which has been designated from time to time by the Board or, in the absence of
such
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designation, at the principal executive office of the Corporation. Special
meetings of the Board shall be held either at any place within or without the
State of California which has been designated in the notice of meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the Corporation.
Section 2. Annual Meeting. Immediately following each annual meeting
of the shareholders, the Board of Directors shall hold a regular meeting for the
purpose of organization and the transaction of other business. Notice of any
such meeting is not required.
Section 3. Other Regular Meetings. Other regular meetings of the
Board of Directors shall be held without call at such time as shall be
designated from time to time by the Board. Notice of any such meeting is not
required.
Section 4. Special Meetings. Special meetings of the Board of
Directors may be called at any time for any purpose or purposes by the Chairman
of the Board or the President or any vice president or the Secretary or any two
directors of the Corporation. Notice shall be given of any special meeting of
the Board.
Section 5. Notice of Special Meetings. Notice of the time and place
of special meetings of the Board of Directors shall be delivered personally or
by telephone to each director or sent to each director by first-class mail or
telegraph, charges prepaid, addressed to each director at that director's
address as shown on the records of the Corporation. Such notice shall be given
four days prior to the holding of the special meeting if sent by mail or 48
hours prior to the holding thereof if delivered personally or given by telephone
or telegraph. The notice or report shall be deemed to have been given at the
time when delivered personally to the recipient or deposited in the mail or sent
by other means of written communication. Notice of any special meeting of the
Board of Directors need not specify the purpose thereof.
Section 6. Waivers, Consents and Approvals. Notice of any meeting of
the Board of Directors need not be given to any director who signs a waiver of
notice or a consent to holding the meeting or an approval of the minutes
thereof, whether before or after the meeting, or who attends the meeting without
protesting, prior thereto or at its commencement, the lack of notice to him. All
such waivers, consents and approvals shall be filed with the corporate records
or made a part of the minutes of the meeting.
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Section 7. Quorum; Action at Meetings; Telephone Meetings.
(a) A majority of the authorized number of directors shall
constitute a quorum for the transaction of business. Every act or decision done
or made by a majority of the directors present is the act of the Board of
Directors, unless action by a greater proportion of the directors is required by
law or the Articles of Incorporation.
(b) A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for such
meeting.
(c) Members of the Board of Directors may participate in a meeting
through use of conference telephone or similar communications equipment so long
as all members participating in such meeting can hear one another.
Section 8. Adjournment. A majority of the directors present, whether
or not a quorum is present, may adjourn any meeting to another time and place.
If the meeting is adjourned for more than 24 hours, notice of any adjournment to
another time or place shall be given prior to the time of the adjourned meeting
to the directors who were not present at the time of the adjournment.
Section 9. Action Without a Meeting. Any action required or
permitted to be taken by the Board of Directors may be taken without a meeting,
if all members of the Board individually or collectively consent in writing to
such action. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board. Such action by written consent shall have the same
force and effect as a unanimous vote of such directors.
Section 10. Meetings of and Action by Committees. The provisions of
this Article VI apply to committees of the Board of Directors and action by such
committees with such changes in the language of those provisions as are
necessary to substitute the committee and its members for the Board and its
members.
ARTICLE VII
Officers
Section 1. Officers. The Corporation shall have as officers, a
President, a Secretary and a Chief Financial Officer. The Corporation may also
have, at the discretion of the Board, a Chairman of the Board, one or more vice
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presidents, one or more assistant secretaries, one or more assistant treasurers
and such other officers as may be appointed in accordance with the provisions of
Section 3 of this Article VII. One person may hold two or more offices.
Section 2. Election of Officers. The officers of the Corporation,
except such officers as may be appointed in accordance with the provisions of
Section 3 or Section 5 of this Article VII, shall be chosen by the Board of
Directors.
Section 3. Subordinate Officers. Etc. The Board of Directors may
appoint by resolution, and may empower the Chairman of the Board, if there be
such an officer, or the President, to appoint such other officers as the
business of the Corporation may require, each of whom shall hold office for such
period, have such authority and perform such duties as are determined from time
to time by resolution of the Board or, in the absence of any such determination,
as are provided in these Bylaws. Any appointment of an officer shall be
evidenced by a written instrument filed with the Secretary of the Corporation
and maintained with the corporate records.
Section 4. Removal and Resignation.
(a) Subject to the rights, if any, of an officer under any contract
of employment, any officer may be removed, either with or without cause, by the
Board of Directors or, except in the case of an officer chosen by the Board, by
any officer upon whom such power of removal may be conferred by resolution of
the Board.
(b) Subject to the rights, if any, of the Corporation under any
contract of employment, any officer may resign at any time effective upon giving
written notice to the Chairman of the Board, President, any Vice President or
the Secretary of the Corporation, unless the notice specifies a later time for
the effectiveness of such resignation.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these Bylaws for regular appointments to such office.
Section 6. Chairman of the Board. If there is a Chairman of the
Board, he shall, if present, preside at all meetings of the Board of Directors,
exercise and perform such other powers and duties as may be from time to time
assigned to him by resolution of the Board or prescribed by these Bylaws and,
if there is no President, the Chairman of the Board shall be the chief executive
officer of the Corporation and have the power and duties set forth in Section 7
of this Article VII.
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Section 7. President. Subject to such supervisory powers, if any,
as may be given by these Bylaws or the Board of Directors to the Chairman of
the Board, if there be such an officer, the President shall be the chief
executive officer and general manager of the Corporation and shall, subject to
the control of the Board, have general supervision, direction and control of the
business and affairs of the Corporation. He shall preside at all meetings of the
shareholders and, in the absence of the Chairman of the Board, or if there be
none, at all meetings of the Board. He shall have the general powers and duties
of management usually vested in the office of president of a corporation, and
shall have such other powers and duties as may be prescribed from time to time
by resolution of the Board.
Section 8. Vice President. In the event of the absence or disability
of the President, the Vice Presidents in order of their rank as fixed by the
Board of Directors, or, if not ranked, the Vice President designated by the
Board, shall perform all the duties of the President, and when so acting shall
have all the powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board or as the President may from time to time delegate.
Section 9. Secretary.
(a) The Secretary shall keep or cause to be kept (1) the minute
book, and (2) the share register of the Corporation.
(b) The Secretary, an assistant secretary, or if they are absent or
unable to act, any other officer shall give, or cause to be given, notice of all
meetings of the shareholders and of the Board of Directors required by these
Bylaws or by law to be given, and shall have such other powers and perform such
other duties as may be prescribed from time to time by the Board of Directors or
any committee of the Board of Directors.
Section 10. Chief Financial Officer.
(a) The Chief Financial Officer shall keep, or cause to be kept, the
books and records of account of the Corporation.
(b) The Chief Financial Officer shall deposit all monies and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated from time to time by resolution of the Board
of Directors. He shall disburse the funds of the Corporation as may be ordered
by the
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Board of Directors, shall render to the President and the Board, whenever they
request it, an account of all of his transactions as Chief Financial Officer and
of the financial condition of the Corporation, and shall have such other powers
and perform such other duties as may be prescribed from time to time by the
Board or as the President may from time to time delegate.
ARTICLE VIII
Records and Reports
Section 1. Minute Book. The Corporation shall keep or cause to be
kept in written form at its principal executive office or such other place as
the Board of Directors may order, a minute book which shall contain a record of
all actions by its shareholders, Board or committees of the Board including the
time, date and place of each meeting; whether a meeting is regular or special
and, if special, how called; the manner of giving notice of each meeting and a
copy thereof; the names of those present at each meeting of the Board or
committees thereof; the number of shares present or represented at each meeting
of the shareholders; the proceedings of all meetings; any written waivers of
notice, consents to the holding of a meeting or approvals of the minutes
thereof; and written consents for action without a meeting.
Section 2. Share Register. The Corporation shall keep or cause to be
kept at its principal executive office or, if so provided by resolution of the
Board of Directors, at the Corporation's transfer agent or registrar, a share
register, or a duplicate share register, which shall contain the names of the
shareholders and their addresses, the number and classes of shares held by each,
the number and date of certificates issued for the same and the number and date
of cancellation of every certificate surrendered for cancellation.
Section 3. Books and Records of Account. The Corporation shall keep
or cause to be kept at its principal executive office or such other place as the
Board of Directors may order, adequate and correct books and records of account.
Section 4. Bylaws. The Corporation shall keep at its principal
executive office or, in the absence of such office in the State of California,
at its principal business office in the state, the original or a copy of the
Bylaws as amended to date.
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Section 5. Inspection of Records. The shareholders and directors of
the Corporation shall have all of the rights to inspect the books and records of
the Corporation that are specified in Sections 213 and 1600 through 1602 of the
Code.
Section 6. Annual Report to Shareholders. So long as the Corporation
has fewer than 100 holders of record of its shares, the annual report to the
shareholders described in Section 1501 of the Code is expressly dispensed with,
but nothing herein shall be interpreted as prohibiting the Board of Directors
from issuing annual or other periodic reports to the shareholders of the
Corporation as it sees fit.
ARTICLE IX
Miscellaneous
Section 1. Checks, Drafts, Etc. All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness, and any
assignment or endorsement thereof, issued in the name of or payable to the
Corporation, shall be signed or endorsed by such person or persons and in such
manner as, from time to time, shall be determined by resolution of the Board of
Directors.
Section 2. Contracts, Etc. - How Executed. The Board of Directors,
except as otherwise provided in these Bylaws, may authorize any officer or
officers, agent or agents, to enter into any contract or execute any instrument
in the name of and on behalf of the Corporation, and such authority may be
general or confined to specific instances; and, unless so authorized or ratified
by the Board, no officer, employee or other agent shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or to any amount.
Section 3. Certificates of Stock. A certificate or certificates for
shares of the capital stock of the Corporation shall be issued to each
shareholder when the shares are fully paid. All certificates shall be signed in
the name of the Corporation by the Chairman of the Board or the President or a
Vice President and by the Chief Financial Officer or an assistant treasurer or
the Secretary or an assistant secretary, certifying the number of shares and the
class or series thereof owned by the shareholder. Any or all of the signatures
on a certificate may be by facsimile signature. In the event 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 person were an officer, transfer
agent or registrar at the date of issue.
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Section 4. Lost Certificates. Except as provided in this section, no
new certificate for shares shall be issued in lieu of an old certificate unless
the latter is surrendered to the Corporation and canceled at the same time. The
Board of Directors may, in case any share certificate or certificate for any
other security is lost, stolen or destroyed, authorize the issuance of a new
certificate in lieu thereof, upon such terms and conditions as the Board may
require, including provision for indemnification of the Corporation secured by a
bond or other adequate security sufficient to protect the Corporation against
any claim that may be made against it, including any expense or liability, on
account of the alleged loss, theft or destruction of such certificate or the
issuance of such new certificate.
Section 5. Representation of Shares of Other Corporations. Any
person designated by resolution of the Board of Directors or, in the absence of
such designation, the Chairman of the Board, the President or any Vice
President, or by any other person authorized by any of the foregoing, is
authorized to vote on behalf of the Corporation any and all shares of any other
corporation or corporations, foreign or domestic, owned by the Corporation.
Section 6. Construction and Definitions. Unless the context
otherwise requires, the general provisions, rules of construction and
definitions contained in the California Corporations Code shall govern the
construction of these Bylaws.
Section 7. Indemnification of Corporate Agents; Purchase of
Liability Insurance.
(a) Subject only to the express limitations of the Corporation's
Articles of Incorporation and Sections 204 and 317 of the Code, as the same may
from time to time be amended, (i) the Corporation shall indemnify each of its
directors and officers from and against any expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding to which such person was or is a party or is threatened to
be made a party arising by reason of the fact that such person is or was a
director or officer of the Corporation; and (ii) the Corporation may indemnify
any other agent of the Corporation with respect to such proceedings if and to
the extent the Board of Directors so determines by resolution.
(b) The Corporation shall, if and to the extent the Board of
Directors so determines by resolution, enter into indemnification agreements
with its agents on the terms and conditions determined by the Board of
Directors, subject to
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those limitations upon the Corporation's capacity to indemnify its agents set
forth in the Corporation's Articles of Incorporation and Sections 204 and 317 of
the Code, as the same may from time to time be amended.
(c) Subject to the provisions of subdivision,(i) of Section 317 of
the Code, as the same may from time to time be amended, the Corporation shall,
if and to the extent the Board of Directors so determines by resolution,
purchase and maintain insurance in an amount and on behalf of such agents of the
Corporation as the Board may specify in such resolution against any liability
asserted against or incurred by the agent in such capacity or arising out of the
agent's status as such whether or not the Corporation would have the capacity to
indemnify the agent against such liability under the provisions of this Section
7.
(d) The Corporation shall, if and to the extent the Board of
Directors so determines by resolution, advance expenses incurred by an agent in
defending any proceeding prior to the final disposition of such proceeding,
subject to the provisions of subdivision (f) of Section 317 of the Code, as the
same may from time to time be amended.
(e) This Section 7 shall not apply to any proceeding against any
trustee, investment manager or other fiduciary of an employee benefit plan in
such person's capacity as such, even though such person may be an agent, as
defined in subdivision (f) hereof.
(f) For purposes of this Section 7, "agent" of the Corporation
includes any person who is or was a director, officer, employee or other agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the Corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative, and includes an action or proceeding by or in
the right of the Corporation to procure a judgment in its favor; and "expenses"
includes, without limitation, attorneys fees and any expenses of establishing a
right to indemnification under subdivisions (d) or (e)(3) of Section 317 of the
Code.
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ARTICLE X
Corporate Seal
Section 1. Corporate Seal. The Corporation shall have no seal.
ARTICLE XI
Fiscal Year
Section 1. Fiscal Year. The fiscal year of the Corporation shall end
on the Saturday nearest the last day of March of each year.
ARTICLE XII
Amendments
Section 1. Amendments. New bylaws may be adopted or these Bylaws
may be amended or repealed by the approval of an affirmative vote of a majority
of the outstanding shares entitled to vote or by the Board of Directors.
Notwithstanding the preceding sentence, the adoption of a bylaw (a) specifying
or changing a fixed number of directors or the minimum or maximum number of
directors, or (b) changing from a variable to a fixed board or vice versa may
only be adopted by the approval of an affirmative vote of a majority of the
outstanding shares, subject to the provisions of Section 1 of Article IV of
these Bylaws.
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ADDENDUM
HORSE & RIDER, INC.
UNANIMOUS WRITTEN ACTION
OF THE BOARD OF DIRECTORS
Effective this 10th day of June, 1996, the undersigned, being all of the
directors of Horse & Rider, Inc., a corporation organized under the laws of the
State of California (the "Corporation"), hereby unanimously adopt the resolution
set forth below:
RESOLVED, that Article - IV Section 1.(b) ("Number of Directors"), of the
Bylaws of the Corporation be amended as follows:
"(b) The exact number of directors shall be one (1) until changed as
provided in subdivision (a) of this section."
/s/ David C. Cox /s/ James J. Viera
- --------------------------- ---------------------------
David C. Cox James J. Viera
<PAGE>
Exhibit 3.157
CERTIFICATE OF INCORPORATION
OF
KITPLANES ACQUISITION COMPANY
The undersigned incorporator, being a person 18 years of age or
older, an order to form a corporate entity under Delaware General Corporation
Law, hereby sets forth the following Certificate of Incorporation;
ARTICLE I
The name of this Corporation is Kitplanes Acquisition Company.
ARTICLE II
The address of the registered office of this Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801, located in New Castle County.
The registered agent at that address is The Corporation Trust
Company.
ARTICLE III
The purpose of this Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The total number of shares of stock which this Corporation has the
authority to issue is 10,000 shares, all of which shall be designated Common
Stock, with a par value of $.01 per share.
ARTICLE V
The name and mailing address of the incorporator of this Corporation
is:
Barbara H. Brown
FAEGRE & BENSON
Professional Limited Liability Partnership
2200 Norwest Corner
90 South Seventh Street
Minneapolis, Minnesota 55402-3901
ARTICLE VI
Except as may otherwise be provided by law, the books of the
Corporation may be kept outside of the State of Delaware at such place or places
as the Board of Directors may designate.
<PAGE>
ARTICLE VII
The following individual is hereby appointed as the first sole
Director of the Corporation, to serve until the first meeting of stockholders of
the Corporation and until his successor is duly elected and qualified.
James J. Viera
Elections of Directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal by-laws of the Corporation, without any action on the part of the
stockholders. The by-laws made by the directors may be adopted, amended or
repealed by the stockholders. Any specific provision in the by-laws regarding
amendment thereof shall be controlling.
ARTICLE IX
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article shall
not eliminate or limit the liability of a director to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of Delaware or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
IN WITNESS WHEREOF, I have hereto set my hand this 4th day of
December, 1996.
/s/ Barbara H. Brown
------------------------------
Barbara H. Brown, Incorporator
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Exhibit 3.158
BY-LAWS
OF
K1TPLANES ACQUISITION COMPANY
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE I
STOCKHOLDERS
Section 1. The annual meeting of stockholders for the election of
directors and the transaction of other business shall be held annually at such
place either within or without the State of Delaware as shall be designated by
the board of directors and stated in the notice of the meeting. Special meetings
of stockholders for any purpose or purposes may be held at such time and place,
within or without the State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on such date and
at such time as shall be designated from time to time by the board of directors
and stated in the notice of the meeting, at which stockholders shall elect a
board of directors and transact such other business as may properly be brought
before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten or more than sixty days before the date of the
meeting, except as otherwise required by law.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of such stockholder.
<PAGE>
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten or more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting, except as
otherwise required by law.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote at a meeting, whether present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote at such meeting, whether present in person or represented by proxy, shall
have the power to adjourn the meeting from time to time without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the voting power of the stock present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of the statutes or
of the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy
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for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be effective for more than three years from
its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by
or under the direction of a board of one or more directors. The stockholders at
their annual meeting shall determine the number of directors to constitute the
board for the next year, provided that thereafter the authorized number of
directors may be increased by the stockholders or the board and decreased by the
stockholders. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and each director
elected shall hold office until his or her successor is elected and qualified or
until his or her earlier resignation or removal. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
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Meetings of the Board of Directors
Section 3. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 4. The first meeting of each newly elected board of directors
shall be held immediately after the annual meeting of stockholders and at the
same place, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided that a
quorum shall be present. In the event that such meeting is not held at that time
and place. the meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of the board of
directors, or as shall be specified in a written waiver signed by all of the
directors.
Section 5. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 6. Special meetings of the board may be called by the president on
three days' notice to each director, either personally, by telephone, by mail,
by telegram or by any other means of communication; special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of one or more of the directors.
Section 7. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the board of directors, except as may be otherwise specifically provided
by statute or by the certificate of incorporation. If a quorum shall not be
present at any meeting of the board of directors, the directors present may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 8. Any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 9. Members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment in which all persons participating in the meeting can
hear each other, and such participation in a meeting shall constitute presence
in person at the meeting.
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Committees of Directors
Section 10. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each consisting of one or
more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he, she or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, but no such committee shall have the power or authority to amend
the certificate of incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommend to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amend the by-laws of the corporation; and, unless the resolution of the board
designating the committee expressly so provides, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of stock
or to adopt a certificate of ownership and merger pursuant to the Delaware
General Corporation Law. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Compensation of Directors
Section 12. The board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Removal of Directors
Section 13. Unless otherwise restricted by law, any director or the entire
board of directors may be removed, with or without cause, by the holders of a
majority of the stock issued and outstanding and entitled to vote at an election
of directors.
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ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of statute, certificate of
incorporation or by-laws, notice is required to be given to any stockholder, it
shall not be construed to require personal notice but shall mean such notice as
may be given in writing, by mail, addressed to such stockholder, at such
stockholder's address as it appears on the records of the corporation, with
postage thereon prepaid, and such notice shall be deemed to have been given at
the time when the same shall have been deposited in the United States mail.
Section 2. Whenever any notice is required to be given under the
provisions of statute, certificate of incorporation or by-laws, a waiver thereof
in writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or a committee of directors need be specified in any
written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall include a president, a secretary and a treasurer. The board
of directors may also choose a chairman of the board, one or more vice
presidents and one or more assistant secretaries and assistant treasurers. Any
number of offices may be held by the same person, unless the certificate of
incorporation or these by-laws provide otherwise.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a secretary and a treasurer
and such other officers as it deems necessary or appropriate.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary or appropriate, and such officers shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.
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Section 4. The salaries of all officers and agents of the corporation
shall be fixed by or in the manner prescribed by the board of directors.
Section 5. Each officer of the corporation shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation may, or, in
the case of the president, secretary or treasurer, shall, be filled by the board
of directors.
The President
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors (unless a chairman of the board is currently holding office, in which
event the chairman of the board shall preside at such meetings), shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried out and
put into effect.
Section 7. The president shall execute bonds, mortgages and other
contracts, except where required or permitted by law to be otherwise signed and
executed and except where signing and execution thereof shall be expressly
delegated by the board of directors to some other officer or agent of the
corporation or except as otherwise permitted in Section 8 hereof.
Section 8. In the absence of the president or in the event of his or her
inability to act, the chairman of the board or the vice president, if any (or if
there is more than one vice president, the vice presidents in the order
designated by the directors, or in the absence of any designation, then in the
order of their election), shall perform the duties of the president, and when so
acting, shall have all the powers of and shall be subject to all the
restrictions upon the president. The vice presidents, if any, shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe.
The Secretary and Assistant Secretaries
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He or she shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision he or she shall be.
Section 10. In the absence of the secretary or in the event of his or her
inability to act, the assistant secretary, if any (or if there is more than one,
the assistant secretaries in the order designated by the directors, or in the
absence of any designation, then in the order of their election),
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shall perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
The Treasurer and Assistant Treasurers
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all money
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. The treasurer shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his or her transactions as treasurer and of the financial condition of the
corporation.
Section 13. In the absence of the treasurer or in the event of his or her
inability to act, the assistant treasurer, if any (or if there is more than one,
the assistant treasurers in the order designated by the directors, or in the
absence of any designation then in the order of their election), shall perform
the duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of the corporation by, the chairman
of the board of directors or the president or a vice president and by the
treasurer or an assistant treasurer or the secretary or an assistant secretary
of the corporation, certifying the number of shares owned by such person in the
corporation.
Certificates may be issued for partly paid shares and in such case upon
the face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor and the amount
paid thereon shall be specified.
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate or certificates which the corporation shall issue to
represent such class or series of stock, provided that, except as otherwise
provided in Section 202 of the Delaware
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General Corporation Law, or any successor provisions enacted from time to time,
in lieu of the foregoing requirements, there may be set forth on the face or
back of the certificate or certificates which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designation, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
Lost Certificates
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or such
owner's legal representative, to give the corporation a bond sufficient to
indemnify it against any claim that may be made against the corporation on
account of the alleged loss, theft or destruction of any such certificate or
certificates or the issuance of such new certificate or certificates.
Transfer of Stock
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Fixing Record Date
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, to express consent to corporate action in writing without a
meeting, to receive payment of any dividend or other distribution or allotment
of any rights, or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the board of
directors may fix, in advance, a record date, which shall be not more than
sixty or less than ten
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days before the date of such meeting, or more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Registered Stockholders
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Delaware
General Corporation Law.
ARTICLE VII
GENERAL PROVISIONS
Dividends
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions (if any) of the certificate of incorporation, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as
the directors shall deem in the best interests of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
Checks
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
Fiscal Year
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
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ARTICLE VIII
INDEMNIFICATION
Section 1. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation) by
reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that such person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, shall not, of itself, create a presumption that such person had
reasonable cause to believe that such conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reason of the
fact that such person is or was a director or officer of the corporation, or is
or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation, provided,
however, that no indemnification shall be made with respect to any claim, issue
or matter as to which such person shall have been adjudged liable to the
corporation, except to the extent that the Court of Chancery of the State of
Delaware (or the court in which such action or suit was brought) determines that
despite the adjudication of liability, such person is fairly and reasonably
entitled to indemnity for such expenses as such Court of Chancery or other court
deems proper.
Section 3. To the extent that a director or officer has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections (1) or (2) of this bylaw, or in defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith.
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Section 4. Any indemnification under Sections (1) or (2) of this by-law
(unless ordered by a court) shall be made by the corporation only upon a
determination that indemnification of the director or officer is proper in the
circumstances because he or she has met the applicable standards of conduct set
forth in said Sections (1) and (2). Such determination shall be made (1) by the
board of directors of the corporation by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel (who may be
regular counsel for the corporation) in a written opinion, or (3) by the
stockholders of the corporation.
Section 5. Expenses incurred by any person who may have a right of
indemnification under these by-laws in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the corporation
pursuant to these by-laws.
Section 6. The indemnification and advancement of expenses provided by, or
granted pursuant to, these by-laws are (a) in addition to and independent of and
shall not be deemed exclusive of any other rights of any person under any
certificate of incorporation, articles of incorporation, articles of
association, by-law, agreement, vote of stockholders or disinterested directors,
or otherwise, (b) apply both to such person's action in an official capacity and
to action in another capacity while holding such office, (c) shall continue for
a person who has ceased to be a director or officer and (d) shall inure to the
benefit of the heirs, executors and administrators of such a person; provided,
however, that any indemnification realized other than under these by-laws shall
apply as a credit against any indemnification provided by these by-laws.
Section 7. The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of these
by-laws or of applicable law, if and whenever the board of directors of the
corporation deems it in the best interests of the corporation to do so.
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Section 8. For the purposes of these by-laws and indemnification
hereunder, any person who is or was a director or officer of any other
corporation of which the corporation owns or controls or at the time in question
owned or controlled directly or indirectly a majority of the shares of stock
entitled to vote for election of directors of such other corporation shall be
conclusively presumed to be serving or have served as such director or officer
at the request of the corporation.
Section 9. The corporation may provide indemnification under these by-laws
to any employee or agent of the corporation or of any other corporation of
which the corporation owns or controls or at the time in question owned or
controlled directly or indirectly a majority of the shares of stock entitled to
vote for election of directors or to any director, officer, employee or agent of
any other corporation, partnership, joint venture, trust or other enterprise in
which the corporation has or at the time had an interest as an owner, creditor
or otherwise, if and whenever the board of directors of the corporation deems it
in the best interests of the corporation to do so.
Section 10. The corporation may, to the fullest extent permitted by
applicable law from time to time in effect, indemnify any and all persons whom
the corporation shall have power to indemnify under such law from and against
any and all of the expenses, liabilities or other matters referred to in or
covered by said law, if and whenever the board of directors of the corporation
deems it to be in the best interests of the corporation to do so.
ARTICLE IX
SEAL
The corporation shall have no seal.
ARTICLE X
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the board of directors.
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Exhibit 3.159
CERTIFICATE OF AMENDMENT
Before Issuance of Shares
of
CERTIFICATE OF INCORPORATION
of
DIRECT TO RETAIL, INC.
Pursuant to Section 241 of Title 8
of the Delaware Code, as amended
I, the undersigned, being the Sole Incorporator of the above named
corporation, a corporation organiZed under and by virtue of the General
Corporation Law of the State of Delaware, DO HEREBY CERTIFY:
FIRST, that the Sole Incorporator has o approved a resolution setting
forth the following amendment to the Certificate or Incorporation of said
corporation:
RESOLVED, that the Certificate of Incorporation of this corporation be,
and it hereby is amended by replacing in its entirety Article I with the
following:
The name of this corporation is RetailVision, Inc.
SECOND, that the corporation has not received any payment for its stock.
THIRD, that this amendment has been duly adopted in accordance with
Section 241 of Title B of the Delaware Code, as amended.
IN WITNESS WHEREOF, 1 have duly executed this Certificate of Amendment
this 23rd day of September, 1993.
/s/ Laura S. Carlson
-------------------------
Laura S. Carlson,
Incorporator
STATE 0F MINNESOTA )
)
COUNTY OF HENNEPIN )
Subscribed end sworn to before me this 23rd day of August, 1393, by Laura
S. Carlson, personally known to me as the Incorporator of RetailVision, Inc., a
Delaware corporation, on behalf of the corporation.
/s/ Joan E. Rudolph
-------------------------
Notary Public
JOAN E. RUDOLPH
[SEAL] NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY
My Comm. Expires May 9, 1994
<PAGE>
CERTIFICATE OF INCORPORATION
OF
DIRECT TO RETAIL, INC.
The undersigned incorporator, being a person is 18 years of age or older,
in order to form a corporate entity under the Delaware General Corporation Law
("DGCL"), hereby sets forth the following Certificate of Incorporation:
ARTICLE I
The name of this corporation is Direct To Retail, Inc.
ARTICLE II
The address of the registered office of this corporation in the
State of Delaware is Corporation Trust Center. 1209 Orange Street, Wilmington,
Delaware 19801, located in New Castle County.
The registered agent at that address is The Corporation Trust Corporation.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or activity
for which corporations may be organized under the DGCL.
ARTICLE IV
The total number of shares of stock which this corporation has the
authority to issue 1,000 shares, all of which shall be designated Common Stock
having a par value of $.01 per share.
ARTICLE V
The name and mailing address of the incorporator of this corporation is
Laura B. Carlson, 2200 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota 55402.
ARTICLE VI
Except as may otherwise be provided by law, the books of this corporation
may be kept outside of the State of Delaware at such place or places as the
board of directors may designate.
<PAGE>
ARTICLE VII
Elections of the board of directors need not be by written ballot unless
the by-laws of the corporation shall so provide.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized to adopt, amend or repeal by-laws
of the corporation, without any action on the part of the stockholders. The
by-laws made by the board of directors may be adopted, amended or repealed by
the stockholders. Any specific provision in the by-laws regarding amendment
thereof shall be controlling.
ARTICLE IX
No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that this Article shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit. This Article shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the date on which this Article becomes effective.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of
September, 1993.
/s/ Laura S. Carlson
-------------------------
Laura S. Carlson
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Exhibit 3.160
BY-LAWS
OF
RETAILVISION, INC.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. The annual meeting of stockholders for the election of
directors and the transaction of other business shall be held annually at such
place either within or without the State of Delaware as shall be designated by
the board of directors and stated in the notice of the meeting. Special meetings
of stockholders for any purpose or purposes may be held at such time and place,
within or without the State of Delaware, as shall be stated in the notice of
the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on such date and
at such time as shall be designated from time to time by the board of directors
and stated in the notice of the meeting, at which stockholders shall elect a
board of directors and transact such other business as may properly be brought
before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten or more than sixty days before the date of the
meeting, except as otherwise required by law.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
Stockholder and the number of shares registered in the name of such stockholder.
Such list shall be open to the examination of any stockholder, for
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any purpose germane to the meeting, during ordinary business hours for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten or more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting, except as
otherwise required by law.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote at a meeting, whether present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote at such meeting, whether present in person or represented by proxy, shall
have the power to adjourn the meeting from time to time without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the voting power of the stock present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which,
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by express provision of the statutes or of the certificate of incorporation, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be effective for more than
three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by
or under the direction of a board of one or more directors. The stockholders at
their annual meeting shall determine the number of directors to constitute the
board for the next year, provided that thereafter the authorized number of
directors may be increased by the stockholders or the board and decreased by the
stockholders. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Directors need not
be stockholders.
Section 2. Vacancies and newly created directorships. resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner
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provided by statute. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.
Meetings of the Board of Directors
Section 3. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 4. The first meeting of each newly elected board of directors
shall be held immediately after the annual meeting of stockholders and at the
same place, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided that a
quorum shall be present. In the event that such meeting is not held at that time
and place, the meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of the board of
directors, or as shall be specified in a written waiver signed by all of the
directors.
Section 5. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 6. Special meetings of the board may be called by the president on
three days' notice to each director, either personally, by telephone, by mail,
by telegram or by any other means of communication; special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of one or more of the directors.
Section 7. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be
present at any meeting of the board of directors, the directors present may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 8. Any action required or permitted to be taken at any meeting of
the board of directors or of any committee
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thereof ray be taken without a meeting, if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
Section 9. Members of the board of directors, or any committee
designated by the board of directors, may participate in a meeting of the board
of directors, or any committee, by means of conference telephone or similar
communications equipment in which all persons participating in the meeting can
hear each other, and such participation in a meeting shall constitute presence
in person at the meeting.
Committees of Directors
Section 10. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each consisting of one or
more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he, she or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, but no such committee shall have the power or authority to amend
the certificate of incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommend to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amend the by-laws of the corporation; and, unless the resolution of the
board designating the committee expressly so provides, no such committee shall
have the power or authority to declare a dividend, to authorize the issuance of
stock or to adopt a certificate of ownership and merger pursuant to the Delaware
General Corporation Law. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors.
Section 11. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
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Compensation of Directors
Section 12. The board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Removal of Directors
Section 13. Unless otherwise restricted by law, any director or the entire
board of directors may be removed, with or without cause, by the holders of a
majority of the stock issued and outstanding and entitled to vote at an election
of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of statute, certificate of
incorporation or by-laws, notice is required to be given to any stockholder, it
shall not be construed to require personal notice but shall mean such notice as
may be given in writing, by mail, addressed to such stockholder, at such
stockholder's address as it appears on the records of the corporation, with
postage thereon prepaid, and such notice shall be deemed to have been given at
the time when the same shall have been deposited in the United States mail.
Section 2. Whenever any notice is required. to be given under the
provisions of statute, certificate of incorporation or by-laws, a waiver thereof
in writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or a committee of directors need be specified in any
written waiver of notice.
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ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall include a president, a secretary and a treasurer. The board
of directors may also choose a chairman of the board, one or more vice
presidents and one or more assistant secretaries and assistant treasurers. Any
number of offices may be held by the same person, unless the certificate of
incorporation or these by-laws provide otherwise.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a secretary and a treasurer
and such other officers as it deems necessary or appropriate.
Section 3. The board of directors at its first meeting may appoint such
other officers and agents as it shall deem necessary or appropriate, and such
officers shall hold their offices for such terms and shall exercise such powers
and perform such duties as shall be determined from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by or in the manner prescribed by the board of directors.
Section 5. Each officer of the corporation shall hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation may, or, in
the case of the president, secretary or treasurer, shall, be filled by the board
of directors.
The President
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors (unless a chairman of the board is currently holding office, in which
event the chairman of the board shall preside at such meetings), shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried out and
put into effect.
Section 7. The president shall execute bonds, mortgages and other
contracts, except where required or permitted by law to be otherwise signed and
executed and except: where signing and execution thereof shall be expressly
delegated by the board of
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directors to some other officer or agent of the corporation or except as
otherwise permitted in Section 8 hereof.
Section 8. In the absence of the president or in the event of his or her
inability to act, the chairman of the board or the vice president, if any, (or
if there is more than one vice president, the vice presidents in the order
designated by the directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the president, and when so
acting, shall have all the powers of and shall be subject to all the
restrictions upon the president. The vice presidents, if any, shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe.
The Secretary and Assistant Secretaries
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He or she shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision he or she shall be.
Section 10. In the absence of the secretary or in the event of his or her
inability to act, the assistant secretary, if any, (or if there is more than
one, the assistant secretaries in the order designated by the directors, or in
the absence of any designation, then in the order of their election) shall
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
The Treasurer and Assistant Treasurers
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all money
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. The treasurer shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his or
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her transactions as treasurer and of the financial condition of the corporation.
Section 13. In the absence of the treasurer or in the event of his or her
inability to act, the assistant treasurer, if any, (or if there is more than
one, the assistant treasurers in the order designated by the directors, or in
the absence of any designation then in the order of their election) shall
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of the corporation by the chairman
or vice chairman of the board of directors, or the president or a vice president
and by the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by such
person in the corporation.
Certificates may be issued for partly paid shares and in such case upon
the face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid thereof or and the
amount paid thereon shall be specified.
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualification, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided in Section
202 of the Delaware General Corporation Law, or any successor provisions enacted
from time to time, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designation, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent
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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 person were such officer, transfer agent or registrar at
the date of issue.
Lost Certificates
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or such
owner's legal representative, to give the corporation a bond sufficient to
indemnify it against any claim that may be made against the corporation on
account of the alleged loss, theft or destruction of any such certificate or
certificates or the issuance of such new certificate or certificates.
Transfer of Stock
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Fixing Record Date
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, to express consent to corporate action in writing without a
meeting, to receive payment of any dividend or other distribution or allotment
of any rights, or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the board of
directors may fix, in advance, a record date, which shall be not more than sixty
or less than ten days before the date of such meeting, or more than sixty days
prior to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
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Registered Stockholders
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Delaware
General Corporation Law.
ARTICLE VII
GENERAL PROVISIONS
Dividends
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions (if any) of the certificate of incorporation, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
directors shall deem in the best interests of the corporation, and the directors
may modify or abolish any such reserve in the manner in which it was created.
Checks
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
Fiscal Year
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
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ARTICLE VIII
INDEMNIFICATION
Section 1. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation) by
reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, the corporation has no reasonable cause to believe such conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that such person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, shall not, of itself, create a presumption
that such person had reasonable cause to believe that such conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reason of the
fact that such person is or was a director or officer of the corporation, or is
or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation, provided,
however, that no indemnification shall be made with respect to any claim, issue
or matter as to which such person shall have been adjudged liable to the
corporation, except to the extent that the Court of Chancery of the State of
Delaware (or the court in which such action or suit was brought) determines that
despite the adjudication of liability, such person is fairly and reasonably
entitled to indemnity for such expenses as such Court of Chancery or other court
deems proper.
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Section 3. To the extent that a director or officer has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections (1) or (2) of this by-law, or in defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith.
Section 4. Any indemnification under Sections (1) or (2) of this by-law
(unless ordered by a court) shall be made by the corporation only upon a
determination that indemnification of the director or officer is proper in the
circumstances because he or she has met the applicable standards of conduct set
forth in said Sections (1) and (2). Such determination shall be made (1) by the
board of directors of the corporation by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel (who may be
regular counsel for the corporation) in a written opinion, or (3) by the
stockholders of the corporation.
Section 5. Expenses incurred by any person who may have a right of
indemnification under this by-law in defending a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by the corporation pursuant to
this by-law.
Section 6. The indemnification and advancement of expenses provided by, or
granted pursuant to, this by-law are (a) in addition to and independent of and
shall not be deemed exclusive of any other rights of any person under any
certificate of incorporation, articles of incorporation, articles of
association, by-law, agreement, vote of stockholders or disinterested directors,
or otherwise, (b) apply both to such person's action in an official capacity and
to action in another capacity while holding such office, (c) shall continue for
a person who has ceased to be a director or officer and (d) shall inure to the
benefit of the heirs, executors and administrators of such a person; provided,
however, that any indemnification realized other than under this by-law shall
apply as a credit against any indemnification provided by this by-law.
Section 7. The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
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person and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this by-law
or of applicable law, if and whenever the board of directors of the corporation
deems it in the best interests of the corporation to do so.
Section 8. For the purposes of this by-law and indemnification hereunder,
any person who is or was a director or officer of any other corporation of which
the corporation owns or controls or at the time in question owned or controlled
directly or indirectly a majority of the shares of stock entitled to vote for
election of directors of such other corporation shall be conclusively presumed
to be serving or have served as such director or officer at the request of the
corporation.
Section 9. The corporation may provide indemnification under this by-law
to any employee or agent of the corporation or of any other corporation of which
the corporation owns or controls or at the time in question owned or controlled
directly or indirectly a majority of the shares of stock entitled to vote for
election of directors or to any director, officer, employee or agent of any
other corporation, partnership, joint venture, trust or other enterprise in
which the corporation has or at the time had an interest as an owner, creditor
or otherwise, if and whenever the board of directors of the corporation deems it
in the best interests of the corporation to do so.
Section 10. The corporation may, to the fullest extent permitted by
applicable law from time to time in effect, indemnify any and all persons whom
the corporation shall have power to indemnify under such law from and against
any and all of the expenses, liabilities or other matters referred to in or
covered by said law, if and whenever the board of directors of the corporation
deems it to be in the best interests of the corporation to do so.
ARTICLE IX
SEAL
The corporation shall have no seal.
ARTICLE X
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the board of directors.
14
<PAGE>
Exhibit 3.161
CERTIFICATE OF OWNERSHIP AND MERGER
OF
CBH PUBLISHING, INC.
(a Texas corporation)
WITH AND INTO
CBH HOLDINGS, INC.
(a Delaware corporation)
The undersigned corporation, CBH Holdings, Inc., a corporation duly organized
under the laws of Delaware (the "Corporation), hereby certifies as follows:
FIRST: That the Corporation is incorporated pursuant to the General Corporation
Law of the State of Delaware.
SECOND: That the Corporation owns all the outstanding shares of the capital
stock of CBH Publishing, Inc., a Texas corporation ("Publishing").
THIRD: That the Corporation, by the resolutions of its Board of Directors duly
adopted by unanimous written action as of the 31st day of March, 1995, and
attached hereto as Exhibit A, determined to merge Publishing with and into
itself, with the Corporation being the surviving corporation, on the conditions
set forth in such resolutions.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed
this 11th day of April, 1995.
CBH HOLDINGS. INC.
/s/ James J. Viera
-----------------------------------
James J. Viera, Vice President
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:43 PM 04/12/1995
950081730 -- 2140502
<PAGE>
EXHIBIT A
WHEREAS, the Corporation owns all of the issued and outstanding capital
stock of CBH Publishing. Inc., a Texas corporation ("Publishing"); and
WHEREAS, the Corporation desires to increase the efficiency of the
operations of Publishing by merging Publishing with and into the Corporation;
and
WHEREAS, the Directors believe it is in the best interests of the
Corporation and its shareholder to effect a such a merger;
NOW, THEREFORE, IT IS HEREBY RESOLVED, that the merger of Publishing with
and into the Corporation in accordance with the terms and conditions set forth
in that certain Agreement and Plan of Merger, attached hereto as Exhibit 1 (the
"Merger"), is approved.
FURTHER RESOLVED, that in connection with the Merger the name of the
Corporation shall be changed to "Southwest Art, Inc." pursuant to Section 253(b)
of the Delaware General Corporation Law.
FURTHER RESOLVED, that the officers of the Corporation and each of them
are hereby authorized and directed to execute that certain Agreement and Plan
of Merger and to take any and all other actions, including but not limited to
filing the Certificate of Ownership and Merger evidencing the Merger with the
Secretary of State of Delaware and with the Office of Recorder of Deeds of the
County of Kent, Delaware, in the manner required by law, and to execute such
certificates, documents and other instruments as such officer or officers may
deem necessary, appropriate or desirable to cause the Corporation to effect the
Agreement and Plan or Merger.
<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is entered into as of this 31st day of
March, 1995, by and between CBH Holdings, Inc., a Delaware corporation
("Holdings"), and CBH Publishing, Inc., a Texas corporation ("Publishing").
WITNESSETH
WHEREAS, Holdings is a Delaware corporation with its registered office in
the State of Delaware located at The Prentice-Hall Corporation System. Inc., 229
South State Street, Dover, Delaware 19901; and
WHEREAS, Publishing is a Texas corporation with its registered office in
the State of Texas located at 5444 Westheimer, Suite 1440, Houston, Texas 77056;
and
WHEREAS, the Boards of Directors of Holdings and Publishing have
determined that it is desirable and in the best interests of their respective
corporations and the shareholders of such corporations that Publishing be merged
with and into Holdings on the terms and conditions hereinafter set forth and in
accordance with applicable provisions of the laws of the State of Delaware and
the State of Texas that permit such merger and the Board of Directors of each
corporation has, by resolution, duly adopted, approved, certified, executed and
acknowledged this Agreement and Plan of Merger (the "Plan").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, covenants and provisions hereof, the parties hereto agree that
Publishing shall be merged with and into Holdings and that the terms and
conditions of such merger shall be as follows:
1. The Merger. Publishing shall be merged with and into Holdings in
accordance with the terms of the Plan and the applicable provisions of the
Delaware General Corporation Law and the Texas Business Corporation Act
(the "Merger").
2. Al1ocation of Property of Publishing. Holdings shall thereupon
and thereafter, to the extent consistent with its Certificate of
Incorporation as in effect at the Effective Time (as hereinafter defined),
possess all rights, privileges, immunities, of a public as well as of a
private nature of Publishing, and all property, real, personal and mixed,
and all debts due on whatever account, and all other choses in action and
every other interest of or belonging to Publishing shall by virtue of the
Merger and without further action, be taken and transferred to and vested
in Holdings. The title to any real estate, or any interest therein, vested
in Publishing shall not revert or be an any way impaired by reason of the
Merger. Holdings shall thereafter he responsible and liable for all the
liabilities, obligations
<PAGE>
and penalties of Publishing; and any claim existing or action or
proceeding, civil or criminal, pending by or against Publishing may be
prosecuted as if the Merger had not taken place, or Holdings may be
substituted in place of Publishing; and any judgment rendered against
Publishing may be enforced against Holdings. Neither any rights of
creditors nor any liens upon the property of Publishing shall be impaired
by the Merger.
3. Surviving Corporation. At the Effective Time the surviving
corporation shall be Holdings (hereinafter sometimes referred to as the
"Surviving Corporation").
4. Cancellation of Shares. The manner and basis of canceling the
shares of stock of Publishing shall be as follows:
(a) Each share of Common Stock of Publishing issued and
outstanding immediately prior to the Effective Time shall, by virtue
of the Merger, be canceled, null and void, and cease to exist as of
the Effective Time and no securities of the Surviving Corporation or
any other corporation, or any money or property, shall be issued or
transferred in exchange therefor.
(b) As soon as practicable after the Effective Time, the
holder of the stock certificate theretofore representing issued and
outstanding shares of Publishing immediately prior to the Effective
Time shall surrender the same to the Surviving Corporation, and upon
such surrender, such certificate shall be marked "canceled" and
retained by the Secretary of the Surviving Corporation.
5. Amendment to Articles of Incorporation of the Surviving
Corporation. At the Effective Time, the name of the Surviving Corporation
shall be changed to "Southwest Art, Inc." In all other respects, the
Certificate of Incorporation, as amended, of Holdings in effect
immediately prior to the Effective Time shall become the Certificate of
Incorporation of the Surviving Corporation.
6. By-Laws. At the Effective Time, the By-Laws of Holdings
immediately prior to the Effective Time shall become the By-Laws of the
Surviving Corporation at the Effective Time.
7.Effective Time. The "Effective Time" shall occur at the later of
the time the Certificate of Ownership and Merger is accepted for filing by
the Secretary of State of Delaware and the Articles of Merger are accepted
for filing by the Secretary of State of Texas.
2
<PAGE>
8. Effect of Merger. At the Effective Time, the separate existence
of Publishing shall cease and Publishing shall be merged with and into the
Surviving Corporation.
9. Further Assurances. If at any time the Surviving Corporation
determines that any further action is necessary or desirable to vest,
perfect or confirm in the Surviving Corporation, according to the terms
hereof, title to any property rights of Publishing, the former officers
and directors of Publishing and each of them shall take such action as is
necessary or desirable to vest, perfect or confirm title in such property
or rights in the Surviving Corporation, and otherwise carry out the
purposes of the Plan.
10. Counterparts. Any number of counterparts hereof may he executed
and each such counterpart shall be deemed to be an original instrument.
IN WITNESS WHEREOF, the parties hereto have each caused the Plan to be
executed by the respective duly authorized officers as of the date first written
above.
CBH HOLDINGS, INC.
/s/ James J. Viera
-----------------------------------
James J. Viera, Vice President
CBH PUBLISHING, INC.
/s/ James J. Viera
-----------------------------------
James J. Viera, Vice President
<PAGE>
CERTIFICATE OF INCORPORATION
of
CBH HOLDINGS, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the "corporation")
is
CBH holdings, INC.
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 229 South State
Street, City of Dover, County of Kent; and the name of the registered agent of
the corporation in the State of Delaware at such address is The Prentice-Hall
Corporation System, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is One Hundred Thousand (100,000), with a par value of
One Cent ($.01). All such shares are of one class and are Common Stock.
FIFTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
---- ---------------
Barbara Toffler c/o Rubin Gross Harris Fischl & Roth
1290 Avenue of the Americas
New York, New York 10104
SIXTH: The corporation is to have perpetual existence.
SEVENTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and regulation
of the powers of the corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
<PAGE>
1. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the By-Laws. The phrase "whole
Board" and the phrase "total number of directors" shall be deemed to have
the same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. No election of
directors need be by written ballot.
2. After the original or other By-Laws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 190 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of
its stock, the power to adopt, amend, or repeal the By-Laws of the
corporation may be exercised by the Board of Directors of the corporation;
provided, however, that any provision for the classification of directors
of the corporation for staggered terms pursuant to the provisions of
subsection (d) of Section 141 of the General Corporation Law of the State
of Delaware shall be set forth in an initial By-Law or in a By-Law adopted
by the stockholders entitled to vote of the corporation unless provisions
for such classification shall be set forth in this certificate of
incorporation.
3. Whenever the corporation shall be authorized to issue only one class of
stock, each outstanding share shall entitle the holder thereof to notice
of, and the right to vote at, any meeting of stockholders. Whenever the
corporation shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting power under
the provisions of the certificate of incorporation shall entitle the
holder thereof to the right to vote at any meeting of stockholders except
as the provisions of paragraph (2) of subsection (b) of Section 242 of the
General Corporation Law of the State of Delaware shall otherwise require,
provided that no share of any such class which is otherwise denied voting
power shall entitle the holder thereof to vote upon the increase or
decrease in the number of authorized shares of said class.
EIGHT: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of subsection
(b) of Section 102 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented.
2
<PAGE>
NINTH: The corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify and advance expenses to any and all persons
whom it shall have power to indemnify and advance expenses to under said section
from and against any and all of the expenses, liabilities or other matters
referred to in or covered by said section, and the indemnification and
advancement of expenses provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article TENTH.
Signed on October 9, 1987
/s/ Barbara Toffler
----------------------------
Barbara Toffler, Incorporator
3
<PAGE>
[Partly legible number] 877288023
FILED
OCT 13 1987
[ILLEGIBLE] 9AM
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CBH HOLDINGS, INC.
The undersigned corporation, in order to amend its Certificate of
Incorporation hereby certifies as follows:
FIRST: The name of the corporation is CBH HOLDINGS, INC. (hereinafter
called the "corporation").
SECOND: The amendment to the Certificate of Incorporation, effected hereby
is as follows:
Article FOURTH of the Certificate of Incorporation, relating to the
stock of the corporation, is hereby amended in its entirety as
follows:
"FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is One Hundred Five Thousand
(105,000), divided into two classes, of which One Hundred Thousand
(100,000) shares of the par value of One Cent ($.01) each shall be
designated Common Stock and Five Thousand (5,000) shares of the par
value of One Dollar ($1.00) each shall be designated Preferred
Stock.
The designations, preferences and relative, participating,
optional and other special rights of the Preferred Stock and the
Common Stock and the qualifications, limitations and restrictions
thereof, are as follows:
1. Dividends. The holders of the Preferred Stock shall be
entitled to receive, when and as declared by the Board of
Directors of the corporation, out of any funds legally
available therefor, cumulative preferential dividends on
shares of the Preferred Stock outstanding, at the per annum
rate per share equal to the prime rate as then announced by
MBank Houston, N.A. ("Prime") plus 1%, multiplied by $87.05,
payable in one installment on the 15th day of October in each
year commencing on October 15, 1992.
Such dividends on the Preferred Stock shall be
cumulative from October 15, 1992. So long as there is any
arrearage on the Preferred Stock
<PAGE>
dividends, no dividend shall be payable on the Common Stock.
If the dividends on any shares of the Preferred Stock shall be
in arrears, the holders thereof shall not be entitled to any
interest or sum of money in lieu of interest thereon.
2. Redemption. The corporation shall, on the 15th day of
October of each year for the years 1988 through 1992, redeem
the number of shares of the then outstanding Preferred Stock
in an amount equal to the corporation's Excess Cash Flow, as
hereinafter defined, as determined on the last day of the
month preceding such redemption date. The corporation shall be
deemed to have Excess Cash Flow, if, after giving effect to
the redemption provided for herein, (1) neither the
corporation nor CBH Publishing, Inc., its wholly-owned
subsidiary ("CBH") is in default in respect of any covenants
contained in any agreement pertaining to any outstanding
amount owed by the corporation or CBH in order to consummate
the transactions contemplated by a certain Acquisition
Agreement (the "Acquisition Agreement") dated as of July 24,
1987 between CBH and Southwest Art, Inc., among others, or
borrowings for the conduct of the operations of the
corporation and/or CBH, or (ii) if no such agreement then
exists, the ratio of CBH's then current assets to then current
liabilities, as the same relates to the business of Southwest
Art Magazine, is then at least 1.5 to 1.0. The foregoing
redemption shall be upon notice duly given as hereinafter
provided, by paying or providing for the payment in cash of a
discounted redemption price as described in paragraph 4 below.
On each of October 15, 1993, October 15, 1994, and October 15,
1995, the corporation shall redeem thirty-three and one-third
(33 1/3%) percent, fifty (50%) percent and one hundred (100%)
percent, respectively, of the then outstanding Preferred
Stock, upon notice duly given as hereinafter provided, by
paying or providing for the payment in cash of a redemption
price of $87.05 per share; provided, however, that the
corporation shall not be required to redeem any Preferred
Stock on October 15, 1993 and October 15, 1994, unless the
-2-
<PAGE>
corporation, after giving effect to such redemption, has
Excess Cash Flow as determined on the last day of the month
preceding such redemption date. The foregoing notwithstanding,
on October 15, 1995 the corporation shall redeem, if it has
not already done so, all the remaining outstanding shares of
the Preferred Stock, out of funds of the corporation which are
legally available therefor, upon notice duly given as
hereinafter provided, by paying or providing for the payment
of cash of a redemption price of $87.05 per share. In
addition, the corporation shall pay for each share to be
redeemed an amount equal to the dividends accrued thereon but
not paid for the period from the date on which dividends on
such shares became cumulative to and including the date fixed
for redemption. Such accrual shall be computed without
interest.
Subject to the limitations prescribed in this Article
FOURTH and any further limitations which may from time to time
be prescribed by the Board of Directors in accordance
herewith, the holders of Common Stock shall be entitled to
receive dividends on the Common Stock, when, as and if
declared by the Board of Directors, out of the funds of the
corporation which are legally available therefor.
At least ten (10) days prior notice of every such
redemption of the Preferred Stock shall be mailed to the
holders of record of the Preferred Stock to be redeemed at
their last known post office addresses as shown by the
corporation's records. Each such notice shall specify the date
fixed for redemption and the place where payment of the
redemption price is to be made upon surrender for cancellation
of the certificates representing shares called for redemption.
No failure to mail such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings
for such redemption except as to any holder to whom the
corporation has failed to mail said notice or except as to any
holder whose
-3-
<PAGE>
notice was defective. Any notice which was mailed in the
manner herein provided shall be conclusively presumed to have
been duly given whether or not the holder receives the notice.
In case of the redemption of only a part of the
Preferred Stock outstanding at he time, the shares of the
Preferred Stock to be redeemed shall be selected either pro
rata or, if required by the terms of any agreement with the
corporation, in the manner prescribed by such agreement. The
Board of Directors shall have full power and authority to
prescribe the manner in which and, subject to the provisions
and limitations herein contained, the terms and conditions
upon which such Preferred Stock shall be redeemed from time to
time.
If the aforesaid notice of redemption shall have been
duly given and if, on or before the redemption date designated
in such notice, the corporation shall have deposited in trust
with any bank or trust company having a capital, surplus and
undivided profits aggregating at least Five Million
($5,000,000) Dollars, named in such notice, all funds
necessary for the redemption of the shares of the Preferred
Stock so called for redemption, then from and after the
redemption date designated in such notice and notwithstanding
that any certificates for such shares shall not have been
surrendered for cancellation (a) all shares of such Preferred
Stock so called for redemption shall no longer be deemed to be
outstanding, and (b) all rights with respect to such shares of
the Preferred Stock called for redemption shall forthwith
cease and terminate except only the right of the holders
thereof to receive the moneys so deposited, but without
interest. Any interest accrued on such funds shall be paid to
the corporation from time to time. Any funds so set aside or
deposited, as the case may be, and unclaimed at the end of six
(6) years from such redemption date shall be released and/or
repaid to the corporation, and such holders of such Preferred
Stock so called for redemption
-4-
<PAGE>
as shall not have received the redemption price prior to such
release and/or payment to the corporation shall look only to
the corporation for payment of the redemption price.
3. Liquidation, Dissolution, Winding Up, Sale of Assets. In
the event of any liquidation, dissolution or winding up of the
affairs of the corporation, whether voluntary or involuntary,
or in the event of the sale of substantially all of the assets
of the corporation or any wholly-owned subsidiary, the holders
of all of the then outstanding shares of the Preferred Stock
shall be entitled to receive, out of the net assets of the
corporation, after payment or provision for payment of the
debts and other liabilities of the corporation, an amount in
cash equal to the discounted redemption price per share as
described in paragraph 4 below, and no more, before any
distribution or payment shall be made to the holders of Common
Stock. In case the net assets of the corporation available for
distribution are insufficient to pay to holders of all
outstanding shares of the Preferred Stock the full amount to
which they are entitled, the entire net assets of the
corporation remaining shall be distributed ratably to the
holders of all outstanding shares of the Preferred Stock in
proportion to the full amounts which would be payable on such
distribution if all amounts payable were paid in full. Neither
the consolidation nor merger of the corporation into or with
any other corporation or corporations shall be deemed a
liquidation, dissolution or winding up of the affairs of the
corporation within the meaning of any of the provisions of
this subparagraph (3), unless such consolidation or merger
would be deemed a sale of the business of Southwest Art
Magazine.
4. Discounted Redemption Price.
Discounted redemption price as contemplated herein for any
redemption of shares of Preferred Stock prior to October 15,
1993 shall mean an amount equal to $87.05 per share discounted
back on an annual basis from October 15, 1993
-5-
<PAGE>
to the date of redemption by Prime plus 1%, multiplied by the
number of shares then being redeemed.
5. Consideration for Shares. The authorized but unissued
shares of Common Stock and the authorized but unissued shares
of the Preferred Stock may be issued for such consideration,
not less than the par value thereof, as may be fixed from time
to time by the Board of Directors.
6. Voting. Except as otherwise determined pursuant to
authority of the Board of Directors as hereinbefore provided,
or by the General corporation Law of the State of Delaware,
all voting rights shall be vested exclusively in the holders
of the outstanding shares of Common Stock and each such holder
shall be entitled to one vote per share for all purposes for
each share of Common Stock held of record by such holder.
Except as otherwise determined pursuant to authority of
the Board of Directors as hereinbefore provided, or by the
General Corporation Law of the State of Delaware, the holders
of the Preferred Stock shall not be entitled to vote for any
purpose nor shall they be entitled to notice of meetings of
stockholders."
THIRD: The aforesaid amendment was duly adopted by the sole stockholder
and sole director of the corporation in accordance with the applicable
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: This Certificate of Amendment is executed by the sole stockholder
of the corporation in accordance with the applicable provisions of Section 103
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate has been signed the 14th day of
October, 1987, and the statements contained therein are affirmed as true under
penalties of perjury.
CBH HOLDINGS, INC.
By: /s/ Clay B. Hall
--------------------------------
Clay B. Hall, Sole Stockholder
-6-
<PAGE>
Exhibit 3.162
BY-LAWS
OF
CBH HOLDINGS, INC.
(A Delaware Corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock
in the corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a vice-president and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all of the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate theretofore issued by it,
alleged to have been lost, stolen, or destroyed, and the Board of Directors may
require the owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
<PAGE>
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of
-2-
<PAGE>
Directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting. In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining the stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by the General Corporation Law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by the General Corporation Law,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the day
on which the Board of Directors adopts the resolution taking such prior action.
In order that the corporation may determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of stockholders or
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<PAGE>
a waiver thereof or to participate or vote thereat or to consent or dissent in
writing in lieu of a meeting, as the case may be, the term "share" or "shares"
or "share of stock" or "shares of stock" or "stockholder" or "stockholders"
refers to an outstanding share or shares of stock and to a holder or holders of
record of outstanding shares of stock when the corporation is authorized to
issue only one class of shares of stock, and said reference is also intended to
include any outstanding share or shares of stock and any holder or holders of
record of outstanding shares of stock of any class upon which or upon whom the
certificate of incorporation confers such rights where there are two or more
classes or series of shares of stock or upon which or upon whom the General
Corporation Law confers such rights notwithstanding that the certificate of
incorporation may provide for more than one class or series of shares of stock,
one or more of which are limited or denied such rights thereunder; provided,
however, that no such right shall vest in the event of an increase or a decrease
in the authorized number of shares of stock of any class or series which is
otherwise denied voting rights under the provisions of the certificate of
incorporation, except as any provision of law may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the organization of
the corporation, and each successive annual meeting shall be held on a date
within thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall
be given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The
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<PAGE>
notice of a special meeting shall in all instances state the purpose or purposes
for which the meeting is called. The notice of any meeting shall also include,
or be accompanied by, any additional statements, information, or documents
prescribed by the General Corporation Law. Except as otherwise provided by the
General Corporation Law, a copy of the notice of any meeting shall be given,
personally or by mail, not less than ten days nor more than sixty days before
the date of the meeting, unless the lapse of the prescribed period of time shall
have been waived, and directed to each stockholder at his record address or at
such other address which he may have furnished by request in writing to the
Secretary of the corporation. Notice by mail shall be deemed to be given when
deposited, with postage thereon prepaid, in the United States Mail. If a meeting
is adjourned to another time, not more than thirty days hence, and/or to another
place, and if an announcement of the adjourned time and/or place is made at the
meeting, it shall not be necessary to give notice of the adjourned meeting
unless the directors, after adjournment, fix a new record date for the adjourned
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice signed by him before or after the time stated therein.
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the 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. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the
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<PAGE>
president, a Vice-President, or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman of the meeting shall appoint a secretary of
the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
- INSPECTORS The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
- QUORUM. The holders of a majority of the outstanding shares of
stock shall constitute a quorum at a meeting of stockholders for the transaction
of any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
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<PAGE>
- VOTING. Each share of stock shall entitle the holder thereof to
one vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be authorized by a majority of
the votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these By-Laws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of one person. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be at least one. The
number of directors may be increased or decreased by action of the stockholders
or of the directors.
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<PAGE>
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. In the
interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal of one
or more directors and for the filling of any vacancy in that connection, newly
created directorships and any vacancies in the Board of Directors, including
unfilled vacancies resulting from the removal of directors for cause or without
cause, may be filled by the vote of a majority of the remaining directors then
in office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any member of
a committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of,
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<PAGE>
any regular or special meeting of the directors need be specified in any written
waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute
a quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
except as otherwise provided by the General Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these By-Laws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of
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<PAGE>
the Board of Directors in the management of the business and affairs of the
corporation with the exception of any authority the delegation of which is
prohibited by Section 141 of the General Corporation Law, and may authorize the
seal of the corporation to be affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the
Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an
Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the Board, if any, need be a director. Any number of offices may be held by the
same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each
officer shall be chosen for a term which shall continue until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
his successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and
perform such duties in the management and operation of the corporation as shall
be prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office except
to the extent that such resolutions may be inconsistent therewith. The Secretary
or an Assistant Secretary of the corporation shall record all of the proceedings
of all meetings and actions in writing of stockholders, directors, and
committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to him. Any officer may
be removed, with or without cause, by the Board of Directors. Any vacancy in any
office may be filled by the Board of Directors.
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<PAGE>
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BY-LAWS
Subject to the provisions of the certificate of incorporation and
the provisions of the General Corporation Law, the power to amend, alter or
repeal these By-Laws and to adopt new By-Laws may be exercised by the Board of
Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true and correct copy
of the By-Laws of CBH Holdings, Inc., a Delaware corporation, as in effect on
the date hereof.
WITNESS my hand and the seal of the corporation.
Dated: October 13, 1987
/s/ Clay B. Hall
--------------------------------
Clay B. Hall, Secretary
(SEAL)
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<PAGE>
Exhibit 3.163
JIM EDGAR
Secretary of State
State of Illinois
ARTICLES OF INCORPORATION
- ---------------------------------- -----------------------
Submit in Duplicate This Spec. For Use By
Secretary of State
Payment must be made by Certified
Check, Cashier's Check, Illinois Date 1-19-89
Attorney's Check, Illinois C.P.A.'s
Check or Money Order, Payable to License Fee $ .50
"Secretary of State" Franchise Tax $ 25.00
Filing Fee $ 75.00
DO NOT SEND CASH --------
- ---------------------------------- Clerk 100.50
----------------------
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned incorporator(s) hereby adopt the following Articles of
Incorporation.
ARTICLE ONE The name of the corporation is VEGETARIAN TIMES, INC.
----------------------------------
(Shall contain the word
"corporation", "company",
"incorporated",
-----------------------------------------------------------------
"limited", or an abbreviation thereof)
ARTICLE TWO The name and address of the initial registered agent and its
registered office are:
Registered Agent
Thomas Robert Leavens
-------------------------------------------------------
First Name Middle Name Last Name
Registered Office
500 West Madison 40th Floor
-------------------------------------------------------
Number Street Suite # (A.P.0.
Box alone is not
acceptable)
Chicago 60606 Cook
-------------------------------------------------------
City Zip Code County
ART1CLE THREE The purpose or purposes for which the corporation is organized
are:
if not sufficient space to cover the point add one or more
sheets of this size
The purposes for which the Corporation is organized are to engage in the
transaction of any or all lawful activities for which corporations may be
incorporated under the Illinois Business Corporation Act of 1983.
ARTICLE FOUR Paragraph 1: The authorized shares shall be:
Class *Par Value per share Number of shares authorized
-----------------------------------------------------------------
Common n/a 10,000
-----------------------------------------------------------------
Preferred $100 1,000
-----------------------------------------------------------------
-----------------------------------------------------------------
Paragraph 2: The preferences, qualifications, limitations,
restrictions and the special or relative rights in respect of
the shares of each class are:
if not sufficient space to cover the point add one or more
sheets of this size
The Preferred shares shall be subject to the preferences, qualifications,
limitations, restrictions and the special or relative rights as set forth in the
additional sheets attached hereto:
ARTICLE FIVE The number of shares to be issued initially, and the consideration
to be received by the corporation therefor are:
*Par Value Number of shares Consideration to be
Class per share proposed to be Issued received therefor
-----------------------------------------------------------------
Common n/a 100 $ 100
-----------------------------------------------------------------
$
-----------------------------------------------------------------
$
-----------------------------------------------------------------
$
-----------------------------------------------------------------
TOTAL $ 100
-------------------
* A declaration as to a "par value" is optional. This space may be marked
"n/a" when no reference to a par value is
<PAGE>
ARTICLE SIX OPTIONAL
The number of directors constituting the initial board of directors of the
corporation is _________, and the names and addresses of the persons who are to
serve as directors until the first annual meeting of shareholders or until their
successors be elected and qualify are:
Name Residential Address
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
ARTICLE SEVEN OPTIONAL
(a) It is estimated that the value of all property $ ___________
to be owned by the corporation for the
following year wherever located will be:
(b) It is estimated that the value of the property $ ___________
to be located within the State of Illinois
during the following year will be:
(c) It is estimated that the gross amount of $ ___________
business which will be transacted by the
corporation during the following year will be:
(d) It is estimated that the gross amount of $ ___________
business which will be transacted from places
of business in the State of Illinois during the
following year will be:
ARTICLE EIGHT OTHER PROVISIONS
Attach a separate sheet of this size for any other provision to be included in
the Articles of Incorporation, e.g., authorizing pre-emptive rights; denying
cumulative voting; regulating internal affairs; voting majority requirements;
fixing a duration other than perpetual; etc.
NAMES & ADDRESSES OF INCORPORATORS
The undersigned incorporator(s) hereby declare(s), under penalties of
perjury, that the statements made in the foregoing Articles of Incorporation
are true.
Dated January 18, 1989
Signatures and Names Post Office Address
1. /s/ Paul Obis, Jr. 1. 218 South Elmwood
----------------------------- ----------------------------------
Signature Street
Paul Obis, Jr. Oak Park, IL 60302
----------------------------- ----------------------------------
Name (Please Print) City/Town State Zip
2. /s/ Clare Obis 2. 218 South Elmwood
----------------------------- ----------------------------------
Signature Street
Clare Obis Oak Park, IL 60302
----------------------------- ----------------------------------
Name (Please Print) City/Town State Zip
3. 3.
----------------------------- ----------------------------------
Signature Street
----------------------------- ----------------------------------
Name (Please Print) City/Town State Zip
(Signatures must be in ink on original document. Carbon copy, xerox or rubber
stamp signatures may only be used on conformed copies.)
NOTE: If a corporation acts as incorporator, the name of the corporation and the
state of incorporation shall be shown and the execution shall be by its
President or Vice-President and verified by him, and attested by its Secretary
or an Assistant Secretary.
FILED
JAN 19 1989
JIM EDGAR
Secretary of State
Form BCA-2.10
File No. ____________
================================================================================
ARTICLES OF INCORPORATION
FEE SCHEDULE
The following fees are required to be paid at the time of issuing the
Certificate of Incorporation: FILING FEE $75.00; INITIAL LICENSE FEE of 1/20th
of 1% of the Consideration to be received or initial issued shares (See Art. 5).
MINIMUM 50; INITIAL FRANCHISE TAX of 1/10 of 1% of the consideration to be
received for initial issued shares (see Art. 5). MINIMUM $25.00.
EXAMPLES OF TOTAL DUE
Consideration to TOTAL
be Received Due*
==============================
up to $1,000 $100.50
------------------------------
$ 5,000 $102.50
------------------------------
$ 10,000 $105.00
------------------------------
$ 25,000 $112.50
------------------------------
$ 50,000 $150.00
------------------------------
$100,000 $225.0O
------------------------------
includes Filing Fee + License Fee + Franchise Tax
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone: (217) 782-6961
================================================================================
<PAGE>
Continuation of Article Four Paragraph 2
A. The holders of preferred stock shall not be entitled to vote, except as
hereinafter provided and except as otherwise provided by law. Furthermore,
no reclassification of the shares of the Corporation or reorganization of
the Corporation in any manner provided by law shall be valid unless:
(a) all of the holders of preferred shares, voting as a class, approve;
and
(b) provision is made for payment of any and all aggregate declared but
unpaid dividends then in arrears to the holders of preferred shares
in cash or property.
B. The preferred shares shall entitle the holders thereof to receive out of
the surplus of the Corporation a non-cumulative dividend at the rate of
10% per annum, payable annually, before any dividend shall be set apart or
paid on any common shares for such years; and the remainder, if any, of
the surplus or net earnings applicable to the payment of dividends shall
be distributed as dividends among the holders of the common shares, as and
when the Board of Directors shall determine. In no event shall any holder
of any common shares receive any dividends unless the aforesaid 10%
dividends have been paid on each preferred share.
C. In case of any liquidation or distribution of assets of the Corporation,
the holders of preferred shares shall be paid the par amounts of such
preferred shares plus an additional 5% of the par amount, together with
any and all aggregate declared, but unpaid, dividends then in arrears to
the holders of preferred shares, before any amount shall be payable to the
holders of the common shares; and after the payment of all of the
aforesaid amounts to all the holders of the preferred shares, the balance
of the assets and funds of the Corporation, if any, shall be distributed
wholly among the holders of the common shares.
The terms "liquidation" or "distribution" in this paragraph C shall
include without limitation any winding up or liquidation of the
Corporation, any bankruptcy or reorganization of the Corporation (whether
private or by State, Federal or other law), any merger or consolidation of
the Corporation with any other corporation, corporations or other entity
or entities (other than a merger that constitutes a mere change in the
state of incorporation), the sale, bulk sale, lease, exchange or
disposition of assets of the Corporation not in
<PAGE>
the usual course of business, or any reduction of the capital of the
Corporation resulting in any distribution of its assets to its
shareholders other than preferred shareholders.
D. The Corporation shall have the right to redeem all of the preferred stock,
or any number of the shares thereof, issued and outstanding at any time by
paying to the holders thereof a sum equal to the par value of the
preferred shares plus an additional 5% of that par value.
In the case of the redemption of a part only of the preferred stock at the
time outstanding, the Corporation shall select pro rata the shares to be
redeemed. Notice of the Corporation's election to redeem any preferred
stock shall be given by mailing a copy of such notice, postage prepaid,
not less than 20 days nor more than 40 days prior to the date designated
therein as the date of such redemption, to the holders of record of the
preferred stock to be redeemed, addressed to them at their respective
addresses appearing on the books of the Corporation.
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<PAGE>
Exhibit 3.164
BY-LAWS
OF
VEGETARIAN TIMES, INC.
ARTICLE I
OFFICES AND RECORDS
Section 1.1 Registered Office. The Corporation shall continuously
maintain in the State of Illinois a registered office and a registered
agent whose business office shall be the registered office.
Section 1.2 Other Offices. The Corporation may have such other
offices, either within or without the State of Illinois, as the Board of
Directors may designate or as the business of the Corporation may from
time to time require.
Section 1.3 Corporate Records -- Examination by Shareholders. The
Corporation shall keep correct and complete books and records of account
and shall also keep minutes of the proceedings of its shareholders and
Board of Directors and committees thereof. The Corporation also shall keep
at its registered office or principal place of business in the State of
Illinois, or at the office of a transfer agent or registrar in the State
of Illinois, a record of its shareholders, giving the names and addresses
of all shareholders and the number and class of shares held by each.
Upon the written request of any shareholder of the Corporation, the
Corporation shall mail to such shareholder within fourteen (14) days after
receipt of such request a balance sheet as of the close of its latest
fiscal year and a profit and loss statement for such fiscal year; provided
that if such request is received by the Corporation before such financial
statements are available, the Corporation shall mail such financial
statements within fourteen (14) days after they become available, but in
any event within one hundred twenty (120) days after the close of its
latest fiscal year.
Any person who is a shareholder of record of the Corporation shall
have the right to examine, in person or by agent, at any reasonable time
or times, the Corporation's books and records of account, minutes, voting
trust agreements filed with the Corporation, and the record of
shareholders, and to make extracts therefrom, but only for a proper
purpose. In order to
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exercise this right, a shareholder must make written demand upon the
Corporation, stating with particularity the records sought to be examined
and the purpose therefor.
ARTICLE II
SHAREHOLDERS
Section 2.1 Annual Meeting. An annual meeting of the shareholders
shall be held during the month of September of each year for the purpose
of electing the directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday, such meeting shall be held on the next
succeeding business day.
Section 2.2 Special Meetings. Special meetings of the shareholders
may be called by the President, by the Board of Directors, or by the
holders of not less than one-third of all the outstanding shares entitled
to vote on the matter for which the meeting is called, for the purpose or
purposes stated in the call of the meeting. Special meetings of the
shareholders may also be called by such other officers or persons as
provided in the Articles of Incorporation or these By-laws.
Section 2.3 Time and Place of Meeting. The Board of Directors may
designate any time and place as the time and place of meeting for any
annual or special meeting of shareholders called by the Board of
Directors. If no designation is made, or if a special meeting is otherwise
called, the place of the meeting shall be at the main business office of
the Corporation in the State of Illinois.
Section 2.4 Notice of Meeting; Waiver. Written or printed notice
stating the place, day, and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called,
shall be delivered not less than ten (10) nor more than sixty (60) days
before the date of the meeting, or in the case of a merger, consolidation,
share exchange, dissolution, or sale, lease, or exchange of assets, not
less than twenty (20) nor more than sixty (60) days before the date of the
meeting, either personally or by mail, by or at the direction of the
President, or the Secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered when deposited in
the United States mail, with postage thereon prepaid, addressed to the
shareholder at his address as it appears on the records of the
Corporation. Except
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as provided herein, when a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken.
Attendance at any meeting shall constitute waiver of notice thereof unless
the person at the meeting objects to the holding of the meeting because
proper notice was not given.
Section 2.5 Fixing Record Date. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or to receive payment of
any dividend, or other distribution or allotment of any rights, or to
exercise any rights in respect of any change, conversion or exchange of
shares or for the purpose of any other lawful action, the Board of
Directors of the Corporation may fix in advance a record date for such
determination of shareholders, which shall not be more than sixty (60)
days and, for a meeting of shareholders, not less than ten (10) days, or
in the case of a merger, consolidation, share exchange, dissolution or
sale, lease or exchange of assets, not less than twenty (20) days,
immediately preceding such meeting. If no record date is fixed, the record
date for the determination of shareholders for any purpose shall be the
date on which notice of the meeting is mailed or the date the Board of
Directors adopts the resolution relating thereto. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting.
Section 2.6 Voting Lists. The officer or agent having charge of the
transfer books for shares of the Corporation shall make, within twenty
(20) days after the record date for a meeting of shareholders or ten (10)
days before such meeting, whichever is earlier, a complete list of
shareholders entitled to vote at such meeting, arranged in alphabetical
order, showing the address of and the number of shares registered in the
name of the shareholder, which list, for a period of ten (10) days prior
to such meeting, shall be kept on file at the registered office of the
Corporation and shall be open to inspection by any shareholder and to
copying at the shareholder's expense, for any proper purpose at any time
during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to
inspection by any shareholder during the whole time of the meeting. The
original share ledger or transfer book, or a duplicate thereof kept in the
State of Illinois, shall be prima facie evidence as to who are the
shareholders entitled to examine such list-or share ledger or transfer
book or to vote at any meeting of shareholders.
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Section 2.7 Quorum. A majority of the outstanding shares of the
Corporation entitled to vote on a matter, represented in person or by
proxy, shall constitute a quorum at any meeting of shareholders for
consideration of such matter at a meeting of shareholders; provided that
if less than a majority of the outstanding shares are represented at such
meeting, a majority of the shares so represented may adjourn the meeting
at any time without further notice. In no event shall a quorum consist of
less than one-third of the outstanding shares entitled so to vote. If a
quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on a matter shall be the
act of the shareholders, unless the vote of a greater number or voting by
classes is required by the Illinois Business Corporation Act of 1983, the
Articles of Incorporation or these By-laws. At any adjourned meeting at
which a quorum shall be present, any business may be transacted which
might have been transacted at the original meeting. Withdrawal of
shareholders from any meeting shall not cause failure of a duly
constituted quorum at that meeting. The Articles of Incorporation may
require any number of a percent greater than a majority up to and
including a requirement of unanimity to constitute a quorum.
Section 2.8 Voting of Shares. Each outstanding share, regardless of
class, shall be entitled to one vote upon each matter submitted to vote at
a meeting of shareholders, except as otherwise provided in the Articles of
Incorporation of the Corporation.
Section 2.9 Noncumulative Voting. Every shareholder shall have the
right to vote the number of shares owned by such shareholder for as many
persons as there are directors to be elected, but shall not have the right
to cumulate such votes.
Section 2.10 Voting of Shares by Certain Holders. Shares registered
in the name of another corporation, domestic or foreign, may be voted by
any officer, agent, proxy or other legal representative authorized to vote
such shares under the law of incorporation of such corporation or as the
by-laws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation may determine.
A corporation may treat the president or other person holding the
position of chief executive officer of such other corporation as
authorized to vote such shares, together with any other person indicated
and any other holder of an office indicated by the corporate shareholder
to the corporation as a person or an office authorized to vote such
shares. Such persons and offices indicated shall be registered by the
Corporation on the transfer books for shares and included in any voting
list
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prepared in accordance with Section 7.30 of the Illinois Business
Corporation Act of 1983.
Shares registered in the name of a deceased person, a minor ward or
a person under legal disability may be voted by his administrator,
executor, or court appointed guardian, either in person or by proxy
without a transfer of such shares into the name of such administrator,
executor, or court appointed guardian. Shares registered in the name of a
trustee may be voted by him or her, either in person or by proxy.
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares
so transferred.
Shares of its own stock belonging to the Corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but
shares of its own stock held by it in a fiduciary capacity may be voted
and shall be counted in determining the total number of outstanding shares
at any given time.
Section 2.11 Proxies. Each shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act
for him by proxy. No proxy shall be valid after eleven (11) months from
the date of its execution, unless otherwise provided in the proxy.
Section 2.12 Informal Action by Shareholders. Any action required to
be taken at a meeting of the shareholders, or any other action which may
be taken at a meeting of the shareholders, may be taken without a meeting
and without a vote if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding shares having not
less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote
thereon were present and voting.
Prompt notice of the taking of the corporation action without a
meeting by less than unaminious written consent shall be given in writing
to those shareholders who have not consented in writing. In the event that
the action which is consented to is such as would have required the filing
of a certificate under any other section of the Illinois Business
Corporation Act of 1983 other than Section 7.10, if such action had been
voted on by the shareholders at a meeting thereof, the certificate filed
under such other section of Illinois Business Corporation Act of 1983,
shall state, in lieu of any statement required by such section
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concerning any vote of shareholders, that written consent has been given
in accordance with the provisions of this Section 7.10 of the Illinois
Business Corporation Act of 1983, and that written notice has been given
as provided in said Section 7.10.
Section 2.13 Voting by Ballot. Voting on any question or in any
election may be by voice unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
Section 2.14 Inspectors. At any meeting of shareholders, the
chairman of the meeting may, or upon the request of any shareholder shall,
appoint one or more persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity
and effect of proxies; count all votes and report the results; and do such
other acts as are proper to conduct the election and voting with
impartiality and fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or
by a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority
shall be the report of the inspectors. The report of the inspector or
inspectors on the number of shares represented at the meeting and the
results of the voting shall be prima facie evidence thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors.
Section 3.2 Number, Tenure and Qualifications. The number of
directors of the Corporation shall within the range of two (2) at the
minimum and seven (7) at the maximum. The directors shall hold office
until the next annual meeting of shareholders or, thereafter, until their
successors shall have been elected and qualified. Directors need not be
residents of Illinois or shareholders of the Corporation. The number of
directors may be increased or decreased from time to time by the amendment
of this section, but no decrease shall have the effect of shortening the
term of any incumbent director. A director may resign at any time by
giving written notice to the board of directors, its chairman, or to the
president or secretary of the corporation. A
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resignation is effective when the notice is given unless the notice
specifies a future date. The pending vacancy may be filled before the
effective date, but the successor shall not take office until the
effective date.
Section 3.3 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this By-law immediately
after, and at the same place, as the annual meeting of shareholders. The
Board of Directors may, by resolution, provide the time and place for the
holding of additional regular meetings without other notice than such
resolution.
Section 3.4 Special Meetings. Special meetings of the Board of
Directors may be called at the request of the President or any one or more
director. The person or persons authorized to call special meetings of the
Board of Directors may fix any place as the place for holding any special
meeting of the Board of Directors called by them.
Section 3.5 Notice; Waiver. Notice of any special meeting shall be
given at least two (2) days previous thereto by written notice to each
director at his business address, by mail, telegram, or personal delivery.
If mailed, such notice shall be deemed to be delivered when deposited in
the United States mail so addressed, with postage thereon prepaid. If by
telegram, such notice shall be deemed delivered when the telegram is
delivered to the telegraph company. Attendance of a director at any
meeting shall constitute a waiver of notice of such meeting except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting.
Section 3.6 Quorum. A majority of the number of directors fixed by
these By-laws, or in the absence of a By-law fixing the number of
directors, the number stated in the Articles of Incorporation or named by
the incorporators, shall constitute a quorum for transaction of business
at any meeting of the Board of Directors unless a greater number is
required by the Articles of Incorporation or these By-laws, provided that
if less than a majority of such directors is present at said meeting, a
majority of the directors present may adjourn the meeting at any time
without further notice. If the Corporation has a variable range board of
directors, a quorum shall consist of a majority of the directors then in
office, but not less than a majority of the minimum number of directors
specified for the variable range of the Board unless the Articles of
Incorporation or these By-laws specify a greater number. The act of the
majority of the directors present at a meeting at which a quorum is
present shall
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be the act of the Board of Directors, unless the act of a greater number
is required by the Illinois Business Corporation Act of 1983, the Articles
of Incorporation or these By-laws.
Section 3.7 Vacancies. Any vacancy occurring in the Board of
Directors and any directorship to be filled by reason of an increase in
the number of directors may be filled by election at an annual meeting or
at a special meeting of shareholders called for that purpose. A director
elected by the shareholders to fill a vacancy shall hold office for the
balance of the term for which he was elected. A director appointed to fill
a vacancy shall serve until the next meeting of shareholders at which
directors are to be selected.
Section 3.8 Informal Action. Unless specifically prohibited by the
Articles of Incorporation or these By-laws, any action required by the
Illinois Business Corporation Act of 1983 to be taken at a meeting of the
Board of Directors, or any other action which may be taken at a meeting of
the Board of Directors or any committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall
be signed by all the directors entitled to vote with respect to the
subject matter thereof, or by all the members of the committee, as the
case may be. Any such consent signed by all the directors or all the
members of a committee shall have the same effect as an unanimous vote.
The consent shall be evidenced by one or more written approvals,
each of which sets forth the action taken and bears the signature of one
or more directors. All the approvals evidencing the consent shall be
delivered to the Secretary to be filed with the corporate records. The
action taken shall be effective when all the directors have approved the
consent unless the consent specifies a different effective date.
Section 3.9 Telephonic Meetings. Unless specifically prohibited by
the Articles of Incorporation or these By-laws, members of the Board of
Directors or of any committee of the Board of Directors may participate in
and act at any meeting of such board or committee through the use of a
telephone conference or other communications equipment by means of which
all persons participating in the meeting can hear each other.
Participation in such meetings shall constitute attendance and presence in
person at the meeting of the person or persons so participating.
Section 3.10 Committees. The Board of Directors, by a resolution
adopted by a majority of the number of directors fixed by the By-laws may
create one or more committees of the Board of Directors and may designate
two or more directors to constitute such a committee, which committee, to
the extent provided in such resolution, shall have and exercise all of the
authority of the
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Board of Directors in the management of the Corporation, except as
otherwise provided in the Illinois Business Corporation Act of 1983.
Vacancies in the membership of any committee shall be filled by the Board
of Directors at a regular or special meeting of the Board of Directors.
Each committee shall keep regular minutes of its proceedings and report
the same to the Board when requested.
Unless the appointment by the Board of Directors requires a greater
number, a majority of any committee shall constitute a quorum, and a
majority of a quorum is necessary for committee action. A committee may
act by unanimous consent in writing without a meeting and, subject to the
provision of these By-laws or action by the Board of Directors, any
committee by majority vote of its members shall determine the time and
place of meetings and the notice required therefor.
Section 3.11 Presumption of Assent. A director of the Corporation
who is present at a meeting of the Board of Directors at which action on
any corporate matter is taken shall be conclusively presumed to have
assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to
the Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 3.12 Compensation. The Board of Directors, by the
affirmative vote of a majority of directors then in office, and
irrespective of any personal interest of any of its members, shall have
authority to establish reasonable compensation of all directors for
services to the Corporation as directors, officers, or otherwise,
notwithstanding the provisions of Section 8.60 of the Illinois Business
Corporation Act of 1983. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each
meeting of the Board. No such payment previously mentioned in this section
shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.13 Removal of Directors. Shareholders at a meeting may
remove one or more directors, with or without cause, by the affirmative
vote of the holders of two-thirds of the outstanding shares then entitled
to vote at an election of directors, except as follows:
(1) No director shall be removed at a meeting of the shareholders
unless the notice of such meeting shall state that a purpose of the
meeting is to vote upon the removal of one or more
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directors named in the notice. Only the named director or directors may be
removed at such meeting.
(2) If the Corporation has cumulative voting and less than the
entire Board is to be removed, no director may be removed, with or without
cause, if the votes cast against his removal would be sufficient to elect
him if then cumulatively voted at an election of the entire Board of
Directors.
(3) If a director is elected by a class or series of shares, he may
be removed only by the shareholders of that class or series.
ARTICLE IV
OFFICERS
Section 4.1 Number. The officers of the Corporation shall be a
President, a Secretary, and such other officers as may be elected or
appointed by the Board of Directors. Any two or more offices may be held
by the same person. One officer shall have the authority to certify the
By-laws, resolutions of the shareholders and Board of Directors and
committees thereof, and other documents of the Corporation as true and
correct copies thereof.
Section 4.2 Election and Term of Office. The officers of the
Corporation shall be elected or appointed annually by the Board of
Directors at the regular meeting of the Board of Directors or at a meeting
held in lieu thereof. Vacancies may be filled or new offices created and
filled at any meeting of the Board of Directors. Except as provided
herein, each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his death, resignation or
removal. Election of an officer shall not of itself create any contract
right: of that officer against the Corporation.
Section 4.3 Removal. Any officer elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation would be served thereby,
but such removal shall be without prejudice to the contract rights; if
any, of the person so removed.
Section 4.4 President. The President shall be the principal
executive officer of the Corporation. Subject to the direction and control
of the Board of Directors, he shall be in charge of the business of the
Corporation; he shall see that the resolutions and directions of the Board
of Directors are carried into
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effect except in those instances in which that responsibility is
specifically assigned to some other person by the Board of Directors; and,
in general, he shall discharge all duties incident to the office of
President and such other duties as may be prescribed by the Board of
Directors from time to time. He shall preside at all meetings of the
shareholders and of the Board of Directors unless these By-laws provide
that a Chairman of the Board or other officer shall preside. Except in
those instances in which the authority to execute is expressly delegated
to another officer or agent of the Corporation or a different mode of
execution is expressly prescribed by the Board of Directors or these
By-laws, he may execute for the Corporation certificates of its shares,
and any contracts, deeds, mortgages, bonds, or other instruments which the
Board of Directors has authorized to be executed, and he may accomplish
such execution either under or without the seal of the Corporation and
either individually or with the Secretary, any Assistant Secretary, or any
other officer thereunto authorized by the Board of Directors, according to
the requirements of the form of the instrument. He may vote all securities
which the Corporation is entitled to vote except as and to the extent the
Corporation shall be vested in a different officer or agent of the
Corporation by the Board of Directors.
Section 4.5 Vice Presidents. The Vice President (or if there be more
than one, the Vice Presidents) shall assist the President in the discharge
of his duties as the President may direct and shall perform such other
duties as from time to time may be assigned to him by the President or by
the Board of Directors. In the absence of the President or in the event of
his death, inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the
order of their seniority as determined from time to time by the Board of
Directors) shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon
the President. Except in those instances in which the authority to execute
is expressly delegated to another officer or agent of the Corporation or a
different mode of execution is expressly prescribed by the Board of
Directors or these By-laws, the Vice President (or each of them if there
are more than one) may execute for the Corporation certificates for its
shares and any contracts, deeds, mortgages, bonds or other instruments,
which the Board of Directors has authorized to be executed, and he may
accomplish such execution either under or without the seal of the
Corporation and either individually or with the Secretary, any Assistant
Secretary, or any other officer thereunto authorized by the Board of
Directors, according to the requirements of the form of the instrument.
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Section 4.6 Secretary. The Secretary shall (a) keep the minutes of
the shareholders' and the Board of Directors' meetings in one or more
books provided for that purpose; (b) see that all notices are duly given
in accordance with the provisions of these By-laws or as required by law;
(c) be custodian of the corporate records and of the seal of the
Corporation, if such a seal shall exist; (d) keep a register of the post
office address of each shareholder which shall be furnished to the
Secretary by each such shareholder; (e) sign with the President or a Vice
President, or any other officer thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, the issuance of
which shall have been authorized by the Board of Directors and any
contracts, deeds, mortgages, bonds, or other instruments which the Board
of Directors has authorized to be executed, according to the requirements
of the form of the instrument, except when a different mode of execution
is expressly prescribed by the Board of Directors or these By-laws; (f)
have general charge of the stock transfer books of the Corporation; and
(h) in general perform all duties incident to the office of Secretary and
such other duties from time to time may be assigned to him by the
President or the Board of Directors.
Section 4.7 Treasurer. The Treasurer shall be the principal
accounting and financial officer of the Corporation. He shall (a) have
charge and custody of and be responsible for all funds and securities of
the Corporation, (b) receive and give receipts for moneys due and payable
to the Corporation from any source whatsoever, and deposit all such moneys
in the name of the Corporation in such banks, trust companies or other
depositaries as shall be selected by the Board of Directors, (c) disburse
the funds of the Corporation as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and (d) in general perform
all of the duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the President or the
Board of Directors. If required by the Board of Directors, the Treasurer
shall give a bond in such sum and with such surety or sureties as the
Board of Directors shall determine, for the faithful discharge of his
duties and for the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money, securities, and other property belonging to the
Corporation in his possession or control.
Section 4.8 Assistant Treasurers and Assistant Secretaries. The
Assistant Treasurer, or any of them if there be more than one, and the
Assistant Secretary or any of them if there be more than one, shall
perform such duties as shall be assigned to them by the Treasurer or the
Secretary, respectively, or by the President or the Board of Directors. An
Assistant Secretary may sign with the President, or a Vice President, or
any other officer thereunto authorized by the Board of Directors
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certificates for shares of the Corporation, the issue of which shall have
been authorized by the Board of Directors, and any contracts, deeds,
mortgages, bonds, or other instruments which the Board of Directors has
authorized to be executed, according to the requirements of the form of
the instrument, except when a different mode of execution is expressly
prescribed by the Board of Directors or these By-laws. An Assistant
Treasurer shall respectively, if required by the Board of Directors, give
bonds for the faithful discharge of his duties in such sums and with such
sureties as the Board of Directors shall determine.
Section 4.9 Controller. The Board of Directors may elect a
Controller who shall be responsible for all accounting and auditing
functions of the Corporation and who shall perform such other duties as
may from time to time be required of him by the Board of Directors.
Section 4.10 Appointive Officers. The President may appoint other
officers and agents on a division basis or otherwise, as such divisions or
other operating units are created by the Board of Directors, and such
other officers and agents shall receive such compensation, have such
tenure and exercise such authority as the President shall specify. All
appointments made by the President hereunder and all the terms and
conditions thereof must be reported to the Board of Directors. No
appointive officer shall have any contractual rights against the
Corporation for compensation by virtue of such appointment beyond the date
of the appointment of his successor, his death, his resignation, or his
removal, whichever event shall first occur, except as otherwise provided
in an employment contract or under an employee deferred compensation plan.
Section 4.11 Salaries. The salaries of the elected officers shall be
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that he is also
a director of the Corporation.
Section 4.12 Vacancies. A newly created office or a vacancy in any
office because of death, resignation, removal, disqualification or
otherwise may be filled by the Board of Directors for the unexpired
portion of the term at any meeting of the Board of Directors.
ARTICLE V
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 5.1 Certificates For Shares. Certificates representing
shares of the Corporation shall be signed by the
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appropriate corporate officers, such as the President or a Vice president
or by such officer as shall be designated by resolution of the Board of
Directors, and by the Secretary or an Assistant Secretary, and shall be
sealed with the seal or a facsimile of the seal of the corporation if the
Corporation has a seal. If the signature of each officer be by facsimile,
the certificate shall be manually signed by or on behalf of a duly
authorized transfer agent or clerk. Each certificate representing shares
shall be consecutively numbered or otherwise identified, and shall also
state the name of the shareholder to whom issued, the number and class of
shares (with designation of series, if any), the date of issue, and that
the Corporation is organized under Illinois law. The certificate may state
the par value or a statement that the shares are without par value, if
applicable. If the Corporation is authorized and does issue shares of more
than one class or of a series within a class, the certificate shall also
contain such information or statement as may be required by law.
The name and address of each shareholder, the number and class of
shares held and the date on which the certificates for the shares were
issued shall be entered on the books of the Corporation. The shareholder
in whose name shares are registered on the books of the Corporation shall
be deemed the owner thereof for all purposes as regards the Corporation.
Unless prohibited by the Articles of Incorporation, the Board of
Directors may provide by resolution that some or all of any class or
series of shares shall be uncertificated shares. Any such resolution shall
not apply to shares represented by a certificate until the certificate has
been surrendered to the Corporation. Within a reasonable time after the
issuance or transfer of uncertificated shares, the Corporation shall send
the registered owner thereof a written notice of all information that
would appear on a certificate. Except as otherwise expressly provided by
law, the rights and obligations of the holders of uncertificated shares
shall be identical to those of the holders of certificates representing
shares of the same class and series.
Section 5.2 Transfer of Shares. Transfer of shares of the
Corporation shall be recorded on the books of the Corporation and, except
in the case of a lost or destroyed certificate, shall be made on
surrender for cancellation of the certificate for such shares. A
certificate presented for transfer must be duly endorsed and accompanied
by proper guaranty of signature and other appropriate assurances that the
endorsement is effective. Transfer of an uncertified share shall be made
on receipt by the Corporation of an instruction from the registered owner
or other appropriate person. The instruction shall be in writing or be a
communication in such form as may be agreed upon in writing by the
Corporation.
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Section 5.3 Lost Certificates. If a certificate representing shares
has allegedly been lost or destroyed, the Board of Directors may in its
discretion as may be required by law, direct that a new certificate be
issued upon such indemnification and other reasonable requirements as it
may impose.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 6.1 Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, of the Corporation, to enter into
any contract or execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined
to specific instances.
Section 6.2 Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such
authority may be general or confined to specific instances. The
Corporation shall have the power to lend money to its directors, officers,
employees and agents.
Section 6.3 Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation, shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as shall
from time to time be determined by resolution of the Board of Directors.
Section 6.4 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositaries as the
Board of Directors may select.
ARTICLE VII
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
Section 7.1 Third Party Action. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of the Corporation) by reason of the fact that he is or
was a director, officer, employee or agent of the Corporation, or who is
or was
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<PAGE>
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendre
or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the' Corporation,
or with respect to any criminal action or proceeding, that the person had
reasonable cause to believe that his conduct was unlawful.
Section 7.2 Derivative Action. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit' if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation; provided that an indemnification shall be
made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Corporation, unless, and only to the extent
that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 7.3 Successful Defense. To the extent that a director,
officer, employee or agent of the Corporation has been successful, on the
merits or otherwise, in the defense of any action, suit or proceeding
referred to in Sections 7.1 and 7.2 herein, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Section 7.4 Procedures. Any indemnification under Sections 7.1 and
7.2 herein (unless ordered by a court) shall be made by
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<PAGE>
the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 7.1 and 7.2 herein. Such
determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (c) by the
shareholders.
Section 7.5 Expenses. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding, as
authorized by the Board of Directors in the specific case, upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent
to repay such amount, unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized herein.
Section 7.6 Not Exclusive Provisions. The indemnification provided
by this Article VII shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any by-law, contract,
agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in his other official capacity and as to action in
another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of
such a person.
Section 7.7 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by such person in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify such person against such
liability under the provisions of this Article VII.
Section 7.8 Shareholder Notice. If the Corporation has paid
indemnity or has advanced expenses to a director, officer, employee or
agent, the Corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next
shareholders' meeting.
Section 7.9 Merger. In the case of a merger, the term "corporation"
shall include, in addition to the surviving
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<PAGE>
corporation, any merging corporation absorbed in a merger which, if its
separate existence had continued, would have had the power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who was a director, officer, employee or agent of such merging
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this section with
respect to the surviving corporation as such person would have with
respect to such merging corporation if its separate existence had
continued.
Section 7.10 Definitions. For purposes of this Article VII,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise tax assessed on a person
with respect to an employee benefit plan; and references to the phrase
"serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes
duties on, or involves services by such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries. A person who acted in good faith and in a manner he
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interest of the Corporation" as referred
to in this Article VII.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 8.2 Distributions. The Board of Directors may from time to
time declare and the Corporation may pay distributions (dividends,
redemptions and other transfers of money or property) to its shareholders
on its outstanding shares in the manner and upon the terms and conditions
provided by the Illinois Business Corporation Act of 1983 and the Articles
of Incorporation of the Corporation.
Section 8.3 Seal. The Corporation may use a corporate seal which may
be altered at pleasure, by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced. The corporate seal
shall have inscribed thereon the name of the Corporation and the words
"Corporate Seal, Illinois". The affixing of a corporate seal to an
instrument shall not give the instrument additional force or effect, or
change the construction thereof and the use of the corporate seal is not
mandatory.
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<PAGE>
Section 8.4 Audits. The Board of Directors shall determine whether
the Corporation's accounts, books and records shall be audited upon the
conclusion of each fiscal year, and shall determine who performs that
audit.
Section 8.5 Resignations. Any director or any officer, whether
elected or appointed, may resign at any time by serving written notice of
such resignation on the Board of Directors and unless specifically made
effective at a future date, such resignation shall be deemed to be
effective as of the close of business on the date said notice is received
by the Board of Directors. No formal action shall be required of the Board
of Directors or the shareholders to make any such resignation effective.
ARTICLE IX
AMENDMENTS
Section 9. Amendments. Unless reserved to the shareholders by the
Articles of Incorporation of the Corporation, these By-laws may be made,
altered, amended or repealed by the shareholders or the Board of
Directors, but no By-law adopted by the shareholders may be altered,
amended or repealed by the Board of Directors if the By-law: so provides
The By-laws may contain any provisions for the regulation and management
of the affairs of the Corporation not inconsistent with law or the
Articles of Incorporation of the Corporation.
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<PAGE>
VEGETARIAN TIMES, INC.
UNANIMOUS WRITTEN ACTION
OF THE BOARD OF DIRECTORS
Effective this 10th day of June, 1996, the undersigned, being all of the
directors of Vegetarian Times, Inc., a corporation organized under the laws of
the State of Illinois (the "Corporation"), hereby unanimously adopt the
resolution set forth below:
RESOLVED, that the first sentence of Article III - Section 3.2 ("Number,
Tenure and Qualifications") of the By-laws of the Corporation is hereby
deleted and replaced with the following:
"The number of directors of the Corporation shall be a minimum of
one and a minimum of seven."
/s/ David C. Cox /s/ James J. Viera
- ------------------- ---------------------
David C. Cox James J. Viera
<PAGE>
Exhibit 3.165
ARTICLES OF INCORPORATION
OF
THE VIRTUAL FLYSHOP, INC.
The undersigned, who, if a natural person, is eighteen years of age or
older, hereby establishes a corporation pursuant to the Colorado Business
Corporation Act as amended and adopts the following Articles of Incorporation:
FIRST: The name of the corporation is The Virtual Flyshop, Inc.
SECOND: The corporation shall have and may exercise all of the rights,
powers and privileges now or hereafter conferred upon corporations organized
under the laws of Colorado. In addition, the corporation may do everything
necessary, suitable or proper for the accomplishment of any of its corporate
purposes. The corporation may conduct part of all of its business in any part of
Colorado, the United States or the world and may hold, purchase, mortgage, lease
and convey real and personal property in any of such places.
THIRD: (a) The aggregate number of shares which the corporation shall have
the authority to issue is ten thousand (10,000) shares of common stock. The
shares of this class of common stock shall have unlimited voting rights and
shall constitute the sole voting group of the corporation, except to the extent
any additional voting group or groups may hereafter be established in accordance
with the Colorado Business Corporation Act. The shares of this class shall also
be entitled to receive the net assets of the corporation upon dissolution.
(b) Each shareholder of record shall have one vote for each share of
stock standing in his name on the books of the corporation and entitled to vote,
except that in the election of directors, each shareholder shall have as many
votes for each share held by him as there are directors to be elected and for
whose election the shareholder has a right to vote. Cumulative voting shall not
be permitted in the election of directors or otherwise.
(c) Unless otherwise ordered by a court of competent jurisdiction,
at all meetings of shareholders one-third of the shares of a voting group
entitled to vote at such meeting, represented in person or by proxy, shall
constitute a quorum of that voting group.
FOURTH: The number of directors of the corporation shall be fixed by the
bylaws, or if the bylaws, fail to fix such a number, then by resolution adopted
from time to time by the board of directors, provided that the number of
directors shall not be more
<PAGE>
than five nor less than one. Two directors shall constitute the initial board of
directors. The following persons are elected to serve as the corporation's
initial directors until the first annual meeting of shareholders or until their
successors are duly elected and qualified:
Michael R. Tucker 4412 East Mulberry, #221
Fort Collins, Colorado 80524
Greg McDermid Unit 39
639 Beachwood Drive
Waterloo, ON CANADA N272P6.
FIFTH: The street address of the initial registered office of the
corporation is 375 East Horsetooth Road, Building 6, Suite 200, Fort Collins,
Colorado 80525. The name of the initial registered agent of the corporation at
such address is Peter W. Bullard.
SIXTH: The address of the initial principal office of the corporation is
4412 East Mulberry, #221, Fort Collins, Colorado 80524.
SEVENTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and the same are
in furtherance of and not in limitation or exclusion of the powers conferred by
law.
(a) Conflicting Interest Transactions. As used in this paragraph,
"conflicting interest transaction" means any of the following: (i) a loan or
other assistance by the corporation to a director of the corporation or to an
entity in which a director of the corporation is a director or officer or has a
financial interest; (ii) a guaranty by the corporation of an obligation of a
director of the corporation or of an obligation of an entity in which a director
of the corporation is a director or officer or has a financial interest; or
(iii) a contract or transaction between the corporation and a director of the
corporation or between the corporation and an entity in which a director of the
corporation is a director or officer or has a financial interest. No conflicting
interest transaction shall be void or voidable, be enjoined, be set aside, or
give rise to an award of damages or other sanctions in a proceeding by a
shareholder or by or in the right of the corporation, solely because the
conflicting interest transaction involves a director of the corporation or an
entity in which a director of the corporation is a director or officer or has a
financial interest, or solely because the director is present at or participates
in the meeting of the corporation's board of directors or of the committee of
the board of directors which authorizes, approves or ratifies a conflicting
interest transaction, or solely because the director's vote is counted for such
purpose if (A) the material facts as to the director's relationship or interest
and as
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<PAGE>
to the conflicting interest transaction are disclosed or are known to the board
of directors or the committee, and the board of directors or committee in good
faith authorizes, approves or ratifies the conflicting interest transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors are less than an quorum; or (B) the material facts
as to the director's relationship or interest and as to the conflicting interest
transaction are disclosed or are known to the shareholders entitled to vote
thereon, and the conflicting interest transaction is specifically authorized,
approved or ratified in good faith by a vote of the shareholders; or (C) a
conflicting interest transaction is fair as to the corporation as of the time it
is authorized, approved or ratified by the board of directors, a committee
thereof, or the shareholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes, approves or ratifies the conflicting interest
transaction.
(b) Loans and Guaranties for the Benefit of Directors. Neither the
board of directors nor any committee thereof shall authorize a loan by the
corporation to a director of the corporation or to an entity in which a director
of the corporation is a director or officer or has a financial interest, or a
guaranty by the corporation of an obligation of a director of the corporation or
of an obligation of an entity in which a director of the corporation is a
director or officer or has a financial interest, until at lease ten days after
written notice of the proposed authorization of the loan or guaranty has been
given to the shareholders who would be entitled to vote thereon if the issue of
the loan or guaranty were submitted to a vote of the shareholders. The
requirements of this paragraph (b) are in addition to, and not in substitution
for, the provisions of paragraph (a) of Article SEVENTH.
(c) Indemnification. The corporation shall indemnify, to the maximum
extent permitted by law, any person who is or was a director, officer, agent,
fiduciary or employee of the corporation against any claim, liability or expense
arising against or incurred by such person made party to a proceeding because he
is or was a director, officer, agent, fiduciary or employee of the corporation
or because he is or was serving another entity as a director, officer, partner,
trustee, employee, fiduciary or agent at the corporation's request. The
corporation shall further have the authority to the maximum extent permitted by
law to purchase and maintain insurance providing such indemnification.
(d) Limitation on Director's Liability. No director of this
corporation shall have any personal liability for monetary damages to the
corporation or its shareholders for breach of his fiduciary duty as a director,
except that this provision shall not eliminate or limit the personal liability
of a director to the
3
<PAGE>
corporation or its shareholders for monetary damages for: (i) any breach of the
director's duty of loyalty to the corporation or its shareholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) voting for or assenting to a distribution in violation
of Colorado Revised Statutes ss. 7-106-401 or the articles of incorporation if
it is established that the director did not perform his duties in compliance
with Colorado Revised Statutes ss. 7-108-401, provided that the personal
liability of a director in this circumstance shall be limited to the amount of
the distribution which exceeds what could have been distributed without
violation of Colorado Revised Statutes ss. 7-106-401 or the articles of
incorporation; or (iv) any transaction from which the director directly or
indirectly derives an improper personal benefit. Nothing contained herein will
be construed to deprive any director of his right to all defenses ordinarily
available to a director nor will anything herein be construed to deprive any
director of any right he may have for contribution from any other director or
other person.
(e) Negation of Equitable Interests in Shares or Rights. Unless a
person is recognized as a shareholder through procedures established by the
corporation pursuant to Colorado Revised Statutes ss. 7-107-204 or any similar
law, the corporation shall be entitled to treat the registered holder of any
shares of the corporation as the owner thereof for all purposes permitted by the
Colorado Business Corporation Act, including without limitation all rights
deriving from such shares, and the corporation shall not be bound to recognize
any equitable or other claim to, or interest in, such shares or rights deriving
from such shares on the part of any other person including without limitation, a
purchases, assignee or transferee of such shares, unless and until such other
person becomes the registered holder of such shares or is recognized as such,
whether or not the corporation shall have either actual or constructive notice
of the claimed interest of such other person. By way of example and not of
limitation, until such other person has become the registered holder of such
shares or is recognized pursuant to Colorado Revised Statutes ss.7-107-204 or
any similar applicable law, he shall not be entitled: (i) to receive notice of
the meetings of the shareholders; (ii) to vote at such meetings; (iii) to
examine a list of the shareholders; (iv) to be paid dividends or other
distributions payable to shareholders; or (v) to own, enjoy and exercise any
other rights deriving from such shares against the corporation. Nothing
contained herein will be construed to deprive any beneficial shareholder, as
defined in Colorado Revised Statutes ss. 7-113-101 (1), of any right he may have
pursuant to Article 113 of the Colorado Business Corporation Act or any
subsequent law.
EIGHTH: The name and address of the incorporator is: Peter W. Bullard, 375
East Horsetooth Road, Building 6, Suite 200, Fort Collins, Colorado 80525.
4
<PAGE>
Dated the 7th day of September, 1995
/s/ Peter W. Bullard
------------------------------
Peter W. Bullard, Incorporator
Peter W. Bullard hereby consents to the appointment as the initial registered
agent for The Virtual Flyshop, Inc.
/s/ Peter Bullard
------------------------
Initial Registered Agent
5
<PAGE>
STATE OF COLORADO
DEPARTMENT OF STATE
I hereby certify that this is a true and complete copy of the document
filed in this office and admitted to record in File 951111430
DATED Mar 4 1998
/s/ Victoria Buckly
---------------------
Secretary of State
[SEAL OF COLORADO]
By /s/ [ILLEGIBLE]
-------------------
<PAGE>
Exhibit 3.166
BYLAWS
OF
THE VIRTUAL FLYSHOP, INC.
ARTICLE I
Offices
The principal office of the corporation shall be designated from time to
time by the corporation and may be within or outside of Colorado.
The corporation may have such other offices, either within or outside
Colorado, as the board of directors may designate or as the business of the
corporation may require from time to time.
The registered office of the corporation required by the Colorado Business
Corporation Act to be maintained in Colorado may be, but need not be, identical
with the principal office, and the address of the registered office may be
changed from time to time by the board of directors.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders shall be
held during the month of October of each year on a date and at a time fixed by
the board of directors of the corporation (or by the president in the absence of
action by the board of directors), beginning with the year 1996, for the purpose
of electing directors and for the transaction of such other business as may come
before the meeting. If the election of directors is not held on the day fixed as
provided herein for any annual meeting of the shareholders, or any adjournment
thereof, the board of directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as it may conveniently be held.
A shareholder may apply to the district court in the county in Colorado
where the corporation's principal office is located or, if the corporation has
no principal office in Colorado, to the district court of the county in which
the corporation's registered office is located to seek an order that a
shareholder meeting be held (i) if an annual meeting was not held within-six
months after the close of the corporation's most recently ended fiscal year or
fifteen months after its last annual meeting, whichever is earlier, or (ii) if
the shareholder participated in a proper call of or proper demand for a special
meeting and notice of the special meeting was not given within thirty days after
the date of the call or the date the last of the demand necessary to require
calling of the meeting was received by the corporation pursuant to C.R.S. ss. 7-
<PAGE>
107-102 (1)(b), or the special meeting was not held in accordance with the
notice.
Section 2. Special Meetings. Unless otherwise prescribed by statute,
special meetings of the shareholders may be called for any purpose by the
president or by the board of directors. The president shall call a special
meeting of the shareholders if the corporation receives one or more written
demands for the meeting, stating the purpose or purposes for which it is to be
held, signed and dated by holders of shares representing at least ten percent of
all the votes entitled to be case on any issue proposes to be considered at the
meeting.
Section 3. Place of Meeting. The board of directors may designate any
place, either within or outside Colorado, as the place for any annual meeting or
any special meeting called by the board of directors. A waiver of notice signed
by all shareholders entitled to vote at a meeting may designate any place,
wither within or outside Colorado, as the place for such meeting. If no
designation is made, or if a special meeting is called other than by the board,
the place of meeting shall be the principal office of the corporation.
Section 4. Notice of Meeting. Written notice stating the place, date, and
hour of the meeting shall be given not less than ten nor more than sixty days
before the date of the meeting, except that (i) if the number of authorized
shares is to be increased, at least thirty days' notice shall be given, or (ii)
any other longer notice period is required by the Colorado Business Corporation
Act. Notice of a special meeting shall include a description of the purpose or
purposes of the meeting. Notice of an annual meeting need not include a
description of the purpose or purposes of the meeting except the purpose or
purposes shall be stated with respect to (i) an amendment to the articles of
incorporation o the corporation, (ii) a merger or share exchange in which the
corporation is a party acquired, (iii) a sale, lease, exchange or other
disposition, other than in the usual and regular course of business, of all or
substantially all of the property of the corporation or of another entity which
this corporation controls, in each case with or without the goodwill, (iv) a
dissolution of the corporation, or (v) any other purpose for which a statement
of purpose is required by the Colorado Business Corporation Act. Notice shall be
given personally or by mail, private carrier, telegraph, teletype,
electronically transmitted facsimile or other form of wire or wireless
communication by or at the direction of the president, the secretary, or the
officer or persons calling the meeting to each shareholder of record entitled to
vote at such meeting. If mailed and if in a comprehensive form, such notice
shall be deemed to be given and effective when deposited in the United States
mail, addressed to the shareholder at his address as it appears in the
corporation's current record of shareholders, with postage prepaid. If notice is
given other than by mail, and
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<PAGE>
provided that such notice is in a comprehensible form, the notice is given and
effective on the date received by the shareholder.
If requested by the person or persons lawfully calling such meeting, the
secretary shall give notice thereof at corporate expense. No notice need be sent
to any shareholder if three successive notices mailed to the last known address
of such shareholder have been returned as undeliverable until such time a
another address for such shareholder is made known to the corporation by such
shareholder. In order to be entitled to receive notice of any meeting, a
shareholder shall advise the corporation in writing of any change in such
shareholder's mailing address as shown on the corporation's books and records.
When a meeting is adjourned to another date, time or place, notice need
not be given of the new date, time or place if the new date, time of place of
such meeting is announced before adjournment at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact any
business which may have been transacted at the original meeting. If the
adjournment is for more than 120 days, or if a new record date is fixed for the
adjourned meeting, a new notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting as of the new record date.
A shareholder may waive notice of a meeting before or after the time and
date of the meeting by a writing signed by such shareholder. Such waiver shall
be delivered to the corporation for filing with the corporate records. Further,
by attending a meeting either in person or by proxy, a shareholder waives
objection to lack of notice or defective notice of the meeting unless the
shareholder objects at the beginning of the meeting to the holding of the
meeting or the transaction of business at the meeting because of lack of notice
or defective notice. By attending the meeting, the shareholder also waives any
objection to consideration at the meeting of a particular matter not within the
purpose or purposes described in the meeting notice unless the shareholder
objects to considering the matter when it is presented.
Section 5. Fixing of Record Date. For the purpose of determining
shareholders entitled to (i) notice of or vote at any meeting of shareholders or
any adjournment thereof, (ii) receive distribution or share dividends, or (iii)
demand a special meeting, or to make a determination of shareholders for any
other proper purpose, the board of directors may fix a future date as the record
date for any such determination of shareholders, such date in any case to be not
more than seventy days, and, in case a meeting of shareholders, not less than
ten days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed by the
directors, the record date shall be the date on which notice of the meeting is
mailed to shareholders, or the date on which the resolution of the
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board of directors providing for a distribution is adopted, as the case may be.
When a determination of shareholders entitled to vote at any meeting of
shareholders is made as provided in the Section, such determination shall apply
to any adjournment thereof unless the board of directors fixes a new record
date, which it must do if the meeting is adjourned to a date more than 120 days
after the date fixed for the original meeting.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to be given
notice of action so taken shall be the date a writing upon which the action is
taken is first received by the corporation. The record date for determining
shareholders entitled to demand a special meeting shall be the date of the
earliest of any of the demands pursuant to which the meeting is called.
Section 6. Voting Lists. The secretary shall make, at the earlier of ten
days before each meeting of shareholders or two business days after notice of
the meeting has been given, a complete list of the shareholders entitled to be
given notice of such meeting or any adjournment thereof. The list shall be
arranged by voting groups and within each voting group by class or series of
shares, shall be in alphabetical order within each class or series, and shall
show the address of and the number of shares of each class or series held by
each shareholder. For the period beginning the earlier of ten days prior to the
meeting or two business days after notice of the meeting is given and continuing
through the meeting and any adjournment thereof, this list shall be kept on file
at the principal office the corporation, or at a place (which shall be
identified in the notice) in the city where the meeting will be held. Such list
shall be available for inspection on written demand by any shareholder
(including for the purpose of this Section 6 any holder of voting trust
certificates) or his agent or attorney during regular business hours and during
the period available for inspection. The original stock transfer books shall be
prima facie evidence as to the shareholders entitled to examine such list or to
vote at any meeting of shareholders.
Any shareholder, his agent or attorney may copy the list during regular
business hours and during the period it is available for inspection, provided
(i) the shareholder has been a shareholder for at least three months immediately
preceding the demand or holds at least five percent of all outstanding shares of
any class of shares as of the date of the demand, (ii) the demand is made in
good faith and for a purpose reasonably related to the demanding shareholder's
interest as a shareholder, (iii) the shareholder describes with reasonable
particularity the purpose and the records the shareholder desires to inspect,
(iv) the records are directly connected with the described purpose, and (v) the
shareholder pays a reasonable charge covering the costs of the labor and
material for such copies, not to exceed the estimated cost of production and
reproduction.
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Section 7. Recognition Procedure for Beneficial Owners. The board of
directors may adopt by resolution a procedure whereby a shareholder of the
corporation may adopt by resolution a procedure whereby a shareholder of the
corporation may certify in writing to the corporation that all or a portion of
the shares registered in the name of such shareholder are held for the account
of a specified person or persons. The resolution may set forth (i) the types of
nominees to which it applies, (ii) the rights or privileges that the corporation
will recognize in a beneficial owner, which may include rights and privileges
other than voting, (iii) the form of certification and the information to be
contained therein, (iv) if the certification is with respect to a record date,
the time within which the certification must be received by the corporation, (v)
the period for which the nominee's use of the procedure is effective, and (vi)
such other provisions with respect to the procedure as the board deems necessary
or desirable. Upon receipt by the corporation of a certificate complying with
the procedure established by the board of directors, the persons specified in
the certification shall be deemed, for the purpose or purposes set forth in the
certification, to be the registered holders of the number of shares specified in
place of the shareholder making the certification.
Section 8. Quorum and Manner of Acting. Fifty-one percent (51%) of the
votes entitled to be cast on a matter by a voting group shall constitute a
quorum of that voting group for action on the matter. If less than one-third of
such votes are represented at a meeting, a majority of the votes so represented
may adjourn the meeting from time to time without further notice, for a period
not to exceed 120 days for any one adjournment. If a quorum is present at such
adjourned meeting, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until the adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, unless the meeting is adjourned and a new record date is set for the
adjourned meeting.
If a quorum exists, action on a matter other than the election of
directors by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast within the voting group opposing
the action, unless the vote of a greater number or voting by classes is required
by law or the articles or incorporation.
Section 9. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy by signing an appointment form or similar writing, either
personally or by his duly authorized attorney-in-fact. A shareholder may also
appoint a proxy by transmitting or authorizing the transmission of a telegram,
teletype, or other electronic transmission providing a written statement of the
appointment to the proxy, a proxy solicitor, proxy
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support service organization, or other person duly authorized by the proxy to
receive appointments as agent for the proxy, or to the corporation. The
transmitted appointment shall set forth or be transmitted with written evidence
from which it can be determined that the shareholder transmitted or authorized
the transmission of the appointment. The proxy appointment form or similar
writing shall be filed with the secretary of the corporation before or at the
time of the meeting. The appointment of a proxy is effective when received by
the corporation and is valid for eleven months unless a different period is
expressly provided in the appointment form or similar writing.
Any complete copy, including an electronically transmitted facsimile, of
an appointment of a proxy may be substituted for or used in lieu of the original
appointment for any purpose for which the original appointment could be used.
Revocation of a proxy does not affect the right of the corporation to
accept the proxy's authority unless (i) the corporation had notice that the
appointment was coupled with an interest and notice that such interest is
extinguished is received by the secretary or other officer or agent authorized
to tabulate votes before the proxy exercises his authority under the
appointment, or (ii) other notice of the revocation of the appointment is
received by the secretary or other officer or agent authorized to tabulate votes
before the proxy exercises his authority under the appointment. Other notice of
revocation may, in the discretion of the corporation, be deemed to include the
appearance at a shareholders' meeting of the shareholder who granted the proxy
and his voting in person on any matter subject to a vote at such meeting.
The death or incapacity of the shareholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
The corporation shall not be required to recognize an appointment made
irrevocable if it has received a writing revoking the appointment signed by the
shareholder (including a shareholder who is a successor to the shareholder who
granted the proxy) either personally or by his attorney-in-fact, notwithstanding
that the revocation may be a breach of an obligation of the shareholder to
another person not to revoke the appointment.
Subject to Section 11 and any express limitation on the proxy's authority
appearing on the appointment form, the corporation is entitled to accept the
proxy's vote or other action as that of the shareholder making the appointment.
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Section 10. Voting of Shares. Each outstanding share, regardless of class,
shall be entitled to one vote, except in the election of directors, and each
fractional share shall be entitled to a corresponding fractional vote on each
matter submitted to a vote at a meeting of shareholders, except to the extent
that the voting rights of the shares of any class or classes are limited or
denied by the articles of incorporation as permitted by the Colorado Business
Corporation Act. Cumulative voting shall not be permitted in the election of
directors or for any other purpose. Each record holder of stock shall be
entitled to vote in the election of directors and shall have as many votes for
each of the shares owned by him as there are directors to be elected and for
whose election he has the right to vote.
At each election of directors, that number of candidates equaling the
number of directors to be elected, having the highest number of votes cast in
favor of their election, shall be elected to the board of directors.
Except as otherwise ordered by a court of competent jurisdiction upon a
finding that the purpose of this Section would not be violated in the
circumstances presented to the court, the shares of the corporation are not
entitled to be voted if they are owned, directly or indirectly, by a second
corporation, domestic or foreign, and the first corporations owns, directly or
indirectly, a majority of the shares entitled to vote for directors of the
second corporation except to the extent the second corporation holds the shares
in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of redemption
is mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
Section 11. Corporation's Acceptance of Votes. If the name signed on a
vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, proxy appointment or
proxy appointment revocation and give it effect as the act of the shareholder.
If the name signed on a vote, consent, waiver, proxy appointment or proxy
appointment revocation does not correspond to the name of a shareholder, the
corporation, if acting in good faith, is nevertheless entitled to accept the
vote, consent, waiver, proxy appointment or proxy appointment revocation and to
give it effect as the act of the shareholder if:
(i) the shareholder is an entity and the name signed purports to be that
of an officer or agent of the entity;
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(ii) the name signed purports to be that of an administrator, executor,
guardian or conservator representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, proxy appointment or proxy
appointment revocation;
(iii) the name signed purports to be that of a receiver of trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, proxy appointment or proxy appointment revocation;
(iv) the name signed purports to be that of a pledgee, beneficial owner or
attorney-in-fact of the shareholder and, if the corporation requests, evidence
acceptable to the corporation of the signatory's authority to sign for the
shareholder has been presented with respect to the vote, consent, waiver, proxy
appointment or proxy appointment revocation;
(v) two or more persons are the shareholder as co-tenants or fiduciaries
and the name signed purports to be the name of at lease one of the co-tenants or
fiduciaries, and the person signing appears to be acting on behalf of all the
co-tenants or fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy appointment or
proxy appointment revocation is otherwise proper under rules established by the
corporation that are not inconsistent with this Section 11.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the secretary or other officer or
agent authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
Neither the corporation not its officers nor any agent who accepts or
rejects a vote, consent, waiver, proxy appointment or proxy appointment
revocation in good faith and in accordance with the standards of this Section is
liable in damages for the consequences of the acceptance or rejection.
Section 12. Informal Action by Shareholder. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a written consent (or counterparts thereof) that sets forth the
action so taken is signed by all of the shareholders entitled to vote with
respect to the subject matter thereof and received by the corporation. Such
consent shall have the same force and effect as a unanimous vote of the
shareholders and may be stated as such in any documents.
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Action taken under this Section 12 is effective as of the date the last writing
necessary to effect the action is received by the corporation, unless all of the
writings specify a different effective date, in which case such specified date
shall be the effective date for such action. If any shareholder revokes his
consent as provided for herein prior to what would otherwise be the effective
date, the action proposed in the consent shall be invalid. The record date for
determining shareholders entitled to take action without a meeting is the date
the corporation first receives a writing upon which the action is taken.
Any shareholder who has signed a writing describing and consenting to
action taken pursuant to this Section 12 may revoke such consent by a writing
signed by the shareholder describing the action and stating that the
shareholder's prior consent thereto is revoked, if such writing is received by
the corporation before the effectiveness of the action.
Section 13. Meetings by Telecommunication. Any or all of the shareholders
may participate in an annual or special shareholders' meeting by, or the meeting
may be conducted through the use of, any means of communication by which all
persons participating in the meeting may hear each other during the meeting. A
shareholder participating in a meeting by this means is deemed to be present in
person at the meeting.
ARTICLE III
Board of Directors
Section 1. General Powers. All corporate powers shall be exercised by or
under the authority of, and the business affairs of the corporation shall be
managed under the direction of its board of directors, except as otherwise
provided in the Colorado Business Corporation Act or the articles of
incorporation.
Section 2. Number, Qualifications and Tenure. The number of directors of
the corporation shall be fixed from time to time by the board of directors,
within a range of not less than two or more than five. A director shall be a
natural person who is eighteen years of age or older. A director need not be a
resident of Colorado or a shareholder of the corporation.
Directors shall be elected at each annual meeting of shareholders. Each
director shall hold office until the next annual meeting of shareholders
following his election and thereafter until his successor shall have been
elected and qualified. Directors shall be removed in the manner provided by the
Colorado Business Corporation Act.
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Section 3. Vacancies. Any director may resign at any time by giving
written notice to the corporation. Such resignation shall take effect at the
time the notice is received by the corporation unless the notice specifies a
later effective date. Unless otherwise specified in the notice of resignation,
the corporation's acceptance of such resignation shall not be necessary to make
it effective. Any vacancy on the board of directors may be filled by the
affirmative vote of a majority of the shareholders or the board of directors. If
the directors remaining in office constitute fewer than a quorum of the board,
the directors may fill the vacancy by the affirmative vote of a majority of all
the directors remaining in office. If elected by the directors, the director
shall hold office until the next annual shareholders' meeting at which directors
are elected. If elected by the shareholders, the director shall hold office for
the unexpired term of his predecessor in office; except that, if the director's
predecessor was elected by the directors to fill a vacancy, the director elected
by the shareholders shall hold office for the unexpired term of the last
predecessor elected by the shareholders.
Section 4. Regular Meetings. A regular meeting of the board of directors
shall be held without notice immediately after and at the same place as the
annual meting of shareholders. The board of directors may provide by resolution
the time and place, either within or outside Colorado, for the holding of
additional regular meetings without other notice.
Section 5. Special Meetings. Special meetings of the board of directors
may be called by or at the request of the president or fifty percent (50%) of
the directors. The person or person authorized to call special meetings of the
board of directors may fix any place, either within or outside Colorado, as the
place for holder any special meeting of the board of directors called by them,
provided that no meeting shall be called outside the State of Colorado unless a
majority of the board of directors has so authorized.
Section 6. Notice. Notice of any special meeting shall be given at least
two days prior to the meeting by written notice either personally delivered or
mailed to each director at his business address, or by notice transmitted by
telegraph, telex, electronically transmitted facsimile or other form of wire or
wireless communication. If mailed, such notice shall be deemed to be given and
to be effective on the earlier of (i) three days after such notice is deposited
in the United States mail, properly addressed, with postage prepaid, or (ii) the
date shown on the return receipt, if mailed by registered or certified mail
return receipt requested. If notice if given by telex, electronically
transmitted facsimile or other similar form or wire or wireless communication,
such notice shall be deemed to be given and to be effective when sent, and with
respect to a telegram, such notice shall be deemed to be given and to be
effective when the telegram
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is delivered to the telegraph company. If a director has designated in writing
one or more reasonable addresses or facsimile numbers for delivery of notice to
him, notice sent by mail, telegraph, telex, electronically transmitted facsimile
or other form of wire or wireless communication shall not be deemed to have been
given or to be effective unless sent to such addresses or facsimile numbers, as
the case may be.
A director may waive notice of a meeting before or after the time and date
of the meeting by a writing signed by such director. Such waiver shall be
delivered to the corporation for filing with the corporate records. Further, a
director's attendance at or participation in a meeting waives any required
notice to him of the meeting unless at the beginning of the meeting, or promptly
upon his later arrival, the director objects to holding the meeting or
,transacting business at the meeting because of lack of notice or defective
notice and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of directors fixed by the
board of directors pursuant to Section 2 or, if no number is fixed, a majority
of the number in office immediately before the meeting begins, shall constitute
a quorum for the transaction of business at any meeting of the board of
directors. If less than such majority is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice, for a period not to exceed sixty days at any one adjournment.
Section 8. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
Section 9. Compensation. By resolution of the board of directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings, a fixed sum for attendance at each meeting, a stated
salary as director, or such other compensation as the corporation and the
director may reasonably agree upon. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
Section 10. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors or committee of the board at
which action on any corporate matter is taken shall be presumed to have assented
to the action taken unless (i) the director objects at the beginning of the
meeting, or promptly upon his arrival, to the holding of the meeting or the
transaction of business at the meeting and does not thereafter vote
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for or assent to any action taken at the meeting, (ii) the director
contemporaneously requests that his dissent or abstention as to any specific
action taken be entered in the minutes of the meeting, or (iii) the director
causes written notice of his dissent or abstention as to any specific action to
be received by the presiding officer of the meeting before its adjournment or by
the corporation promptly after the adjournment of the meeting. A director may
dissent to a specific action at a meeting, while assenting to others. The right
to dissent to a specific action taken at a meeting of the board of directors or
a committee of the board shall not be available to a director who voted in favor
of such action.
Section 11. Committees. By resolution adopted by a majority of all the
directors in office when the action is taken, the board of directors may
designate from among its members an executive committee and one or more other
committees, and appoint one or more members of the board of directors to serve
on them. To the extent provided in the resolution, each committee shall have all
the authority of the board of directors, except that no such committee shall
have the authority to (i) authorize distributions, (ii) approve or propose to
shareholders actions or proposals required by the Colorado Business Corporation
Act to be approved by shareholders, (iii) fill vacancies on the board of
directors or any committee thereof, (iv) approve a place of merger not requiring
shareholder approval, (vii) authorize or approve the reacquisition of shares
unless pursuant to a formula or method prescribed by the board of directors, or
(viii) authorize or approve the issuance or sale of shares, or contract for the
sale of shares or determine the designations and relative rights, preferences
and limitation of a class or series of shares, except that the board of
directors may authorize a committee or officer to do so within limits
specifically prescribed by the board of directors. The committee shall then have
full power within the limits set by the board of directors to adopt any final
resolution setting forth all preferences, limitations and relative rights of
such class or series and to authorize an amendment of the articles of
incorporation stating the preferences, limitations and relative rights of a
class or series for filing with the Secretary of State under the Colorado
Business Corporation Act.
Sections 4, 5, 6, 7, 8, and 12 of Article III, which govern meetings,
notice, waiver of notice, quorum, voting requirements and action without a
meeting of the board of directors, shall apply to committees and their members
appointed under this Section 11.
Neither the designation of any such committee, the delegation of authority
to such committee, nor any action by such committee pursuant to its authority
shall alone constitute compliance by an member of the board of directors or a
member of the committee in question with his responsibility to conform to the
standard of care set forth in Article III, Section 14 of these bylaws.
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Section 12. Informal Action by Director. Any action required or permitted
to be taken at a meeting of the directors or any committee designated by the
board of directors may be taken without a meeting if a written consent (or
counterparts thereof) that sets forth the action so taken is signed by all of
the directors entitled to vote with respect to the action taken. Such consent
shall have the same force and effect as a unanimous vote of the directors or
committee members and may be stated as such in any document. Unless the consent
specifies a different effective date, action taken under this Section 12 if
effective at the time the last director signs a writing describing the action
taken, unless, before such time, any director has revoked his consent by a
writing signed by the director and received by the president or the secretary of
the corporation.
Section 13. Telephonic Meetings. The board of directors may permit any
director (or any member of a committee designated by the board) to participate
in a regular or special meeting of the board of directors or a committee thereof
through the use of any means of communication by which all directors
participating in the meeting can hear each other during the meeting. A director
participating in a meeting in this manner is deemed to be present in person at
the meeting.
Section 14. Standard of Care. A director shall perform his duties as a
director, including without limitation his duties as a member of any committee
of the board, in good faith, in a manner he reasonably believes to be in the
best interests of the corporation, and with the care an ordinarily prudent
person in a like position would exercise under similar circumstances. In
performing his duties, a director shall be entitled to rely on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by the persons herein
designated. However, he shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause such reliance
to be unwarranted. A director shall not be liable to the corporation or its
shareholders for any action he takes or omits to take as a director if, in
connection with such action or omission, he performs his duties in compliance
with this Section 14.
The designated persons on whom a director is entitled to rely are (i) one
or more officers or employees of the corporation whom the director reasonably
believes to be reliable and competent in the matters presented, (ii) legal
counsel, public accountant, or other person as to matters which the director
reasonably believes to be within such person's professional or expert
competence, or (iii) a committee of the board of directors on which the director
does not serve if the director reasonably believes the committee merits
confidence.
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ARTICLE IV
Officers and Agents
Section 1. General. The officers of the corporation shall be a president,
one or more vice president, a secretary and a treasurer, each of whom shall be a
natural person eighteen years of age or older. The board of directors or an
officer or officers authorized by the board may appoint such other officers,
assistance officers, committees and agents, including a chairman of the board,
assistant secretaries and assistance treasurers, as they may consider necessary.
The board of directors, or the officer or officers authorized by the board shall
from time to time determine the procedure for the appointment of officers, their
term of office, their authority and duties and their compensation. One person
may hold more than one office. In all cases where the duties of any officer,
agent or employee are not prescribed by the bylaws or by the board of directors,
such officer, agent or employee shall follow the orders and instructions of the
president of the corporation.
Section 2. Appointment and Term of Office. The officers of the corporation
shall be appointed by the board of directors at each annual meeting of the board
held after each annual meeting of the shareholders. If the appointment of
officers is not made at such meeting or if an officer or officers are to be
appointed by another officer or officers of the corporation, such appointments
shall be made as soon thereafter as conveniently may be. Each officer shall hold
office until the first of the following occurs: his successor shall have been
duly appointed and qualified, his death, his resignation, or his removal in the
manner provided in Section 3.
Section 3. Resignation and Removal. An officer may resign at any time by
giving written notice of resignation to the corporation. The resignation is
effective when the notice is received by the corporation unless the notice
specifies a later effective date.
Any officer or agent may be removed at any time with or without cause by
the board of directors or an officer or officers authorized by the board. Such
removal does not affect the contract rights, if any, of the corporation or of
the person so removed. The appointment of an officer or agent shall not in
itself create contract rights.
Section 4. Vacancies. A vacancy in any office, however occurring, may be
filled by the board of directors, or by the officer or officers authorized by
the board, for the unexpired portion of the officer's term. If an officer
resigns and his resignation is made effective at a later date, the board of
directors, or officer of officers authorized by the board, may
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permit the officer to remain in office until the effective date and may fill the
pending vacancy before the effective date if the board of directors or officer
or officers authorized by the board provide that the successor shall not take
office until the effective date. IN the alternative, the board of directors, or
officer or officers authorized by the board of directors, may remove the officer
at any time before the effective date and may fill the resulting vacancy.
Section 5. President. Subject to the direction and supervision of the
board of directors, the president shall be the chief executive officer of the
corporation, and shall have general and active control of its affairs and
business and general supervision of its officers, agents and employees. Unless
otherwise directed by the board of directors, the president shall attend in
person or by substitute appointed by him, or shall execute on behalf of the
corporation written instruments appointing a proxy or proxies to represent the
corporation, at all meetings of the stockholders of any other corporation in
which the corporation holds any stock. On behalf of the corporation, the
president may in person or by substitute or by proxy execute written waivers of
notice and consents with respect to any such meetings. At all such meetings and
otherwise, the president, in person or by substitute or proxy, may vote the
stock held by the corporation, execute written consents and other instruments
with respect to such stock, and exercise any and all rights and powers incident
to the ownership of said stock, subject to the instructions, if any, of the
board of directors. The president shall have custody of the treasurer's bond, if
any.
Section 6. Vice Presidents. The vice presidents shall assist the president
and shall perform such duties as may be assigned to them by the president or by
the board of directors. In the absence of the president, the vice president, if
any (or, if more than one, the vice presidents in the order designated by the
board of directors, or if the board makes no such designation, then the vice
president designated by the president, or if neither the board nor the president
makes any such designation, the senior vice president as determined by first
election to that office), shall have the powers and perform the duties of the
president.
Section 7. Secretary. The secretary shall (i) prepare and maintain as
permanent records the minutes of the proceedings of the shareholders and the
board of directors, a record of all action taken by the shareholders or board of
directors without a meeting, a record of all actions taken by a committee of the
board of directors in place of the board of directors on behalf of the
corporation, and a record of all waivers of notice of meetings of shareholders
and of the board of directors or any committee thereof, (ii) see that all
notices are duly given in accordance with the provisions of these bylaws and as
required by law, (iii) serve as custodian of the corporate records and of the
seal of the corporation and affix the seal to all documents when authorized by
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the board of directors, (iv) keep at the corporation's registered office or
principal place of business a record containing the names and addresses of all
shareholders in a form that permits preparation of a list of shareholders
arranged by voting group and by class or series of shares within each voting
group, that is alphabetical within each class of series and that shows the
address of, and the number of shares of each class or series held by, each
shareholder, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar, (v) maintain at the corporation's
principal office the originals or copies of the corporation's articles of
incorporation, bylaws, minutes of all shareholders' meetings and records of all
action taken by shareholders without a meeting for the past three years, all
written communications within the past three years to shareholders as a group or
to the holders of any class of series of shares as a group, a list of the names
and business addresses of the current directors and officers, a copy of the
corporation's most recent corporate report filed with the Secretary of State,
and financial statements showing in reasonable detail the corporation's assets
and liabilities and results of operations for the last three years (vi) have
general charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent, (vii) authenticate records of the corporation,
and (viii) in general, perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him by the
president or by the board of directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to supervision by the secretary. The
directors and/or shareholders may however respectively designate a person other
than the secretary or assistant secretary to keep the minutes of their
respective meetings.
Any books, records, or minutes of the corporation may be in written form
or in any form capable of being converted into written form within a reasonable
time.
Section 8. Treasurer. The treasurer shall be the principal financial
officer of the corporation, shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
corporation and shall deposit the same in accordance with the instructions of
the board of directors. He or she shall receive and give receipts and
acquittances for money pain in on account of the corporation, and shall pay out
of the corporation's funds on hand all bills, payrolls and other just debts of
the corporation of whatever nature upon maturity. He or she shall perform all
other duties incident to the office of the treasurer and, upon request of the
board, shall make such reports to is as may be required at any time. He or she
shall, if required by the board, give the corporation a bond in such sums and
with such sureties as shall be satisfactory to the board, conditioned upon the
faithful performance of his duties and for the restoration to the corporation of
all books, papers, vouchers, money and other
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property of whatever kind in his possession or under his control belonging to
the corporation. He or she shall have such other powers and perform such other
duties as may from time to time be prescribed by the board of directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
corporation. He or she shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account as
required by the Colorado Business Corporation Act, prepare and file all local,
state and federal tax returns, prescribe and maintain an adequate system of
internal audit and prepare and furnish to the president and the board of
directors statements of account showing the financial position of the
corporation and the results of its operations.
ARTICLE V
Stock
Section 1. Certificates. The board of directors shall be authorized to
issue any of its classes of shares with or without certificates. The fact that
the shares are not represented by certificates shall have no effect on the
rights and obligations of shareholders. If the shares are represented by
certificates, such shares shall be represented by consecutively numbered
certificates signed, either manually or by facsimile, in the name of the
corporation by one or more persons designated by the board of directors. In case
any officer who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such certificate is
issued, such certificate may nonetheless be issued by the corporation with the
same effect as if he were such officer at the date of its issue. Certificates of
stock shall be in such form and shall contain such information consistent with
law as shall be prescribed by the board of directors. If shares are not
represented by certificate, within a reasonable time following the issue or
transfer of such shares, the corporation shall send the shareholder a complete
written statement of all of the information required to be provided to holders
of uncertificated shares by the Colorado Business Corporation Act.
Section 2. Consideration for Shares. Certificated or uncertificated shares
shall not be issued until the shares represented thereby are fully paid. The
board of directors may authorize the issuance of shares for consideration
consisting of any tangible or intangible property or benefit to the corporation,
including cash, promissory notes, services not performed or other securities of
the corporation. Future services shall not constitute payment or partial payment
for shares of the corporation. The promissory note of a subscriber or an
affiliate
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of a subscriber shall not constitute payment of partial payment for shares of
the corporation unless the note is negotiable and is secured by collateral,
other than the shares being purchased, having a fair market value at lease equal
to the principal amount of the note. For purposes of this Section 2, "promissory
note" means a negotiable instrument on which there is an obligation to pay
independent of collateral and does not include a non-recourse note.
Section 3. Lost Certificates. In case of the alleged loss, destruction or
mutilation of a certificate of stock, the board of directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as the board may prescribe. The board of directors may in
its discretion require an affidavit of lost certificate and/or a bond in such
form and amount and with such surety as it may determine before issuing a new
certificate.
Section 4. Transfer of Shares. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and receipt of such documentary stamps as may be required by law and
evidence of compliance with all applicable securities laws and other
restrictions, the corporation shall issue a new certificate to the person
entitled thereto, and cancel the old certificate. Every such transfer of stock
shall be entered on the stock books of the corporation which shall be kept at
its principal office or by the person and the place designated by the board of
directors.
Except as otherwise expressly provided in Article II, Sections 7 and 11,
and except for the assertion of dissenters' rights to the extent provided in
Article 113 of the Colorado Business Corporation Act, the corporation shall be
entitled to treat the registered holder of any shares of the corporation as the
owner thereof for all purposes, and the corporation shall not be bound to
recognize any equitable or other claim to, or interest in, such shares or rights
deriving from such shares on the part of any person other than the registered
holder, including without limitation any purchaser, assignee or transferee of
such shares or rights deriving from such shares, unless and until such other
person becomes the registered holder of such shares, whether or not the
corporation shall have either actual or constructive notice of the claimed
interest of such other person.
Section 5. Transfer Agent, Registrars and Paying Agents. The board may at
its discretion appoint one or more transfer agents, registrars and agents for
making payment upon any class of stock, bond, debenture or other security of the
corporation. Such agents and registrars may be located either within or outside
Colorado. They shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
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ARTICLE VI
Indemnification of Certain Persons
Section 1. Indemnification. For purposes of Article VI, a "Proper Person"
means any person who was or is a party or is threatened to be made a party to
any threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, and whether formal or informal, by
reason of the fact that he is or was a director, officer, employee, fiduciary or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, fiduciary or agent of any
foreign or domestic profit or nonprofit unincorporated association, limited
liability company, or other enterprise or employee benefit plan. The corporation
shall indemnify any Proper Person against reasonably incurred expenses
(including attorneys' fees), judgments, penalties, fines (including any excise
tax assessed with respect to an employee benefit plan) and amounts pain in
settlement reasonably incurred by him in connection with such action, suit or
proceeding if it is determined by the groups set forth in Section 4 of this
Article that he conducted himself in good faith and that he reasonably believed
(i) in the case of conduct in his official capacity with the corporation, that
his conduct was in the corporation's best interests, or (ii) in all other cases
(except criminal cases), that his conduct was at least not opposed to the
corporation's best interests, or (iii) in the case of any criminal proceeding,
that he had no reasonable cause to believe his conduct was unlawful. A Proper
Person will be deemed to be acting in his official capacity while acting as a
director, officer, employee or agent on behalf of this corporation and not while
acting on this corporation's behalf for some other entity.
No indemnification shall be made under this Article VI to a Proper Person
with respect to any claim, issue or matter in connection with a proceeding by or
in the right of a corporation in which the Proper Person was adjudged liable to
the corporation or in connection with any proceeding charging that the Proper
Person derived an improper personal benefit, whether or not involving action in
an official capacity, in which he was adjudged liable on the basis that he
derived an improper personal benefit. Further, indemnification under this
Section in connection with a proceeding brought by or in the right of the
corporation shall be limited to reasonable expenses, including attorneys' fees,
incurred in connection with the proceeding.
Section 2. Right to Indemnification. The corporation shall indemnify any
Proper Person who was wholly successful, on the merits or otherwise, in defense
of any action, suit, or proceeding as to which he was entitled to
indemnification under Section 1 of this Article VI against expenses (including
attorneys' fees) reasonable incurred by him in connection with the proceeding
19
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without the necessity of any action by the corporation other than the
determination in good faith that the defense has been wholly successful.
Section 3. Effect of Termination of Action. The termination of any action,
suit or proceeding by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent shall not of itself create a presumption
that the person seeking indemnification did not meet the standards of conduct
described in Section 1 of this Article VI. Entry of a judgment by consent as
part of a settlement shall be deemed an adjudication of liability, as described
in Section 2 of this Article VI.
Section 4. Groups Authorized to Make Indemnification Determination. Except
where there is a right to indemnification as set forth in Sections 1 or 2 of
this Article or where indemnification is ordered by a court in Section 5, any
indemnification shall be made by the corporation only as authorized in the
specific case upon a determination by a proper group that indemnification of the
Proper Person is permissible under the circumstances because he has met the
applicable standards of conduct set forth in Section 1 of this Article. This
determination shall be made by the board of directors by a majority vote of
those present at a meeting at which a quorum is present, which quorum shall
consist of directors not parties to the proceeding (`Quorum"). If a Quorum
cannot be obtained, the determination shall be made by a majority vote of a
committee of the board of directors designated by the board, which committee
shall consist of two or more directors not parties to the proceeding, except
that directors who are parties to the proceeding may participate in the
designation of directors for the committee. If a Quorum of the board of
directors cannot be obtained and the committee cannot be established, or even if
a Quorum is obtained or the committee is designated and a majority of the
directors constituting such Quorum or committee so directs, the determination
shall be made by (i) independent legal counsel selected by a vote of the board
of directors or the committee in the manner specified in this Section 4 or, if a
Quorum of the full board of directors cannot be obtained and a committee cannot
be established, by independent legal counsel selected by a majority vote of the
full board (including directors who are parties to the action) or (ii) a vote of
the shareholders.
Section 5. Court-Ordered Indemnification. Any Proper Person may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction for mandatory indemnification under Section 2 of this
Article, including indemnification for reasonable expenses incurred to obtain
court-ordered indemnification. If the court determines that such Proper Person
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not he met the standards of conduct set forth in
Section 1 of this Article or was adjudged liable in the proceeding, the court
20
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may order such indemnification as the court deems proper except that if the
Proper Person has been adjudged liable, indemnification shall be limited to
reasonable expenses incurred in connection with the proceeding and reasonable
expenses incurred to obtain court-ordered indemnification.
Section 6. Advance of Expenses. Reasonable expenses (including attorneys'
fees) incurred in defending an action, suit or proceeding as described in
Section 1 may be paid by the corporation to any Proper Person in advance of the
final disposition of such action, suit or proceeding upon receipt of (i) a
written affirmation of such Proper Person's good faith belief that he has met
the standards of conduct prescribed by Section 1 of this Article VI, (ii) a
written undertaking, executed personally or on the Proper Person's behalf, to
repay such advances if it is ultimately determined that he did not meet the
prescribed standards of conduct (the undertaking shall be an unlimited general
obligation of the Proper Person but need not be secured and may be accepted
without reference to financial ability to make repayment), and (iii) a
determination is made by the proper group (as described in Section 4 of this
Article VI) that the facts as then known to the group would not preclude
indemnification. Determination and authorization of payments shall be made in
the same manner specified in Section 4 of this Article VI.
Section 7. Witness Expenses. The sections of this Article VI do not limit
the corporation's authority to pay or reimburse expenses incurred by a director
in connection with an appearance as a witness in a proceeding at a time when he
has not been made a named defendant or respondent in the proceeding.
Section 8. Report to Shareholders. Any indemnification of or advance of
expenses to a director in accordance with this Article VI, if arising out of a
proceeding by or on behalf of the corporation, shall be reported in writing to
the shareholders with or before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting at the instigation of the
board of directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such action.
ARTICLE VII
Provision of Insurance
By action of the board of directors, notwithstanding any interest of the
directors in the action, the corporation may purchase and maintain insurance, in
such scope and amounts as the board of directors deems appropriate, on behalf of
any person who is or was a director, officer, employee, fiduciary or agent of
the corporation, or who, while a director, officer, employee, fiduciary or agent
of the corporation, is or was serving at the request of
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the corporation as a director, officer, partner, trustee, employee, fiduciary or
agent of any other foreign or domestic corporation or of any partnership, joint
venture, trust, profit or nonprofit unincorporated association, limited
liability company or other enterprise or employee benefit plan, against any
liability asserted against, or incurred by, him in that capacity or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of Article VI or
applicable law. Any such insurance may be procured from any insurance company
designated by the board of directors of the corporation, whether such insurance
company is formed under the laws of Colorado or any other jurisdiction of the
United States or elsewhere, including any insurance company in which the
corporation has an equity interest or any other interest, through stock
ownership or otherwise.
ARTICLE VIII
Miscellaneous
Section 1. Seal. The corporate seal of the corporation shall be circular
in form and shall contain the name of the corporation and the words, "Seal,
Colorado".
Section 2. Fiscal Year. The fiscal year of the corporation shall be as
established by the board of directors.
Section 3. Amendments. The board of directors shall have power, to the
maximum extent permitted by the Colorado Business Corporation Act, to make,
amend and repeal the bylaws of the corporation at any regular or special meeting
of the board unless the shareholders, in making, amending or repealing a
particular bylaw, expressly provide that the directors may not amend or repeal
such bylaw. The shareholders also shall have the power to make, amend or repeal
the bylaws of the corporation at any annual meeting or at any special meeting
called for that purpose.
Section 4. Gender. The masculine gender is used in these bylaws as a
matter of convenience only and shall be interpreted to include the feminine and
neuter genders as the circumstances indicate.
Section 5. Conflicts. In the event of any irreconcilable conflict between
these bylaws and either the corporation's articles of incorporation or
applicable law, the latter shall control.
Section 6. Definitions. Except as otherwise specifically provided in these
bylaws, all terms used in these bylaws shall have the same definition as in the
Colorado Business Corporation Act.
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Exhibit 4.8
================================================================================
PRIMEDIA INC.
$
8 5/8% Subordinated Exchange Debentures due 2010
Class G and Class H
-------------
INDENTURE
Dated as of _______ __, ____
-------------
THE BANK OF NEW YORK
Subordinated Debenture Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions.............................................. 1
Section 1.02 Other Definitions........................................ 9
Section 1.03 Incorporation by Reference of Trust Indenture Act........ 9
Section 1.04 Rules of Construction.................................... 10
ARTICLE 2
THE SECURITIES
Section 2.01 Form and Dating.......................................... 10
Section 2.02 Execution and Authentication............................. 11
Section 2.03 Registrar and Paying Agent............................... 12
Section 2.04 Paying Agent to Hold Money in Trust...................... 12
Section 2.05 Holder Lists............................................. 12
Section 2.06 Transfer and Exchange.................................... 13
Section 2.07 Replacement Securities................................... 24
Section 2.08 Outstanding Securities................................... 25
Section 2.09 Treasury Securities...................................... 25
Section 2.10 Temporary Securities..................................... 25
Section 2.11 Cancellation............................................. 26
Section 2.12 Defaulted Interest....................................... 26
Section 2.13 CUSIP Numbers............................................ 26
ARTICLE 3
OPTIONAL REDEMPTION, OPTIONAL REDEMPTION UPON CHANGE OF
CONTROL AND OPTIONAL REDEMPTION UPON A PUBLIC EQUITY OFFERING
Section 3.01 Notices to Subordinated Debenture Trustee................ 26
Section 3.02 Selection of Securities to Be Redeemed................... 27
Section 3.03 Notices to Holders....................................... 27
Section 3.04 Effect of Notice of Redemption........................... 28
Section 3.05 Deposit of Redemption Price or Purchase Price............ 28
Section 3.06 Securities Redeemed in Part.............................. 29
Section 3.07 Optional Redemption...................................... 29
Section 3.08 Optional Redemption Upon Change of Control............... 30
ARTICLE 4
COVENANTS
Section 4.01 Payment of Securities.................................... 30
Section 4.02 Maintenance of Office or Agency.......................... 30
Section 4.03 SEC Reports; Financial Statements........................ 31
Section 4.04 Compliance Certificate................................... 31
Section 4.05 Compliance With Laws, Taxes.............................. 32
Section 4.06 Stay, Extension and Usury Laws........................... 33
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Section 4.07 Limitations on Restricted Payments....................... 33
Section 4.08 Change of Control........................................ 33
Section 4.09 Transactions With Affiliates............................. 35
Section 4.10 Corporate Existence...................................... 35
Section 4.11 Rule 144A Information Requirement........................ 36
ARTICLE 5
SUCCESSORS
Section 5.01 Merger, Consolidation, or Sale of Assets................. 36
Section 5.02 Successor Corporation Substituted........................ 36
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default........................................ 37
Section 6.02 Acceleration ............................................ 38
Section 6.03 Other Remedies........................................... 39
Section 6.04 Waiver of Past Defaults.................................. 39
Section 6.05 Control by Majority...................................... 40
Section 6.06 Limitations on Suits..................................... 40
Section 6.07 Rights of Holders to Receive Payment..................... 40
Section 6.08 Collection Suit by Subordinated Debenture Trustee........ 41
Section 6.09 Subordinated Debenture Trustee May File Proofs of Claim.. 41
Section 6.10 Priorities............................................... 41
Section 6.11 Undertaking for Costs.................................... 42
ARTICLE 7
SUBORDINATED DEBENTURE TRUSTEE
Section 7.01 Duties of Subordinated Debenture Trustee................. 42
Section 7.02 Rights of Subordinated Debenture Trustee................. 43
Section 7.03 Individual Rights of Subordinated Debenture Trustee...... 44
Section 7.04 Subordinated Debenture Trustee's Disclaimer.............. 44
Section 7.05 Notice of Defaults....................................... 44
Section 7.06 Reports by Subordinated Debenture Trustee to Holders..... 44
Section 7.07 Compensation and Indemnity............................... 45
Section 7.08 Replacement of Subordinated Debenture Trustee............ 46
Section 7.09 Successor Subordinated Debenture Trustee by Merger, etc.. 47
Section 7.10 Eligibility; Disqualification............................ 47
Section 7.11 Preferential Collection of Claims Against Company........ 47
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01 Termination of Company's Obligations..................... 47
Section 8.02 Application of Trust Money............................... 49
Section 8.03 Repayment to Company..................................... 49
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Section 8.04 Reinstatement............................................ 49
ARTICLE 9
AMENDMENTS
Section 9.01 Without Consent of Holders............................... 50
Section 9.02 With Consent of Holders.................................. 50
Section 9.03 Compliance with Trust Indenture Act...................... 52
Section 9.04 Revocation and Effect of Consents........................ 52
Section 9.05 Notation on or Exchange of Securities.................... 52
Section 9.06 Subordinated Debenture Trustee to Sign Amendments, etc... 53
ARTICLE 10
SUBORDINATION
Section 10.01 Agreement to Subordinate................................ 53
Section 10.02 Certain Definitions..................................... 53
Section 10.03 Liquidation; Dissolution; Bankruptcy.................... 54
Section 10.04 Default on Senior Debt.................................. 54
Section 10.05 Acceleration of Securities.............................. 54
Section 10.06 When Distribution Must Be Paid Over..................... 54
Section 10.07 Notice by Company....................................... 55
Section 10.08 Subrogation............................................. 55
Section 10.09 Relative Rights......................................... 56
Section 10.10 Subordination May Not Be Impaired by Company............ 56
Section 10.11 Distribution or Notice to Representative................ 56
Section 10.12 Rights of Subordinated Debenture Trustee and
Paying Agent .......................................... 56
Section 10.13 Authorization to Effect Subordination................... 57
ARTICLE 11
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls............................ 57
Section 11.02 Notices................................................. 57
Section 11.03 Communication by Holders with Other Holders............. 59
Section 11.04 Certificate and Opinion as to Conditions Precedent...... 59
Section 11.05 Statements Required in Certificate or Opinion........... 59
Section 11.06 Rules by Subordinated Debenture Trustee and Agents...... 60
Section 11.07 Legal Holidays.......................................... 60
Section 11.08 No Recourse Against Others.............................. 60
Section 11.09 Governing Law........................................... 60
Section 11.10 No Adverse Interpretation of Other Agreements........... 60
Section 11.11 Successors.............................................. 60
Section 11.12 Severability............................................ 61
Section 11.13 Counterpart Originals................................... 61
Section 11.14 Subordinated Debenture Trustee as Paying Agent and
Registrar ............................................. 61
Section 11.15 Table of Contents, Headings, etc........................ 61
Section 11.16 The Bank of New York Not Acting in Individual Capacity.. 61
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Section 11.17 Additional Rights of Holders of Transfer Restricted
Securities ............................................ 61
SIGNATURES ............................................................ 47
Exhibit A Form of Security
Exhibit B Certificate to be Delivered Upon Exchange or Registration of Transfer
of Securities
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Certificate from Acquiring Institutional Accredited Investor
iv
<PAGE>
Exhibit 4.8
INDENTURE, dated as of _______ __, ____, between PRIMEDIA Inc. (the
"Company"), a Delaware corporation, and The Bank of New York, a New York banking
corporation, (the Subordinated Debenture Trustee).
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders (as defined below) of 85/8% Class G
Subordinated Exchange Debentures due 2010 and 85/8% Class H Subordinated
Debentures due 2010 (collectively, the "Securities" or the "Notes") issued by
the Company (as defined below):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS
"144A Global Note" means the global note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with and registered in the name of the Depositary or its nominee that will be
issued in a denomination equal to the outstanding principal amount of the
Securities sold in reliance on Rule 144A.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies, of the controlled person, whether through ownership
of voting securities, by agreement or otherwise.
"Agent" means any Registrar or Paying Agent.
"Applicable Change of Control Premium" with respect to any Security is
defined as the greater of (i) 1.0% of the then outstanding principal amount
thereof and (ii) the excess of (A) the present value of the required interest
and principal payments due thereon, computed using a discount rate equal to the
Treasury Rate plus 75 basis points, over (B) the then outstanding principal
amount of thereof.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Average Life" means, as of the date of determination, with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment (assuming the exercise by the obligor of
such debt security of all unconditional (other than as to the giving of notice)
extension options of each such scheduled payment date) of such debt security
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"Average Life to Redemption" means, as of the date of determination, with
respect to any preferred security, the number of years (including any portion
thereof) remaining to the mandatory redemption date thereof.
"Bank Credit Facility" means the $1.5 billion credit facilities with The
Chase Manhattan Bank, The Bank of New York, Bankers Trust Company and The Bank
of Nova Scotia, as agents.
<PAGE>
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors of the Company.
"Business Day" means any day other than a Legal Holiday (as defined
below).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease which
would at such time be required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than KKR
and its Affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than (A) 35 percent (35%) of the total voting
power of the then outstanding voting stock of the Company and (B) the total
voting power of the then outstanding voting stock of the Company beneficially
owned by KKR and its Affiliates or (ii) during any period of two consecutive
calendar years, individuals who at the beginning of such period constituted the
Company's Board of Directors (together with any new directors whose election by
the Company's Board of Directors or whose nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
Directors then still in office who either were Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors then in
office.
"Class D Subordinated Exchange Debentures" means the 10% Class D
Subordinated Exchange Debentures due 2008 issuable upon exchange of the Series D
Preferred Stock.
"Class E Subordinated Exchange Debentures" means the 9.20% Class E
Subordinated Exchange Debentures due 2009 issuable upon exchange of the Series E
Preferred Stock.
"Class F Subordinated Exchange Debentures" means the 9.20% Class F
Subordinated Exchange Debentures due 2009 issuable upon exchange of the Series F
Preferred Stock.
"Class G Subordinated Exchange Debentures" means the 85/8% Class G
Subordinated Exchange Debentures due 2010 described above and issued under this
Indenture.
"Class H Subordinated Exchange Debentures" means the 85/8% Class H
Subordinated Exchange Debentures due 2010 that may be issued in the Exchange
Offer.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Company" means (i) PRIMEDIA Inc., a Delaware corporation and (ii) any
successor of PRIMEDIA Inc. pursuant to Article 5 hereof.
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"Corporate Trust Office of the Subordinated Debenture Trustee" shall be at
either the address of the Subordinated Debenture Trustee specified in Section
11.02 or such other address as the Subordinated Debenture Trustee may give
notice to the Company.
"Credit Facilities" means, collectively, the Bank Credit Facility and the
New Credit Facility, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, in each
case as amended, modified, renewed, refunded or refinanced from time to time.
"Currency Agreement" means the obligations of any Person pursuant to any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its subsidiaries against
fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, in the form of
Exhibit A hereto except that such Note shall not bear the Global Note Legend and
shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Securities, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Equity Interests" means Capital Stock, warrants, options or other rights
to acquire Capital Stock (but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer which may be made by the Company pursuant
to the Registration Rights Agreement to exchange Class H Subordinated Exchange
Debentures for then outstanding Class G Subordinated Exchange Debentures.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
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"Holder" means a Person in whose name a Security is registered.
"IAI Global Note" means the global Note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its nominee
that will be issued in a denomination equal to the outstanding principal amount
of the Notes sold to Institutional Accredited Investors.
"Indebtedness" of any Person means any indebtedness, contingent or
otherwise, in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement obligations with respect thereto) or
representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to financing leases), if and to the extent any of
the foregoing indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP (except that any such balance that
constitutes a trade payable and/or an accrued liability arising in the ordinary
course of business shall not be considered Indebtedness), and shall also
include, to the extent not otherwise included, any Capital Lease Obligations,
the maximum fixed repurchase price of any Redeemable Stock, indebtedness secured
by a Lien to which the property or assets owned or held by such Person is
subject, whether or not the obligations secured thereby shall have been assumed,
guarantees of items that would be included within this definition to the extent
of such guarantees (exclusive of whether such items would appear upon such
balance sheet), and net liabilities in respect of Currency Agreements and
Interest Rate Agreements. For purposes of the preceding sentence, the maximum
fixed repurchase price of any Redeemable Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Indenture, provided that if such Redeemable Stock is not then permitted to be
repurchased, the repurchase price shall be the book value of such Redeemable
Stock. The amount of Indebtedness of any Person at any date shall be without
duplication (i) the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such contingent
obligations at such date and (ii) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person is
subject, the lesser of the fair market value at such date of any asset subject
to a Lien securing the Indebtedness of others and the amount of Indebtedness
secured. For the purpose of determining the aggregate Indebtedness of the
Company and its Restricted Subsidiaries, such Indebtedness shall exclude the
Indebtedness of any Unrestricted Subsidiary of the Company or any Unrestricted
Subsidiary of a Restricted Subsidiary.
"Indenture" means this Indenture as amended from time to time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Initial Purchasers" means Salomon Brothers Inc and Morgan Stanley & Co.
Incorporated.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Interest Payment Date" has the meaning assigned to such term in the
Security.
"Interest Rate Agreements" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
subsidiaries against fluctuations in interest rates.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
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"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give any security interest in and any filing or other agreement to give
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Securities for use by such Holders in
connection with the Exchange Offer.
"Liquidated Damages" means all unpaid liquidated damages owing by the
Company pursuant to Section 5 of the Registration Rights Agreement.
"New Credit Facility" means the $150 million credit facility with The
Chase Manhattan Bank, The Bank of New York, Bankers Trust Company and The Bank
of Nova Scotia, as agents.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers" means the President, the Treasurer, any Assistant Treasurer,
Controller, Secretary or any Vice President of the Company, as applicable.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Company's principal executive officer, principal financial
officer or principal accounting officer.
"Opinion of Counsel" means a written opinion prepared in accordance with
Section 11.05 hereof, from legal counsel who is acceptable to the Subordinated
Debenture Trustee. The counsel may be an employee of or counsel to the Company,
if applicable, or the Subordinated Debenture Trustee.
"Participant" means, with respect to DTC, Euroclear or Cedel, a Person who
has an account with DTC, Euroclear or Cedel, respectively (and, with respect to
DTC, shall include Euroclear and Cedel).
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Securities issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Public Equity Offering" means an underwritten public offering of primary
shares of the Company's common stock (or any other class of common stock
hereinafter duly authorized by the Company) pursuant to a registration statement
(other than a registration statement on form S-8 or S-4 or successor forms)
filed with the SEC in accordance with the Securities Act.
"Redeemable Stock" means any Equity Interest issued after February __,
1998 which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable before the stated maturity of the
Securities), or upon the happening of any event, matures or is mandatorily
redeemable, in whole or in part, prior to the stated maturity of the Securities,
or is, by its terms or upon the happening of any event, redeemable at the option
of the holder thereof, in whole or in part, at any time prior to the stated
maturity of the Securities.
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"Registration Rights Agreement" means the Registration Rights Agreement
dated February 17, 1998, between the Initial Purchasers, the Company and the
Guarantors, as such agreement may be amended, modified or supplemented from time
to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Global Note bearing the Global Note
Legend and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Securities
initially sold in reliance on Rule 903 of Regulation S.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means, for the purposes of this Indenture, a
Subsidiary of the Company which at the time of determination is not an
Unrestricted Subsidiary. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"7 5/8% Senior Notes" means the 7 5/8% Senior Notes due 2008 of the
Company issued under the 7 5/8% Senior Indenture.
"7 5/8% Senior Note Indenture" means that certain indenture, dated
February 17, 1998, among the Company, the corporations listed on Schedule I
thereto and The Bank of New York, as Trustee, as amended from time to time.
"8 1/2% Senior Notes" means the 8 1/2% Senior Notes due 2006 of the
Company issued under the 8 1/2% Senior Note Indenture.
"8 1/2% Senior Note Indenture" means that certain indenture, dated as of
January 24, 1996, among the Company, the corporations listed on Schedule I
thereto and The Bank of New York, as Trustee, as amended or modified from time
to time.
"10 1/4% Senior Notes" means the 10 1/4% Senior Notes due 2004 of the
Company issued under the 10 1/4% Senior Note Indenture.
"10 1/4% Senior Note Indenture" means that certain indenture, dated as of
May 31, 1994, among the Company, the corporations listed on Schedule I thereto
and Bankers Trust Company, as Trustee, as amended or modified from time to time.
"Senior Notes" means the 8 1/2% Senior Notes, the 10 1/4% Senior Notes and
the 7 5/8% Senior Notes.
"Senior Note Indentures" means the 8 1/2% Senior Note Indenture, the 10
1/4% Senior Note Indenture and the 7 5/8% Senior Note Indenture.
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"Series D Preferred Stock" means the Company's $10.00 Series D
Exchangeable Preferred Stock Redeemable 2008, par value $.01 per share.
"Series E Preferred Stock" means the Company's $9.20 Series E Exchangeable
Preferred Stock Redeemable 2009, par value $.01 per share.
"Series F Preferred Stock" means the Company's $9.20 Series F Exchangeable
Preferred Stock Redeemable 2009, issuable in exchange for the Series E Preferred
Stock and containing terms identical to the Series E Preferred Stock.
"Series G Preferred Stock" means the Company's $8.625 Series G
Exchangeable Preferred Stock Redeemable 2010, par value $.01 per share.
"Series H Preferred Stock" means the Company's $8.625 Series H
Exchangeable Preferred Stock Redeemable 2010 issuable in exchange for the Series
G Preferred Stock and containing terms identical to the Series G Preferred
Stock.
"Subordinated Debenture Trustee" means the party named as such above until
a successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Subsidiary" means any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss.
77aaa-77bbbb).
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.06(b) hereof.
"Treasury Rate," for the purposes of this Indenture, is defined as the
yield to maturity at the time of computation of United States Treasury
securities with a constant maturity (as compiled by and published in the most
recent Federal Reserve Statistical Release H.15 (519) which has become publicly
available at least two Business Days prior to the date fixed for prepayment (or,
if such Statistical Release is no longer published, any publicly available
source of similar market data)) most nearly equal to the then remaining Average
Life of the Securities; provided that if the Average Life of the Securities is
not equal to the constant maturity of a United States Treasury security for
which a weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such yields
are given.
"Trust Officer" means any officer or assistant officer of the Subordinated
Debenture Trustee assigned by the Subordinated Debenture Trustee to administer
this Indenture.
"Unrestricted Global Note" means a permanent Global Note in the form of
Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Securities that do not bear the Private
Placement Legend.
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"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means, for the purposes of this Indenture, (i)
any Subsidiary of the Company which at the time of determination is an
Unrestricted Subsidiary (as designated by the Board of Directors, as provided
below) and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns, or holds any Lien on, any
property of, any other Subsidiary of the Company which is not a Subsidiary of
the Subsidiary to be so designated; provided that the Subsidiary to be so
designated has not at the time of designation, and does not thereafter, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable with respect to any Indebtedness pursuant to which the lender has
recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary.
"U.S. Government Obligations" means direct noncallable obligations of or
guaranteed by the United States of America.
SECTION 1.02 OTHER DEFINITIONS
Defined in
Term Section
---- -------
"Affiliate Transaction".......................................... 4.09
"Change of Control Offer"........................................ 4.08
"Change of Control Payment"...................................... 4.08
"Change of Control Payment Date"................................. 4.08
"Legal Holiday".................................................. 11.07
"Paying Agent"................................................... 2.03
"Registrar"...................................................... 2.03
"Representative"................................................. 10.02
"Restricted Payments"............................................ 4.07
"Senior Debt".................................................... 10.02
"Successor"...................................................... 5.01
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Security;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Subordinated
Debenture Trustee;
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"obligor" on the Security means the Company, any other obligor upon the
Security or any successor obligor upon the Security.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
SECTION 2.01 FORM AND DATING
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the
Subordinated Debenture Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
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(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
SECTION 2.02 EXECUTION AND AUTHENTICATION
One Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal may be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Subordinated Debenture Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Subordinated Debenture Trustee shall, upon a written order of the
Company signed by two Officers (an "Authentication Order"), authenticate Notes
for original issue up to the aggregate principal amount stated in paragraph 4 of
the Notes. The aggregate principal amount of Notes outstanding at any time may
not exceed such amount except as provided in Section 2.07 hereof.
The Subordinated Debenture Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Subordinated Debenture Trustee may do so. Each
reference in this Indenture to authentication by the Subordinated Debenture
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
SECTION 2.03 REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Subordinated Debenture Trustee in writing of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Subordinated Debenture Trustee to act
as the Registrar and Paying Agent and to act as Note Custodian with respect to
the Global Notes.
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SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST
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The Company shall require each Paying Agent other than the Subordinated
Debenture Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Subordinated Debenture Trustee all money held
by the Paying Agent for the payment of principal, premium or Liquidated Damages,
if any, or interest on the Notes, and will notify the Subordinated Debenture
Trustee of any default by the Company in making any such payment. While any such
default continues, the Subordinated Debenture Trustee may require a Paying Agent
to pay all money held by it to the Subordinated Debenture Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Subordinated Debenture Trustee. Upon payment over to the Subordinated Debenture
Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have
no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy
or reorganization proceedings relating to the Company, the Subordinated
Debenture Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05 HOLDER LISTS
The Subordinated Debenture Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA ss. 312(a). If the
Subordinated Debenture Trustee is not the Registrar, the Company shall furnish
to the Subordinated Debenture Trustee at least seven Business Days before each
Interest Payment Date and, at such other times as the Subordinated Debenture
Trustee may request in writing, a list in such form and as of such date as the
Subordinated Debenture Trustee may reasonably require of the names and addresses
of Holders, and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06 TRANSFER AND EXCHANGE
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Notes will be exchanged by the Company for Definitive Notes if (i) the
Company delivers to the Subordinated Debenture Trustee notice from the
Depositary that it is unwilling or unable to continue to act as Depositary
or that it is no longer a clearing agency registered under the Exchange
Act and, in either case, a successor Depositary is not appointed by the
Company within 90 days after the date of such notice from the Depositary
or (ii) the Company in its sole discretion determines that the Global
Notes (in whole but not in part) should be exchanged for Definitive Notes
and delivers a written notice to such effect to the Subordinated Debenture
Trustee. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Subordinated Debenture Trustee. Global Notes
also may be exchanged or replaced, in whole or in part, as provided in
Sections 2.07 and 2.11 hereof. Every Security authenticated and delivered
in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to Section 2.07 or 2.11 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may
not be exchanged for another Security other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Notes also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs as
applicable:
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(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, that
prior to the expiration of the Restricted Period transfers of beneficial
interests in the Regulation S Global Note may not be made to a U.S. Person
or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Note may be
transferred only to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests (other than a transfer of a beneficial interest in a Global Note
to a Person who takes delivery thereof in the form of a beneficial
interest in the same Global Note), the transferor of such beneficial
interest must deliver to the Registrar either (A) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Note in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a Participant
or an Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to
the Registrar containing information regarding the Person in whose name
such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above; provided, that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Global Note prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903 under the Securities Act. Upon
an Exchange Offer by the Company in accordance with Section 2.06(f)
hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to
have been satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction of
all of the requirements for transfer or exchange of beneficial interests
in Global Notes contained in this Indenture, the Securities and otherwise
applicable under the Securities Act, the Subordinated Debenture Trustee
shall adjust the principal amount of the relevant Global Note(s) pursuant
to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of clause (ii) above and the Registrar
receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then (x) the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications and certificates and Opinion of Counsel
required by item (3) thereof, if applicable, and (y) the transferee
must deliver a certificate in the form of Exhibit D hereto.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form
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of a beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of clause (ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Class H Subordinated Indentures or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item (1)(a)
thereof;
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are not required in order to maintain compliance
with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Subordinated Debenture Trustee
shall authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon receipt by
the Registrar of the following documentation:
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(A) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note,
a certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable, and a
certificate in the form of Exhibit D hereto;
(F) if such beneficial interest is being transferred to the Company
or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof,
the Subordinated Debenture Trustee shall cause the aggregate principal amount of
the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and the Subordinated Debenture Trustee
shall authenticate and make available for delivery to the Person designated in
the instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in such name or
names and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Subordinated
Debenture Trustee shall make available for delivery such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global Note
may exchange such beneficial interest for an Unrestricted Definitive Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
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(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including the certifications
in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a Definitive Note that does not
bear the Private Placement Legend, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive Note
or to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(ii) hereof, the Subordinated Debenture Trustee shall
cause the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute
and the Subordinated Debenture Trustee shall authenticate and make available for
delivery to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in
such name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant.
The Subordinated Debenture Trustee shall make available for delivery such
Definitive Notes to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
section 2.06(c)(iii) shall not bear the Private Placement Legend. A beneficial
interest in an Unrestricted Global Note cannot be exchanged for a Definitive
Note bearing the Private Placement Legend or transferred to a Person who takes
delivery thereof in the form of a Definitive Note bearing the Private Placement
Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to transfer
such Definitive Notes to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
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(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Definitive Note is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(1) thereof;
(C) if such Definitive Note is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (2) thereof;
(D) if such Definitive Note is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such Definitive Note is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(b) thereof;
(F) if such Definitive Note is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof; or
(G) if such Definitive Note is being transferred to an Institutional
Accredited Investor pursuant to an exemption from the registration
requirements of the Securities Act, a certificate in the Form of Exhibit D
hereto,
the Subordinated Debenture Trustee shall cancel the Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause (B)
above, the 144A Global Note, in the case of clause (C) above, the Regulation S
Global Note and, in the case of clause (G) above,the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof;
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company to
the effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein
and in the Private Placement Legend are not required in order to
maintain compliance with the Securities Act, and such Definitive
Notes are being exchanged or transferred in compliance with any
applicable blue sky securities laws of any State of the United
States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Subordinated Debenture Trustee shall cancel the
Definitive Notes and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Subordinated Debenture Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Subordinated Debenture Trustee shall authenticate one
or more Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraphs
(ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
Restricted Definitive Notes may be transferred to and registered in the
name of Persons who take delivery thereof if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
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(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver (x) a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(a) thereof;
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in
compliance with the Securities Act, that the restrictions on
transfer contained herein and in the Private Placement Legend are
not required in order to maintain compliance with the Securities
Act, and such Restricted Definitive Note is being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request for such a
transfer, the Registrar shall register the Unrestricted Definitive Notes
pursuant to the instructions from the Holder thereof. Unrestricted
Definitive Notes cannot be exchanged for or transferred to Persons who
take delivery thereof in the form of a Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, the
Subordinated Debenture Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
the beneficial interests in the Restricted Global Notes tendered for acceptance
by persons that are not (x) broker-dealers, (y) Persons participating in the
distribution of the Exchange Notes or (z) Persons who are affiliates (as defined
in Rule 144) of the Company and accepted for exchange
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in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount
equal to the principal amount of the Restricted Definitive Notes accepted for
exchange in the Exchange Offer. Concurrent with the issuance of such Notes, the
Subordinated Debenture Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Notes to be reduced accordingly, and the Company
shall execute and the Subordinated Debenture Trustee shall authenticate and make
available for delivery to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following
form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE
SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO
SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2 .06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE SUBORDINATED DEBENTURE TRUSTEE MAY
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MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE SUBORDINATED DEBENTURE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Subordinated Debenture Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Gl obal Note shall be reduced accordingly and an endorsement shall be
made on such Global Note, by th e Subordinated Debenture Trustee or by the
Depositary at the direction of the Subordinated Debenture Trustee, to reflect
such reduction; and if the beneficial interest is being exchanged for or
transferred t o a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note, by
the Subordinated Debenture Trustee or by the Depositary at the direction of the
Subordinated Debenture Trustee, to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Subordinated Debenture Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.08, and
9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Security selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the valid
obligations of the Company, evidencing th e same debt, and entitled to the same
benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Securities during a period beginning at the opening
of business 15 days before the day of mailing of a notice of redemption under
Section 3.02 hereof and ending at the close of business on the day of mailing,
(B) to register the transfer of or to exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part or (C) to register the transfer of or to exchange a
Security between a record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any
Security, the Subordin ated Debenture Trustee, any Agent and the Company may
deem and treat the Person in whose na me any Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Securities and for all other purposes, and
none of th e Subordinated Debenture Trustee, any Agent or the Company shall be
affected by notice to the contrary.
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(vii) The Subordinated Debenture Trustee shall authenticate Global Notes
and Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
transfer or exchange may be submitted by facsimile.
SECTION 2.07 REPLACEMENT SECURITIES
If any mutilated Security is surrendered to the Subordinated Debenture
Trustee, or the Company and the Subordinated Debenture Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, the
Company shall issue and the Subordinated Debenture Trustee, upon the written
order of the Company signed by an Officer, shall authenticate a replacement
Security if the Subordinated Debenture Trustee's requirements are met. An
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Subordinated Debenture Trustee and the Company to protect the Company,
the Subordinated Debenture Trustee, any Agent or any authenticating agent from
any loss which any of them may suffer if a Security is replaced. The Company may
charge for its expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company and
shall be entitled t o all benefits of this Indenture equally and proportionately
with all other Securities duly issued hereunder.
SECTION 2.08 OUTSTANDING SECURITIES
The Securities outstanding at any time are all the Securities
authenticated by the Subordinate d Debenture Trustee except for those cancelled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Subordinated Debenture Trustee receives proof
satisfactory to it that the replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Securities payable on that date, then on and after that date such
Securities shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Except as set forth in Section 2.09 hereof, a Security does not cease to
be outstanding because the Company or an Affiliate holds the Security.
SECTION 2.09 TREASURY SECURITIES
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Subordinated Debenture Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which a Trust
Officer of the Subordinated Debenture Trustee knows are so owned shall be so
disregarded.
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SECTION 2.10 TEMPORARY SECURITIES
Until definitive Securities are ready for delivery, the Company may
prepare and the Subordinated Debenture Trustee shall authenticate temporary
securities upon a written order of the Company signed by an Officer and
delivered or caused to be delivered to a Trust Officer. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Subordinated
Debenture Trustee shall authenticate definitive Securities in exchange for
temporary Securities.
Holders of temporary Securities shall be entitled to all benefits of this
Indenture.
SECTION 2.11 CANCELLATION
The Company at any time may deliver Securities to the Subordinated
Debenture Trustee for cancellation. The Registrar and Paying Agent shall forward
to the Subordinated Debenture Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Subordinated Debenture
Trustee and no one else shall cancel all Securities surrendered for registration
of transfer, exchange, payment, replacement or cancellation. The Company may not
issue new Securities to replace Securities that it has paid or that have been
delivered to the Subordinated Debenture Trustee for cancellation.
SECTION 2.12 DEFAULTED INTEREST
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Securities and in Section 4.01 hereof. The Company shall, with the
consent of the Subordinated Debenture Trustee, fix each such special record date
and payment date. At least 15 days before the record date, the Company (or the
Subordinated Debenture Trustee, in the name of and at the expense of the
Company) shall mail to Holders a notice that states the special record date, the
related payment date and the amount of such interest to be paid.
SECTION 2.13 CUSIP NUMBERS
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Subordinated Debenture Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Subordinated Debenture Trustee of any change in the "CUSIP"
numbers.
ARTICLE 3
OPTIONAL REDEMPTION, OPTIONAL REDEMPTION UPON CHANGE OF
CONTROL AND OPTIONAL REDEMPTION UPON A PUBLIC EQUITY OFFERING
SECTION 3.01 NOTICES TO SUBORDINATED DEBENTURE TRUSTEE
(a) If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the
Subordinated Debenture Trustee, at least 45 days but not more than 60 days
before a redemption date, an
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Officers' Certificate stating that such redemption shall occur pursuant to
Section 3.07 hereof and stating the redemption date, the principal amount
of Securities to be redeemed and the redemption price.
(b) If the Company elects to redeem Securities pursuant to the provisions
of Section 3.08 hereof, it shall furnish to the Subordinated Debenture
Trustee, at least 45 days but not more than 60 days before the redemption
date, an Officers' Certificate stating that a Change of Control has
occurred, the date of such Change of Control and that such redemption
shall occur pursuant to Section 3.08 hereof, and further stating the
principal amount of Securities to be redeemed, the redemption price of
such Securities and the intended redemption date.
SECTION 3.02 SELECTION OF SECURITIES TO BE REDEEMED
If less than all of the Securities are to be redeemed at any time,
selection of the Securities for redemption will be made by the Subordinated
Debenture Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Securities are listed, or, if the
Securities are not listed on a national securities exchange, on a pro rata
basis, by lot or by such method as the Subordinated Debenture Trustee shall deem
fair and appropriate; provided that no Securities of $1,000 or less shall be
redeemed in part. The Subordinated Debenture Trustee may select for redemption
any portion (equal to $1,000 or any integral multiple thereof) of the principal
of Securities that have denominations larger than $1,000. Except as provided in
the preceding sentence, provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption.
The Subordinated Debenture Trustee shall promptly notify the Company in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. The particular Securities to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
redemption date by the Subordinated Debenture Trustee from the outstanding
Securities not previously called for redemption.
SECTION 3.03 NOTICES TO HOLDERS
(a) If the Company elects to redeem Securities pursuant to either Section
3.07 or 3.08 hereof, notice of redemption shall be mailed by first class
mail at least 30 days but not more than 60 days before the redemption date
to each Holder of Securities that are to be redeemed at its registered
address.
The notice shall identify the Securities to be redeemed (including CUSIP
number) and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will
be issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the
redemption price;
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(6) that interest on Securities or portions of them called for
redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
are being redeemed; and
(8) the aggregate principal amount of Securities that are being
redeemed.
(b) At the Company's request, the Subordinated Debenture Trustee shall
give the notice required in Section 3.03(a) hereof in the Company's name
and at its expense and setting forth the information to be stated in such
notice as provided in Section 3.03(a) hereof.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed (after the Subordinated Debenture
Trustee has received the notice provided for in Section 3.01 hereof), Securities
called for redemption become due and payable on the redemption date at the
redemption price and shall cease to bear interest from and after the redemption
date (unless the Company shall fail to make payment of the redemption price or
accrued interest on the redemption date). Upon surrender to the Paying Agent,
such Securities shall be paid at the redemption price, plus premium and
Liquidated Damages, if any, plus accrued interest, if any, to the redemption
date, but interest installments whose maturity is on the redemption date and
Liquidated Damages which become payable on the redemption date will be payable
to the Holder of record at the close of business on the relevant record dates
referred to in the Securities.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE OR PURCHASE PRICE
One Business Day prior to the redemption date, the Company shall deposit
with the Subordinated Debenture Trustee or with the Paying Agent money (in
same-day funds) sufficient to pay the redemption price of, premium and
Liquidated Damages, if any, and accrued interest on, all Securities to be
redeemed on that date other than Securities or portions thereof called for
redemption on that date which previously have been delivered by the Company to
the Subordinated Debenture Trustee for cancellation. The Subordinated Debenture
Trustee or the Paying Agent shall return to the Company any such money not
required for that purpose.
If the Company complies with the preceding paragraph, interest on the
Securities or portions thereof to be redeemed, whether or not such Securities
are presented for payment, will cease to accrue on the applicable redemption
date. If any Security called for redemption shall not be so paid upon surrender
for redemption because of the failure of the Company to comply with the
preceding paragraph, then interest will be paid on the unpaid principal from the
redemption date until such principal is paid and on any interest not paid on
such unpaid principal, in each case, at the rate provided in the Securities and
in Section 4.01 hereof.
SECTION 3.06 SECURITIES REDEEMED IN PART
Upon surrender of a Security that is redeemed in part, the Company shall
issue and the Subordinated Debenture Trustee shall authenticate for the Holder
at the expense of the Company a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
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SECTION 3.07 OPTIONAL REDEMPTION
Except as otherwise provided herein, prior to April 1, 2003, the Company
may not redeem the Securities, in whole or in part. At any time on or after
April 1, 2003, the Company may redeem all or any of the Securities, in whole or
in part, at a redemption price equal to a percentage of the principal amount
thereof, as set forth in the immediately succeeding paragraph, plus Liquidated
Damages, if any, plus accrued and unpaid interest to the redemption date.
The redemption price as a percentage of the principal amount shall be as
follows, if the Securities are redeemed during the 12 month period beginning
April 1 of the following years:
Year Percentage
---- ----------
2003 .................................... 104.313%
2004 .................................... 102.875%
2005 .................................... 101.438%
2006 and thereafter...................... 100.000%
Notwithstanding the foregoing,
(1) at any time prior to April 1, 2001, the Company may redeem up to
$125.0 million of the Securities at a redemption price of 108.625% of the
principal amount thereof, plus accrued and unpaid interest to the redemption
date, out of the net proceeds of one or more Public Equity Offerings, provided
that any such redemption shall occur within 180 days of such Public Equity
Offering; and
(2) upon the occurrence at any time of a Change in Control, the Securities
will be redeemable, at the option of the Company, in whole or in part, pursuant
to the provisions of Section 3.08 hereof.
Any redemption pursuant to this Section 3.07 shall be made, to the extent
applicable, pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08 OPTIONAL REDEMPTION UPON CHANGE OF CONTROL
In addition to any redemption pursuant to Section 3.07 hereof, the
Securities will be redeemable, at the option of the Holders, in whole or in
part, at any time within 160 days after a Change of Control at a redemption
price equal to the sum of (i) the then outstanding principal amount thereof plus
(ii) accrued and unpaid interest, if any, to the redemption date plus (iii) the
Applicable Change of Control Premium.
ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF SECURITIES
The Company shall pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities, and shall pay Liquidated
Damages, if any, on the dates and in the manner provided in the Registration
Rights Agreement. Principal and interest shall be considered paid on the date
due if the Paying Agent, other than the Company or a Subsidiary of the Company,
holds on that date money deposited by the Company in available funds and
designated for and sufficient to pay all principal and interest then due.
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The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
at the same rate per annum on the Securities to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY
The Company shall maintain, in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Subordinated Debenture
Trustee or the Registrar) where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company shall
give prompt written notice to the Subordinated Debenture Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Subordinated Debenture Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Subordinated Debenture Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt
written notice to the Subordinated Debenture Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Subordinated Debenture Trustee as one such office or agency of the Company in
accordance with Section 2.03 hereof.
SECTION 4.03 SEC REPORTS; FINANCIAL STATEMENTS
(a) The Company shall file with the Subordinated Debenture Trustee, within
15 days after it files the same with the SEC, copies of the annual reports
and the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. If the Company is not subject to
the requirements of such Section 13 or 15(d), the Company shall file with
the Subordinated Debenture Trustee, within 15 days after it would have
been required to file the same with the SEC, financial statements,
including any notes thereto (and with respect to annual reports, an
auditors' report by a firm of established national reputation), and a
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," both comparable to that which the Company would have been
required to include in such annual reports, information, documents or
other reports if the Company had been subject to the requirements of such
Section 13 or 15(d). The Company shall also comply with the other
provisions of TIA ss.314(a).
(b) If the Company is required to furnish annual or quarterly reports to
its stockholders pursuant to the Exchange Act, the Company shall cause any
annual report furnished to its stockholders generally and any quarterly or
other financial reports furnished by it to its stockholders generally to
be filed with the Subordinated Debenture Trustee and mailed to the Holders
at their addresses appearing in the register of Securities maintained by
the Registrar. If the Company is not required to furnish annual or
quarterly reports to its stockholders pursuant to the Exchange Act, so
long as at least 5% of the original principal amount of the Securities
remain outstanding, the Company shall cause its financial statements
referred to in Section 4.03(a) hereof, including any notes thereto (and
with respect to annual reports, an auditors' report by a firm of
established national reputation), and a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" to be so mailed
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to the Holders within 90 days after the end of each of the Company's
fiscal years and within 60 days after the end of each of the Company's
first three fiscal quarters. As of the date hereof, the Company's fiscal
year ends on December 31.
Delivery of such reports, information and documents to the Subordinated
Debenture Trustee is for informational purposes only and the Subordinated
Debenture Trustee's receipt of such shall not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any
of its covenants hereunder (as to which the Subordinated Debenture Trustee
is entitled to rely exclusively on Officers' Certificates).
SECTION 4.04 COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Subordinated Debenture Trustee,
within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as to
each such Officer signing such certificate, that to the best of his
knowledge the Company has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions
hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have
knowledge and what action the Company is taking or proposes to take with
respect thereto) and that to the best of his knowledge no event has
occurred and remains in existence by reason of which payments on account
of the principal of or interest, if any, on the Securities are prohibited
or, if such event has occurred, a description of the event and what action
the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 hereof shall be accompanied
by a written statement of the Company's independent public accountants
(who shall be a firm of established national reputation) that in making
the examination necessary for certification of such financial statements
nothing has come to their attention that would lead them to believe that
the Company has violated any provisions of Articles 4 or 5 of this
Indenture or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such accountants
shall not be liable directly or indirectly to any Person for any failure
to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Securities are outstanding,
(i) deliver to the Subordinated Debenture Trustee, forthwith upon any
Officer becoming aware of any Default or Event of Default under this
Indenture, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with
respect thereto and (ii) promptly notify the Subordinated Debenture
Trustee of any Change of Control.
SECTION 4.05 COMPLIANCE WITH LAWS, TAXES
The Company shall, and shall cause each of its Subsidiaries to, comply
with all statutes, laws, ordinances, or government rules and regulations to
which it is subject, noncompliance with which would materially adversely affect
the business, earnings, properties, assets or condition, financial or otherwise,
of the Company and its Subsidiaries taken as a whole.
The Company shall, and shall cause each of its Subsidiaries to, pay prior
to delinquency all taxes, assessments, and governmental levies except as
contested in good faith and by appropriate proceedings.
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SECTION 4.06 STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the Company's
obligation to pay the Securities; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
insofar as such law applies to the Securities, and covenants that it shall not,
by resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Subordinated Debenture Trustee, but will suffer and permit
the execution of every such power as though no such law has been enacted.
SECTION 4.07 LIMITATIONS ON RESTRICTED PAYMENTS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Capital Stock or other Equity Interests (other than (A) dividends
or distributions payable in Equity Interests of the Company or such Restricted
Subsidiary or (B) dividends or distributions payable to the Company or any of
its Restricted Subsidiaries) or (ii) purchase, redeem or otherwise acquire or
retire for value any Equity Interests of the Company or any Restricted
Subsidiary (other than any such Equity Interests owned by the Company or any of
its Restricted Subsidiaries) (the foregoing actions set forth in clauses (i) and
(ii) being referred to as "Restricted Payments"), if, at the time of such
Restricted Payment, a Default or Event of Default under the Securities shall
have occurred and be continuing or shall occur as a consequence thereof.
SECTION 4.08 CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder shall have the
right to require the repurchase of such Holder's Securities pursuant to the
offer described below (the "Change of Control Offer") at a purchase price equal
to 101% of the aggregate principal amount of such Securities plus accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
Payment"). Prior to the mailing of the notice to holders provided for in the
paragraph below, the Company hereby covenants (i) (A) to repay in full all
Obligations under the Credit Facilities or to offer to repay in full all such
Obligations and to repay the Obligations of each lender who has accepted such
offer or (B) to obtain the requisite consent under the Credit Facilities to
permit the repurchase of Securities pursuant to the Change of Control Offer;
(ii) (A) to commence an offer (the "Exchange Debenture Offer") to repurchase all
and to purchase (upon termination of the Exchange Debenture Offer) all Exchange
Debentures tendered pursuant to such offer or (B) to obtain the requisite
consent under the Exchange Debenture Indenture to permit the repurchase of
Securities pursuant to the Change of Control Offer and (iii) with respect to all
other Senior Debt (as defined below) to (A) repay such Senior Debt to the extent
required by the terms thereof to permit repurchase of the Securities pursuant to
the Change of Control Offer or (B) to obtain the requisite consents, if any,
under all agreements governing all such Senior Debt to permit the repurchase of
Securities pursuant to the Change of Control Offer. In no event shall the
Company be required to offer to repurchase or repurchase the Securities unless
it shall have either repaid the outstanding Senior Debt to the extent required
by the terms thereof or obtained the requisite consents thereunder, if any, to
permit the repurchase of the Securities pursuant to the Change of Control Offer.
Within the later of (a) 40 days following any Change of Control and (b)
the date that the foregoing conditions are satisfied, the Company shall mail a
notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.08 and that all Securities tendered will be accepted for
payment;
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(2) the purchase price and the purchase date (which shall be no earlier
than 30 days nor later than 40 days from the date such notice is
mailed)(the "Change of Control Payment Date");
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Securities accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that Holders electing to have any of their Securities purchased
pursuant to a Change of Control Offer will be required to surrender the
Securities, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
preceding the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying
Agent receives, not later than the close of business on the third Business
Day preceding the Change of Control Payment Date, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Securities delivered for purchase, and a statement that such Holder is
withdrawing his election to have such Securities purchased; and
(7) that Holders whose Securities are being purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion
of the Securities surrendered; provided that each Security purchased and
each such new Security issued by the Company shall be in a principal
amount of $1,000 or integral multiples thereof.
The Change of Control Offer shall be deemed to have commenced upon mailing
of the notice described in this paragraph and shall terminate 20 Business Days
after its commencement, unless a longer offering period is required by law. If
the Change of Control Payment Date is on the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Securities pursuant to the Change
of Control Offer.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment Securities or portions thereof tendered pursuant
to the Change of Control Offer, (2) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Securities or portions
thereof so tendered and (3) deliver or cause to be delivered to the Subordinated
Debenture Trustee, the Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof tendered to the Company.
The Paying Agent shall promptly mail to each holder of Securities so accepted,
payment in an amount equal to the purchase price for such Securities, and the
Subordinated Debenture Trustee shall promptly authenticate and make available
for delivery to such holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered; provided that each such new
Security shall be in a principal amount of $1,000 or integral multiples thereof.
The Company will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
SECTION 4.09 TRANSACTIONS WITH AFFILIATES
Neither the Company nor any of its Restricted Subsidiaries shall make any
loan, advance, guarantee or capital contribution to, or for the benefit of, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or for the benefit of, or purchase or lease any property or assets from, or
enter into or amend any contract, agreement or understanding with, or for the
benefit of, (i) any Person (or any Affiliate of such Person) holding 10% or more
of any class of Capital Stock of the Company or any of its Restricted
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Subsidiaries or (ii) any Affiliate of the Company or any of its Restricted
Subsidiaries (each an "Affiliate Transaction"), involving aggregate payments of
consideration in excess of $5.0 million, unless (a) such Affiliate Transaction
is on terms that are not materially less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (b) the Company delivers to the Trustee with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, a resolution adopted by the
majority of the Board of Directors approving such Affiliate Transaction and set
forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (a) above; and provided, further, that, the foregoing
restriction shall not apply to (i) the payment of an annual fee to KKR for the
rendering of management consulting and financial services to the Company and its
Restricted Subsidiaries in an aggregate amount which is reasonable in relation
thereto, (ii) the payment of transaction fees to KKR in amounts which are in
accordance with past practices for the rendering of financial advice and
services in connection with acquisitions, dispositions and financings by the
Company and its Subsidiaries, (iii) the payment of reasonable and customary fees
paid to, and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary, (iv) loans to officers,
directors and employees of the Company and its Subsidiaries for business or
personal purposes and other loans and advances to such officers, directors and
employees for travel, entertainment, moving and other relocation expenses made
in the ordinary course of business of the Company and its Subsidiaries, (v) any
Restricted Payments (as defined in the referent indenture) not prohibited by the
RESTRICTED PAYMENTS covenant in the Senior Note Indentures, the Exchange
Debenture Indenture, the Class B Debenture Indenture, the Class D Debenture
Indenture, Class E Debenture Indenture of the Class F Debenture Indenture or any
Investment (as defined in the referent indenture) not prohibited by the
INVESTMENTS IN UNRESTRICTED SUBSIDIARIES covenant in the Senior Note Indentures,
(vi) transactions between or among any of the Company and its Restricted
Subsidiaries or (vii) allocation of corporate overhead to Unrestricted
Subsidiaries on a basis no less favorable to the Company than such allocations
to Restricted Subsidiaries.
SECTION 4.10 CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each Restricted
Subsidiary in accordance with the respective organizational documents of each
Restricted Subsidiary and the rights (charter and statutory), licenses and
franchises of the Company and its Restricted Subsidiaries; provided that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any Restricted Subsidiary,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Restricted Subsidiaries taken as a whole and that the loss thereof is not
adverse in any material respect to the Holders.
SECTION 4.11 RULE 144A INFORMATION REQUIREMENT.
The Company will furnish to the Holders or beneficial holders of the
Securities and prospective purchasers of the Securities designated by the
holders of Transfer Restricted Securities, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act
until such time as the Company consummates the Exchange Offer or has registered
the Securities for resale under the Securities Act.
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ARTICLE 5
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Company may not consolidate with, merge with or into, or transfer all
or substantially all of its assets (as an entirety or substantially as an
entirety in one transaction or a series of related transactions) to any Person
or permit any Person to merge with or into it unless:
(1) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into which the Company
is merged or to which the properties and assets of the Company are
transferred (collectively the "Successor") shall be a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture, executed and delivered to the Subordinated
Debenture Trustee, in form satisfactory to the Subordinated Debenture
Trustee, all the obligations of the Company under the Securities and this
Indenture; and
(2) immediately after giving effect to such transaction, no Default and no
Event of Default under this Indenture shall have occurred and be
continuing.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company or any
assignment of its obligations under this Indenture or the Securities in
accordance with Section 5.01 hereof, the successor formed by such consolidation
or into or with which the Company is merged or to which such sale, lease,
conveyance or other disposition or assignment is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such Successor has been named as the
Company herein and the predecessor Company, in the case of a sale, lease,
conveyance or other disposition or assignment, shall be released from all
obligations under this Indenture and the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT
An "Event of Default" occurs if:
(1) the Company fails to make any payment of interest or Liquidated
Damages on any Security when the same shall become due and payable and
such default continues for a period of 30 days and for five days after
written notice of such default is given to the Company by the Holders of
at least 51% in principal amount of the Securities following the
expiration of such 30-day period;
(2) the Company fails to make any payment of the principal of or premium
on any Security when the same shall become due and payable, whether at
maturity or upon acceleration, redemption or otherwise, and such default
continues for a period of ten days;
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(3) the Company fails to comply with any of its other agreements or
covenants in, or provisions of, the Securities or this Indenture and such
failure continues for the period and after the notice specified below;
(4) an event of default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness
or guarantee is now existing or thereafter created in the future, if as a
result of such event of default the maturity of such Indebtedness has been
accelerated prior to its express maturity and the principal amount of such
Indebtedness is $22.5 million or more or the principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness the maturity of which as been accelerated, aggregates $45
million or more, provided that an Event of Default shall not be deemed to
occur with respect to any accelerated Indebtedness which is repaid or
prepaid, or the acceleration of which is rescinded, within 60 days after
such declaration;
(5) the Company, or any of the Restricted Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors; or
(6) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(a) is for relief against the Company, or any of its Restricted
Subsidiaries as debtor in an involuntary case,
(b) appoints a Custodian of the Company, or any of its Restricted
Subsidiaries or a Custodian for all or substantially all of the
property of the Company, or any of its Restricted Subsidiaries, or
(c) orders the liquidation of the Company, or any of its Restricted
Subsidiaries, and the order or decree remains unstayed and in effect
for 60 days.
The Company is required pursuant to Section 4.04(a) hereof to deliver to
the Subordinated Debenture Trustee annually a statement regarding compliance
with the provisions of this Indenture, and the Company is required pursuant to
Section 4.04(c) hereof upon becoming aware of any Default or Event of Default to
deliver a statement to the Subordinated Debenture Trustee specifying such
Default or Event of Default. The Subordinated Debenture Trustee shall not be
deemed to know of a Default unless a Trust Officer has actual knowledge of such
Default or receives written notice of such Default with specific reference to
such Default.
In the case of any Event of Default pursuant to the provisions of this
Section 6.01 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium, if any, which the Company would have had to pay if the Company
then had elected to redeem the Securities pursuant to Section 3.07 hereof, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law, anything contained in this Indenture or in the
Securities to the contrary notwithstanding.
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A Default under clause (3) is not an Event of Default until the
Subordinated Debenture Trustee notifies the Company, or the Holders of at least
51% in principal amount of the then outstanding Securities notify the Company
and the Subordinated Debenture Trustee in writing, of the Default and the
Company does not cure the Default within 60 days after receipt of the notice.
The notice must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default."
SECTION 6.02 ACCELERATION
If an Event of Default (other than an Event of Default with respect to the
Company specified in clauses (5) and (6) of Section 6.01 hereof) occurs and is
continuing, the Subordinated Debenture Trustee or the Holders of at least 51% in
principal amount of the then outstanding Securities, by written notice to the
Company and to the agents under the Credit Facilities, the trustees under the
Senior Note Indentures and the Exchange Debenture Indenture (and to the
Subordinated Debenture Trustee if such notice is given by the Holders) may, and
the Subordinated Debenture Trustee at the request of such Holders shall, declare
all unpaid principal of, premium and Liquidated Damages, if any, and accrued
interest on the Securities to be due and payable upon the first to occur of an
acceleration under any of the Credit Facilities, any of the Senior Notes or
Exchange Debentures or 15 Business Days after receipt by the Company, such agent
and such trustees of such written notice to the extent that the Event of Default
is continuing. If an Event of Default with respect to the Company specified in
clause (5) or (6) of Section 6.01 hereof occurs, all unpaid principal of,
premium and Liquidated Damages, if any, and accrued interest on the Securities
then outstanding shall ipso facto become and be immediately due and payable
without any declaration, notice or other act on the part of the Subordinated
Debenture Trustee or any Holder. The Holders of at least 51% in aggregate
principal amount of the then outstanding Securities by written notice to the
Subordinated Debenture Trustee may rescind an acceleration and its consequences
if the rescission would not conflict with any judgment or decree and if all
existing Events of Default (except nonpayment of principal, premium and
Liquidated Damages, if any, or interest on the Securities that has become due
solely as a result of such acceleration) have been cured or waived.
In the event that the maturity of the Securities is accelerated pursuant
to this Section 6.02, 100% of the principal amount thereof and premium and
Liquidated Damages, if any, and accrued interest to the date of payment shall
become due and payable.
SECTION 6.03 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Subordinated
Debenture Trustee may pursue any available remedy to collect the payment of
principal, premium and Liquidated Damages, if any, or interest then due on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Subordinated Debenture Trustee may maintain a proceeding even if it
does not possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Subordinated Debenture Trustee or any
Holder in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
SECTION 6.04 WAIVER OF PAST DEFAULTS
The Holders of at least 51% in principal amount of the then outstanding
Securities by notice to the Subordinated Debenture Trustee may waive an existing
Default or Event of Default and its consequences (including waivers obtained in
connection with a tender offer or exchange offer for Securities), except a
continuing Default or Event of Default in the payment of the principal of,
premium or Liquidated Damages, if any, or interest on, such Security (including,
without limitation, pursuant to any mandatory or optional redemption obligation
hereunder) or that resulted from the failure to comply with Section 4.08 hereof.
Upon any such waiver, such Default shall cease
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to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05 CONTROL BY MAJORITY
The Holders of at least 51% in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Subordinated Debenture Trustee or exercising any
trust or power conferred on it. However, the Subordinated Debenture Trustee may
refuse to follow any direction that conflicts with law or this Indenture, that
the Subordinated Debenture Trustee determines may be unduly prejudicial to the
rights of other Holders, or that may involve the Subordinated Debenture Trustee
in personal liability.
SECTION 6.06 LIMITATIONS ON SUITS
A Holder may not pursue a remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Subordinated Debenture Trustee written notice
of a continuing Event of Default;
(2) the Holders of at least 51% in principal amount of the then
outstanding Securities make a written request to the Subordinated Debenture
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Subordinated Debenture Trustee
indemnity satisfactory to the Subordinated Debenture Trustee against any loss,
liability or expense (including, without limitation, fees and expenses of
counsel);
(4) the Subordinated Debenture Trustee does not comply with the request
within 30 days after receipt of the request and the offer of indemnity; and
(5) during such 30-day period the Holders of at least 51% in principal
amount of the then outstanding Securities do not give the Subordinated Debenture
Trustee a direction which is inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal of, premium and Liquidated
Damages, if any, and interest on the Security, on or after the respective due
dates expressed in the Security or the Registration Rights Agreement, as the
case may be, or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of the Holder.
SECTION 6.08 COLLECTION SUIT BY SUBORDINATED DEBENTURE TRUSTEE
If an Event of Default specified in Section 6.01(1), (2) or (3) (with
respect to the Company's obligations under Section 4.08 hereof) hereof occurs
and is continuing, the Subordinated Debenture Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against the Company
for the amount of principal, premium and Liquidated Damages, if any, and
interest remaining unpaid on the Securities, determined in accordance with
Section 6.02 hereof and interest on overdue principal, premium, if any,
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and, to the extent lawful, interest, and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Subordinated Debenture Trustee, its agents and counsel.
SECTION 6.09 SUBORDINATED DEBENTURE TRUSTEE MAY FILE PROOFS OF CLAIM
The Subordinated Debenture Trustee is authorized to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Subordinated Debenture Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Subordinated Debenture Trustee, its agents and counsel) and the Holders allowed
in any judicial proceedings relative to the Company, its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Subordinated Debenture Trustee, and in the event that
the Subordinated Debenture Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Subordinated Debenture Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances
of the Subordinated Debenture Trustee, its agents and counsel, and any other
amounts due the Subordinated Debenture Trustee under Section 7.07 hereof. To the
extent that the payment of any such compensation, expenses, disbursements and
advances of the Subordinated Debenture Trustee, its agents and counsel, and any
other amounts due the Subordinated Debenture Trustee under Section 7.07 hereof
out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties which
the Holders of the Securities may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the
Subordinated Debenture Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Subordinated Debenture Trustee to vote in respect of the claim of
any Holder in any such proceeding.
SECTION 6.10 PRIORITIES
If the Subordinated Debenture Trustee collects any money pursuant to this
Article 6, it shall pay out the money in the following order:
First: to the Subordinated Debenture Trustee for amounts due under Section
7.07 hereof;
Second: subject to Article 10 hereof, to Holders for amounts due and
unpaid on the Securities for principal, premium and Liquidated Damages, if
any, and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal,
premium and Liquidated Damages, if any, and interest, respectively; and
Third: to the Company.
The Subordinated Debenture Trustee may fix a record date and payment date
for any payment to Holders pursuant to this Article 6.
SECTION 6.11 UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Subordinated Debenture Trustee for any
action taken or omitted by it as a Subordinated Debenture Trustee, a court in
its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims
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or defenses made by the party litigant. This Section 6.11 does not apply to a
suit by the Subordinated Debenture Trustee, a suit by a Holder pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Securities.
ARTICLE 7
SUBORDINATED DEBENTURE TRUSTEE
SECTION 7.01 DUTIES OF SUBORDINATED DEBENTURE TRUSTEE
(1) If an Event of Default has occurred and is continuing, the
Subordinated Debenture Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill in such exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(a) the Subordinated Debenture Trustee need perform only those
duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into
this Indenture against the Subordinated Debenture Trustee; and
(b) in the absence of bad faith on its part, the Subordinated
Debenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Subordinated
Debenture Trustee and conforming to the requirements of this
Indenture. However, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be
furnished to the Subordinated Debenture Trustee, the Subordinated
Debenture Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(3) The Subordinated Debenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(a) this paragraph does not limit the effect of paragraph (2) of
this Section 7.01;
(b) the Subordinated Debenture Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer, unless it
is proved that the Subordinated Debenture Trustee was negligent in
ascertaining the pertinent facts; and
(c) the Subordinated Debenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.05
hereof.
(4) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Subordinated Debenture Trustee is
subject to paragraphs (1), (2) and (3) of this Section 7.01.
(5) No provision of this Indenture shall require the Subordinated
Debenture Trustee to expend or risk its own funds or incur any liability.
The Subordinated Debenture Trustee is not obligated to perform any duty or
exercise any right or power under
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this Indenture at the request of the Holders of the Securities unless it
receives an offer from such Holders of security and indemnity satisfactory
to it against any loss, liability or expense (including, without
limitation, fees of counsel).
(6) The Subordinated Debenture Trustee shall not be liable for interest on
any money received by it except as the Subordinated Debenture Trustee may
agree in writing with the Company. Money held in trust by the Subordinated
Debenture Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 RIGHTS OF SUBORDINATED DEBENTURE TRUSTEE
(1) The Subordinated Debenture Trustee may rely on any document believed
by it to be genuine and to have been signed or presented by the proper
Person. The Subordinated Debenture Trustee need not investigate any fact
or matter stated in the document.
(2) Before the Subordinated Debenture Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion of Counsel
or both. The Subordinated Debenture Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel. The Subordinated Debenture
Trustee may consult with counsel of its selection and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder and in reliance thereon.
(3) The Subordinated Debenture Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent,
attorney, custodian or nominee appointed with due care.
(4) The Subordinated Debenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized
or within its rights or powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
SECTION 7.03 INDIVIDUAL RIGHTS OF SUBORDINATED DEBENTURE TRUSTEE
The Subordinated Debenture Trustee in its individual or any other capacity
may become the owner or pledgee of Securities and may otherwise deal with the
Company or any of its Affiliates with the same rights it would have if it were
not Subordinated Debenture Trustee. Any Agent may do the same with like rights.
However, the Subordinated Debenture Trustee is subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04 SUBORDINATED DEBENTURE TRUSTEE'S DISCLAIMER
The Subordinated Debenture Trustee makes no representation as to the
validity or adequacy of this Indenture or the Securities; it shall not be
accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision
hereof; it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Subordinated Debenture Trustee; and
it shall not be responsible for any statement or recital herein or any statement
in the Securities other than its certificate of authentication.
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SECTION 7.05 NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and if it is
actually known to a Trust Officer of the Subordinated Debenture Trustee, the
Subordinated Debenture Trustee shall mail to each Holder a notice of the Default
or Event of Default within 90 days after it occurs, or if later, within 10 days
after such Default or Event of Default becomes known to the Subordinated
Debenture Trustee unless such Default or Event of Default has been cured. Except
in the case of a Default or Event of Default in payment of principal of, premium
and Liquidated Damages, if any, or interest on any Security or that resulted
from a failure to comply with Section 4.08 hereof, the Subordinated Debenture
Trustee may withhold the notice if and so long as a committee of its Trust
Officers determines in good faith that withholding the notice is in the
interests of Holders.
SECTION 7.06 REPORTS BY SUBORDINATED DEBENTURE TRUSTEE TO HOLDERS
Within 60 days after each June 1 beginning with the first June 1 to occur
after the date of this Indenture, the Subordinated Debenture Trustee shall mail
to Holders a brief report dated as of such reporting date that complies with TIA
ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Subordinated Debenture Trustee also shall comply with TIA ss. 313(b). The
Subordinated Debenture Trustee shall also transmit by mail all reports as
required by TIA ss. 313(c).
A copy of each report at the time of its mailing to Holders shall be filed
with the SEC and each stock exchange on which the Securities are listed. The
Company shall promptly notify the Subordinated Debenture Trustee when the
Securities are listed on any stock exchange and when such Securities become
delisted on any such exchange.
SECTION 7.07 COMPENSATION AND INDEMNITY
The Company shall pay to the Subordinated Debenture Trustee from time to
time such compensation as shall be agreed in writing between the Company and the
Subordinated Debenture Trustee for its acceptance of this Indenture and services
hereunder. The Subordinated Debenture Trustee's compensation shall not be
limited by any law relating to compensation of a trustee of an express trust.
The Company shall reimburse the Subordinated Debenture Trustee upon request for
all reasonable disbursements, advances and expenses incurred by it. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Subordinated Debenture Trustee's agents and counsel.
The Company shall indemnify and hold harmless each of the Subordinated
Debenture Trustee and any predecessor Subordinated Debenture Trustee and its
directors, officers, employees and agents against any and all loss, liability,
damage, claim or expense (including, without limitation, fees and expenses of
counsel) incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture including, without limitation,
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of its powers and duties hereunder,
except as set forth in the next paragraph. The Subordinated Debenture Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
The Company shall defend the claim and the Subordinated Debenture Trustee shall
cooperate in the defense. The Subordinated Debenture Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any loss
or liability incurred by the Subordinated Debenture Trustee through its
negligence or bad faith.
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To secure the Company's payment obligations in this Section 7.07, the
Subordinated Debenture Trustee shall have a Lien prior to the Securities on all
money or property held or collected by the Subordinated Debenture Trustee,
except that held in trust to pay principal, premium and Liquidated Damages, if
any, and interest on particular Securities. Such Lien shall survive the
satisfaction and discharge of the Indenture.
When the Subordinated Debenture Trustee incurs expenses or renders
services after an Event of Default specified in Section 6.01(5) or (6) hereof
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 7.08 REPLACEMENT OF SUBORDINATED DEBENTURE TRUSTEE
The Subordinated Debenture Trustee may resign and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Securities may remove the Subordinated
Debenture Trustee by so notifying the Subordinated Debenture Trustee and the
Company. The Company may remove the Subordinated Debenture Trustee if:
(1) the Subordinated Debenture Trustee fails to comply with Section 7.10
hereof;
(2) the Subordinated Debenture Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the
Subordinated Debenture Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Subordinated
Debenture Trustee or its property; or
(4) the Subordinated Debenture Trustee becomes incapable of acting.
Notwithstanding the foregoing, a resignation or removal of the
Subordinated Debenture Trustee and appointment of a successor Subordinated
Debenture Trustee shall become effective only upon the successor Subordinated
Debenture Trustee's acceptance of appointment as provided in this Section 7.08,
and thereafter the Subordinated Debenture Trustee shall have no liability for
any acts or omission of any successor Trustee.
If the Subordinated Debenture Trustee resigns or is removed or if a
vacancy exists in the office of Subordinated Debenture Trustee for any reason,
the Company shall promptly appoint a successor Subordinated Debenture Trustee.
If a successor Subordinated Debenture Trustee does not take office within
30 days after the retiring Subordinated Debenture Trustee resigns or is removed,
the retiring Subordinated Debenture Trustee, the Company or the Holders of at
least 10% in principal amount of the then outstanding Securities may petition,
at the expense of the Company, any court of competent jurisdiction for the
appointment of a successor Subordinated Debenture Trustee.
If the Subordinated Debenture Trustee fails to comply with Section 7.10
hereof, any Holder may petition any court of competent jurisdiction for the
removal of the Subordinated Debenture Trustee and the appointment of a successor
Subordinated Debenture Trustee.
A successor Subordinated Debenture Trustee shall deliver a written
acceptance of its appointment to the retiring Subordinated Debenture Trustee and
to the Company. Thereupon the resignation or removal of the retiring
Subordinated Debenture Trustee shall become
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effective, and the successor Subordinated Debenture Trustee shall have all the
rights, powers and duties of the Subordinated Debenture Trustee under this
Indenture. The successor Subordinated Debenture Trustee shall mail a notice of
its succession to Holders. The retiring Subordinated Debenture Trustee shall
promptly transfer all property held by it as Subordinated Debenture Trustee to
the successor Subordinated Debenture Trustee, subject to the Lien provided for
in Section 7.07 hereof. Notwithstanding replacement of the Subordinated
Debenture Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Subordinated
Debenture Trustee.
SECTION 7.09 SUCCESSOR SUBORDINATED DEBENTURE TRUSTEE BY MERGER, ETC.
Subject to Section 7.10 hereof, if the Subordinated Debenture Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation or national banking
association, the successor entity without any further act shall be the successor
Subordinated Debenture Trustee. In case any Securities have been authenticated,
but not delivered, by the Subordinated Debenture Trustee then in office, any
succession by merger, conversion or consolidation of such authenticating trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor trustee had itself authenticated such
Securities.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Subordinated Debenture Trustee hereunder
which shall be a corporation organized and doing business under the laws of the
United States of America, any state thereof or the District of Columbia
authorized under such laws to exercise corporate trust power, shall be subject
to supervision or examination by federal or state (or the District of Columbia)
authority and shall have a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Subordinated Debenture Trustee who
satisfies the requirements of TIA ss. 310(a)(1). The Subordinated Debenture
Trustee is subject to TIA ss. 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Subordinated Debenture Trustee is subject to TIA ss. 311(a), excluding
therefrom any creditor relationship listed in TIA ss. 311(b). A Subordinated
Debenture Trustee who has resigned or been removed shall be subject to TIA ss.
311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01 TERMINATION OF COMPANY'S OBLIGATIONS
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.07 hereof and the Subordinated Debenture
Trustee's and Paying Agent's obligations under Section 8.03 hereof shall
survive) when all outstanding Securities theretofore authenticated and issued
have been delivered (other than destroyed, lost or stolen Securities that have
been replaced or paid) to the Subordinated Debenture Trustee for cancellation
and the Company has paid all sums payable hereunder. In addition, the Company
may terminate all of its obligations under this Indenture if:
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(1) the Company irrevocably deposits, or causes to be deposited, in trust
with the Subordinated Debenture Trustee or the Paying Agent or, at the
option of the Subordinated Debenture Trustee, with a trustee satisfactory
to the Subordinated Debenture Trustee and the Company under the terms of
an irrevocable trust agreement in form and substance satisfactory to the
Subordinated Debenture Trustee, money or U.S. Government Obligations in an
amount sufficient (without reinvestment thereof) to pay principal, premium
and Liquidated Damages, if any, and interest on the Securities to maturity
or redemption, as the case may be, as such amounts become due, and to pay
all other sums payable by it hereunder, and such deposit, when made, does
not violate the provisions of Article 10 hereof; provided that (i) the
trustee of the irrevocable trust shall have been irrevocably instructed to
pay such money or the proceeds of such U.S. Government Obligations to the
Subordinated Debenture Trustee and (ii) the Subordinated Debenture Trustee
shall have been irrevocably instructed to apply such money or the proceeds
of such U.S. Government Obligations to the payment of said principal,
premium and Liquidated Damages, if any, and interest on the Securities;
(2) the Company delivers to the Subordinated Debenture Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture have been complied with, and
delivers an Opinion of Counsel to the same effect;
(3) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit; and
(4) the Company shall have delivered to the Subordinated Debenture Trustee
an Opinion of Counsel from nationally recognized counsel acceptable to the
Subordinated Debenture Trustee or a tax ruling from the Internal Revenue
Service to the effect that the Holders of the Securities will not
recognize income, gain or loss for federal income tax purposes as a result
of the Company's exercise of its option under this Section 8.01 and will
be subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such option had not
been exercised.
In such event, this Indenture shall cease to be of further effect, except
that the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01,
4.06, 7.07, 7.08 and 8.04 hereof and the Company's, the Subordinated Debenture
Trustee's and the Paying Agent's obligations in Section 8.03, and the
Subordinated Debenture Trustee's rights under Article 7 hereof, shall survive
until the Securities are no longer outstanding. Thereafter, only the Company's
obligations in Section 7.07 hereof and the Subordinated Debenture Trustee's and
the Paying Agent's obligations in Section 8.03 hereof shall survive.
After such irrevocable deposit made pursuant to this Section 8.01 and
satisfaction of the other conditions set forth herein, the Subordinated
Debenture Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified above.
In order to have money available on a payment date to pay principal or
interest on the Securities, the U.S. Government Obligations shall be payable as
to principal or interest on or before such payment date in such amounts as will
provide the necessary money. U.S. Government Obligations shall not be callable
at the issuer's option.
SECTION 8.02 APPLICATION OF TRUST MONEY
The Subordinated Debenture Trustee or a trustee satisfactory to the
Subordinated Debenture Trustee and the Company shall hold in trust money or U.S.
Government Obligations deposited with it pursuant to Section 8.01 hereof. It
shall apply the deposited money and the money from U.S. Government Obligations
through the Paying Agent and in accordance with this Indenture to the payment of
principal of and interest on the Securities.
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The Company shall pay and indemnify the Subordinated Debenture Trustee
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 8.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Securities.
SECTION 8.03 REPAYMENT TO COMPANY
The Subordinated Debenture Trustee and the Paying Agent shall promptly pay
to the Company upon written request any excess money or securities held by them
at any time.
The Subordinated Debenture Trustee and the Paying Agent shall pay to the
Company upon written request any money held by them for the payment of principal
or interest that remains unclaimed for two years after the date upon which such
payment shall have become due; provided that the Company shall have either
caused notice of such payment to be mailed to each Holder entitled thereto no
less than 30 days prior to such repayment or within such period shall have
published such notice in a financial newspaper of widespread circulation
published in The City of New York. After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person, and all
liability of the Subordinated Debenture Trustee and such Paying Agent with
respect to such money shall cease.
SECTION 8.04 REINSTATEMENT
If the Subordinated Debenture Trustee or Paying Agent is unable to apply
any money or U.S. Government Obligations in accordance with Section 8.01 hereof
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 hereof until such time as the Subordinated Debenture
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 8.01 hereof; provided that if the Company
has made any payment of interest on or principal of any Securities because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
or U.S. Government Obligations held by the Subordinated Debenture Trustee or
Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01 WITHOUT CONSENT OF HOLDERS
Without the consent of any Holder of Securities the Company and the
Subordinated Debenture Trustee may amend or supplement this Indenture or the
Securities:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Securities in addition to or in place of
certificated Securities;
(3) to comply with Section 5.01 hereof;
(4) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the rights
hereunder of any Holder; or
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(5) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon receipt by the Subordinated Debenture Trustee of the documents described in
Section 9.06 hereof, the Subordinated Debenture Trustee shall join with the
Company in the execution of any supplemental indenture authorized or permitted
by the terms of this Indenture and make any further appropriate agreements and
stipulations that may be therein contained, but the Subordinated Debenture
Trustee shall not be obligated to enter into any supplemental indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
After an amendment or waiver under this Section 9.01 becomes effective, the
Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment or waiver. Any failure of the Company to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
SECTION 9.02 WITH CONSENT OF HOLDERS
Except as provided below in this Section 9.02, this Indenture or the
Securities may be amended or supplemented with the written consent (including
consents obtained in connection with a tender offer or exchange offer for
Securities) of the Holders of at least 51% in principal amount of the then
outstanding Securities.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon the filing with the Subordinated Debenture Trustee of evidence of the
consent of the Holders as aforesaid, and upon receipt by the Subordinated
Debenture Trustee of the documents described in Section 9.06 hereof, the
Subordinated Debenture Trustee shall join with the Company in the execution of
such supplemental indenture unless such supplemental indenture affects the
Subordinated Debenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Subordinated Debenture Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
The Holders of 51% in principal amount of the Securities then outstanding
may waive compliance in a particular instance by the Company with any provision
of this Indenture or the Securities (including waivers obtained in connection
with a tender offer or an exchange offer for Securities) or any existing
default. However, without the consent of each Holder affected, an amendment or
waiver under this Section may not (with respect to any Securities held by a
non-consenting Holder):
(1) reduce the principal amount of Securities whose Holders must consent
to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Security
or alter the provisions with respect to the redemption price in connection
with repurchases under Sections 3.07, 3.08 or 4.08 hereof;
(3) reduce the rate of or change the time for payment of interest on any
Security;
(4) waive a Default or Event of Default in the payment of the principal
of, or premium or Liquidated Damages, if any, or interest on Securities or
that resulted from a failure to comply with Section 4.08 hereof (except a
rescission of acceleration of the Securities as provided in Section 6.02
hereof);
(5) make any Security payable in money other than that stated in the
Security;
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(6) make any change in Article 10 hereof that adversely affects the rights
of any Holder;
(7) make any change in Section 6.04 or 6.07 hereof or in this sentence of
this Section 9.02;
(8) waive a redemption payment with respect to any Security; or
(9) make a change in any of the foregoing.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of this Indenture (and the obligation of the Company
to obtain any such consent otherwise required from such Holder) may be subject
to the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Subordinated Debenture Trustee in a notice furnished to
Holders in accordance with the terms of this Indenture.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment to this Indenture or the Securities shall comply in form
and substance with the TIA as then in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS
Until an amendment (which includes any supplement) or waiver becomes
effective, a consent to it by a Holder of a Security is a continuing consent by
the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to his or her Security or portion of
a Security if the Subordinated Debenture Trustee receives written notice of
revocation before the date the amendment or waiver becomes effective. An
amendment or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Securities required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every Holder,
unless it is of the type described in any of clauses (1) through (8) of Section
9.02 hereof. In such case, the amendment or waiver shall bind each Holder of a
Security who has consented to it and every subsequent Holder of a Security that
evidences the same debt as the consenting Holder's Security.
SECTION 9.05 NOTATION ON OR EXCHANGE OF SECURITIES
If an amendment, supplement or waiver changes the terms of a Security, the
Subordinated Debenture Trustee may require the Holder of the Security to deliver
it to the Subordinated Debenture Trustee. The Subordinated Debenture Trustee may
place an appropriate notation about the changed terms and return it to the
Holder and the Subordinated Debenture Trustee may place an appropriate notation
on any Security thereafter authenticated. Alternatively, if the Company or
Subordinated Debenture Trustee so determines, the Company
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in exchange for all Securities shall issue and the Subordinated Debenture
Trustee shall authenticate new Securities that reflect the changed terms.
SECTION 9.06 SUBORDINATED DEBENTURE TRUSTEE TO SIGN AMENDMENTS, ETC.
The Subordinated Debenture Trustee shall sign any amendment or
supplemental indenture authorized pursuant to this Article 9 if the amendment
does not adversely affect the rights, duties, liabilities or immunities of the
Subordinated Debenture Trustee. If it does, the Subordinated Debenture Trustee
may, but need not, sign it. In signing or refusing to sign such amendment or
supplemental indenture, the Subordinated Debenture Trustee shall be entitled to
receive and, subject to Section 7.01 hereof, shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that such amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms.
ARTICLE 10
SUBORDINATION
SECTION 10.01 AGREEMENT TO SUBORDINATE
The Company agrees, and each Holder by accepting a Security agrees, that
the indebtedness evidenced by the Security is subordinated in right of payment,
to the extent and in the manner provided in this Article 10, to the prior
payment in full of all "Senior Debt" (as defined below) and that the
subordination is for the benefit of the holders of Senior Debt. The Indebtedness
evidenced by the Security shall be pari passu with the Series D Subordinated
Debentures and the Series E Subordinated Debentures.
SECTION 10.02 CERTAIN DEFINITIONS
"Representative" means (i) with respect to the Credit Facilities, the
Agents (as defined therein) and (ii) with respect to any other Senior Debt, the
indenture trustee or other trustee, agent or representative for such Senior
Debt.
"Senior Debt" means all present and future Indebtedness, including all
Indebtedness incurred under the Credit Facilities and the Senior Note
Indentures, created, assumed, incurred or guaranteed by the Company (and all
renewals, extensions and refundings thereof), unless by its terms such
Indebtedness is not senior to the Class G Subordinated Debentures. Senior Debt
does not include any Indebtedness of the Company to any of its subsidiaries or
trade indebtedness.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
For the purposes of this Article 10, Obligations with respect to Senior
Debt shall not be deemed to have been paid in full unless the holders thereof
shall have received payment in full in cash.
SECTION 10.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property or in
an assignment for the benefit of creditors or any marshalling of the assets and
liabilities of the Company:
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(1) holders of Senior Debt shall be entitled to receive payment in full of
all Obligations with respect to the Senior Debt (including interest after
the commencement of any such proceeding at the rate specified in the
applicable Senior Debt whether or not such interest is an allowed claim
enforceable against the Company in any such bankruptcy, reorganization,
insolvency, receivership or similar proceeding) before Holders shall be
entitled to receive any payment of any Obligations with respect to the
Securities; and
(2) until all Obligations with respect to Senior Debt (as provided in
subsection (1) of this Section 10.03) are paid in full, any distribution
to which Holders would be entitled but for this Article 10 shall be made
to holders of Senior Debt, as their interests may appear.
SECTION 10.04 DEFAULT ON SENIOR DEBT
No direct or indirect payment or distribution by or on behalf of the
Company of principal of, premium, if any, or interest on the Securities, whether
pursuant to the terms of the Securities or otherwise, may be made (i) if a
default of any Obligations to the holders of Senior Debt occurs and has not been
cured or waived, (ii) for a period of 180 days upon the occurrence of a default
(other than a payment default) in respect of Senior Debt and for successive
periods of 180 days if the default is continuing at the end of such 180 day
period or another default (other than a payment default) in respect of Senior
Debt has occurred or (iii) upon the maturity of any Senior Debt, prior to the
payment of all Obligations with respect to Senior Debt that is then due and
payable. In addition, upon the acceleration of the Securities prior to their
stated maturity, holders of the Senior Debt shall receive payment in full before
any payment shall be made to Holders of the Securities.
SECTION 10.05 ACCELERATION OF SECURITIES
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify the Representatives of Senior Debt of
the acceleration.
SECTION 10.06 WHEN DISTRIBUTION MUST BE PAID OVER
In the event that the Subordinated Debenture Trustee or any Holder
receives any payment of any Obligations (other than, in the case of the
Subordinated Debenture Trustee, fees, expenses and all other amounts payable
pursuant to Section 7.07 hereof) with respect to the Securities at a time when
such payment is prohibited by Section 10.04 hereof, then and in such event (but
with respect to the Subordinated Debenture Trustee, subject to the provisions of
Section 10.12 hereof) such payment shall be held by the Subordinated Debenture
Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith
over and delivered, upon written request, to, the holders of Senior Debt as
their interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations due to the holders of Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Debt.
If a distribution is made to the Subordinated Debenture Trustee or any
Holder (other than, in the case of the Subordinated Debenture Trustee, fees,
expenses and all other amounts payable pursuant to Section 7.07 hereof) that
because of this Article 10 should not have been made to it, the Subordinated
Debenture Trustee (subject to the provision of Section 10.12 hereof) or such
Holder who receives the distribution shall hold it in trust for the benefit of,
and, upon written request, pay it over to, the holders of Senior Debt as their
interests may appear, or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations due to the holders of Senior Debt remaining unpaid
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to the extent necessary to pay such Obligations in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
With respect to the holders of Senior Debt, the Subordinated Debenture
Trustee undertakes to perform only such obligations on the part of the
Subordinated Debenture Trustee as are specifically set forth in this Article 10,
and no implied covenants or obligations with respect to the holders of Senior
Debt shall be read into this Indenture against the Subordinated Debenture
Trustee. The Subordinated Debenture Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Subordinated Debenture Trustee shall pay over or distribute
to or on behalf of Holders or the Company or any other Person money or assets to
which any holders of Senior Debt shall be entitled by virtue of this Article 10,
unless such payment or distribution is made as a result of the willful
misconduct or gross negligence of the Subordinated Debenture Trustee.
SECTION 10.07 NOTICE BY COMPANY
The Company shall promptly notify the Subordinated Debenture Trustee and
the Paying Agent of any facts known to the Company that would cause a payment of
any Obligations with respect to the Securities to violate this Article 10, but
failure to give such notice shall not affect the subordination of the Securities
to the Senior Debt provided in this Article 10.
SECTION 10.08 SUBROGATION
After all Obligations with respect to all Senior Debt are paid in full and
until the Securities are paid in full, Holders shall be subrogated (equally and
ratably with all other Indebtedness ranking pari passu with the Securities) to
the rights of holders of Senior Debt to receive distributions applicable to
Senior Debt to the extent that distributions otherwise payable to the Holders
have been applied to the payment of Senior Debt. A distribution made under this
Article 10 to holders of Senior Debt which otherwise would have been made to
Holders is not, as between the Company and Holders, a payment by the Company on
the Securities.
SECTION 10.09 RELATIVE RIGHTS
This Article 10 defines the relative rights of Holders and holders of
Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay principal of, premium
and Liquidated Damages, if any, and interest on the Securities in
accordance with their terms;
(2) affect the relative rights of the Holders and creditors of the Company
other than their rights in relation to holders of Senior Debt; or
(3) prevent the Subordinated Debenture Trustee or any Holder from
exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders.
If the Company fails because of this Article 10 to pay principal of,
premium or Liquidated Damages, if any, or interest on a Security on the due
date, the failure is still a Default or Event of Default.
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY
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No right of any holder of Senior Debt to enforce the subordination of the
indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Indenture.
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Subordinated Debenture Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Subordinated Debenture Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Debt and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 10.
SECTION 10.12 RIGHTS OF SUBORDINATED DEBENTURE TRUSTEE AND PAYING AGENT
Notwithstanding the provisions of this Article 10 or any other provisions
of this Indenture, the Subordinated Debenture Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment or distribution by the Subordinated Debenture Trustee, or the taking of
any action by the Subordinated Debenture Trustee, and the Subordinated Debenture
Trustee and the Paying Agent may continue to make payments on the Securities
unless it shall have received at its Corporate Trust Office at least three
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Securities to
violate this Article 10. Only the Company, a Representative of Senior Debt or a
holder of an issue of Senior Debt that has no Representative may give the
notice. Nothing in this Article 10 shall impair the claims of, or payments to,
the Subordinated Debenture Trustee under or pursuant to Section 7.07 hereof.
Except as set forth in the immediately preceding sentence, nothing in this
Section 10.12 shall limit the rights of holders of Senior Debt to recover
payments as contemplated by Section 10.06 hereof.
The Subordinated Debenture Trustee in its individual or any other capacity
may hold Senior Debt with the same rights it would have if it were not
Subordinated Debenture Trustee. Any Agent may do the same with like rights.
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION
Each Holder of a Security by its acceptance thereof authorizes and directs
the Subordinated Debenture Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10 and appoints the Subordinated Debenture Trustee his attorney-in-fact
for any and all such purposes.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included herein by any of Sections 310
to 317 inclusive of the TIA, such required provisions shall control.
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SECTION 11.02 NOTICES
Any notice or communication to the Company, the Subordinated Debenture
Trustee, or the agents under the Credit Facilities, is duly given if in writing
and delivered in person or mailed by first-class mail (registered or certified,
return receipt requested), telecopier or overnight air courier guaranteeing next
day delivery, to the other's address:
If to the Company:
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
Attention: General Counsel
Telecopier No.: (212) 745-0199
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Gary I. Horowitz, Esq.
Telecopier No.: (212) 455-2502
If to the Subordinated Debenture Trustee:
The Bank of New York
101 Barclay Street -- 21W
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopier No.: (212) 815-5915/5917
If to the agents under the Credit Facilities:
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
Attention: William K. Luby
Telecopier No.: (212) 552-1159
The Bank of New York
101 Barclay Street
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New York, New York 10286
Attention: James Dimino
Telecopier No.: (212) 815-4038
The Company, the Subordinated Debenture Trustee and the agents under the
Credit Facilities Outstanding Note Trustee by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first-class
mail, to the Holder's address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Subordinated Debenture Trustee and each Agent at the same time.
SECTION 11.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Company, the
Subordinated Debenture Trustee, the Registrar and anyone else shall have the
protection of TIA ss. 312(c).
SECTION 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by the Company to the Subordinated
Debenture Trustee to take any action under this Indenture, the Company shall
furnish to the Subordinated Debenture Trustee:
(1) an Officers' Certificate (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been complied with.
SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall include:
(1) a statement that the Person making such certificate or opinion has
read and understands such covenant
51
<PAGE>
or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with; provided that with respect
to matters of fact Opinions of Counsel may rely on an Officers'
Certificate or certificates of public officials.
SECTION 11.06 RULES BY SUBORDINATED DEBENTURE TRUSTEE AND AGENTS
The Subordinated Debenture Trustee may make reasonable rules for action by
or at a meeting of Holders. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
SECTION 11.07 LEGAL HOLIDAYS
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
SECTION 11.08 NO RECOURSE AGAINST OTHERS
No director, officer, employee, incorporator or shareholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of,
or by reason of, such obligations of their creation. Each Holder of the
Securities by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Security.
SECTION 11.09 GOVERNING LAW
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
SECTION 11.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 11.11 SUCCESSORS
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Subordinated Debenture Trustee in this
Indenture shall bind its successor.
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<PAGE>
SECTION 11.12 SEVERABILITY
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.13 COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.14 SUBORDINATED DEBENTURE TRUSTEE AS PAYING AGENT AND REGISTRAR
The Company initially appoints the Subordinated Debenture Trustee as
Paying Agent and Registrar.
SECTION 11.15 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 11.16 THE BANK OF NEW YORK NOT ACTING IN INDIVIDUAL CAPACITY
Notwithstanding anything to the contrary contained herein, this Indenture
has been accepted by The Bank of New York not in its individual capacity but
solely as Trustee and in no event shall The Bank of New York have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Company herein or in any of the certificates, notices or agreements
delivered by the Company pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Company, and under no circumstances shall The
Bank of New York be personally liable for the payment of any indebtedness or
expenses of the Company.
SECTION 11.17 ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES
In addition to the rights provided to Holders of Securities under the
Indenture, Holders of Transfer Restricted Securities shall have all the rights
set forth in the Registration Rights Agreement.
[Signatures on Next Page]
53
<PAGE>
SIGNATURES
PRIMEDIA INC.
Dated as of , By:
-------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Subordinated Debenture Trustee
Dated as of , By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
(Face of Note)
================================================================================
CUSIP/CINS ____________
85/8% [Series G] [Series H] Subordinated Exchange Debentures due 2010
No. ___ $__________
PRIMEDIA INC.
promises to pay to _________________________________________________
or registered assigns,
the principal sum of ________________________________________________
Dollars on __________ __, 2010.
Interest Payment Dates: January 1, April 1, July 1 and October 1
Record Dates: December 15, March 15, June 15 and September 15
PRIMEDIA INC.
By:
------------------------------
Name:
Title:
Dated: _______________,
This is one of the Global Notes referred to in the within-mentioned Indenture:
THE BANK OF NEW YORK,
as Subordinated Debenture Trustee
By:
----------------------------
Authorized Signatory
================================================================================
A-1
<PAGE>
(Back of Note)
____ % [Series G] [Series H] Subordinated Exchange Debentures due 2010
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE SUBORDINATED DEBENTURE TRUSTEE MAY MAKE SUCH NOTATIONS
HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
SUBORDINATED DEBENTURE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE
SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO
SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. PRIMEDIA, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 85/8% per annum
from ________________, until maturity and shall pay the Liquidated Damages, if
any, payable pursuant to
A-2
<PAGE>
Section 5 of the Registration Rights Agreement referred to below. The Company
will pay interest and Liquidated Damages, if any, on January 1, April 1, July 1
and October 1 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each, an "Interest Payment Date"). Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided, that if there
is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be _____________. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at the rate per annum
on the Notes then in effect; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages, if any (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to the Persons who are
registered Holders of Notes at the close of business on December 15, March 15,
June 15 and September 15 next preceding the Interest Payment Date, even if such
Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Notes will be payable as to principal, premium and
Liquidated Damages, if any, and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders at their addresses set forth in
the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, premium and Liquidated Damages, if any, on all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Subordinated Debenture Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
____________, ("Indenture") between the Company and the Subordinated Debenture
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $250.0 million
in aggregate principal amount, plus amounts, if any, issued to pay Liquidated
Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. SUBORDINATION. The Company's payment of the principal of, premium and
Liquidated Damages, if any, and interest on the Notes is subordinated to the
prior payment in full of the Company's Senior Debt. Each Holder of Notes by his
acceptance hereof covenants and agrees that all payments of the principal of,
premium and Liquidated Damages, if any, and interest on the Notes by the Company
shall be subordinated in accordance with the provisions of Article 10 of the
Indenture, and each Holder accepts and agrees to be bound by such provisions.
6. OPTIONAL REDEMPTION. On and after April 1, 2003 and on and after a
Change of Control of the Company, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the
A-3
<PAGE>
redemption prices (expressed as percentages of the principal amount) set forth
below plus accrued and unpaid interest thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning April 1 of the years
indicated below.
Year Percentage
---- ----------
2003 .................................... 104.313%
2004 .................................... 102.875%
2005 .................................... 101.438%
2006 and thereafter...................... 100.000%
Notwithstanding the foregoing,
(1) at any time prior to April 1, 2001, the Company may redeem up to
$125.0 million of the Securities at a redemption price of 108.625% of the
principal amount thereof, plus accrued and unpaid interest to the redemption
date, out of the net proceeds of one or more Public Equity Offerings, provided
that any such redemption shall occur within 180 days of such Public Equity
Offering; and
(2) upon the occurrence at any time of a Change in Control, the Securities
will be redeemable, at the option of the Company, in whole or in part, pursuant
to the provisions of Section 3.08 hereof.
Any redemption pursuant to this Section 3.07 shall be made, to the extent
applicable, pursuant to the provisions of Sections 3.01 through 3.06 hereof.
7. MANDATORY OFFERS TO REPURCHASE; MANDATORY REDEMPTION. Subject to
repayment of all then outstanding Senior Debt (to the extent required by the
terms thereof) or receipt by the Company of all consents with respect thereto
required to permit such an offer, following the occurrence of any Change of
Control, the Company will be required to offer (a "Change of Control Offer") to
purchase all outstanding Notes at a purchase price equal to 101% of the
aggregate principal amount of such Notes, plus Liquidated Damages and accrued
and unpaid interest, if any, to the date of purchase (the "Change of Control
Payment"), in each case in accordance with and to the extent provided in the
Indenture. The Change of Control Offer shall remain open for a period of 20
Business Days after its commencement unless a longer offering period is required
by law. No earlier than 30 days nor later than 40 days after the notice of the
Change of Control Offer has been mailed (the "Change of Control Payment Date"),
the Company shall deposit, to the extent lawful, with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Notes or portions
thereof tendered by Holders. The Paying Agent shall promptly mail or deliver
payment for all Notes tendered in the Change of Control Offer.
A Holder of Notes may tender or refrain from tendering all or any portion
of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER
TO ELECT PURCHASE" appearing on this Note. Any portion of Notes tendered must be
in integral multiples of $1,000.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first
class mail at least 30 days but not more than 60 days before the redemption date
to each Holder whose Notes are to be redeemed at its registered address. Notes
in denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Subordinated Debenture Trustee may require
a Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The
A-4
<PAGE>
Company need not exchange or register the transfer of any Note or portion of a
Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, it need not exchange or register the transfer of
any Notes for a period of 15 days before the mailing of a notice of redemption
or during the period between a record date and the corresponding Interest
Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
11. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture
or the Notes may be amended or supplemented and any existing Default under, or
compliance with any provision of, the Indenture may be waived with the written
consent of the Holders of at least 51% in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for Notes). Without the consent of any Holder, the Company and
the Subordinated Debenture Trustee may amend or supplement the Indenture or the
Notes to cure any ambiguity, defect or inconsistency; to provide for
uncertificated Notes in addition to or in place of certificated Notes; to comply
with Section 5.01 of the Indenture; to make any change that would provide any
additional rights or benefits to the Holders or that does not adversely affect
the rights under the Indenture of any Holder; or to comply with requirements of
the SEC in order to effect or maintain the qualification of the Indenture under
the TIA.
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption or purchase price in
connection with repurchases under Sections 3.07, 3.08 or 4.08 of the Indenture;
(iii) reduce the rate of or change the time for payment of interest on any Note;
(iv) waive a Default or Event of Default in the payment of the principal of,
premium or Liquidated Damages, if any, or interest on Notes or that resulted
from a failure to comply with Section 4.08 of the Indenture, (except a
rescission of acceleration of the Notes by Holders of at least 51% in aggregate
principal amount of the Notes); (v) make any Note payable in money other than
that stated in the Note; (vi) make any change in Article 10 of the Indenture
that adversely affects the rights of any Holder; (vii) make any change in
Section 6.04 or 6.07 of the Indenture or the last sentence of the fourth
paragraph of Section 9.02 of the Indenture; (viii) waive a redemption payment
with respect to any Note; or (ix) make any change in the foregoing.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Notes with respect to which such consent is required or sought as of a date
identified by the Subordinated Debenture Trustee in a notice furnished to
Holders in accordance with the terms of this Indenture.
12. DEFAULTS AND REMEDIES. Events of Default include: default in payment
of interest or Liquidated Damages on any Note for 30 days and for five (5) days
after written notice of such default is given to the Company by the Holders of
at least 51% in principal amount of any Note following the expiration of such
30-day period; default in payment of the principal or premium of the Notes at
maturity or upon acceleration, redemption or otherwise, and such default
continues for a period of 10 days; failure by the Company for 60 days after
written notice to it from the Subordinated Debenture Trustee, or after written
notice to it and the Subordinated Debenture Trustee from Holders of at least 51%
in principal amount of the then outstanding Notes, to comply with any of its
other agreements in the Indenture or the Notes; certain defaults under other
Indebtedness; and certain events of bankruptcy or insolvency. If an Event of
Default occurs and is continuing, the Subordinated Debenture Trustee or the
Holders of at least 51% in principal amount of the then outstanding Notes by
written notice to the Company, to the agent under the Credit Facilities, the
trustees under the Senior Notes and the Exchange Debenture Trustee (and to the
Subordinated Debenture Trustee if such notice is given by the Holders) may, and
the Subordinated Debenture Trustee at the request of the Holders shall, declare
all of the Notes to be immediately due and payable for an amount equal to 100%
of the principal amount of the Notes plus premium and Liquidated Damages, if
any, and accrued interest to the date of payment upon the first to occur of an
acceleration under the Credit Facilities, the Senior Notes or the Exchange
Debentures or 15 Business Days after receipt by the Company, such agent and such
trustees of such written notice to the extent such Event of Default is
continuing, except that in the case of an Event
A-5
<PAGE>
of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes shall become due and payable immediately without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Subordinated Debenture Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Notes.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Subordinated Debenture Trustee in its
exercise of any trust or power. The Subordinated Debenture Trustee may withhold
from Holders notice of any continuing Default or Event of Default (except a
Default or Event of Default in payment of principal, premium or Liquidated
Damages, if any, or interest or that resulted from a failure to comply with
Section 4.08 of the Indenture) if and so long as a committee of its Trust
Officers determines in good faith that withholding notice is in their interests.
The Company must furnish an annual compliance certificate to the Subordinated
Debenture Trustee.
13. SUBORDINATED DEBENTURE TRUSTEE DEALINGS WITH COMPANY. The Subordinated
Debenture Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not
Subordinated Debenture Trustee.
14. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or shareholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations of their
creation. Each Holder of the Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Subordinated Debenture Trustee or an authenticating
agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED NOTES. In addition
to the rights provided to Holders of Notes under the Indenture, Holders of
Transfer Restricted Notes shall have all the rights set forth in the
Registration Rights Agreement.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
PRIMEDIA, INC.
745 Fifth Avenue
New York, New York 10151
Attention: Treasurer
A-6
<PAGE>
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:______________________
Your Signature:__________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.*
- -------------------------------------
* Signature must be guaranteed by a financial institution that is a member of
the Securities Transfer Agent Medallion program in accordance with the
Securities Exchange Act of 1934, as amended.
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.08 of the Indenture, check the box below:
|_| Section 4.08
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.08 of the Indenture, state the amount you elect to
have purchased: $___________
Date: Your Signature:
---------------------- ------------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No.:
Signature Guarantee.*
- ---------------------------
* Signature must be guaranteed by a financial institution that is a member of
the Securities Transfer Agent Medallion program in accordance with the
Securities Exchange Act of 1934, as amended.
A-8
<PAGE>
SCHEDULE OF EXCHANGES FOR DEFINITIVE DEBENTURES
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
Principal Amount of this
Amount of decrease in Amount of increase in Global Note Signature of
Principal Amount of Principal Amount of following such decrease authorized signatory
Date of Exchange this Global Note this Global Note (or increase) of Trustee Custodian
- ---------------- --------------------- --------------------- ------------------------ --------------------
<S> <C> <C> <C> <C>
</TABLE>
A-9
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: 8 5/8% Subordinated Exchange Debentures Due 2010
Reference is hereby made to the Indenture, dated as of ___________________
(the "Indenture"), between PRIMEDIA Inc., as issuer (the "Company"), and The
Bank of New York, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. |_| Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act and, (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act and (iv) if
the proposed transfer is being made prior
A2-1
<PAGE>
to the expiration of the Restricted Period, the transfer is not being made to a
U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a beneficial
interest in a Definitive Note pursuant to any provision of the Securities Act
other than Rule 144A or Regulation S. The Transfer is being effected in
compliance with the transfer restrictions applicable to beneficial interests in
Restricted Global Notes and Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act and any applicable blue sky securities laws
of any state of the United States, and accordingly the Transferor hereby further
certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) |_| such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2) if
such Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $100,000, an Opinion of Counsel provided by the Transferor
or the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred Definitive Note will be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on Definitive Notes and in the Indenture and the Securities Act.
4. |_| Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture
A2-2
<PAGE>
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
------------------------------
[Insert Name of Transferor]
By:
---------------------------
Name:
Title:
Dated: ,
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP________), or
(ii) |_| Regulation S Global Note (CUSIP________), or
(iii) |_| IAI Global Note (CUSIP________), or
(b) |_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP________), or
(ii) |_| Regulation S Global Note (CUSIP________), or
(iii) |_| Unrestricted Global Note (CUSIP________); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: 8 5/8% Subordinated Exchange Debentures Due 2010
(CUSIP___________)
Reference is hereby made to the Indenture, dated as of _____________
______________________ (the "Indenture"), between PRIMEDIA Inc., as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
_______, (the "Owner") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and
C-1
<PAGE>
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) |_| Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
|_| 144A Global Note, |_| Regulation S Global Note with an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer and (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, and in compliance with any applicable blue sky securities laws of any state
of the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the beneficial interest issued will be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the relevant Restricted Global Note and in the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-------------------------
[Insert Name of Owner]
By:
----------------------
Name:
Title:
Dated: ,
C-2
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: 8 5/8% Subordinated Exchange Debentures Due 2010
Reference is hereby made to the Indenture, dated as of
___________________ (the "Indenture"), between PRIMEDIA Inc., as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) |_| a beneficial interest in a Global Note, or
(b) |_| a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $100,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require
D-1
<PAGE>
to confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion and we are acquiring the Notes for investment purposes and
not with a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act or other applicable securities law.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
------------------------------------
[Insert Name of Accredited Investor]
By:
---------------------------------
Name:
Title:
Dated: ,
D-1
<PAGE>
Exhibit 4.9
================================================================================
PRIMEDIA INC.
and the Guarantors listed herein
7 5/8 Senior Notes due 2008
Series A and Series B
-------------
INDENTURE
Dated as of February 17, 1998
-------------
THE BANK OF NEW YORK
Trustee
================================================================================
<PAGE>
Table of Contents
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions .................................................. 1
Section 1.02 Other Definitions ...................................... 16
Section 1.03 Incorporation by Reference of Trust Indenture Act ...... 16
Section 1.04 Rules of Construction .................................. 17
ARTICLE 2
THE SECURITIES
Section 2.01 Form and Dating ........................................ 17
Section 2.02. Execution and Authentication ........................... 18
Section 2.03. Registrar and Paying Agent ............................. 18
Section 2.04. Paying Agent to Hold Money in Trust .................... 18
Section 2.05. Holder Lists ........................................... 19
Section 2.06. Transfer and Exchange .................................. 19
Section 2.07. Replacement Notes ...................................... 30
Section 2.08. Outstanding Notes ...................................... 30
Section 2.09. Treasury Notes ......................................... 31
Section 2.10. Temporary Notes ........................................ 31
Section 2.11. Cancellation ........................................... 31
Section 2.12. Defaulted Interest ..................................... 31
Section 2.13 CUSIP Numbers .......................................... 32
ARTICLE 3
OPTIONAL REDEMPTION AND
OPTIONAL REDEMPTION UPON CHANGE OF CONTROL
Section 3.01 Notices to Trustee ..................................... 32
Section 3.02 Selection of Securities to Be Redeemed ................. 32
Section 3.03 Notices to Holders ..................................... 33
Section 3.04 Effect of Notice of Redemption ......................... 33
Section 3.05 Deposit of Redemption Price or Purchase Price .......... 34
Section 3.06 Securities Redeemed in Part ............................ 34
Section 3.07 Optional Redemption .................................... 34
Section 3.08 Optional Redemption Upon Change of Control ............. 35
Section 3.09 Sinking Fund ........................................... 35
ARTICLE 4
COVENANTS
Section 4.01 Payment of Securities .................................. 35
i
<PAGE>
Page
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Section 4.02 Maintenance of Office or Agency ........................ 35
Section 4.03 SEC Reports; Financial Statements ...................... 36
Section 4.04 Compliance Certificate ................................. 36
Section 4.05 Compliance With Laws, Taxes ............................ 37
Section 4.06 Stay, Extension and Usury Laws ......................... 37
Section 4.07 Limitations on Restricted Payments ..................... 38
Section 4.08 Dividends and Payment Restrictions
Affecting Restricted Subsidiaries .................... 41
Section 4.09 Incurrence of Indebtedness ............................. 41
Section 4.10 Change of Control ...................................... 44
Section 4.11 Limitations on Asset Sales ............................. 45
Section 4.12 Transactions With Affiliates ........................... 46
Section 4.13 Limitations on Liens ................................... 47
Section 4.14 Investments in Unrestricted Subsidiaries ............... 47
Section 4.15 Payments for Consent ................................... 48
Section 4.16 Corporate Existence. ................................... 49
Section 4.17 Subsidiary Ownership. .................................. 49
Section 4.18 Rule 144A Information Requirement ...................... 49
ARTICLE 5
SUCCESSORS
Section 5.01 Merger, Consolidation, or Sale of Assets ............... 49
Section 5.02 Successor Corporation Substituted ...................... 50
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default ...................................... 50
Section 6.02 Acceleration ........................................... 52
Section 6.03 Other Remedies ......................................... 53
Section 6.04 Waiver of Past Defaults ................................ 53
Section 6.05 Control by Majority .................................... 53
Section 6.06 Limitations on Suits ................................... 53
Section 6.07 Rights of Holders to Receive Payment ................... 54
Section 6.08 Collection Suit by Trustee ............................. 54
Section 6.09 Trustee May File Proofs of Claim ....................... 54
Section 6.10 Priorities ............................................. 55
Section 6.11 Undertaking for Costs .................................. 55
ARTICLE 7
TRUSTEE
Section 7.01 Duties of Trustee ...................................... 55
Section 7.02 Rights of Trustee ...................................... 56
Section 7.03 Individual Rights of Trustee ........................... 57
Section 7.04 Trustee's Disclaimer ................................... 57
Section 7.05 Notice of Defaults ..................................... 57
Section 7.06 Reports by Trustee to Holders .......................... 57
Section 7.07 Compensation and Indemnity ............................. 58
Section 7.08 Replacement of Trustee ................................. 58
ii
<PAGE>
Page
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Section 7.09 Successor Trustee by Merger, etc ....................... 59
Section 7.10 Eligibility; Disqualification .......................... 59
Section 7.11 Preferential Collection of Claims Against Company ...... 59
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01 Termination of Company's and Guarantors' Obligations ... 60
Section 8.02 Application of Trust Money ............................. 61
Section 8.03 Repayment to Company ................................... 61
Section 8.04 Reinstatement .......................................... 61
ARTICLE 9
AMENDMENTS
Section 9.01 Without Consent of Holders ............................. 62
Section 9.02 With Consent of Holders ................................ 62
Section 9.03 Compliance with Trust Indenture Act .................... 63
Section 9.04 Revocation and Effect of Consents ...................... 63
Section 9.05 Notation on or Exchange of Securities .................. 64
Section 9.06 Trustee to Sign Amendments, etc. ....................... 64
ARTICLE 10
GUARANTEE
Section 10.01 Subsidiary Guarantee ................................... 65
Section 10.02 Execution and Delivery of Guarantee .................... 66
Section 10.03 Guarantors May Consolidate, etc., on Certain Terms ..... 66
Section 10.04 Releases Following Sale of Assets ...................... 67
Section 10.05 "Trustee" to Include Paying Agent ...................... 67
Section 10.06 Additional Subsidiary Guarantees ....................... 68
ARTICLE 11
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls ........................... 68
Section 11.02 Notices ................................................ 68
Section 11.03 Communication by Holders with Other Holders ............ 69
Section 11.04 Certificate and Opinion as to Conditions Precedent ..... 69
Section 11.05 Statements Required in Certificate or Opinion .......... 69
Section 11.06 Rules by Trustee and Agents ............................ 70
Section 11.07 Legal Holidays ......................................... 70
Section 11.08 No Recourse Against Others ............................. 70
Section 11.09 Governing Law .......................................... 70
Section 11.10 No Adverse Interpretation of Other Agreements .......... 70
Section 11.11 Successors ............................................. 71
Section 11.12 Severability ........................................... 71
Section 11.13 Counterpart Originals .................................. 71
Section 11.14 Trustee as Paying Agent and Registrar .................. 71
Section 11.15 Table of Contents, Headings, etc. ...................... 71
Section 11.16 Bank of New York Not Acting in Individual Capacity ..... 71
iii
<PAGE>
Page
----
SIGNATURES ......................................................... 67, 68, 69
iv
<PAGE>
Page
----
EXHIBIT A FORM OF SECURITY
EXHIBIT A-1 FORM OF GUARANTEE
EXHIBIT B FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF SECURITIES
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
v
<PAGE>
1
EXHIBIT 4.9
INDENTURE, dated as of February 17, 1998, among PRIMEDIA Inc., a Delaware
corporation (the "Company"), the corporations listed on Schedule I hereto (each
a "Guarantor" and collectively, the "Guarantors") and The Bank of New York, a
New York banking corporation, as Trustee.
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders (as defined below) of 75/8% Senior
Notes due 2008 (the "Series A Notes") and the 75/8% Senior Notes due 2008 to be
issued in exchange for the Series A Notes (the "Series B Notes" and, together
with the Series A Notes, the "Securities" or the "Notes") issued by the Company
(as defined below):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS
"144A Global Note" means a global note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold in reliance on Rule 144A.
"Adjusted Consolidated Net Income" means, with respect to any Person for
any period, (i) the Consolidated Net Income of such Person for such period, plus
(ii) in the case of the Company and its Restricted Subsidiaries, all cash
received during such period by the Company or any Restricted Subsidiary from its
Unrestricted Subsidiaries from the payment of dividends or distributions
(including tax sharing payments and loans or advances which are junior in right
of payment to the Securities and have a longer Average Life than the
Securities), but only to the extent such cash payments are not otherwise
included in "Adjusted Consolidated Net Income." Each item of Adjusted
Consolidated Net Income will be determined in conformity with GAAP, except that,
for purposes of the application of Accounting Principles Board Opinions Nos. 16
and 17, such Person may select any amortization practice allowable by GAAP up to
40 years, notwithstanding the use of a different amortization in such Person's
consolidated financial statements. Any designation of a Subsidiary of the
Company as a Restricted Subsidiary or Unrestricted Subsidiary at or prior to the
time of the calculation of Adjusted Consolidated Net Income of a Subsidiary will
be treated as if it had occurred at the beginning of the applicable period.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly the power to direct or cause the direction of
the management or policies, of the controlled person, whether through ownership
of voting securities, by agreement or otherwise.
"Agent" means any Registrar or Paying Agent.
"Applicable Premium" with respect to any Security being redeemed pursuant
to Section 3.08 shall equal the greater of (i) 1.0% of the then outstanding
principal amount of such Security and (ii) the excess of (A) the present value
of the required interest and principal payments due on such Security, computed
using a discount rate equal to the Treasury Rate plus the Applicable Spread,
over (B) the then outstanding principal amount of such Security.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Applicable Spread" means one half of one percent.
<PAGE>
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by the referent Person of any of its
assets (including by way of a sale-and-leaseback and including the sale or other
transfer of any of the Capital Stock of any Subsidiary of the referent Person);
provided, that notwithstanding the foregoing, the term "Asset Sale" shall not
include the sale, lease, conveyance, disposition or other transfer of (i) with
respect to an Unrestricted Subsidiary, (A) any assets not constituting all or
substantially all of the assets of any Net Cash Flow Unrestricted Subsidiary and
(B) any Capital Stock or any assets of any Restricted Payment Unrestricted
Subsidiary, (ii) all or substantially all of the assets of the Company, as
permitted pursuant to Section 5.01 hereof, (iii) any assets between the Company,
any Restricted Subsidiary or any Unrestricted Subsidiary, (iv) any sale,
conveyance, disposition or other transfer of (A) cash and cash equivalents, (B)
inventory in the ordinary course of business and (C) any other tangible or
intangible asset, in each case in the ordinary course of business, of the
Company or its Restricted Subsidiaries, or (v) the sale or discount, in each
case without recourse, of accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof.
"Average Life" means, as of the date of determination, with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment (assuming the exercise by the obligor of
such debt security of all unconditional (other than as to the giving of notice)
extension options of each such scheduled payment date) of such debt security
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"Bank Credit Facility" means the $1.5 billion credit facilities with The
Chase Manhattan Bank, The Bank of New York, Bankers Trust Company and The Bank
of Nova Scotia, as agent.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors of the Company.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease which
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Cedel" means Cedel Bank, SA.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than KKR
and its Affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than (A) 35 percent (35%) of the total voting
power of the then outstanding voting stock of the Company and (B) the total
voting power of the then outstanding voting stock of the Company beneficially
owned by KKR and its Affiliates or (ii) during any period of two consecutive
calendar years, individuals who at the beginning of such period constituted the
Company's Board of Directors (together with any new directors whose election by
the Company's Board of Directors or whose nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
Directors then still in office who either were Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors then in
office.
"Class D Subordinated Debentures" means the 10% Class D Subordinated
Exchange Debentures due 2008 of the Company issuable in exchange for the Series
D Preferred Stock.
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"Class E Subordinated Debentures" means the 9.20% Class E Subordinated
Exchange Debentures due 2009 of the Company issuable in exchange for the Series
E Preferred Stock.
"Class F Subordinated Debentures" means the 9.20% Class F Subordinated
Exchange Debentures due 2009 of the Company issuable in exchange for the Series
F Preferred Stock.
"Class G Subordinated Debentures" means the 85/8% Class G Subordinated
Exchange Debentures due 2010 of the Company issuable in exchange for the Series
G Preferred Stock.
"Class H Subordinated Debentures" means the 85/8% Class G Subordinated
Exchange Debentures due 2010 of the Company issuable in exchange for the Series
H Preferred Stock.
"Class D Subordinated Debenture means the indenture between the Company
and the Subordinated Debenture Trustee referred to therein pursuant to which the
Class D Subordinated Debentures will be issued.
"Class E Subordinated Debenture Indenture" means the indenture between the
Company and the Subordinated Debenture Trustee referred to therein pursuant to
which the Class E Subordinated Debentures will be issued.
"Class F Subordinated Debenture Indenture" means the indenture between the
Company and the Subordinated Debenture Trustee referred to therein pursuant to
which the Class F Subordinated Debentures will be issued.
"Class G Subordinated Debenture Indenture" means the indenture between the
Company and the Subordinated Debenture Trustee referred to therein pursuant to
which the Class G Subordinated Debentures will be issued.
"Class H Subordinated Debenture Indenture" means the indenture between the
Company and the Subordinated Debenture Trustee referred to therein pursuant to
which the Class H Subordinated Debentures will be issued.
"Common Stock" means the common stock, par value $0.01 per share, of the
Company.
"Company" means (i) PRIMEDIA Inc., a Delaware corporation, and (ii) any
successor of PRIMEDIA Inc. pursuant to Article 5 hereof.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Adjusted Consolidated Net Income of such Person for such period plus (a) (i)
with respect to any Restricted Subsidiary other than a Partially Owned
Restricted Subsidiary, provision for taxes based on income or profits to the
extent such provision for taxes was included in computing Adjusted Consolidated
Net Income and (ii) with respect to any Partially Owned Restricted Subsidiary,
the Pro Rata Portion of any provision for taxes based on income or profits to
the extent such provision for taxes was included in computing Adjusted
Consolidated Net Income, plus (b) (i) with respect to any Restricted Subsidiary
other than a Partially Owned Restricted Subsidiary, consolidated Interest
Expense, whether paid or accrued, to the extent such expense was deducted in
computing Adjusted Consolidated Net Income (including amortization of original
issue discount and non-cash interest payments), and (ii) with respect to any
Partially Owned Restricted Subsidiary, the Pro Rata Portion of consolidated
Interest Expense, whether paid or accrued, to the extent such expense was
deducted in computing Adjusted Consolidated Net Income (including amortization
of original issue discount and non-cash interest payments), plus (c) (i) with
respect to any Restricted Subsidiary other than a Partially Owned Restricted
Subsidiary, depreciation, amortization and other non-cash charges to the extent
such depreciation, amortization and other non-cash charges were deducted in
computing Adjusted Consolidated Net Income (including amortization of goodwill
and other intangibles) and (ii) with respect to any Partially Owned Restricted
Subsidiary, the Pro Rata Portion of depreciation, amortization and other
non-cash charges to the extent such depreciation, amortization and other
non-cash charges were deducted in computing Adjusted Consolidated Net Income
(including amortization of goodwill and other intangibles); provided, with
respect to the calculation of a Person's Debt to Consolidated Cash Flow Ratio,
that if, during such period, (a) such Person or any of its Subsidiaries shall
have made any Asset Sales (other than, in the case of the Company and its
Restricted Subsidiaries, sales of the Capital Stock of or any assets
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of Unrestricted Subsidiaries which constitute Asset Sales), Consolidated Cash
Flow of such Person for such period shall be reduced by an amount equal to the
Consolidated Cash Flow (if positive), to the extent such Consolidated Cash Flow
was included in computing Consolidated Cash Flow, directly attributable to the
assets or Capital Stock which are the subject of such Asset Sales for such
period or increased by an amount equal to the Consolidated Cash Flow (if
negative), to the extent such Consolidated Cash Flow was included in computing
Consolidated Cash Flow, directly attributable thereto for such period and (b)
such Person or any of its Subsidiaries (other than, in the case of the Company
and its Restricted Subsidiaries, Unrestricted Subsidiaries) has made any
acquisition of assets or Capital Stock (occurring by merger or otherwise),
including without limitation, any acquisition of assets or Capital Stock
occurring in connection with a transaction causing a calculation to be made
hereunder, Consolidated Cash Flow of such person shall be calculated
(notwithstanding clause (a) of the definition of Consolidated Net Income) as if
such acquisition of assets or Capital Stock (including the incurrence of any
Indebtedness in connection with any such acquisition and the application of the
proceeds thereof) took place on the first day of such period. Consolidated Cash
Flow of such Person shall be determined for any period without regard to changes
in Working Capital of such Person and its Subsidiaries during such period.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the (a) consolidated Interest Expense, whether paid or accrued, to the
extent such expense was deducted in computing Adjusted Consolidated Net Income
(including amortization of original issue discount and non-cash interest
payments) and (b) the amount of all cash dividend payments on all series of
preferred stock other than cash dividends on preferred stock of Unrestricted
Subsidiaries and cash dividends paid to such Person or its Subsidiaries;
provided that with respect to Partially Owned Restricted Subsidiaries, only the
Pro Rata Portion of any amounts covered by clauses (a) and (b) above shall be
included in calculating Consolidated Fixed Charges; provided further that if,
during such period, (i) such Person or any of its Subsidiaries shall have made
any Asset Sales (other than in the case of the Company and its Restricted
Subsidiaries, sales of the Capital Stock of or any assets of Unrestricted
Subsidiaries which constitute asset sales), Consolidated Fixed Charges of such
Person for such period shall be reduced by an amount equal to the Consolidated
Fixed Charges directly attributable to the assets which are the subject of such
Asset Sales for such period and (ii) such Person or any of its Subsidiaries
(other than in the case of the Company and its Restricted Subsidiaries,
Unrestricted Subsidiaries) has made any acquisition of assets or Capital Stock
(occurring by merger or otherwise), including, without limitation, any
acquisition of assets or Capital Stock occurring in connection with the
transaction causing a calculation to be made hereunder, Consolidated Fixed
Charges of such Person shall be calculated as if such acquisition of assets or
Capital Stock (including the incurrence of any Indebtedness in connection with
any such acquisition and the application of the proceeds thereof) took place on
the first day of such period.
"Consolidated Net Cash Flow" means, with respect to any Person for any
period, the aggregate Consolidated Cash Flow of such Person for such period,
minus (a) capital expenditures of such Person and its Subsidiaries (and in the
case of the Company and its Restricted Subsidiaries, excluding Unrestricted
Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries,
including only the Pro Rata Portion thereof), minus (b) the aggregate amount of
all cash dividends paid by such Person and its Subsidiaries (and in the case of
the Company and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries
and, in the case of Partially Owned Restricted Subsidiaries, including only the
Pro Rata Portion thereof) to holders of its Capital Stock other than to such
Person or its Subsidiaries, minus (c) the aggregate amount of all taxes based on
income or profits paid by such Person and its Subsidiaries (and in the case of
the Company and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries
and, in the case of Partially Owned Restricted Subsidiaries, including only the
Pro Rata Portion thereof) other than to such Person or its Subsidiaries, minus
(d) cash Interest Expense of such Person and its Subsidiaries (and in the case
of the Company and its Restricted Subsidiaries, excluding Unrestricted
Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries,
including only the Pro Rata Portion thereof), minus (e) repayments of principal
of Indebtedness by such Person and its Subsidiaries (and in the case of the
Company and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries
and, in the case of Partially Owned Restricted Subsidiaries, including only the
Pro Rata Portion thereof), minus (f) any increases in Working Capital of such
Person and its Subsidiaries (and in the case of the Company and its Restricted
Subsidiaries, excluding Unrestricted Subsidiaries and, in the case of Partially
Owned Restricted Subsidiaries, including only the Pro Rata Portion thereof), and
plus (g) any decreases in Working Capital of such Person and its Subsidiaries
(and in the case of the Company and its Restricted Subsidiaries, excluding
Unrestricted Subsidiaries and, in the case of Partially Owned Restricted
Subsidiaries, including only the Pro Rata Portion thereof), in each case, for
such period and determined in accordance with GAAP; provided that in calculating
the amount referred to in clause (f) or (g) above, as the case may be, for any
period during which the Company or any of its Restricted Subsidiaries has
consummated an Asset Sale (other than, the case of the Company and its
Restricted Subsidiaries, sales of Capital Stock of, cash or any assets of
Unrestricted
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Subsidiaries which constitute Asset Sales), the portion of the change in Working
Capital for such period attributable to the entity or business sold or purchased
shall be based (x) in the case of such an Asset Sale, on the change in Working
Capital attributable to the entity or business sold from the first day of such
period to the date of the consummation of such sale and (y) in the case of an
acquisition, on the change in Working Capital attributable to the entity or
business acquired from the date of consummation of such acquisition to the last
day of such period.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
(and in the case of the Company and its Restricted Subsidiaries, excluding
Unrestricted Subsidiaries and, with respect to any Partially Owned Restricted
Subsidiary, including only the Pro Rata Portion of the net income (or loss) of
such Partially Owned Restricted Subsidiary as of any date of determination of
Consolidated Net Income for the Company and its Restricted Subsidiaries) for
such period, on a consolidated basis, determined in accordance with GAAP,
provided that (i) the net income (or loss) of any Person which is not a
Subsidiary or is accounted for by the equity method of accounting shall be
included only to the extent of the amount of cash dividends or distributions
(including tax sharing payments and loans or advances which are junior in right
of payment to the Securities and have a longer Average Life than the Securities)
paid to the referent Person or a Subsidiary of the referent Person, (ii) except
to the extent includable pursuant to the foregoing clause (i), the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary of such
Person or is merged into or consolidated with such Person or any of its
Subsidiaries or that Person's assets are acquired by such Person or any of its
Subsidiaries shall be excluded, (iii) any gains or losses attributable to Asset
Sales net of related tax costs or tax benefits, as the case may be, shall be
excluded and (iv) the net income of any Unrestricted Subsidiary (and, solely for
purposes of Section 4.07 hereof, the net income of any Partially Owned
Restricted Subsidiary) shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Unrestricted Subsidiary
(or, solely for the purposes of Section 4.07 hereof, any Partially Owned
Restricted Subsidiary) of that net income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders that, in each such
case, has not been legally waived or otherwise satisfied.
"Consolidated Net Worth" means, for purposes of this Indenture, at any
date of determination, the sum of the Capital Stock and additional paid-in
capital plus retained earnings (or minus accumulated deficit) of the referent
Person and its Subsidiaries on a consolidated basis, less amounts attributable
to Redeemable Stock, each item to be determined in conformity with GAAP
(excluding the effects of foreign currency exchange adjustments under Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 52),
except that all effects of the application of Accounting Principles Board
Opinions Nos. 16 and 17 and related interpretations shall be disregarded.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of execution of this Indenture is located at 101
Barclay Street, New York, New York 10286, Attention: Corporate Trust and Agency
Group.
"Credit Facilities" means, collectively, the Bank Credit Facility and the
New Credit Facility, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, in each
case as amended, modified, renewed, refunded or refinanced from time to time, as
permitted in clause (i) of the second paragraph of Section 4.09 hereof.
"Currency Agreement" means the obligations of any Person pursuant to any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its subsidiaries against
fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Debt to Consolidated Cash Flow Ratio" means the ratio of all Indebtedness
of the Company and its Restricted Subsidiaries to Consolidated Cash Flow.
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"Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, in the form of
Exhibit A hereto except that such Note shall not bear the Global Note Legend and
shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Equity Interests" means Capital Stock, warrants, options or other rights
to acquire Capital Stock (but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer which may be made by the Company pursuant
to the Registration Rights Agreement to exchange Series A Notes for the Series B
Notes.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than the Credit Facilities and the Outstanding Notes) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charge Coverage Ratio" means the ratio of Consolidated Cash Flow to
Consolidated Fixed Charges.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Guarantee" means, individually and collectively, the guarantees given by
the Guarantors pursuant to Article 10 hereof, including a notation in the
Securities substantially in the form attached hereto as Exhibit A-1.
"Guarantee Date" means the date upon which a Guarantor executes a
Guarantee.
"Guarantor" means each domestic Restricted Subsidiary of the Company (or
successor of such Restricted Subsidiary) which executes a Guarantee.
"Holder" means a Person in whose name a Security is registered.
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"IAI Global Note" means the global Note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its nominee
that will be issued in a denomination equal to the outstanding principal amount
of the Notes sold to Institutional Accredited Investors.
"Indebtedness" of any Person means any indebtedness, contingent or
otherwise, in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement obligations with respect thereto) or
representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to financing leases), if and to the extent any of
the foregoing indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP (except that any such balance that
constitutes a trade payable and/or an accrued liability arising in the ordinary
course of business shall not be considered Indebtedness), and shall also
include, to the extent not otherwise included, any Capital Lease Obligations,
the maximum fixed repurchase price of any Redeemable Stock, indebtedness secured
by a Lien to which the property or assets owned or held by such Person is
subject, whether or not the obligations secured thereby shall have been assumed,
guarantees of items that would be included within this definition to the extent
of such guarantees (exclusive of whether such items would appear upon such
balance sheet), and net liabilities in respect of Currency Agreements and
Interest Rate Agreements. For purposes of the preceding sentence, the maximum
fixed repurchase price of any Redeemable Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Indenture, provided that if such Redeemable Stock is not then permitted to be
repurchased, the repurchase price shall be the book value of such Redeemable
Stock. The amount of Indebtedness of any Person at any date shall be without
duplication (i) the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such contingent
obligations at such date and (ii) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person is
subject, the lesser of the fair market value at such date of any asset subject
to a Lien securing the Indebtedness of others and the amount of the Indebtedness
secured. For the purpose of determining the aggregate Indebtedness of the
Company and its Restricted Subsidiaries, such Indebtedness shall exclude (a) the
Indebtedness of any Unrestricted Subsidiary of the Company or any Unrestricted
Subsidiary of a Restricted Subsidiary and (b) with respect to any Partially
Owned Restricted Subsidiary, the Pro Rata Portion of any Indebtedness of any
Partially Owned Restricted Subsidiary of the Company or any Partially Owned
Restricted Subsidiary of a Restricted Subsidiary pursuant to which the lender
thereunder does not have recourse to any of the assets of the Company or any of
its Restricted Subsidiaries.
"Indenture" means this Indenture as amended from time to time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Initial Purchaser" means Salomon Brothers Inc or Morgan Stanley & Co.
Incorporated.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Interest Expense" means, with respect to any Person, for any period, the
aggregate amount of interest in respect of Indebtedness (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and the net cost (benefit)
associated with Interest Rate Agreements, and excluding amortization of deferred
finance fees and interest recorded as accretion in the carrying value of
liabilities (other than Indebtedness) recorded at a discounted value) and all
but the principal component of rentals in respect of Capital Lease Obligations,
paid, accrued or scheduled to be paid or accrued by such Person during such
period.
"Interest Payment Date" has the meaning assigned to such term in the
Securities.
"Interest Rate Agreements" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
subsidiaries against fluctuations in interest rates.
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"Investment" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any Person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other Person. For the
purposes of Sections 4.07 and 4.14 hereof, (i) "Investment" shall include and be
valued at the fair market value of the net assets of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary and (ii) any property transferred to or from
an Unrestricted Subsidiary shall be valued at fair market value at the time of
such transfer, in each case as determined by the Board of Directors of the
Company in good faith.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give any security interest in and any filing or other agreement to give
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Liquidated Damages" means, with respect to any Securities, all unpaid
liquidated damages owing by the Company pursuant to Section 5 of the
Registration Rights Agreement for such Securities.
"Net Cash Flow Unrestricted Subsidiary" means an Unrestricted Subsidiary
which is not a Restricted Payment Unrestricted Subsidiary.
"Net Proceeds" means, with respect to any Asset Sale, the aggregate cash
proceeds (including any cash received by way of deferred payment pursuant to a
note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, and including any
amounts received as disbursement or withdrawals from any escrow or similar
account established in connection with any such Asset Sale, but, in either such
case, only as and when so received) received by the Company or any of its
Subsidiaries in respect of such Asset Sale, net of (i) the cash expenses of such
sale (including, without limitation, the payment of principal, premium, if any,
and interest on Indebtedness required to be paid as a result of such Asset Sale
(other than the Securities and amounts repaid pursuant to the Credit Facilities)
and legal, accounting and investment banking fees and sales commissions), (ii)
taxes paid or payable as a result thereof, (iii) any portion of cash proceeds
which the Company determines in good faith should be reserved for post-closing
adjustments, it being understood and agreed that on the day that all such
post-closing adjustments have been determined, the amount (if any) by which the
reserved amount in respect of such Asset Sale exceeds the actual post-closing
adjustments payable by the Company or any of its Subsidiaries shall constitute
Net Proceeds on such date and (iv) any relocation expenses and pension,
severance and shutdown costs incurred as a result thereof.
"New Credit Facility" means the $150 million credit facility with The
Chase Manhattan Bank, The Bank of New York, Bankers Trust Company and The Bank
of Nova Scotia, as agents.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers" means the President, the Treasurer, any Assistant Treasurer,
Controller, Secretary or any Vice President of the Company or any Guarantor, as
applicable.
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"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Company's chief executive officer, chief financial officer or
controller financial accounting.
"Opinion of Counsel" means a written opinion prepared in accordance with
Section 11.05 hereof and acceptable in form and substance to the Trustee, from
legal counsel who is acceptable to the Trustee. The counsel may be an employee
of or counsel to the Company or any Guarantor, if applicable, or the Trustee.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Outstanding Notes" means the 10 1/4% Senior Notes due 2004 and the 8 1/2%
Senior Notes due 2006, as each may be amended, supplemented or otherwise
modified from time to time.
"Outstanding Note Indentures" means the Indenture, dated as of May 31,
1994, among the Company, the guarantors listed therein and Bankers Trust
Company, as trustee, relating to the 10 1/4% Senior Notes due 2004, and the
Indenture, dated as of January 24, 1996, among the Company, the guarantors
listed therein and The Bank of New York, as trustee, relating to the 8 1/2%
Senior Notes due 2006, as each may be amended, supplemented or otherwise
modified from time to time.
"Partially Owned Restricted Subsidiary" means any Restricted Subsidiary
other than a wholly-owned Restricted Subsidiary.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to The Depository Trust Company, shall include Euroclear and
Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (ii) statutory Liens of landlords and carriers',
warehousemen's, mechanics', suppliers', materialmen's, repairmen's, or other
like Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate
proceedings, if a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor; (iii) Liens
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with the
business of the Company or any of its Subsidiaries incurred in the ordinary
course of business; (vi) Liens (including extensions and renewals thereof) upon
real or tangible personal property acquired after the date of this Indenture,
provided that (a) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the cost
(including the cost of construction) of the item of property subject thereto,
(b) the principal amount of the Indebtedness secured by such Lien does not
exceed 100% of such cost, (c) such Lien does not extend to or cover any other
property other than such item of property and any improvements on such item and
(d) the incurrence of such Indebtedness is permitted by Section 4.09 hereof;
(vii) Liens securing reimbursement obligations with respect to letters of credit
which encumber documents and other property relating to such letters of credit
and the products and proceeds thereof; (viii) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (ix) judgment and attachment
Liens not giving rise to an Event of Default; (x) leases or subleases granted to
others not interfering in any material respect with the business of the Company
or any of its Subsidiaries; (xi) Liens encumbering customary initial deposits
and margin deposits, and other Liens incurred in the ordinary course of business
and which are within the general parameters customary in the industry, in each
case securing Indebtedness
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under Interest Rate Agreements and Currency Agreements; (xii) Liens encumbering
deposits made to secure obligations arising from statutory, regulatory,
contractual or warranty requirements of the Company or its Subsidiaries; (xiii)
Liens arising out of consignment or similar arrangements for the sale of goods
entered into by the Company or any of its Subsidiaries in the ordinary course of
business of the Company and its Subsidiaries; (xiv) any interest or title of a
lessor in the property subject to any Capital Lease Obligation or operating
lease; (xv) Liens arising from filing Uniform Commercial Code financing
statements regarding leases; (xvi) Liens permitted by the Credit Facilities as
in effect on the date of this Indenture; (xvii) Liens securing Indebtedness
described in clause (xii) of the second paragraph of Section 4.09 hereof;
(xviii) Liens between the Company and any Restricted Subsidiary or between
Restricted Subsidiaries; (xix) Liens securing letters of credit in an amount not
to exceed $75 million in the aggregate at any one time; (xx) Liens in an amount
not to exceed $50 million in the aggregate at any one time and (xxi) Liens
incurred by Partially Owned Restricted Subsidiaries which do not exceed 10% of
Total Assets in the aggregate at any one time.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Pro Rata Portion" means, with respect to any Partially Owned Restricted
Subsidiary, the percentage of such Partially Owned Restricted Subsidiary's
outstanding Equity Interests beneficially owned by the Company and its
Restricted Subsidiaries.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redeemable Stock" means any Equity Interest which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable before the stated maturity of the Securities), or upon the
happening of any event, matures or is mandatorily redeemable, in whole or in
part, prior to the stated maturity of the Securities, or is, by its terms or
upon the happening of any event, redeemable at the option of the holder thereof,
in whole or in part, at any time prior to the stated maturity of the Securities
except for Equity Interests of the Company issued to present and former members
of management of the Company and its Subsidiaries pursuant to subscription and
option agreements in effect on the date hereof and common stock and options of
the Company issued to future members of management of the Company and its
Subsidiaries pursuant to subscription agreements executed subsequent to the date
hereof containing provisions for the repurchase of such common stock and options
upon death, disability or termination of employment of such persons which are
substantially identical to those contained in the subscription agreements in
effect on the date hereof; provided that for purposes of Section 4.07 hereof and
that for purposes of the definition of Indebtedness, Redeemable Stock does not
include the Series B Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock.
"Registration Rights Agreement" means the Registration Rights Agreement
dated February 17, 1998, between the Initial Purchasers, the Company and the
subsidiaries of the Company listed on the signature page thereto, as such
agreement may be amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust and Agency Group (or any successor group
thereto) of the Trustee, including any Vice President, Assistant Vice President,
Secretary, Assistant Secretary or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and, with respect to a particular matter, any other officer to whom
such matter is referred because of such officer's knowledge and familiarity with
the particular subject.
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"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Payment Unrestricted Subsidiary" means an Unrestricted
Subsidiary which was capitalized exclusively with a permitted Restricted Payment
or the proceeds from the issuance of an Equity Interest by the Company or with
the proceeds of the sale of stock or substantially all of the assets of any
other Unrestricted Subsidiary which was capitalized with such funds to the
extent that a liquidating dividend is paid to the Company or any Restricted
Subsidiary from the proceeds of such sale.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means, for the purposes of this Indenture, a
Subsidiary of the Company which at the time of determination is not an
Unrestricted Subsidiary. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that immediately after giving
effect to such designation, the Company could incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of Section 4.09 hereof, on a pro
forma basis taking into account such designation.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series D Preferred Stock" means the Company's $10.00 Series D
Exchangeable Preferred Stock Redeemable 2008, par value $.01 per share.
"Series E Preferred Stock" means the Company's $9.20 Series E Exchangeable
Preferred Stock Redeemable 2009, par value $.01 per share.
"Series F Preferred Stock" means the Company's $9.20 Series F Exchangeable
Preferred Stock Redeemable 2009, issuable in exchange for the Series E Preferred
Stock and containing terms identical to the Series E Preferred Stock.
"Series G Preferred Stock" means the Company's $8.625 Series G
Exchangeable Preferred Stock Redeemable 2010, par value $.01 per share.
"Series H Preferred Stock" means the Company's $8.625 Series H
Exchangeable Preferred Stock Redeemable 2010 issuable in exchange for the Series
G Preferred Stock and containing terms identical to the Series G Preferred
Stock.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
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"Subordinated Debentures" means the Company's 10% Class D Subordinated
Exchange Debentures due 2008, the 9.20% Class E Subordinated Exchange Debentures
due 2009, the 9.20% Class F Subordinated Exchange Debentures due 2009, the 8e%
Class G Subordinated Exchange Debentures due 2010, and the 8e% Class H
Subordinated Exchange Debentures due 2010.
"Subsidiary" of any Person means any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of such Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss.
77aaa-77bbbb).
"Total Assets" means the total consolidated assets of the Company and its
Restricted Subsidiaries.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.06(b) hereof.
"Transfers" means (i) any payment of interest on Indebtedness, dividends
or repayments of loans or advances and (ii) any other transfers of assets, in
each case from an Unrestricted Subsidiary to the Company or any of its
Restricted Subsidiaries.
"Treasury Rate" means, for the purposes of this Indenture, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled by and published in the most recent Federal
Reserve Statistical Release H.15 (519) which has become publicly available at
least two Business Days prior to the date fixed for prepayment (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the then remaining Average Life of
the Securities; provided that if the Average Life of the Securities is not equal
to the constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the Average Life of the Securities is less than one year,
the weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form of
Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means, for the purposes of this Indenture, (i)
any Subsidiary of the Company which at the time of determination is an
Unrestricted Subsidiary (as designated by the Board of Directors, as provided
below) and (ii) any subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns, or holds any Lien on, any
property of, any other Subsidiary of the Company which is not a Subsidiary of
the Subsidiary to be so designated; provided that (a) the Company certifies that
such designation complies with Section 4.07 and 4.14 hereof, and (b) the
Subsidiary to be so designated has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable with respect to any Indebtedness pursuant to which the
lender has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that immediately
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after giving effect to such designation, the Company could incur at least $1.00
of additional Indebtedness pursuant to the first paragraph of Section 4.09
hereof, on a pro forma basis taking into account such designation.
"U.S. Government Obligations" means direct noncallable obligations of or
guaranteed by the United States of America.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Working Capital" means, with respect to any Person for any period, the
current assets of such Person and its Subsidiaries (and in the case of the
Company and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries
and, in the case of Partially Owned Restricted Subsidiaries, including only the
Pro Rata Portion thereof) on a consolidated basis, after excluding therefrom
cash and cash equivalents and deferred income taxes, less the current
liabilities of such person and its Subsidiaries (and in the case of the Company
and its Restricted Subsidiaries, excluding Unrestricted Subsidiaries and, in the
case of Partially Owned Restricted Subsidiaries, including only the Pro Rata
Portion thereof) on a consolidated basis, after excluding therefrom, in each
case to the extent otherwise included therein, all short-term Indebtedness for
borrowed money, the current portion of any long-term Indebtedness, liabilities
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts, which will not be, and will not be deemed to be, inadvertent) drawn
against insufficient funds in the ordinary course of business, provided that
such liabilities are extinguished within three business days of this incurrence,
and deferred income taxes of such Person and its Subsidiaries (and in the case
of the Company and its Restricted Subsidiaries, excluding Unrestricted
Subsidiaries and, in the case of Partially Owned Restricted Subsidiaries,
including only the Pro Rata Portion thereof).
SECTION 1.02 OTHER DEFINITIONS
Defined in
Term Section
---- -------
"Affiliate Transaction".......................................... 4.12
"Change of Control Offer"........................................ 4.10
"Change of Control Payment"...................................... 4.10
"Change of Control Payment Date"................................. 4.10(2)
"Event of Default"............................................... 6.01
"Legal Holiday".................................................. 11.07
"Paying Agent"................................................... 2.03
"Registrar"...................................................... 2.03
"Refinancing Indebtedness"....................................... 4.09
"Restricted Payments"............................................ 4.07
"Retired Capital Stock".......................................... 4.07
"Refunding Capital Stock"........................................ 4.07
"Successor"...................................................... 5.01(i)
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities and the Guarantees.
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
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"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company, any other obligor upon the
Securities or any successor obligor upon the Securities or any Guarantor.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
SECTION 2.01 FORM AND DATING
(a)General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b)Global Notes. Notes issued in global form shall be substantially in the
form of Exhibit A attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
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(c)Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION
One Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal may be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
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SECTION 2.05. HOLDER LISTS
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE
(a)Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Notes will be exchanged by the Company for Definitive Notes if (i) the
Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no
longer a clearing agency registered under the Exchange Act and, in either
case, a successor Depositary is not appointed by the Company within 90
days after the date of such notice from the Depositary or (ii) the Company
in its sole discretion determines that the Global Notes (in whole but not
in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also
may be exchanged or replaced, in whole or in part, as provided in Sections
2.07 and 2.11 hereof. Every Security authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to Section 2.07 or 2.11 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may
not be exchanged for another Security other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f)
hereof.
(b)Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Notes also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs as
applicable:
(i)Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set forth
in the Private Placement Legend; provided, that prior to the expiration of
the Restricted Period transfers of beneficial interests in the Regulation S
Global Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred only to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note.
No written orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial interests
(other than a transfer of a beneficial interest in a Global Note to a Person
who takes delivery thereof in the form of a beneficial interest in the same
Global Note), the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given
in accordance with the Applicable Procedures containing information regarding
the Participant account to be credited with such increase or (B) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary
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to cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above; provided, that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Global Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act. Upon an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions conta4ined in the
Letter of Transmittal delivered by the Holder of such beneficial interests in
the Restricted Global Notes. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Notes contained in
this Indenture, the Securities and otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note.
A beneficial interest in any Restricted Global Note may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with the requirements
of clause (ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial
interest in the 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications
in item (1) thereof; and
(B) if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Global Note, then the transferor must deliver
a certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof;
(C) if the transferee will take delivery in the form of a beneficial
interest in the IAI Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications
and certificates and Opinion of Counsel required by item (3) thereof, if
applicable, and the tansferee must deliver a certificate in the form of
Exhibit D hereto.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global
Note for Beneficial Interests in the Unrestricted Global Note. A beneficial
interest in any Restricted Global Note may be exchanged by any holder thereof
for a beneficial interest in an Unrestricted Global Note or transferred to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of clause (ii) above and:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of the beneficial interest to be transferred, in the case of an exchange,
or the transferee, in the case of a transfer, is not (1) a broker-dealer,
(2) a Person participating in the distribution of the Securities or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item (1)(a)
thereof;
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(2)if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof; and
(3)in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are not required in order to maintain compliance
with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
beneficial interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note,
a certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable, and a
certificate in the form of Exhibit D hereto;
(F) if such beneficial interest is being transferred to the Company
or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof,
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the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and make
available for delivery to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The Trustee
shall make available for delivery such Definitive Notes to the Persons in
whose names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement Legend and shall
be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest
to a Person who shall take delivery thereof in the form of a
Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and make
available for delivery to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
make available for delivery
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such Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this section 2.06(c)(iii) shall not bear the Private
Placement Legend. A beneficial interest in an Unrestricted Global Note
cannot be exchanged for a Definitive Note bearing the Private Placement
Legend or transferred to a Person who takes delivery thereof in the form
of a Definitive Note bearing the Private Placement Legend.
(d)Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i)Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to transfer
such Definitive Notes to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Definitive Note is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(1) thereof;
(C) if such Definitive Note is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (2) thereof;
(D) if such Definitive Note is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such Definitive Note is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(b) thereof;
(F) if such Definitive Note is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof; or
(G) if such Definitive Note is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration
requirements of the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, and a certificate in the
form of Exhibit D hereto,
the Trustee shall cancel the Definitive Note, increase or cause to be increased
the aggregate principal amount of, in the case of clause (A) above, the
appropriate Restricted Global Note, in the case of clause (B) above, the 144A
Global Note, in the case of clause (C) above, the Regulation S Global Note and
in the case of clause (G) above, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
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(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1)if the Holder of such Definitive Notes proposes to exchange
such Notes for a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(c) thereof;
(2)if the Holder of such Definitive Notes proposes to transfer
such Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof; and
(3)in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company to the
effect that such exchange or transfer is in compliance with the Securities
Act, that the restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act, and such Definitive Notes are being exchanged or
transferred in compliance with any applicable blue sky securities laws of
any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause to
be increased the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
beneficial interests transferred pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above.
(e)Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Restricted
Definitive Notes may be transferred to and registered in the name of Persons
who take delivery thereof if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (1) thereof;
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(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof;
(C) if the transfer will be made pursuant to an exemption from the
registration requirements of the Securities Act to an Institutional
Accredited Investor, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications and certificates
and Opinion of Counsel required by item (3) thereof, if applicable, and
the transferee must deliver a certificate in the form of Exhibit D hereto;
and
(D) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver (x) a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required
by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1)if the Holder of such Restricted Definitive Notes proposes
to exchange such Notes for an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof;
(2)if the Holder of such Restricted Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery thereof in the
form of an Unrestricted Definitive Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in item (4)
thereof; and
(3)in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company to the
effect that such exchange or transfer is in compliance with the Securities
Act, that the restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act, and such Restricted Definitive Note is being exchanged or
transferred in compliance with any applicable blue sky securities laws of
any State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such Notes to
a Person who takes delivery thereof in the form of an Unrestricted Definitive
Note. Upon receipt of a request for such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions from
the Holder thereof. Unrestricted Definitive Notes cannot be exchanged for or
transferred to Persons who take delivery thereof in the form of a Restricted
Definitive Note.
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(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by persons that
are not (x) broker-dealers, (y) Persons participating in the distribution of the
Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144) of the
Company and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrent with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the appropriate
principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following
form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE
SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO
SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
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(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE Trustee MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND
(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depositary at the direction of the Trustee, to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Notes and Definitive Notes
upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.06, 4.08, and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Security selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Securities during a period beginning at the
opening of business 15 days before the day of mailing of a notice of
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part or (C) to register
the transfer of or to exchange a Security between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any
Security, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and interest on
such Securities and for all other purposes, and none of the Trustee, any
Agent or the Company shall be affected by notice to the contrary.
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(vii) The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
transfer or exchange may be submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES .
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES .
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES .
Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form
of certificated Notes but may
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have variations that the Company considers appropriate for temporary Notes and
as shall be reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION .
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation. The Company may not
issue new Notes to replace Notes that it has paid or that have been delivered to
the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST .
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.13 CUSIP NUMBERS
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE 3
OPTIONAL REDEMPTION AND
OPTIONAL REDEMPTION UPON CHANGE OF CONTROL
SECTION 3.01 NOTICES TO TRUSTEE
(a) If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth that such redemption shall occur pursuant to
Section 3.07 hereof and setting forth the redemption date, the principal amount
of Securities to be redeemed and the redemption price.
(b) If the Company elects to redeem Securities pursuant to the provisions
of Section 3.08 hereof, it shall furnish to the Trustee, at least 45 days but
not more than 60 days before the redemption date, an Officers' Certificate
setting forth that a Change of Control has occurred and the date of such Change
of Control and that such redemption shall occur pursuant to Section 3.08 hereof,
and further setting forth the principal amount of Securities to be redeemed, the
redemption price of such Securities and the intended redemption date.
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SECTION 3.02 SELECTION OF SECURITIES TO BE REDEEMED
If less than all of the Securities are to be redeemed at any time,
selection of the Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed, or, if the Securities are not listed
on a national securities exchange, on a pro rata basis, by lot or by such method
as the Trustee shall deem fair and appropriate; provided that no Security in
denominations of $1,000 or less shall be redeemed in part. The Trustee may
select for redemption any portion (equal to $1,000 or any integral multiple
thereof) of the principal of Securities that have denominations larger than
$1,000. Except as provided in the preceding sentence, provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed. The particular
Securities to be redeemed shall be selected, unless otherwise provided herein,
not less than 30 nor more than 60 days prior to the redemption date by the
Trustee from the outstanding Securities not previously called for redemption.
SECTION 3.03 NOTICES TO HOLDERS
(a) If the Company elects to redeem Securities pursuant to either of
Section 3.07 or 3.08 hereof, notice of redemption shall be mailed by first class
mail at least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at its registered address.
The notice shall identify the Securities to be redeemed (including CUSIP
number) and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that,
after the redemption date, upon surrender of such Security, a
new Security or Securities in principal amount equal to the
unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to
the Paying Agent at the address specified in such notice to
collect the redemption price;
(6) that interest on Securities or portions of them called for
redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities are being redeemed; and
(8) the aggregate principal amount of Securities that are being
redeemed.
(b) At the Company's timely request, the Trustee shall give the notice
required in Section 3.03(a) hereof above in the Company's name and at its
expense and setting forth the information to be stated in such notice as
provided in Section 3.03(a) hereof.
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SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed (after the Trustee has received the
notice provided for in Section 3.01 hereof), Securities called for redemption
become due and payable on the redemption date at the redemption price and shall
cease to bear interest from and after the redemption date (unless the Company
shall fail to make payment of the redemption price or accrued interest on the
redemption date). Upon surrender to the Paying Agent, such Securities shall be
paid at the redemption price, plus premium and Liquidated Damages, if any, plus
accrued interest, if any, to the redemption date, but interest installments
whose maturity is on the redemption date and Liquidated Damages which become
payable on the redemption date will be payable to the Holder of record at the
close of business on the relevant record dates referred to in the Securities.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE OR PURCHASE PRICE
Prior to 10:00 a.m. on the redemption date, the Company shall deposit with
the Trustee or with the Paying Agent money (in same-day funds) sufficient to pay
the redemption price of, premium and Liquidated Damages, if any, and accrued
interest on, all Securities to be redeemed on that date other than Securities or
portions thereof called for redemption on that date which previously have been
delivered by the Company to the Trustee for cancellation. The Trustee or the
Paying Agent shall return to the Company any such money not required for that
purpose.
If the Company complies with the preceding paragraph, interest on the
Securities or portions thereof to be redeemed, whether or not such Securities
are presented for payment, will cease to accrue on the applicable redemption
date. If any Security called for redemption shall not be so paid upon surrender
for redemption because of the failure of the Company to comply with the
preceding paragraph, then interest will be paid on the unpaid principal from the
redemption date until such principal is paid and on any interest not paid on
such unpaid principal, in each case, at the rate provided in the Securities and
in Section 4.01 hereof.
SECTION 3.06 SECURITIES REDEEMED IN PART
Upon surrender of a Security that is redeemed in part, the Company shall
issue and the Trustee, upon the written order of the Company, shall authenticate
for the Holder at the expense of the Company a new Security equal in principal
amount to the unredeemed portion of the Security surrendered.
SECTION 3.07 OPTIONAL REDEMPTION
The Company may redeem all or any of the Securities, in whole or in part,
at any time on or after April 1, 2003 at the redemption prices (expressed as
percentages of the principal amount) set forth in the immediately succeeding
paragraph, plus accrued and unpaid interest thereon to the applicable redemption
date.
The redemption price as a percentage of the principal amount shall be as
follows, if the Securities are redeemed during the twelve-month period beginning
April 1 of the year indicated below:
Year Percentage
---- ----------
2003 103.813%
2004 102.542%
2005 101.271%
2006 and thereafter 100.000%
Notwithstanding the foregoing, upon the occurrence at any time of a Change
in Control, the Securities will be redeemable, at the option of the Company, in
whole or in part, pursuant to the provisions of Section 3.08 hereof.
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Any redemption pursuant to this Section 3.07 shall be made, to the extent
applicable, pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08 OPTIONAL REDEMPTION UPON CHANGE OF CONTROL
In addition to any redemption pursuant to Section 3.07 hereof, the
Securities will be redeemable, at the option of the Holders, in whole or in
part, at any time within 160 days after a Change of Control upon not less than
30 nor more than 60 days' prior notice to the Company of Securities to be
redeemed, at a redemption price equal to the sum of (i) the then outstanding
principal amount of the Securities being redeemed plus Liquidated Damages for
such Securities, if any, plus (ii) accrued and unpaid interest, if any, to the
redemption date plus (iii) the Applicable Premium.
Any redemption pursuant to this Section 3.08 shall be made, to the extent
applicable, pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.09 SINKING FUND
The Securities will not be entitled to any sinking fund payments.
ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF SECURITIES
The Company shall pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities, and shall pay Liquidated
Damages, if any, on the dates and in the manner provided in the Registration
Rights Agreement. Principal and interest shall be considered paid on the date
due if the Paying Agent, other than the Company or a Subsidiary of the Company,
holds on that date money deposited by the Company in available funds and
designated for and sufficient to pay all principal and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
at the same rate per annum on the Securities to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY
The Company shall maintain, in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee or the
Registrar) where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
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The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.03 SEC REPORTS; FINANCIAL STATEMENTS
(a) The Company and the Guarantors shall file with the Trustee, within 15
days after it files the same with the SEC, copies of the annual reports and the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) that the
Company and/or the Guarantors are required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. If the Company is not subject to the
requirements of such Section 13 or 15(d), the Company shall file with the
Trustee, within 15 days after it would have been required to file the same with
the SEC, financial statements, including any notes thereto (and with respect to
annual reports, an auditors' report by a firm of established national
reputation), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," both comparable to that which the Company would have
been required to include in such annual reports, information, documents or other
reports if the Company had been subject to the requirements of such Section 13
or 15(d). Any Guarantor not required to file with the SEC pursuant to Section 13
or 15(d) of the Exchange Act shall not be required to file such reports with the
SEC or Trustee. The Company and the Guarantors shall also comply with the other
provisions of TIA ss.314(a).
(b) If the Company is required to furnish annual or quarterly reports to
its stockholders pursuant to the Exchange Act, the Company shall cause any
annual report furnished to its stockholders generally and any quarterly or other
financial reports furnished by it to its stockholders generally to be filed with
the Trustee and mailed to the Holders at their addresses appearing in the
register of Securities maintained by the Registrar. If the Company is not
required to furnish annual or quarterly reports to its stockholders pursuant to
the Exchange Act, so long as at least 5% of the original principal amount of the
Securities remain outstanding, the Company shall cause its financial statements
referred to in Section 4.03(a) hereof, including any notes thereto (and with
respect to annual reports, an auditors' report by a firm of established national
reputation), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" to be so mailed to the Holders within 90 days after
the end of each of the Company's fiscal years and within 60 days after the end
of each of the Company's first three fiscal quarters. The Company will cause to
be disclosed in a statement accompanying any annual report or comparable
information as of the date of the most recent financial statements in each such
report or comparable information the amount available for payments pursuant to
Section 4.07 hereof. As of the date hereof, the Company's fiscal year ends on
December 31. Any Guarantor not required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act shall not be required to file such reports with
the SEC or Trustee.
SECTION 4.04 COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his knowledge the Company has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge and what action the
Company is taking or proposes to take with respect thereto) and that to the best
of his knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal of or interest, if any, on the
Securities are prohibited or, if such event has occurred, a description of the
event and what action the Company is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 hereof shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Articles 4 or 5 of this Indenture or, if any such violation
has occurred, specifying the nature and period of existence
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thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Securities are outstanding,
(i) deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default under this Indenture, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto and (ii) promptly notify the
Trustee of any Change of Control.
SECTION 4.05 COMPLIANCE WITH LAWS, TAXES
The Company shall, and shall cause each of its Subsidiaries to, comply
with all statutes, laws, ordinances, or government rules and regulations to
which it is subject, noncompliance with which would materially adversely affect
the business, earnings, properties, assets or condition, financial or otherwise,
of the Company and its Subsidiaries taken as a whole.
The Company shall, and shall cause each of its Subsidiaries to, pay prior
to delinquency all taxes, assessments, and governmental levies except as
contested in good faith and by appropriate proceedings.
SECTION 4.06 STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the Company's
obligation to pay the Securities; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
insofar as such law applies to the Securities, and covenants that it shall not,
by resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 4.07 LIMITATIONS ON RESTRICTED PAYMENTS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Capital Stock or other Equity Interests (other than (A) dividends
or distributions payable in Equity Interests (other than Redeemable Stock) of
the Company or such Restricted Subsidiary or (B) dividends or distributions
payable to the Company or any of its Restricted Subsidiaries), (ii) (A)
voluntarily purchase, redeem or otherwise acquire or retire for value any
preferred stock of the Company or any of its Restricted Subsidiaries, which by
its terms, is exchangeable for any Indebtedness that is pari passu with or
subordinated in right of payment to the Securities or (B) purchase, redeem or
otherwise acquire or retire for value any Equity Interests (other than
Exchangeable Preferred Stock) of the Company or any of its Restricted
Subsidiaries (other than any such Equity Interests purchased from the Company or
any of its Restricted Subsidiaries), (iii) voluntarily purchase, repay, redeem,
defease (including, but not limited to, covenant or legal defeasance) or
otherwise acquire or retire for value any Indebtedness (other than (A) the
Securities, (B) Indebtedness under the Credit Facilities, (C) Indebtedness
permitted under clause (v) or (vi) of the second paragraph of Section 4.09
hereof, and any extension, refinancing, renewal, replacement, substitution or
refunding thereof permitted under clause (vii) of the second paragraph of
Section 4.09 hereof or (D) Indebtedness between and among the Company and its
Restricted Subsidiaries) that is pari passu with or subordinated in right of
payment to the Securities (other than in connection with the refunding or
refinancing of such Indebtedness) or (iv) make Investments in Restricted Payment
Unrestricted Subsidiaries (the foregoing actions set forth in clauses (i)
through (iv) being referred to as "Restricted Payments"), if, at the time of
such Restricted Payment:
(a) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof; or
(b) the Company could not incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of Section 4.09 hereof
(without giving effect to clauses (i) through (xv) of the second paragraph
thereof), which calculation shall be made on a pro
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forma basis deducting from Adjusted Consolidated Net Income the amount of
any Investment the Company has made in an Unrestricted Subsidiary during
the relevant period and any Investment the Company intends to make in an
Unrestricted Subsidiary, to the extent that such Investment is made with
amounts included in Adjusted Consolidated Net Income as a result of
Transfers described in clause (c)(x) of this Section 4.07 or clause (c)(y)
of Section 4.14 hereof; or
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made after May 13, 1992 exceeds the sum of the
following: (w) 50% of the amount of the Adjusted Consolidated Net Income
(other than amounts included in the next succeeding clause (c)(x)) of the
Company for the period (taken as one accounting period) from the beginning
of the first quarter commencing immediately after May 13, 1992 through the
end of the Company's fiscal quarter ending immediately prior to the time
of such Restricted Payment (or, if Adjusted Consolidated Net Income for
such period is a deficit, 100% of such deficit); plus (x) 100% of the
amount of all Transfers from a Restricted Payment Unrestricted Subsidiary
up to the aggregate amount of the Investment (after taking into account
all prior Transfers from such Restricted Payment Unrestricted Subsidiary)
in such Restricted Payment Unrestricted Subsidiary (valued in each case as
provided in the definition of "Investment"); plus (y) in the event of a
designation of a Restricted Payment Unrestricted Subsidiary as a
Restricted Subsidiary, 100% of an amount equal to the greater of (A) the
fair market value of such Subsidiary as determined by the Board of
Directors in good faith (or, if such fair market value may exceed $25.0
million, as determined in writing by an independent investment banking
firm of nationally recognized standing) at the time of the redesignation
of such Restricted Payment Unrestricted Subsidiary as a Restricted
Subsidiary and (B) the Consolidated Net Cash Flow generated by such
Subsidiary for the period (taken as one accounting period) from the
beginning of its first fiscal quarter commencing immediately after the
date of its designation as a Restricted Payment Unrestricted Subsidiary
through such Subsidiary's fiscal quarter ending immediately prior to its
designation as a Restricted Subsidiary (or if such Consolidated Net Cash
Flow for such period is a deficit, 100% of such deficit); plus (z) 100% of
the aggregate net cash proceeds received by the Company from (i) the
issuance or sale of Equity Interests of the Company (other than such
Equity Interests issued or sold to a Restricted Subsidiary of the Company
and other than Redeemable Stock) or (ii) the sale of the stock of an
Unrestricted Subsidiary or the sale of all or substantially all of the
assets of an Unrestricted Subsidiary to the extent that a liquidating
dividend is paid to the Company or any Restricted Subsidiary from the
proceeds of such sale;
provided, however, that for purposes of making Investments in Unrestricted
Subsidiaries, if the amount determined in accordance with clauses (w) or (y)
above is a deficit, such deficit shall be excluded from the computation of this
clause (c); and provided, further, that all such amounts applied pursuant to
this clause (c) shall not be available for application under clause (c) of
Section 4.14 hereof.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) (A) the retirement of any shares of the Company's Capital Stock
(the "Retired Capital Stock") either (1) in exchange for or (2) out of the net
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of other shares of the Company's Capital Stock (the
"Refunding Capital Stock") other than any Redeemable Stock, and (B) if
immediately prior to such retirement of such Retired Capital Stock the
declaration and payment of dividends thereon was permitted under either clause
(iii) or (vii) of this paragraph, the declaration and payment of dividends on
the Refunding Capital Stock in an aggregate amount per year no greater than the
aggregate amount of dividends per year that was declarable and payable on such
Retired Capital Stock immediately prior to such retirement; (iii) the
declaration and payment of dividends to the holders of the Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock and the Series G
Preferred Stock; (iv) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company issued to present
and former members of management of the Company and its Subsidiaries pursuant to
subscription and option agreements in effect on the date hereof and Equity
Interests of the Company issued to future members of management pursuant to
subscription agreements executed subsequent to the date hereof, containing
provisions for the repurchase of such Equity Interests upon death, disability or
termination of employment of such persons which are substantially identical to
those contained in the subscription agreements in effect on the date hereof; (v)
the declaration and payment of dividends on the Company's Common Stock of up to
$25.0 million per annum plus 6% per annum of the net proceeds received at any
time by the Company from (a) the issue or sale of Common Stock or (b) (1) the
issuance of securities convertible into Common Stock (other than any such
convertible securities issued to (A) members of the Company's management or its
Board of Directors and (B) any Subsidiary of the Company) and (2) the conversion
of such convertible securities into Common Stock, in both cases at the time of
such conversion into Common Stock; (vi) the repurchase, redemption or other
acquisition or retirement for value
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of Indebtedness of the Company which is subordinated in right of payment to the
Securities either (A) in exchange for or (B) with the proceeds of the issuance
of, Equity Interests (other than Redeemable Stock) of the Company; (vii) the
declaration and payment of dividends to holders of any class or series of the
Company's preferred stock issued after the date hereof (including, without
limitation, the declaration and payment of dividends on Refunding Capital Stock
in excess of the dividends declarable and payable thereon pursuant to clause
(ii) of this paragraph), provided that at the time of such issuance the
Company's Fixed Charge Coverage Ratio, after giving effect to such issuance,
would be greater than 1.25 to 1; (viii) the redemption, repurchase or other
acquisition or retirement for value of any Indebtedness of the Company which is
subordinated in right of payment to the Securities (A) with the proceeds of, or
in exchange for, Indebtedness incurred pursuant to clause (vii) of the second
paragraph of Section 4.09 hereof or (B) if, after giving effect to such
redemption, repurchase or retirement, the Company could incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.09 hereof (without giving
effect to clauses (i) through (xv) of the second paragraph thereof); (ix) the
retirement of the Series B Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock in
exchange for the issuance of the Class B Subordinated Debentures, Class D
Subordinated Debentures, Class E Subordinated Debentures, Class F Subordinated
Debentures and Class G Subordinated Debentures, respectively, pursuant to the
respective certificates of designations relating thereto, (x) the purchase of
Class B Subordinated Debentures, Class D Subordinated Debentures, Class E
Subordinated Debentures, Class F Subordinated Debentures and Class G
Subordinated Debentures in accordance with the Change of Control covenants in
the Class B Debenture Indenture, the Class D Debenture Indenture, the Class E
Debenture Indenture, the Class F Debenture and the Class G Debenture Indenture,
respectively; (xi) Investments in Unrestricted Subsidiaries having an aggregate
fair market value, when taken together with all other Investments made pursuant
to this clause (xi) that are at that time outstanding, not to exceed $50.0
million at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value); (xii) the repurchase, retirement or other
acquisition for value of Equity Interests of the Company which are not held by
KKR or any of its Affiliates; provided, that (A) the aggregate Restricted
Payments made under this clause (xii) shall not exceed $75 million and (B)
immediately after giving effect to each Restricted Payment made pursuant to this
clause (xii) on a pro forma basis, the Company could incur at least $1.00 of
additional Indebtedness pursuant to the first paragraph of Section 4.09 hereof
and (xiii) other Restricted Payments in an aggregate amount not to exceed $25
million; provided that in determining the aggregate amount expended for
Restricted Payments in accordance with paragraph (c) above, (1) no amounts
expended under clauses (ii)(A)(1), (vi)(A), (viii) and (ix) of this paragraph
will be included, (2) 100% of the amounts expended under clauses (ii)(A)(2),
(iv), (v), (vi)(B), (vii), (x), (xi), (xii) and (xiii) of this paragraph will be
included, (3) 50% of the amounts expended under clause (iii) of this paragraph
will be included, (4) amounts expended under clause (ii)(B) of this paragraph
will be included to the extent previously included for the Retired Capital Stock
and (5) 100% of the amounts expended under clause (i) to the extent not included
under subclauses (1) through (4) of this proviso will be included. For the
purposes of determining compliance with this Section 4.07, in the event that a
Restricted Payment meets the criteria of more than one of the categories of
permitted Restricted Payments described in clauses (i) through (xiii) above or
is entitled to be incurred pursuant to the first paragraph of this Section 4.07
(including clauses (a), (b) and (c) thereof), the Company shall, in its sole
discretion, classify such Restricted Payment in any manner that complies with
the covenants described above and such Restricted Payment will be treated as
having been made pursuant to only one of such clauses or pursuant to the first
paragraph of this Section 4.07.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officer's Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, which calculations may
be based on the Company's latest available internal financial statements.
SECTION 4.08 DIVIDENDS AND PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock, or any other interest or participation in, or measured by,
its profits, owned by the Company or any of its Restricted Subsidiaries, or pay
any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii)
make loans or advances to the Company or any of its Restricted Subsidiaries or
(iii) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of: (A) the terms (as in effect on the date hereof) of the
Existing Indebtedness, (B) the terms (as in effect on the date hereof) of the
Credit Facilities and the Outstanding
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Notes and Outstanding Note Indentures, (C) the terms of Indebtedness of the
Company incurred in accordance with Section 4.09 hereof; provided that such
terms of any such Indebtedness constitute no greater encumbrance or restriction
on the ability of any Restricted Subsidiary to pay dividends or make
distributions, make loans or advances or transfer properties or assets than is
permitted by this Section 4.08, (D) the terms of this Indenture and the
Securities, (E) applicable law, (F) customary non-assignment provisions entered
into in the ordinary course of business and consistent with past practices, (G)
the terms of purchase money obligations for property acquired in the ordinary
course of business, but only to the extent that such purchase money obligations
restrict or prohibit the transfer of the property so acquired, (H) the terms of
the Class B Subordinated Debentures, the Class B Debenture Indenture, the Class
D Subordinated Debentures, the Class D Debenture Indenture, the Class E
Subordinated Debentures, the Class E Debenture Indenture, the Class F
Subordinated Debentures, the Class F Debenture Indenture, the Class G
Subordinated Debentures and the Class G Debenture Indenture, (I) any encumbrance
or restriction with respect to a Subsidiary of the Company that is not a
Subsidiary of the Company on the date of this Indenture, which encumbrance or
restriction is in existence at the time such Person becomes a Subsidiary of the
Company or is created on the date it becomes a Subsidiary of the Company, (J)
any encumbrance or restriction with respect to a Subsidiary of the Company
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of such
Subsidiary, (K) customary provisions in joint venture agreements and other
similar agreements entered into in the ordinary course of business, (L)
customary provisions contained in leases and other agreements entered into in
the ordinary course of business, (M) the terms of any Indebtedness for borrowed
money of any Partially Owned Restricted Subsidiary or (N) any encumbrance or
restriction existing under any agreement which refinances or replaces the
agreements described in clauses (A), (B), (D), (H), (K), (L) and (M), provided
that the terms and conditions of any such encumbrances or restrictions contained
in any such agreement constitute no greater encumbrance or restriction on the
ability of any Restricted Subsidiary to pay dividends or make distributions,
make loans or advances or transfer properties or assets than those under or
pursuant to the agreement evidencing the Indebtedness or obligations refinanced.
Nothing contained in this Section 4.08 shall prevent the Company or a Restricted
Subsidiary from entering into any agreement permitting or providing for the
incurrence of Liens otherwise permitted by Section 4.13 hereof.
SECTION 4.09 INCURRENCE OF INDEBTEDNESS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness unless the Company's Debt to Consolidated Cash Flow Ratio for its
four full fiscal quarters ending immediately prior to the date such additional
Indebtedness is created, incurred, issued, assumed or guaranteed would have been
no greater than 6 to 1, and such Indebtedness is not senior in right of payment
to the Securities; provided that such calculation shall give effect to (A) the
incurrence of any Indebtedness (after giving effect to the application of the
proceeds thereof) in connection with the simultaneous acquisition of any person,
business, property or assets and (B) the Consolidated Cash Flow generated by
such acquired person, business, property or assets, giving effect in each case
to such incurrence of Indebtedness, application of proceeds and Consolidated
Cash Flow as if such acquisition had occurred at the beginning of such four
quarter period. For purposes of the foregoing provision, cash flow generated by
any acquired person, business, property or asset shall be determined on the same
basis as the definition of Consolidated Cash Flow and shall be based on the
actual earnings before interest, taxes, depreciation and amortization of such
acquired person, business, property or asset during the immediately preceding
four full fiscal quarters plus (y) (i) the savings in cost of goods sold that
would have resulted during that period from the effect of using the Company's
actual costs for comparable goods and services during that period and (ii) other
savings in cost of goods sold or eliminations of selling, general and
administrative expenses as determined by the Company in good faith in its
consideration of such acquisitions and consistent with the Company's experiences
in acquisitions of similar businesses minus (z) the incremental expenses that
would be included in cost of goods sold and selling, general and administrative
expenses that would have been incurred by the Company in the operation of such
acquired person, business, property or assets during such period.
The foregoing limitations shall not apply to the incurrence of (i)
Indebtedness pursuant to the Credit Facilities (provided that the principal
amount of such Indebtedness shall not exceed $1.65 billion, less the amount of
all repayments made in respect of term loans and of all permanent commitment
reductions with respect to revolving loans (except to the extent, and only to
the extent, that any required repayments of principal in connection with such
commitment reduction are not made) made under the Credit Agreements (excluding
such repayments and commitment reductions which occur substantially
contemporaneously with a refinancing or a refunding thereof)), plus any amounts
then available under clause (vi) of this paragraph; (ii) Existing Indebtedness;
(iii) Indebtedness represented by the Outstanding
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Notes; (iv) Indebtedness represented by the Class B Subordinated Debentures
issued in exchange for all of the outstanding Series B Preferred Stock, the
Class D Subordinated Debentures issued in exchange for all the outstanding
Series D Preferred Stock, the Class E Subordinated Debentures issued in exchange
for all the outstanding Series E Preferred Stock, the Class F Subordinated
Debentures issued in exchange for all the outstanding Series F Preferred Stock
and the Class G Subordinated Debentures issued in exchange for all the
outstanding Series G Preferred Stock; (v) Capital Lease Obligations in an
aggregate principal amount which, when aggregated with the principal amount of
all other Capital Lease Obligations then outstanding and incurred pursuant to
this clause (v) and including all Refinancing Indebtedness (as defined below)
incurred to refund, refinance or replace any other Indebtedness incurred
pursuant to this clause (v), does not exceed 5% of Total Assets; (vi)
Indebtedness in an aggregate principal amount equal to the greater of (A) $225
million in the aggregate at any one time outstanding for the Company and its
Restricted Subsidiaries or (B) Indebtedness created, incurred, issued, assumed
or guaranteed (x) by the Company at any one time outstanding not in excess of 7%
of the Consolidated Net Worth of the Company at the time of such creation,
incurrence, issuance, assumption or guarantee or (y) by any Restricted
Subsidiary of the Company at any one time outstanding not in excess of 7% of the
Consolidated Net Worth of such Restricted Subsidiary at the time of such
creation, incurrence, issuance, assumption or guarantee; (vii) Indebtedness
created, incurred, issued, assumed or guaranteed in exchange for or the proceeds
of which are used to extend, refinance, renew, replace, substitute or refund
Indebtedness referred to in clauses (i) through (vi) above, including additional
Indebtedness incurred to pay premiums and fees in connection therewith (the
"Refinancing Indebtedness"); provided, that (A) the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount of Indebtedness
(including unused commitments and additional Indebtedness incurred to pay
premiums and fees in connection therewith) so extended, refinanced, renewed,
replaced, substituted or refunded plus any amounts then available under clause
(vi) of this paragraph, (B) in the case of Refinancing Indebtedness for
Indebtedness permitted under clauses (ii) and (iv) of this paragraph, the
Refinancing Indebtedness permitted under clauses (ii) and (iv) of this paragraph
shall have an Average Life equal to or greater than the Average Life of the
Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded and (C) the Refinancing Indebtedness for Indebtedness permitted under
clauses (ii) and (iv) of this paragraph shall rank, in right of payment, no more
senior than such Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded and the Refinancing Indebtedness for Indebtedness
permitted under clauses (i), (iii), (v) and (vi) of this paragraph shall rank,
in right of payment, pari passu with or junior to the Securities; (viii)
intercompany Indebtedness incurred in connection with Investments in
Unrestricted Subsidiaries; provided that such Investments are permitted by
Section 4.07 or Section 4.14 hereof; (ix) Indebtedness under Currency Agreements
and Interest Rate Agreements, provided that in the case of Currency Agreements
which relate to other Indebtedness, such Currency Agreements do not increase the
Indebtedness of the Company outstanding other than as a result of fluctuations
in foreign currency exchange rates; (x) Indebtedness arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any Restricted
Subsidiary of the Company pursuant to such agreements, incurred or assumed by
the acquired Subsidiary in connection with the acquisition or disposition of any
business, assets or Restricted Subsidiary of the Company, other than guarantees
or similar credit support by the Company of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or Restricted Subsidiary
for the purpose of financing such acquisition; provided that the maximum
aggregate liability in respect of all such Indebtedness in the nature of such
guarantees shall at no time exceed the gross proceeds actually received from the
sale of such business, assets or Restricted Subsidiary; (xi) Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts, which will not be, and will not be deemed to be, inadvertent) drawn
against insufficient funds in the ordinary course of business, provided that
such Indebtedness is extinguished within three Business Days of its incurrence;
(xii) Indebtedness of an entity at the time it is acquired as a Restricted
Subsidiary, provided that such Indebtedness was not incurred or assumed by such
entity in connection with or in anticipation of such acquisition; (xiii)
Indebtedness between the Company and any Restricted Subsidiary; (xiv)
Non-Compete Notes, not to exceed $50.0 million in aggregate principal amount
less the amount of all principal repayments made in respect thereof; and (xv)
the Company's Obligations arising from the repurchase, redemption or other
acquisitions of Capital Stock from management investors to the extent permitted
by Section 4.07 hereof. For the purposes of determining the aggregate
Indebtedness of any referent Person, Indebtedness shall not include guarantees
by any other Person of such Indebtedness. For the purposes of determining
compliance with this Section 4.09, in the event that an item of Indebtedness
meets the criteria of more than one of the categories of permitted Indebtedness
described in clauses (i) through (xv) of this Section 4.09 or is entitled to be
incurred pursuant to the first paragraph of this Section 4.09, the Company
shall, in its sole discretion, classify such item of Indebtedness in any manner
that complies with the covenants described above and such item of Indebtedness
will be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph of this Section 4.09. Accrual of interest, the
accretion of
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accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this Section 4.09.
SECTION 4.10 CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder shall have the
right to require the repurchase of such Holder's Securities pursuant to the
offer described below (the "Change of Control Offer") at a purchase price equal
to 101% of the aggregate principal amount of such Securities plus accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
Payment"). Within 40 days following any Change of Control, the Company shall
mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.10 and that all Securities tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 40 days from the date such notice is mailed (the
"Change of Control Payment Date");
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Securities accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that Holders electing to have any Securities purchased pursuant to a
Change of Control Offer will be required to surrender the Securities, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day preceding the
Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying
Agent receives, not later than the close of business on the third Business
Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities delivered for purchase, and a statement
that such Holder is withdrawing his election to have such Securities
purchased; and
(7) that Holders whose Securities are being purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered; provided that each Holder shall tender
Securities, and each Security purchased and each such new Security issued by
the Company shall be in a principal amount of $1,000 or integral multiples
thereof.
The Change of Control Offer shall be deemed to have commenced upon mailing
of notice described in this paragraph and shall terminate 20 Business Days after
its commencement, unless a longer offering period is required by law. If the
Change of Control Payment Date is on the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Securities pursuant to the Change
of Control Offer.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment Securities or portions thereof tendered pursuant
to the Change of Control Offer, (2) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Securities or portions
thereof so tendered and (3) deliver or cause to be delivered to the Trustee, the
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof were tendered to the Company. The Paying Agent
shall promptly mail to each Holder of Securities so accepted, payment in an
amount equal to the purchase price for such Securities, and the Trustee shall
promptly authenticate and mail to such Holder a new Security equal in principal
amount to any unpurchased portion of the Securities surrendered; provided that
each such new Security shall be in a principal amount of $1,000 or integral
multiples thereof.
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The Company will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
SECTION 4.11 LIMITATIONS ON ASSET SALES
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate an Asset Sale (including the
sale of any of the stock of any Subsidiary) unless at least 100% of the Net
Proceeds from such Asset Sale (or, in the case of a Partially Owned Restricted
Subsidiary, the Company's Pro Rata Portion thereof, after repayment by such
Partially Owned Restricted Subsidiary of its Indebtedness) are applied first to
repay Obligations or reduce commitments under the Credit Facilities in
accordance with the terms thereof, second to offer to redeem at par the
Outstanding Notes and third to offer to redeem at par the Securities. The
foregoing application of Net Proceeds from Asset Sales is not required in the
case of (i) sales or dispositions generating cash proceeds of less than, with
respect to the Company, its Restricted Subsidiaries, $2.5 million and (ii) sales
and dispositions as to which the Company delivers a reinvestment notice and the
proceeds are so reinvested in one or more communications, publishing,
information, education or media assets or businesses within twelve months of the
date the relevant Asset Sale is consummated. Notwithstanding the foregoing
provisions of this Section 4.11, neither the Company nor its Subsidiaries shall
be required to apply the Net Proceeds from any Asset Sale (i) to the extent that
the aggregate Net Proceeds from such Asset Sale, together with the Net Proceeds,
if any, of any other Asset Sale which have not been previously applied, are less
than $25 million or (ii) to the extent that, and for so long as, such Net
Proceeds cannot be so applied as a result of an encumbrance or restriction
permitted pursuant to Section 4.13 hereof.
(b) At least 15 days prior to the Company's mailing of a notice of a Net
Proceeds Offer, the Company shall notify the Trustee of the Company's obligation
to make such Net Proceeds Offer. Notice of a Net Proceeds Offer shall be mailed
by the Company not less than 30 Business Days nor more than 40 days before the
Net Proceeds Payment Date to the Holders of the Securities at their last
registered addresses with a copy to the Trustee and the Paying Agent. The Net
Proceeds Offer shall remain open from the time of mailing until the close of
business on the Business Day prior to the Net Proceeds Payment Date. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Net Proceeds Offer. The notice, which shall
govern the terms of the Net Proceeds Offer, shall state:
(1) that the Net Proceeds Offer is being made pursuant to this
Section 4.11 and that the Securities will be accepted for payment on a pro
rata basis (rounded down to the nearest $1,000), if necessary;
(2) the Purchase Price and the Net Proceeds Payment Date;
(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Net
Proceeds Offer shall cease to accrue interest after the Net Proceeds
Payment Date;
(5) that each Holder of a Security electing to have such Security
purchased pursuant to a Net Proceeds Offer will be required to surrender
the Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Trustee at the address
specified in the notice prior to the close of business on the Business Day
prior to the Net Proceeds Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Trustee receives, not later than the close of business on the fifth
Business Day next preceding the Net Proceeds Payment Date, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Securities the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Securities
purchased; and
(7) that Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion
of the Securities surrendered.
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The Trustee shall notify the Company at the opening of business on the Net
Proceeds Payment Date as to the principal amount of each of the Securities or
portions thereof which have been surrendered to the Trustee in connection with
the Net Proceeds Offer. On the Net Proceeds Payment Date, the Company shall (i)
accept for payment on a pro rata basis (if necessary) Securities or portions
thereof tendered pursuant to the Net Proceeds Offer, (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Securities or
portions thereof so accepted and (iii) deliver or cause to be delivered to the
Trustee all Securities so accepted together with an Officers' Certificate
stating the Securities or portions thereof accepted for payment by the Company
and any other information that the Trustee may reasonably request in order to
make the payments required to be made on the Net Proceeds Payment Date. The
Paying Agent shall promptly mail to Holders of Securities so accepted, payment
in an amount equal to the Purchase Price, and the Trustee shall promptly
authenticate and mail to such Holders a new Security equal in principal amount
to any unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed by the Trustee to the Holder thereof. The
Company will publicly announce the results of the Net Proceeds Offer on or as
soon as practicable after the Net Proceeds Payment Date. For purposes of this
Section 4.11, the Trustee shall act as the Paying Agent.
SECTION 4.12 TRANSACTIONS WITH AFFILIATES
Neither the Company nor any of its Restricted Subsidiaries shall make any
loan, advance, guarantee or capital contribution to, or for the benefit of, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or for the benefit of, or purchase or lease any property or assets from, or
enter into or amend any contract, agreement or understanding with, or for the
benefit of, (i) any Person (or any Affiliate of such Person) holding 10% or more
of any class of Capital Stock of the Company or any of its Restricted
Subsidiaries or (ii) any Affiliate of the Company or any of its Restricted
Subsidiaries (each an "Affiliate Transaction") involving aggregate payments or
consideration in excess of $5.0 million, unless (a) such Affiliate Transaction
is on terms that are not materially less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (b) the Company delivers to the Trustee with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, a resolution adopted by the
majority of the Board of Directors approving such Affiliate Transaction and set
forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (a) of this Section 4.12.
The foregoing restriction shall not apply to (i) the payment of an annual
fee to KKR for the rendering of management consulting and financial services to
the Company and its Restricted Subsidiaries in an aggregate amount which is
reasonable in relation thereto, (ii) the payment of transaction fees to KKR in
amounts which are in accordance with past practices for the rendering of
financial advice and services in connection with acquisitions, dispositions and
financings by the Company and its Subsidiaries, (iii) loans to officers,
directors and employees of the Company and its Subsidiaries for business or
personal purposes and other loans and advances to such officers, directors and
employees for travel, entertainment, moving and other relocation expenses made
in the ordinary course of business of the Company and its Subsidiaries, (iv) any
Restricted Payments not prohibited by Section 4.07 hereof, covenant or any
Investment not prohibited by Section 4.14 hereof, (v) transactions between or
among any of the Company and its Restricted Subsidiaries, (vi) allocation of
corporate overhead to Unrestricted Subsidiaries on a basis not materially less
favorable to the Company than such allocations to Restricted Subsidiaries or
(vii) the payment of reasonable and customary fees paid to, and indemnity
provided on behalf of, officers, directors, employees or consultants of the
Company or any Restricted Subsidiary.
SECTION 4.13 LIMITATIONS ON LIENS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than Permitted Liens) on any of its assets or any income
or profits therefrom or assign or convey any right to receive income therefrom
unless the Securities are equally and ratably secured.
SECTION 4.14 INVESTMENTS IN UNRESTRICTED SUBSIDIARIES
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, make any Investment in any Unrestricted Subsidiary, if
at the time of such Investment:
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(a)a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof; or
(b)immediately before such Investment, the Company would not be permitted
to incur at least $1.00 of Indebtedness pursuant to the first paragraph of
Section 4.09 hereof (without giving effect to clauses (i) through (xv) of the
second paragraph thereof), which calculation shall be made on a pro forma
basis deducting from Adjusted Consolidated Net Income the amount of any
Investment the Company has made in an Unrestricted Subsidiary during the
relevant period and any Investment the Company intends to make in an
Unrestricted Subsidiary, to the extent that such Investment is made with
amounts included in Adjusted Consolidated Net Income as a result of Transfers
described in clause (c)(x) of Section 4.07 hereof or clause (c)(y) of this
Section 4.14; or
(c)such Investment, together with the aggregate of all other Investments
in Unrestricted Subsidiaries made after May 13, 1992, exceeds (w) the
aggregate Consolidated Net Cash Flow of the Company for the period (taken as
one accounting period) from the beginning of the first quarter immediately
after May 13, 1992 to the end of the Company's most recently ended fiscal
quarter at the time of such Investment; plus (x) 100% of the aggregate net
cash proceeds received by the Company from (i) the issue or sale of Equity
Interests of the Company (other than such Equity Interests issued or sold to
a Restricted Subsidiary of the Company and other than Redeemable Stock) or
(ii) the sale of the stock of an Unrestricted Subsidiary or the sale of all
or substantially all of the assets of an Unrestricted Subsidiary to the
extent that a liquidating dividend is paid to the Company or any Restricted
Subsidiary from the proceeds of such sale; plus (y) 100% of the amount of all
Transfers from a Net Cash Flow Unrestricted Subsidiary up to the aggregate
Investment (after taking into account all prior Transfers from such Net Cash
Flow Unrestricted Subsidiary) in such Net Cash Flow Unrestricted Subsidiary
resulting from such payments or transfers of assets (valued in each case as
provided in the definition of "Investment"); plus (z) in the event of a
designation of a Net Cash Flow Unrestricted Subsidiary as a Restricted
Subsidiary, 100% of an amount equal to the greater of (A) the fair market
value of such Subsidiary as determined by the Board of Directors in good
faith (or, if such fair market value may exceed $25.0 million, as determined
in writing by an independent investment banking firm of nationally recognized
standing) at the time of the redesignation of such Net Cash Flow Unrestricted
Subsidiary as a Restricted Subsidiary and (B) the Consolidated Net Cash Flow
generated by such Subsidiary for the period (taken as one accounting period)
from the beginning of its first fiscal quarter commencing immediately after
the date of its designation as Net Cash Flow an Unrestricted Subsidiary
through such Subsidiary's fiscal quarter ending immediately prior to its
designation as a Restricted Subsidiary (or if such Consolidated Net Cash Flow
for such period is a deficit, 100% of such deficit);
provided, that all such amounts applied pursuant to this clause (c) shall not be
available for application under clause (c) of Section 4.07 hereof.
The foregoing limitations shall not apply to an Investment to the extent
that it is (i) to capitalize a Restricted Payment Unrestricted Subsidiary
permitted pursuant to Section 4.07 hereof; (ii) funded by the issuance of Equity
Interests of the Company to the extent net proceeds are not used to fund an
optional redemption of Notes and (iii) Investments in Unrestricted Subsidiaries
having an aggregate fair market value, when taken together with all other
Investments made pursuant to this clause (iii) that are at that time
outstanding, not to exceed $50.0 million at the time of such Investment (with
the fair market value of each Investment being measured at the time made and
without giving effect to subsequent changes in value). For the purposes of
determining compliance with this Section 4.14, in the event that the making of
an Investment in an Unrestricted Subsidiary meets the criteria of more than one
of the categories of permitted Investments in Unrestricted Subsidiaries
described in clauses (i) through (iii) above or is entitled to be incurred
pursuant to the first paragraph of this Section 4.14 (including clauses (a), (b)
and (c) thereof), the Company shall, in its sole discretion, classify such
Investment in an Unrestricted Subsidiary in any manner that complies with this
Section 4.14 and Investment in an Unrestricted Subsidiary will be treated as
having been made pursuant to only one of such clauses or pursuant to the first
paragraph of this Section 4.14.
All Net Cash Flow Unrestricted Subsidiaries of the Company shall at all
times remain wholly-owned, directly or indirectly, by the Company or a
wholly-owned Restricted Subsidiary of the Company.
Not later than the date of making any Investment described above, the
Company shall deliver to the Trustee an Officer's Certificate stating that such
Investment is permitted (including, without limitation, whether such Investment
is capitalizing a Net Cash Flow
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Unrestricted Subsidiary or a Restricted Payment Unrestricted Subsidiary) and
setting forth the basis upon which the calculations required by this Section
4.14 were computed, which calculations may be based on the Company's latest
available internal financial statements.
SECTION 4.15 PAYMENTS FOR CONSENT
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid or agreed to be paid to all Holders of the Securities which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
SECTION 4.16 CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each Restricted
Subsidiary in accordance with the respective organizational documents of each
Restricted Subsidiary and the rights (charter and statutory), licenses and
franchises of the Company and its Restricted Subsidiaries; provided that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any Restricted Subsidiary,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Restricted Subsidiaries taken as a whole and that the loss thereof is not
adverse in any material respect to the Holders.
SECTION 4.17 SUBSIDIARY OWNERSHIP.
All Restricted Subsidiaries and all Net Cash Flow Unrestricted
Subsidiaries shall at all times remain wholly-owned, directly or indirectly, by
the Company or a Restricted Subsidiary except if sold, leased, conveyed,
disposed of or transferred in accordance with Section 4.11 hereof.
SECTION 4.18 RULE 144A INFORMATION REQUIREMENT .
The Company will furnish to the Holders or beneficial holders of the
Securities and prospective purchasers of the Securities designated by the
holders of Transfer Restricted Securities, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act
until such time as the Company consummates the Exchange Offer or has registered
the Securities for resale under the Securities Act.
ARTICLE 5
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Company may not consolidate with, merge with or into, or transfer all
or substantially all of its assets (as an entirety or substantially as an
entirety in one transaction or a series of related transactions), to any Person
(except a wholly-owned Restricted Subsidiary, provided that in connection with
any merger of the Company with a Restricted Subsidiary of the Company, no
consideration (other than common stock in the surviving corporation or the
Company) shall be issued or distributed to the shareholders of the Company) or
permit any person to merge with or into it unless:
(i) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company are transferred
(collectively, the "Successor") shall be a corporation organized and existing
under the laws of the United States or any State thereof or the District of
Columbia and shall
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expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction on a pro forma
basis, (a) no Default and no Event of Default under this Indenture shall have
occurred and be continuing and (b) the Company could incur at least $1.00 of
additional Indebtedness pursuant to the first paragraph of Section 4.09 hereof;
and
(iii) immediately after giving effect to such transaction on a pro forma
basis, the Fixed Charge Coverage Ratio of the surviving entity is at least 1:1;
provided that if the Fixed Charge Coverage Ratio of the Company before giving
effect to such transaction is within the range set forth in column (A) below,
then the pro forma Fixed Charge Coverage Ratio of the surviving entity shall be
at least equal to the lesser of (x) the ratio determined by multiplying the
percentage set forth in Column B by the Fixed Charge Coverage Ratio of the
Company prior to such transaction, and (y) the ratio set forth in Column C
below:
(A) (B) (C)
--- --- ---
1.11:1 to 1.99:1.......................... 90% 1.5:1
2.00:1 to 2.99:1.......................... 80% 2.1:1
3.00:1 to 3.99:1.......................... 70% 2.4:1
4.00:1 or more............................ 60% 2.5:1
and provided, further, that if the pro forma fixed Charge Coverage Ratio of the
surviving entity is 3:1 or more, the calculation in the preceding provision
shall be inapplicable and such transaction shall be deemed to have complied with
the requirements of clause (iv) of this Section 5.01.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company or any
assignment of its obligations under this Indenture or the Securities in
accordance with Section 5.01 hereof, the Successor formed by such consolidation
or into or with which the Company is merged or to which such sale, lease,
conveyance or other disposition or assignment is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such Successor has been named as the
Company herein and the predecessor Company, in the case of a sale, lease,
conveyance or other disposition or assignment, shall be released from all
obligations under this Indenture and the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT
Each of the following constitutes an "Event of Default":
(1) the Company fails to make any payment of interest on any Security when
the same shall become due and payable and the Default continues for a period
of 30 days;
(2) the Company fails to make any payment of the principal or premium of
any Security when the same shall become due and payable at maturity, or upon
acceleration, redemption or otherwise;
(3) the Company fails to comply with any of its other agreements or
covenants in, or provisions of, the Securities or this Indenture and such
failure continues for the period and after the notice specified below;
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(4) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Restricted Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee is now existing or
thereafter created in the future, if either (A) such default is the failure
to pay the final scheduled principal installment in an amount of at least $10
million in respect of any such Indebtedness on the stated maturity date
thereof (after giving effect to any extension of such maturity date by the
holder of such Indebtedness and after the expiration of any grace period in
respect of such final scheduled principal installment contained in the
instrument under which such Indebtedness is outstanding) or (B) as a result
of such default the maturity of such Indebtedness has been accelerated prior
to its express maturity and the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness the
maturity of which has been accelerated, aggregates $20 million or more;
provided that an Event of Default shall not be deemed to occur with respect
to any accelerated Indebtedness which is repaid or prepaid within 20 days
after such declaration;
(5) a final judgment that exceeds $15 million individually, or final
judgments that exceed $25 million in the aggregate, for the payment of money
are entered by a court or courts of competent jurisdiction against the
Company, or any of its Restricted Subsidiaries and such judgment or judgments
shall not be discharged, satisfied, stayed, annulled or rescinded within 60
days of being entered;
(6) the Company or any of the Restricted Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors;
or
(7) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(a) is for relief against the Company, or any of its Restricted
Subsidiaries as debtor in an involuntary case,
(b) appoints a Custodian of the Company, or any of its Restricted
Subsidiaries or a Custodian for all or substantially all of
the property of the Company, or any of its Restricted
Subsidiaries, or
(c) orders the liquidation of the Company, or any of its
Restricted Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days.
(8)except as permitted by this Indenture and the Securities, the
Guarantees shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect with
respect to any Guarantor or any Guarantor shall deny or disaffirm its
obligations under its Guarantee.
The Company is required, pursuant to Section 4.04(a) hereof, to deliver to
the Trustee annually a statement regarding compliance with this Indenture, and
the Company is required, pursuant to Section 4.04(c) hereof, upon becoming aware
of any Default or Event of Default to deliver a statement to the Trustee
specifying such Default or Event of Default. The Trustee shall not be deemed to
know of a Default unless a Responsible Officer has actual knowledge of such
Default or receives written notice of such Default with specific reference to
such Default.
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In the case of any Event of Default pursuant to the provisions of this
Section 6.01 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium, if any, which the Company would have had to pay if the Company
then had elected to redeem the Securities pursuant to Section 3.07 hereof, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law, anything in this Indenture or in the Securities
contained to the contrary notwithstanding.
A Default under clause (3) is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 30% in principal amount of the
then outstanding Securities notify the Company and the Trustee, in writing, of
the Default and the Company does not cure the Default within 30 days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
SECTION 6.02 ACCELERATION
If an Event of Default (other than an Event of Default with respect to the
Company specified in clauses (6) or (7) of Section 6.01 hereof) occurs and is
continuing, the Trustee by written notice to the Company, or the Holders of at
least 30% in principal amount of the then outstanding Securities by written
notice to the Company and the Trustee, may and the Trustee at the request of
such Holders shall, declare all unpaid principal of, premium and Liquidated
Damages, if any, and accrued interest on the Securities to be due and payable
immediately. Upon such declaration of acceleration such principal of, premium
and Liquidated Damages, if any, and accrued interest, due and payable on the
Securities, as determined in the next succeeding paragraph, shall be due and
payable immediately. If an Event of Default with respect to the Company
specified in clause (6) or (7) of Section 6.01 hereof occurs, all unpaid
principal of, premium and Liquidated Damages, if any, and accrued interest on
the Securities then outstanding shall ipso facto become and be immediately due
and payable without any declaration, notice or other act on the part of the
Trustee or any Holder. The Holders of at least 51% in aggregate principal amount
of the then outstanding Securities by written notice to the Trustee may rescind
an acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default (except nonpayment
of principal, premium and Liquidated Damages, if any, or interest on the
Securities that has become due solely as a result of such acceleration) have
been cured or waived.
In the event that the maturity of the Securities is accelerated pursuant
to this Section 6.02, 100% of the principal amount thereof and premium or
Liquidated Damages, if any, plus accrued interest to the date of payment shall
become due and payable.
SECTION 6.03 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium and Liquidated
Damages, if any, or interest then due on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
SECTION 6.04 WAIVER OF PAST DEFAULTS
The Holders of at least 51% in principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences (including waivers obtained in connection with a
tender offer or exchange offer for Securities), except a continuing Default or
Event of Default (i) in the payment of the principal of, premium or Liquidated
Damages, if any, or interest on any Security (including, without limitation,
pursuant to any mandatory or optional redemption obligation hereunder) or (ii)
that resulted from the failure to comply with Section 4.10 or 4.11 hereof. Upon
any such waiver, such Default shall cease to exist,
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and any Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.05 CONTROL BY MAJORITY
The Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders, or that may involve the Trustee in
personal liability.
SECTION 6.06 LIMITATIONS ON SUITS
A Holder may not pursue a remedy with respect to this Indenture, the
Securities or any Guarantee unless:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense (including, without
limitation, fees and expenses of counsel);
(4) the Trustee does not comply with the request within 30 days after
receipt of the request and the offer of indemnity; and
(5) during such 30-day period the Holders of a majority in principal
amount of the then outstanding Securities do not give the Trustee a direction
which is inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal of, premium and Liquidated
Damages, if any, and interest on the Security, on or after the respective due
dates expressed in the Security, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of the Holder.
SECTION 6.08 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.01(1) or (2) or (3) (with
respect to the Company's obligations under Section 4.10 or 4.11 hereof) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company or any Guarantor
for the amount of principal, premium, if any, and interest remaining unpaid on
the Securities, determined in accordance with Section 6.02 hereof and interest
on overdue principal, premium and Liquidated Damages, if any, and, to the extent
lawful, interest, and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the
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Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company, its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any Custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders of the
Securities may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 6.10 PRIORITIES
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.07 hereof;
Second: to Holders for amounts due and unpaid on the Securities for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, premium, if any, and interest,
respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Article 6.
SECTION 6.11 UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Securities.
ARTICLE 7
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE
(1) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in such exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(2) Except during the continuance of an Event of Default:
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(a) the Trustee need perform only those duties that are specifically set
forth in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(b) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee
pursuant to and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine whether
or not, on their face, they appear to conform to the requirements of this
Indenture.
(3) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(a) this paragraph does not limit the effect of paragraph (2) of
this Section 7.01;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or other officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts;
and
(c) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.02 or 6.05 hereof.
(4) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (1),
(2), (3) and (5) of this Section 7.01.
(5) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee is not obligated to
perform any duty or exercise any right or power under this Indenture at the
request of the Holders of the Securities unless it receives an offer from such
Holders of security and indemnity satisfactory to it against any loss, liability
or expense (including, without limitation, fees of counsel).
(6) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 RIGHTS OF TRUSTEE
(1) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require
receipt of an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel of its selection and the advice of such counsel
(to be promptly confirmed in writing) or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder and in reliance thereon.
(3) The Trustee may act through agents, attorneys, custodians and nominees
and shall not be responsible for the misconduct or negligence of any such agent,
attorney, custodian or nominee appointed with due care.
(4) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor.
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SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company or any of its
Affiliates with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11 hereof.
SECTION 7.04 TRUSTEE'S DISCLAIMER
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities, it shall not be accountable for the Company's use
of the proceeds from the Securities or any money paid to the Company or upon the
Company's direction under any provision hereof, it shall not be responsible for
the use or application of any money received by any Paying Agent other than the
Trustee and it shall not be responsible for any statement or recital herein or
any statement in the Securities other than its certificate of authentication.
SECTION 7.05 NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and if it is
actually known to a Responsible Officer of the Trustee, the Trustee shall mail
to each Holder a notice of the Default or Event of Default within 90 days after
it occurs or, if later, within ten days after such Default or Event of Default
becomes so known to the Trustee unless such Default or Event of Default has been
cured. Except in the case of a Default or Event of Default in payment of
principal of, premium and Liquidated Damages, if any, or interest on any
Security or that resulted from a failure to comply with Section 4.10 or 4.11
hereof, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers determines in good faith that withholding the notice is in
the interests of the Holders.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS
Within 60 days after each June 1 beginning with June 1, 1998, the Trustee
shall mail to Holders a brief report dated as of such reporting date that
complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall comply with TIA ss. 313(b). The Trustee
also shall transmit by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to Holders shall be filed
with the SEC and each stock exchange on which the Securities are listed. The
Company shall notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 7.07 COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time such compensation
for its acceptance of this Indenture and services hereunder as the parties shall
agree from time to time. The Trustee's compensation shall not be limited by any
law relating to compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred by it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee and its
directors, officers, employees and agents against any loss, liability or expense
(including without limitation fees and expenses of counsel) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture including, without limitation, costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of its powers and duties hereunder, except as set forth in the
next paragraph. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
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The Company need not reimburse any expense or indemnify against any loss
or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal of,
premium and Liquidated Damages, if any, and interest on particular Securities.
Such Lien shall survive the satisfaction and discharge of the Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08 REPLACEMENT OF TRUSTEE
The Trustee may resign and be discharged from the trust hereby created by
so notifying the Company. The Holders of a majority in principal amount of the
then outstanding Securities may remove the Trustee by so notifying the Trustee
and the Company. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy
Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
The foregoing notwithstanding, a resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment as provided in this Section 7.08,
and thereafter the Trustee shall have no liability for any acts or omissions of
any successor Trustee.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to the Holders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring Trustee.
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SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC .
Subject to Section 7.10 hereof, if the Trustee consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation or national banking association, the successor
entity without any further act shall be the successor Trustee. In case any
Securities have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation of such
authenticating trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor trustee had itself
authenticated such Securities.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia authorized under such
laws to exercise corporate trust powers, shall be subject to supervision or
examination by Federal or state (or the District of Columbia) authority and
shall have a combined capital and surplus of at least $50 million as set forth
in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1). The Trustee is subject to TIA ss. 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01 TERMINATION OF COMPANY'S AND GUARANTORS' OBLIGATIONS
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.07 hereof and the Trustee's and Paying
Agent's obligations under Section 8.03 hereof shall survive) when all
outstanding Securities theretofore authenticated and issued have been delivered
(other than destroyed, lost or stolen Securities that have been replaced or
paid) to the Trustee for cancellation and the Company has paid all sums payable
hereunder. In addition, the Company may terminate all of its obligations under
this Indenture if:
(1) the Company irrevocably deposits, or causes to be deposited, in trust
with the Trustee or the Paying Agent, or, at the option of the Trustee, with
a trustee satisfactory to the Trustee and the Company under the terms of an
irrevocable trust agreement in form and substance satisfactory to the
Trustee, money or U.S. Government Obligations in an amount sufficient
(without reinvestment thereof) to pay principal and interest on the
Securities to maturity or redemption, as the case may be, as such amounts
become due, and to pay all other sums payable by it hereunder; provided that
(i) the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S. Government
Obligations to the Trustee and (ii) the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S. Government
Obligations to the payment of said principal, premium and Liquidated Damages,
if any, and interest with respect to the Securities;
(2) the Company delivers to the Trustee an Officers' Certificate stating
that all conditions precedent to satisfaction and discharge of this Indenture
have been complied with, and an Opinion of Counsel to the same effect;
(3) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit; and
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(4) the Company shall have delivered to the Trustee an Opinion of Counsel
from nationally recognized counsel acceptable to the Trustee or a tax ruling
from the Internal Revenue Service to the effect that the Holders of the
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of the Company's exercise of its option under this
Section 8.01 and will be subject to Federal income tax on the same amount and
in the same manner and at the same times as would have been the case if such
option had not been exercised.
In such event, this Indenture shall cease to be of further effect (except as
provided in the next succeeding paragraph), and the Trustee, on demand of the
Company, shall execute proper instruments acknowledging confirmation of and
discharge under this Indenture.
However, the Company's and the Guarantors' obligations in Sections 2.03,
2.04, 2.05, 2.06, 2.07, 4.01, 4.06, 7.07, 7.08 and 8.04 hereof and the
Company's, the Guarantors', the Trustee's and Paying Agent's obligations in
Section 8.03 hereof, and the Trustee's rights under Article 7 hereof, shall
survive until the Securities are no longer outstanding. Thereafter, only the
Company's obligations in Section 7.07 hereof and the Trustee's and Paying
Agent's obligations in Section 8.03 hereof shall survive.
After such irrevocable deposit made pursuant to this Section 8.01 and
satisfaction of the other conditions set forth herein, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture except for those surviving obligations specified above.
In order to have money available on a payment date to pay principal or
interest on the Securities, the U.S. Government Obligations shall be payable as
to principal or interest on or before such payment date in such amounts as will
provide the necessary money. U.S. Government Obligations shall not be callable
at the issuer's option.
SECTION 8.02 APPLICATION OF TRUST MONEY
The Trustee or a trustee satisfactory to the Trustee and the Company shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 8.01 hereof. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.03 REPAYMENT TO COMPANY
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time,
provided that nothing remains owed to the Trustee pursuant to this Indenture.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment shall
have become due; provided that the Company shall have either caused notice of
such payment to be mailed to each Holder entitled thereto no less than 30 days
prior to such repayment or within such period shall have published such notice
in a financial newspaper of widespread circulation published in The City of New
York. After payment to the Company, Holders entitled to the money must look to
the Company for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
SECTION 8.04 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.01 hereof by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 hereof until such time as the Trustee or Paying Agent is permitted
to apply all such money or U.S. Government Obligations in accordance with
Section 8.01 hereof; provided, that if the Company has made any payment of
interest on or principal of any Securities because of the reinstatement of its
obligations, the Company shall be subrogated
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to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01 WITHOUT CONSENT OF HOLDERS
The Company and the Trustee may amend this Indenture, the Securities or
the Guarantee or waive any provision hereof or thereof without the consent of
any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Securities in addition to or in place
of certificated Securities;
(3) to comply with Section 5.01 hereof;
(4) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the rights
hereunder of any Holder; or
(5) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 9.06 hereof,
the Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into any supplemental indenture
that, in its reasonable discretion, affects its own rights, duties or immunities
under this Indenture or otherwise. After an amendment or waiver under this
Section 9.01 becomes effective, the Company shall mail to the Holders of each
Security affected thereby a notice briefly describing the amendment or waiver.
Any failure of the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 9.02 WITH CONSENT OF HOLDERS
Except as provided below in this Section 9.02, this Indenture, the
Securities or the Guarantee may be amended or supplemented, with the written
consent of the Holders of at least 51% in principal amount of the then
outstanding Securities (including consents obtained in connection with a tender
offer or exchange offer for Securities).
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the Holders as
aforesaid, and upon receipt by the Trustee of the documents described in Section
9.06 hereof, the Trustee shall join with the Company in the execution of such
supplemental indenture unless, in the Trustee's reasonable discretion, such
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
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The Holders of at least 51% in principal amount of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities (including waivers obtained in
connection with a tender offer for Securities) or any existing default. However,
without the consent of each Holder affected, an amendment or waiver under this
Section may not (with respect to any Securities held by a non-consenting
Holder):
(1) reduce the principal amount of Securities whose Holders must consent
to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Security
or alter the provisions with respect to the redemption or purchase
price in connection with repurchases under Sections 3.07, 3.08, 4.10
or 4.11 hereof;
(3) reduce the rate of or change the time for payment of interest on any
Security;
(4) waive a Default or Event of Default in the payment of principal of
or premium and Liquidated Damages, if any, or interest on the
Securities or that resulted from a failure to comply with Sections
4.10 or 4.11 hereof (except a rescission of acceleration of the
Securities by the Holders of at least 51% in aggregate principal
amount of the Securities as provided in Section 6.02 hereof);
(5) make any Securities payable in money other than that stated in the
Securities;
(6) make any change in Section 6.04 or 6.07 hereof or in this sentence
of this Section 9.02; or
(7) waive a redemption payment with respect to any Security.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of this Indenture (and the obligation of the Company
to obtain any such consent otherwise required from such Holder) may be subject
to the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of this Indenture.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment to this Indenture or the Securities shall comply in form
and substance with the TIA as then in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS
Until an amendment (which includes any supplement) or waiver becomes
effective, a consent to it by a Holder of a Security is a continuing consent by
the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to his or her Security or portion of
a Security if the Trustee receives written notice of revocation before the date
the amendment or waiver becomes effective. An amendment or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If the Company elects to fix a record date for such purpose, the record
date shall be fixed at (i) the later of 30 days prior to the first solicitation
of such consent or the date of the most recent list of Holders furnished to the
Trustee prior to such solicitation pursuant to Section 2.05 hereof, or (ii) such
other date as the Company shall designate. If a record date is fixed, then
notwithstanding the provisions of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to consent to such amendment or waiver
or to revoke any consent previously given, whether or not such Persons continue
to be Holders after such record date. No consent shall be valid or effective for
more than 90
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days after such record date unless consents from Holders of the principal amount
of Securities required hereunder for such amendment or waiver to be effective
shall have also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every Holder,
unless it is of the type described in any of clauses (1) through (7) of Section
9.02 hereof. In such case, the amendment or waiver shall bind each Holder of a
Security who has consented to it and every subsequent Holder of a Security that
evidences the same debt as the consenting Holder's Security.
SECTION 9.05 NOTATION ON OR EXCHANGE OF SECURITIES
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee. The
Trustee may place an appropriate notation about the changed terms and return it
to the Holder and the Trustee may place an appropriate notation on any Security
thereafter authenticated. Alternatively, if the Company or Trustee so
determines, the Company in exchange for all Securities shall issue and the
Trustee shall authenticate new Securities that reflect the changed terms.
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 9 if the amendment does not, in the Trustee's
reasonable discretion, adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be entitled to receive and, subject to Section 7.01 hereof, shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that such amendment or supplemental indenture is
authorized or permitted by this Indenture, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in accordance with its
terms.
ARTICLE 10
GUARANTEE
SECTION 10.01 SUBSIDIARY GUARANTEE
Each of the Guarantors hereby, jointly and severally, fully and
unconditionally guarantees to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Company hereunder or thereunder, that: (a)
the principal of, and premium and Liquidated Damages, if any, and interest on
the Securities will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of,
premium and Liquidated Damages, if any, and interest on the Securities, if any,
if lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full or performed, all
in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise; provided, however, that the maximum
liability of a Guarantor pursuant to this Guarantee shall in no event exceed the
Maximum Guaranteed Amount (as defined below). Failing payment when due of any
amount so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors will be jointly and severally obligated to pay the same immediately.
The Guarantors hereby agree that their obligations hereunder shall be absolute
and unconditional, irrespective of the validity, regularity or enforceability of
the Securities or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Securities with respect to any
provisions hereof or thereof, the recovery of any judgment against the Company,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor other than
the defense that payment has been made or that the other relevant obligations
have been paid or performed. Each Guarantor hereby waives diligence,
presentment, demand of payment, claim of fraud, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to return to
the Company or
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Guarantors, or any Custodian, trustee, liquidator or other similar official
acting in relation to either the Company or Guarantors, any amount paid by
either to the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor agrees
that it shall not be entitled to any right of subrogation in relation to the
Holders in respect of any obligations guaranteed hereby until payment in full of
all obligations guaranteed hereby. Each Guarantor further agrees that, as
between the Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6, such obligations (whether or not due and payable) shall forthwith
become due and payable by the Guarantors for the purpose of this Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
The "Maximum Guaranteed Amount" means, with respect to any Guarantor, the
amount which allows the Guarantee to be enforceable to the fullest extent
permitted by law, limited only to the extent necessary for the Guarantee to not
constitute a fraudulent conveyance.
The "Adjusted Net Worth" of a Guarantor as of the Guarantee Date shall
mean the excess of (a) the amount of the fair saleable value of the assets of
such Guarantor as of such date determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors over (b)
the amount of all liabilities of such Guarantor, contingent or otherwise, as of
the Guarantee Date, determined on the basis provided in clause (a) above
(excluding all liabilities under this Guarantee).
Each Guarantor shall be subrogated to all rights of each Holder of any
Securities against the Company in respect of any amounts paid to the Holders by
such Guarantor pursuant to the provisions of this Guarantee; provided that the
Guarantors shall not be entitled to enforce, or to receive, any payments arising
out of or based upon, such right of subrogation until the principal of, premium
and Liquidated Damages, if any, and interest on all the Securities shall have
been paid in full and nothing remains owed to the Trustee pursuant to this
Indenture.
The Guarantee set forth in this Section 10.01 shall not be valid or become
obligatory for any purpose with respect to a Security until the certificate of
authentication on such Security shall have been signed by or on behalf of the
Trustee.
No Unrestricted Subsidiary or Partially Owned Restricted Subsidiary shall
become a guarantor of any Indebtedness of the Company or any Restricted
Subsidiaries unless such Unrestricted Subsidiary or Partially Owned Restricted
Subsidiary becomes a guarantor of the Notes.
SECTION 10.02 EXECUTION AND DELIVERY OF GUARANTEE
To evidence its Guarantee set forth in Section 10.01 hereof, each
Guarantor hereby agrees that a notation of such Guarantee substantially in the
form of Exhibit A-1 shall be endorsed by an officer of such Guarantor on each
Security authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Chairmen or Vice Presidents.
Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01
shall remain in full force and effect notwithstanding any failure to endorse on
each Security a notation of such Guarantee.
If an officer or Officer whose signature is on this Indenture of on the
Guarantee no longer holds that office at the time the Trustee authenticates the
Security on which a Guarantee is endorsed, the Guarantee shall be valid, binding
and enforceable nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of the Guarantors.
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SECTION 10.03 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation or
merger of a Guarantor with or into the Company or another Guarantor or shall
prevent any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety, to the Company or another Guarantor. Upon any such
consolidation, merger, sale or conveyance, the Guarantee given by such Guarantor
shall no longer have any force or effect.
(b) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation or
merger of a Guarantor with or into a corporation or corporations other than the
Company or another Guarantor (whether or not affiliated with the Guarantor), or
successive consolidations or mergers in which a Guarantor or its successor or
successors shall be a party or parties, or shall prevent any sale or conveyance
of the property of a Guarantor as an entirety or substantially as an entirety,
to a corporation other than the Company or another Guarantor (whether or not
affiliated with the Guarantor) authorized to acquire and operate the same;
provided that each such Guarantor is sold or disposed of for fair market value,
evidenced by a resolution of the Board of Directors set forth in an Officer's
Certificate delivered to the Trustee; and provided, further, that the foregoing
proviso shall not apply to the sale or disposition of a Guarantor in a
foreclosure proceeding to the extent that such proviso would be inconsistent
with the Uniform Commercial Code. Upon any such consolidation, merger, sale or
conveyance, the Guarantee given by such Guarantor shall no longer have any force
or effect.
SECTION 10.04 RELEASES FOLLOWING SALE OF ASSETS
Concurrently with any sale of assets (including, if applicable, all of the
capital stock of any Guarantor), any Liens in favor of the Trustee in the assets
sold thereby shall be released; provided that any such assets are sold or
disposed of for fair market value, evidenced by a resolution of the Board of
Directors set forth in an Officer's Certificate delivered to the Trustee and,
provided, further, that, the foregoing proviso shall not apply to the sale or
disposition of a Guarantor in a foreclosure proceeding to the extent that such
proviso would be inconsistent with the Uniform Commercial Code. If the assets
sold in such sale or other disposition include all or substantially all of the
assets of any Guarantor or all of the capital stock of any Guarantor, then such
Guarantor (in the event of a sale or other disposition of all of the capital
stock of such Guarantor) or the corporation acquiring the property and such
Guarantor (in the event of a sale or other disposition of all or substantially
all of the assets of a Guarantor) shall automatically be released and relieved
of its obligations under this Article 10, provided that any such sale or
disposition of all or substantially all of the assets of a Guarantor is sold or
disposed of for fair market value, evidenced by a resolution of the Board of
Directors set forth in an Officer's Certificate delivered to the Trustee and,
provided, further, that the foregoing proviso shall not apply to the sale or
disposition of a Guarantor in a foreclosure proceeding to the extent that such
proviso would be inconsistent with the Uniform Commercial Code. Upon delivery by
the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel
to the effect that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Guarantor
from its obligations under its Guarantee. Any Guarantor not released from its
obligations under its Guarantee shall remain liable for the full amount of
principal of and interest on the Securities and for the other obligations of any
Guarantor under the Indenture as provided in this Article 10.
SECTION 10.05 "TRUSTEE" TO INCLUDE PAYING AGENT
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 10 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 10 in place of the Trustee.
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SECTION 10.06 ADDITIONAL SUBSIDIARY GUARANTEES
The Company shall (a) cause each Subsidiary which, after the date of this
Indenture (if not then a Guarantor), becomes a Restricted Subsidiary to execute
a Guarantee of the Obligations of the Company hereunder in the form set forth in
this Article 10 hereof and Exhibit A-1 hereto, provided that no Subsidiary
organized outside of the United States of America and no Unrestricted Subsidiary
shall be required to be a Guarantor, and (b) deliver to the Trustee an Opinion
of Counsel, in form reasonably satisfactory to the Trustee, that such Subsidiary
Guarantee is a valid, binding and enforceable obligation of such Restricted
Subsidiary, subject to customary exceptions for bankruptcy, fraudulent
conveyance and equitable principles and the implied covenant of good faith and
fair dealing.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included herein by any of Sections 310
to 317 inclusive of the TIA, such required provisions shall control.
SECTION 11.02 NOTICES
Any notice or communication by the Company, the Guarantors or the Trustee
to the other is duly given if in writing and delivered in person or mailed by
first-class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company or the Guarantors:
PRIMEDIA, INC.
745 Fifth Avenue
New York, New York 10151
Attention: General Counsel
Telecopier No.: (212) 745-0199
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Gary I. Horowitz, Esq.
Telecopier No.: (212) 455-2502
If to the Trustee:
The Bank of New York
101 Barclay Street -- 21W
New York, New York 10286
Attention: Corporate Trust Administration
Telecopier No.: (212) 815-5915/5917
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The Company, the Guarantors or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first-class
mail, certified or registered, return receipt requested, to the Holder's address
shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 11.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Company, the
Guarantors, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
SECTION 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by the Company and/or any Guarantors to
the Trustee to take any action under this Indenture, the Company and/or such
Guarantor as the case may be shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall include:
(1) a statement that the Person making such certificate or opinion has
read and understands such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
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(4) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with; provided that with respect to
matters of fact Opinions of Counsel may rely on an Officers' Certificate or
certificates of public officials.
SECTION 11.06 RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.07 LEGAL HOLIDAYS
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
SECTION 11.08 NO RECOURSE AGAINST OTHERS
No director, officer, employee, incorporator or shareholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Securities, this Indenture or the Guarantees or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Securities by accepting the Securities waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Securities.
SECTION 11.09 GOVERNING LAW
This Indenture, the Securities and the Guarantee shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law.
SECTION 11.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 11.11 SUCCESSORS
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
SECTION 11.12 SEVERABILITY
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.13 COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
58
<PAGE>
SECTION 11.14 TRUSTEE AS PAYING AGENT AND REGISTRAR
The Company initially appoints the Trustee as Paying Agent and Registrar.
The provisions regarding the indemnification of the Trustee set forth in Section
7.07 shall also apply to the Trustee in its capacity as Paying Agent and
Registrar hereunder.
SECTION 11.15 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 11.16 BANK OF NEW YORK NOT ACTING IN INDIVIDUAL CAPACITY
Notwithstanding anything to the contrary contained herein, this Indenture
has been accepted by The Bank of New York not in its individual capacity but
solely as Trustee and in no event shall The Bank of New York have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Company herein or in any of the certificates, notices or agreements
delivered by the Company pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Company, and under no circumstances shall The
Bank of New York be personally liable for the payment of any indebtedness or
expenses of the Company.
SECTION 11.17 ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES
In addition to the rights provided to Holders of Securities under the
Indenture, Holders of Transfer Restricted Securities shall have all the rights
set forth in the Registration Rights Agreement.
[Signatures on Following Pages]
59
<PAGE>
SIGNATURES
PRIMEDIA INC.
Dated as of February 17, 1998 By:
----------------------------------------
Name:
Title:
THE APARTMENT GUIDE OF NASHVILLE, INC.
ARGUS PUBLISHERS CORPORATION
AMERICAN HEAT VIDEO PRODUCTIONS, INC.
ASTN, INC.
A WEP COMPANY
BACON'S INFORMATION, INC.
BANKERS CONSULTING COMPANY
CARDINAL BUSINESS MEDIA, INC.
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
CHANNEL ONE COMMUNICATIONS
CORPORATION
COVER CONCEPTS MARKETING SERVICES, LLC
CSK PUBLISHING COMPANY INCORPORATED
DAILY RACING FORM, INC.
DATA BOOK, INC.
DRF FINANCE, INC.
THE ELECTRONICS SOURCE BOOK, INC.
EXCELLENCE IN TRAINING CORPORATION
FUNK & WAGNALLS YEARBOOK CORPORATION
GARETH STEVENS, INC.
GO LO ENTERTAINMENT, INC.
GUINN COMMUNICATIONS, INC.
HAAS PUBLISHING COMPANIES, INC.
HEALTH & SCIENCES NETWORK, INC.
IDTN LEASING CORPORATION
INDUSTRIAL TRAINING SYSTEMS CORPORATION
INTELLICHOICE, INC.
INTERMODAL PUBLISHING COMPANY, LTD.
INTERTEC MARKET REPORTS, INC.
INTERTEC PRESENTATIONS, INC.
INTERTEC PUBLISHING CORPORATION
K-III HPC, INC.
K-III PRIME CORPORATION
LAW ENFORCEMENT TELEVISION NETWORK, INC.
LAW ENFORCEMENT TELEVISION NETWORK, INC.
LIFETIME LEARNING SYSTEMS, INC.
LITTLE ROCK APARTMENT GUIDE, INC.
LOCKERT JACKSON & ASSOCIATES, INC.
MCMULLEN ARGUS PUBLISHING, INC.
MEMPHIS APARTMENT GUIDE, INC.
MUSICAL AMERICA PUBLISHING, INC.
NELSON INFORMATION, INC.
NEWBRIDGE COMMUNICATIONS, INC.
<PAGE>
PARK AVENUE PUBLISHING, INC.
PICTORIAL, INC.
PLAZA COMMUNICATIONS, INC.
PRIMEDIA HOLDINGS III INC.
PRIMEDIA INFORMATION INC.
PRIMEDIA MAGAZINES INC.
PRIMEDIA MAGAZINES FINANCE INC.
PRIMEDIA REFERENCE INC.
PRIMEDIA SPECIAL INTEREST
PUBLICATIONS INC.
QWIZ, INC.
R.E.R. PUBLISHING CORPORATION
STRAIGHT DOWN, INC.
SYMBOL OF EXCELLENCE
PUBLISHERS, INC.
TEL-A-TRAIN, INC.
TI-IN ACQUISITION CORPORATION
WEEKLY READER CORPORATION
WESTCOTT COMMUNICATIONS, INC.
WESTCOTT COMMUNICATIONS MICHIGAN, INC.
WESTCOTT ECI, INC.
WESTERN EMPIRE PUBLICATIONS, INC.
Dated as of February 17, 1998 By:
----------------------------------------
Name:
Title:
<PAGE>
THE BANK OF NEW YORK,
as Trustee
Dated as of February 17, 1997 By:
----------------------------------------
Vice President
<PAGE>
EXHIBIT A
7 5/8 SENIOR NOTES DUE 2008
No. _________________ CUSIP _________________
$______________________
PRIMEDIA Inc., a Delaware corporation (herein called the "Company"), for value
received hereby promises to pay to
_________________________________________________________
or registered assigns,
the principal sum of _________________________________________________________
on April 1, 2008.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Reference is hereby made to the further provisions of this Senior Note due 2008
set forth on the reverse side hereof and such further provisions shall for all
purposes have the same effect as if set forth on the front side hereof.
IN WITNESS WHEREOF, the Company has caused this certificate to be signed
manually or by facsimile.
Dated: February 17, 1998
CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred
to in the within mentioned Indenture.
THE BANK OF NEW YORK, PRIMEDIA INC.
as Trustee
By: By:
----------------------- --------------------------------
Authorized Signatory Name:
Title:
<PAGE>
7 5/8 SENIOR NOTES DUE 2008
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE
SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO
SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
Capitalized terms used herein have the meaning assigned to them in the
Indenture unless otherwise indicated.
1. INTEREST; LIQUIDATED DAMAGES. The Company promises to pay
interest on the principal amount of this Security at 7 5/8 per annum from
the date of issuance until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement. The
Company will pay interest and Liquidated Damages, if any, semi-annually on
April 1 and October 1 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Securities will accrue from the most recent date
on which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Security is authenticated between a
record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding
Interest Payment Date; provided, further, that the first Interest Payment
Date shall be October 1, 1998. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at the
same rate per annum on the Securities to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law)
A-2
<PAGE>
on overdue installments of interest (without regard to any applicable
grace periods) from time to time on demand at the same rate to the extent
lawful. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Securities (except defaulted interest) and premium and Liquidated Damages,
if any, to the Persons who are registered Holders of Securities at the
close of business on the March 15 or September 15 next preceding the
Interest Payment Date, even if such Securities are cancelled after such
record date and on or before such Interest Payment Date. The Securities
will be payable as to principal, premium, interest and Liquidated Damages
at the office or agency of the Company maintained for such purpose within
or without the City and State of New York, or, at the option of the
Company, payment of interest, premium and Liquidated Damages may be made
by check mailed to the Holders of the Securities at their addresses set
forth in the register of Holders of Securities.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in
any such capacity.
4. INDENTURE. The Company issued the Securities under an Indenture
dated as of February 17, 1998 (the "Indenture") among the Company, the
Guarantors and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference
to the TIA (15 U.S. Code ss.ss. 77aaa-77bbbb). The Securities are subject
to all such terms, and Holders are referred to the Indenture and such Act
for a statement of such terms. The Securities are senior obligations of
the Company initially limited to $250.0 million in aggregate principal
amount, plus premiums and Liquidated Damages, if any, plus amounts, if
any, sufficient to pay interest on outstanding Securities as set forth in
Paragraph 2 hereof. Additional Notes may be issued from time to time
subject to Section 4.09 of the Indenture. The Notes and any additional
Notes subsequently issued would be treated as a single class for all
purposes under the Indenture, including, without limitation, waivers,
amendments, redemptions and offers to purchase.
5. OPTIONAL REDEMPTION.
The Company may redeem all or any of the Securities, in whole or in
part, at any time on or after April 1, 2003 at the redemption prices
(expressed as percentages of the principal amount) set forth in the
immediately succeeding paragraph, plus accrued and unpaid interest thereon
to the applicable redemption date.
The redemption price as a percentage of the principal amount shall
be as follows, if the Securities are redeemed during the twelve-month
period beginning April 1 of the year indicated below:
Year Percentage
---- ----------
2003 ................................ 103.813%
2004 ................................ 102.542%
2005 ................................ 101.271%
2006 and thereafter ................. 100.000%
Notwithstanding the foregoing, upon the occurrence at any time of a
Change of Control, the Securities will be redeemable, at the option of the
Company, in whole or in part, pursuant to the provisions of Section 3.08
of the Indenture.
6. MANDATORY OFFERS TO REPURCHASE; ASSET SALES.
(a) Upon the occurrence of a Change of Control, the Company will be
required to offer (a "Change of Control Offer") to purchase all
outstanding Securities at a purchase price equal to 101% of the aggregate
principal amount of
A-3
<PAGE>
such Securities, plus premium, Liquidated damages and accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control
Payment"). The Change of Control Offer shall remain open for a period of
20 Business Days after its commencement unless a longer offering period is
required by law. No earlier than 30 days nor later than 40 days after the
notice of the Change of Control Offer has been mailed (the "Change of
Control Payment Date"), the Company shall deposit, to the extent lawful,
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Securities or portions thereof tendered by Holders. The
Paying Agent shall promptly mail or deliver payment for all Securities
tendered in the Change of Control Offer.
A Holder of Securities may tender all or any portion of his
Securities at his discretion by completing the form entitled "OPTION OF
HOLDER TO ELECT PURCHASE" appearing on this Security. Any portion of
Securities tendered must be in integral multiples of $1,000.
(b) The Company is required to apply 100% of the Net Proceeds of any
Asset Sale (including the sale of stock of any Subsidiary) first to repay
Obligations or reduce commitments under the Credit Facilities, second to
offer to redeem at par the Outstanding Notes and third to offer to redeem
at par the Securities.
7. NOTICE OF REDEMPTION. Notice of any redemption pursuant to
Section 3.07 or 3.08 of the Indenture will be mailed by first class mail
at least 30 days but not more than 60 days before the redemption date to
each Holder whose Securities are to be redeemed at its registered address.
Securities in denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000, unless all of the Securities held by a
Holder are to be redeemed. On and after the redemption date interest
ceases to accrue on Securities or portions thereof called for redemption.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by
the Indenture. The Company need not exchange or register the transfer of
any Security or portion of a Security selected for redemption, except the
unredeemed portion of any Security being redeemed in part. Also, it need
not exchange or register the transfer of any Securities for a period of 15
days before the mailing of a Notice of Redemption and ending on the date
of such mailing or during the period between a record date and the
corresponding Interest Payment Date.
9. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as its owner for all purposes.
10. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture, the Securities or the Guarantee may be amended or supplemented
and any existing Default under, or compliance with any provision of, the
Indenture may be waived with the consent of the Holders of at least 51% in
principal amount of the Securities then outstanding (including consents
obtained in connection with a tender offer or exchange offer for
Securities). Without the consent of any Holder, the Company and the
Trustee may amend or supplement the Indenture or the Securities to cure
any ambiguity, defect or inconsistency; to provide for uncertificated
Securities in addition to or in place of certificated Securities; to
comply with Section 5.01 of the Indenture; to make any change that would
provide any additional rights or benefits to the Holders of the Securities
or that does not adversely affect the legal rights under the Indenture of
any such Holder; or to comply with requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the TIA.
A-4
<PAGE>
Without the consent of each Holder affected, an amendment or waiver
may not (with respect to any Securities held by a non-consenting Holder of
Securities) (i) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver, (ii) reduce the
principal of or change the fixed maturity of any Security or alter the
provisions with respect to the redemption or purchase price in connection
with repurchases under Sections 3.07, 3.08, 4.10 or 4.11 of the Indenture,
(iii) reduce the rate of or change the time for payment of interest on any
Security, (iv) waive a Default or Event of Default in the payment of
principal of or premium or Liquidated Damages, if any, or interest on the
Securities or that resulted from a failure to comply with Sections 4.10 or
4.11 of the Indenture (except a rescission of acceleration of the
Securities by the Holders of at least 51% in aggregate principal amount of
the Securities as provided in Section 6.02 of the Indenture), (v) make any
Securities payable in money other than that stated in the Securities, (vi)
make any change in Section 6.04 or 6.07 of the Indenture or this sentence,
and or (vii) waive a redemption payment with respect to any Security.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture or this Security (and
the obligation of the Company to obtain any such consent otherwise
required from such Holder) may be subject to the requirement that such
Holder shall have been the Holder of record of any Securities with respect
to which such consent is required or sought as of a date identified by the
Trustee in a notice furnished to Holders in accordance with the terms of
the Indenture.
11. DEFAULTS AND REMEDIES. Events of Default include: default in
payment of interest or Liquidated Damages on the Securities for 30 days;
default in payment of the principal or premium of any Security at
maturity, or upon acceleration, redemption or otherwise; failure by the
Company for 30 days after written notice to it from the Trustee, or after
written notice to it and the Trustee from Holders of at least 30% in
principal amount of the then outstanding Securities, to comply with any of
its other agreements in the Indenture or the Securities; certain defaults
under other Indebtedness; certain final judgments that remain undischarged
for 60 days after being entered; certain events of bankruptcy or
insolvency; and, except as permitted by the Indenture and the Securities,
the Guarantees are held in any judicial proceeding to be unenforceable or
invalid or otherwise cease for any reason to be in full force and effect
with respect to any Guarantor or any Guarantor denies or disaffirms its
obligations under its Guarantee. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 30% in principal amount
of the then outstanding Securities may declare all the Securities to be
immediately due and payable for an amount equal to 100% of the principal
amount of the Securities plus premium and Liquidated Damages, if any, and
accrued interest to the date of payment, except that in the case of an
Event of Default arising from certain events of bankruptcy or insolvency,
all outstanding Securities become due and payable immediately without
further action or notice. Holders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Securities may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing Default or Event of Default (except a
Default or an Event of Default in payment of principal, premium or
Liquidated Damages, if any, or interest or that resulted from a failure to
comply with Section 4.10 or 4.11 of the Indenture) if and so long as a
committee of its Responsible Officers determines in good faith that
withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee.
12. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.
13. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or shareholder of the Company, as such, shall have any
liability for any obligations of the Company under the Securities, this
Indenture or the Guarantees or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each
A-5
<PAGE>
Holder of the Securities by accepting the Securities waives and releases
all such liability. The waiver and release are part of the consideration
for issuance of the Securities.
14. AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
15. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
16. GUARANTORS. Payment of principal, premium and Liquidated
Damages, if any, and interest (including interest on overdue principal of,
premium, if any, and interest, if lawful) is unconditionally guaranteed by
each of the Guarantors.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
PRIMEDIA INC.
745 Fifth Avenue
New York, New York 10151
Attention: Treasurer
A-6
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:__________________
Your Signature:________________________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee.*
- ----------------------------------------
*Signature must be guaranteed by a financial institution that is a member of the
Securities Transfer Agent Medallion Program in accordance with the Securities
Exchange Act of 1934, as amended.
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section or 4.10 or 4.11 of the Indenture, check the appropriate box:
|_| Section 4.10 |_| Section 4.11
If you want to elect to have only part of the Security purchased by the
Company pursuant to Section 4.10 or 4.11 of the Indenture, state the amount you
elect to have purchased: $______________
Date:__________ Your Signature:________________________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee.*
- ----------------------------------------
*Signature must be guaranteed by a financial institution that is a member of the
Securities Transfer Agent Medallion Program in accordance with the Securities
Exchange Act of 1934, as amended.
A-8
<PAGE>
SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
Amount of Amount of Principal Amount
decrease in increase in of this
Principal Principal Global Note
Amount of Amount of following such Signature of
Date of this this decrease Authorized
Exchange Global Note Global Note (or increase) Signatory
A-9
<PAGE>
EXHIBIT A-1
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
Each of the corporations listed below (hereinafter referred to as the
"Guarantors", which term includes any successor or additional Guarantor under
the Indenture (the "Indenture") referred to in the Security upon which this
notation is endorsed) (i) has jointly and severally, unconditionally guaranteed
that (a) the principal of, and premium, if any, and interest on the Securities
will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of, premium, if
any, and interest on the Securities, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee will be promptly paid
in full or performed, all in accordance with the terms hereof and as set forth
in the Indenture; and (b) in case of any extension of time of payment or renewal
of any Securities or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration, or otherwise; provided,
however, that the maximum liability of a Guarantor pursuant to this Guarantee
shall in no event exceed the Maximum Guaranteed Amount (as defined below).
Capitalized terms used herein have the meanings assigned to them in the
Indenture unless otherwise indicated.
The "Maximum Guaranteed Amount" means, with respect to any Guarantor, the
amount which allows this Guarantee to be enforceable to the fullest extent
permitted by law, limited only to the extent necessary for this Guarantee to not
constitute a fraudulent conveyance.
The Adjusted Net Worth of a Guarantor as of the Guarantee Date shall mean
the excess of (a) the amount of the fair saleable value of the assets of such
Guarantor as of such date determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors over (b) the
amount of all liabilities of such Guarantor, contingent or otherwise, as of the
Guarantee Date, determined on the basis provided in clause (a) above (excluding
all liabilities under this Guarantee).
No stockholder, officer, director, employer or incorporator, past, present
or future, of the Guarantors, as such, shall have any personal liability under
this Guarantee by reason of his or its status as such stockholder, officer,
director, employer or incorporator.
This Guarantee shall be binding upon each Guarantor and its successors and
assigns and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof.
This Guarantee shall not be valid or obligatory for any purpose with
respect to a Security until the certificate of authentication on the Security
upon which this Guarantee is noted shall have been executed by or on behalf of
the Trustee under the Indenture by the manual signature of one of its authorized
signatories.
THE APARTMENT GUIDE OF NASHVILLE, INC.
ARGUS PUBLISHERS CORPORATION
AMERICAN HEAT VIDEO PRODUCTIONS, INC.
ASTN, INC.
A WEP COMPANY
BACON'S INFORMATION, INC.
BANKERS CONSULTING COMPANY
CARDINAL BUSINESS MEDIA, INC.
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
CHANNEL ONE COMMUNICATIONS CORPORATION
COVER CONCEPTS MARKETING SERVICES, LLC
A-1-1
<PAGE>
CSK PUBLISHING COMPANY INCORPORATED
DAILY RACING FORM, INC.
DATA BOOK, INC.
DRF FINANCE, INC.
THE ELECTRONICS SOURCE BOOK, INC.
EXCELLENCE IN TRAINING CORPORATION
FUNK & WAGNALLS YEARBOOK CORPORATION
GARETH STEVENS, INC.
GO LO ENTERTAINMENT, INC.
GUINN COMMUNICATIONS, INC.
HAAS PUBLISHING COMPANIES, INC.
HEALTH & SCIENCES NETWORK, INC.
IDTN LEASING CORPORATION
INDUSTRIAL TRAINING SYSTEMS CORPORATION
INTELLICHOICE, INC.
INTERMODAL PUBLISHING COMPANY, LTD.
INTERTEC MARKET REPORTS, INC.
INTERTEC PRESENTATIONS, INC.
INTERTEC PUBLISHING CORPORATION
K-III HPC, INC.
K-III PRIME CORPORATION
LAW ENFORCEMENT TELEVISION NETWORK, INC.
LAW ENFORCEMENT TELEVISION NETWORK, INC.
LIFETIME LEARNING SYSTEMS, INC.
LITTLE ROCK APARTMENT GUIDE, INC.
LOCKERT JACKSON & ASSOCIATES, INC.
MCMULLEN ARGUS PUBLISHING, INC.
MEMPHIS APARTMENT GUIDE, INC.
MUSICAL AMERICA PUBLISHING, INC.
NELSON INFORMATION, INC.
NEWBRIDGE COMMUNICATIONS, INC.
PARK AVENUE PUBLISHING, INC.
PICTORIAL, INC.
PLAZA COMMUNICATIONS, INC.
PRIMEDIA HOLDINGS III INC.
PRIMEDIA INFORMATION INC.
PRIMEDIA MAGAZINES INC.
PRIMEDIA MAGAZINES FINANCE INC.
PRIMEDIA REFERENCE INC.
PRIMEDIA SPECIAL INTEREST PUBLICATIONS INC.
QWIZ, INC.
R.E.R. PUBLISHING CORPORATION
STRAIGHT DOWN, INC.
SYMBOL OF EXCELLENCE PUBLISHERS, INC.
TEL-A-TRAIN, INC.
TI-IN ACQUISITION CORPORATION
WEEKLY READER CORPORATION
WESTCOTT COMMUNICATIONS, INC.
WESTCOTT COMMUNICATIONS MICHIGAN, INC.
A-1-2
<PAGE>
WESTCOTT ECI, INC.
WESTERN EMPIRE PUBLICATIONS, INC.
Name:
Title:
A-1-3
<PAGE>
SCHEDULE I
THE APARTMENT GUIDE OF NASHVILLE, INC.
ARGUS PUBLISHERS CORPORATION
AMERICAN HEAT VIDEO PRODUCTIONS, INC.
ASTN, INC.
A WEP COMPANY
BACON'S INFORMATION, INC.
BANKERS CONSULTING COMPANY
CARDINAL BUSINESS MEDIA, INC.
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
CHANNEL ONE COMMUNICATIONS CORPORATION
COVER CONCEPTS MARKETING SERVICES, LLC
CSK PUBLISHING COMPANY INCORPORATED
DAILY RACING FORM, INC.
DATA BOOK, INC.
DRF FINANCE, INC.
THE ELECTRONICS SOURCE BOOK, INC.
EXCELLENCE IN TRAINING CORPORATION
FUNK & WAGNALLS YEARBOOK CORPORATION
GARETH STEVENS, INC.
GO LO ENTERTAINMENT, INC.
GUINN COMMUNICATIONS, INC.
HAAS PUBLISHING COMPANIES, INC.
HEALTH & SCIENCES NETWORK, INC.
IDTN LEASING CORPORATION
INDUSTRIAL TRAINING SYSTEMS CORPORATION
INTELLICHOICE, INC.
INTERMODAL PUBLISHING COMPANY, LTD.
INTERTEC MARKET REPORTS, INC.
INTERTEC PRESENTATIONS, INC.
INTERTEC PUBLISHING CORPORATION
K-III HPC, INC.
K-III PRIME CORPORATION
LAW ENFORCEMENT TELEVISION NETWORK, INC.
LIFETIME LEARNING SYSTEMS, INC.
LITTLE ROCK APARTMENT GUIDE, INC.
LOCKERT JACKSON & ASSOCIATES, INC.
MCMULLEN ARGUS PUBLISHING, INC.
MEMPHIS APARTMENT GUIDE, INC.
MUSICAL AMERICA PUBLISHING, INC.
NELSON INFORMATION, INC.
NEWBRIDGE COMMUNICATIONS, INC.
PARK AVENUE PUBLISHING, INC.
PICTORIAL, INC.
PLAZA COMMUNICATIONS, INC.
PRIMEDIA HOLDINGS III INC.
PRIMEDIA INFORMATION INC.
PRIMEDIA MAGAZINES INC.
PRIMEDIA MAGAZINES FINANCE INC.
PRIMEDIA REFERENCE INC.
<PAGE>
PRIMEDIA SPECIAL INTEREST PUBLICATIONS INC.
QWIZ, INC.
R.E.R. PUBLISHING CORPORATION
STRAIGHT DOWN, INC.
SYMBOL OF EXCELLENCE PUBLISHERS, INC.
TEL-A-TRAIN, INC.
TI-IN ACQUISITION CORPORATION
WEEKLY READER CORPORATION
WESTCOTT COMMUNICATIONS, INC.
WESTCOTT COMMUNICATIONS MICHIGAN, INC.
WESTCOTT ECI, INC.
WESTERN EMPIRE PUBLICATIONS, INC.
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: 7 5/8 Senior Notes Due 2008
Reference is hereby made to the Indenture, dated as of February 17, 1998
(the "Indenture"), between PRIMEDIA Inc., as issuer (the "Company"), and The
Bank of New York, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. |_| Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act and, (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act and (iv) if
the proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed
B-1
<PAGE>
on the Regulation S Global Note, the Temporary Regulation S Global Note and/or
the Definitive Note and in the Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a beneficial
interest in a Definitive Note pursuant to any provision of the Securities Act
other than Rule 144A or Regulation S. The Transfer is being effected in
compliance with the transfer restrictions applicable to beneficial interests in
Restricted Global Notes and Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act and any applicable blue sky securities laws
of any state of the United States, and accordingly the Transferor hereby further
certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) |_| such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2) if
such Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $100,000, an Opinion of Counsel provided by the Transferor
or the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred Definitive Note will be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on Definitive Notes and in the Indenture and the Securities Act.
4. |_| Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
<PAGE>
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-------------------------------
[Insert Name of Transferor]
By:
----------------------------
Name:
Title:
Dated:__________ ,____
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP _____), or
(ii) |_| Regulation S Global Note (CUSIP _____), or
(iii) |_| IAI Global Note (CUSIP_____), or
(b) |_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP _____), or
(ii) |_| Regulation S Global Note (CUSIP _____), or
(iii) |_| Unrestricted Global Note (CUSIP _____); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: 7 5/8 Senior Notes 2008
(CUSIP ________)
Reference is hereby made to the Indenture, dated as of February 17,
1998 (the "Indenture"), between PRIMEDIA Inc., as issuer (the "Company"), and
The Bank of New York, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
____, (the "Owner") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and
C-1
<PAGE>
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) |_| Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
|_| 144A Global Note, |_| Regulation S Global Note or |_| IAI Global Note with
an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-------------------------------
[Insert Name of Owner]
By:
----------------------------
Name:
Title:
Dated:__________ ,____
C-2
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: 7 5/8 Senior Notes Due 2008
Reference is hereby made to the Indenture, dated as of February 17, 1998
(the "Indenture"), between PRIMEDIA Inc., as issuer (the "Company"), and The
Bank of New York, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) |_| a beneficial interest in a Global Note, or
(b) |_| a Definitive Note, we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $100,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the
D-1
<PAGE>
proposed sale complies with the foregoing restrictions. We further understand
that the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion and we are acquiring the Notes for investment purposes and
not with a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act or other applicable securities law.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
-------------------------------
[Insert Name of Accredited Investor]
By:
----------------------------
Name:
Title:
Dated:__________ ,____
D-2
<PAGE>
EXHIBIT 10.5
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
K-III COMMUNICATIONS CORPORATION,
VARIOUS LENDING INSTITUTIONS,
THE BANK OF NEW YORK
and
BANKERS TRUST COMPANY,
AS CO-SYNDICATION AGENTS,
THE BANK OF NOVA SCOTIA,
AS DOCUMENTATION AGENT
and
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
------------------------------------------
Dated as of April 21, 1997
------------------------------------------
$150,000,000
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit...................................... 1
1.01 Commitments.................................................. 1
1.02 Minimum Borrowing Amounts, etc............................... 1
1.03 Notice of Borrowing.......................................... 1
1.04 Disbursement of Funds........................................ 2
1.05 Register..................................................... 3
1.06 Conversions.................................................. 3
1.07 Pro Rata Borrowings.......................................... 4
1.08 Interest..................................................... 4
1.09 Interest Periods............................................. 5
1.10 Increased Costs, Illegality, etc............................. 6
1.11 Compensation................................................. 9
1.12 Change of Lending Office..................................... 10
SECTION 2. Fees; Commitments............................................... 10
2.01 Fees ........................................................ 10
2.02 Voluntary Reduction of Commitments........................... 10
2.03 Mandatory Reduction of Commitments, etc...................... 11
SECTION 3. Payments........................................................ 11
3.01 Voluntary Prepayments........................................ 11
3.02 Mandatory Repayments......................................... 12
3.03 Method and Place of Payment.................................. 12
3.04 Net Payments................................................. 13
SECTION 4. Conditions Precedent............................................ 14
4.01 Execution of Agreement....................................... 14
4.02 No Default; Representations and Warranties................... 14
4.03 Opinions of Counsel.......................................... 15
4.04 Corporate Proceedings........................................ 15
4.05 Existing Credit Agreements................................... 15
4.06 Subsidiary Guaranty.......................................... 15
4.07 Notice of Borrowing.......................................... 16
(i)
<PAGE>
Page
----
4.08 Payment of Fees, etc......................................... 16
4.09 Contribution Agreement....................................... 16
4.10 Existing Indebtedness Agreements............................. 16
SECTION 5. Representations, Warranties and Agreements...................... 16
5.01 Corporate Status............................................. 17
5.02 Corporate Power and Authority................................ 17
5.03 No Violation................................................. 17
5.04 Litigation................................................... 18
5.05 Use of Proceeds; Margin Regulations.......................... 18
5.06 Governmental Approvals....................................... 18
5.07 Investment Company Act....................................... 19
5.08 Public Utility Holding Company Act........................... 19
5.09 True and Complete Disclosure................................. 19
5.10 Financial Statements; Financial Condition.................... 19
5.11 Tax Returns and Payments..................................... 20
5.12 Compliance with ERISA........................................ 20
5.13 Subsidiaries................................................. 21
5.14 Intellectual Property........................................ 21
5.15 Compliance with Statutes, etc................................ 22
SECTION 6. Affirmative Covenants........................................... 22
6.01 Information Covenants........................................ 22
6.02 Books, Records and Inspections............................... 25
6.03 Payment of Taxes............................................. 25
6.04 Corporate Franchises......................................... 25
6.05 Compliance with Statutes, etc................................ 26
6.06 ERISA........................................................ 26
6.07 End of Fiscal Years; Fiscal Quarters......................... 27
6.08 Use of Proceeds.............................................. 27
6.09 Ownership of Subsidiaries.................................... 27
6.10 Maintenance of Corporate Separateness........................ 27
SECTION 7. Negative Covenants.............................................. 28
7.01 Changes in Business.......................................... 28
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc....... 28
7.03 Liens........................................................ 31
7.04 Indebtedness................................................. 33
7.05 Advances, Investments and Loans.............................. 35
(ii)
<PAGE>
Page
----
7.06 Contingent Obligations....................................... 38
7.07 Dividends, etc............................................... 39
7.08 Transactions with Affiliates................................. 41
7.09 Fixed Charge Coverage Ratio.................................. 41
7.10 Interest Coverage Ratio...................................... 42
7.11 Leverage Ratio............................................... 42
7.12 Issuance of Stock............................................ 43
7.13 Modifications of Certain Agreements, etc..................... 43
7.14 Limitation on the Creation of Subsidiaries; Redesignation of
Partially-Owned Restricted Subsidiaries................. 44
7.15 Limitation on Payments Under the Non-Compete Notes........... 45
SECTION 8. Events of Default............................................... 45
8.01 Payments..................................................... 45
8.02 Representations, etc......................................... 45
8.03 Covenants.................................................... 46
8.04 Default Under Other Agreements............................... 46
8.05 Bankruptcy, etc.............................................. 46
8.06 ERISA........................................................ 47
8.07 Subsidiary Guaranty.......................................... 47
8.08 Judgments.................................................... 48
8.09 Ownership.................................................... 48
SECTION 9. Definitions..................................................... 48
SECTION 10. The Administrative Agent....................................... 74
10.01 Appointment................................................. 74
10.02 Delegation of Duties........................................ 75
10.03 Exculpatory Provisions...................................... 75
10.04 Reliance by Administrative Agent............................ 76
10.05 Notice of Default........................................... 76
10.06 Non-Reliance on Administrative Agent and Other Banks........ 76
10.07 Indemnification............................................. 77
10.08 Administrative Agent in Its Individual Capacity............. 78
10.09 Holders..................................................... 78
10.10 Resignation of the Administrative Agent; Successor Agent.... 78
SECTION 11. Miscellaneous.................................................. 78
11.01 Payment of Expenses, etc.................................... 79
(iii)
<PAGE>
Page
----
11.02 Right of Setoff............................................. 79
11.03 Notices..................................................... 80
11.04 Benefit of Agreement........................................ 80
11.05 No Waiver; Remedies Cumulative.............................. 82
11.06 Payments Pro Rata........................................... 82
11.07 Calculations; Computations.................................. 83
11.08 Governing Law; Submission to Jurisdiction; Venue............ 84
11.09 Counterparts................................................ 85
11.10 Effectiveness............................................... 85
11.11 Headings Descriptive........................................ 85
11.12 Amendment or Waiver......................................... 85
11.13 Survival.................................................... 86
11.14 Domicile of Revolving Loans................................. 86
11.15 Confidentiality............................................. 86
11.16 Waiver of Jury Trial........................................ 86
ANNEX I List of Banks
ANNEX II Bank Addresses
ANNEX III Subsidiaries
ANNEX IV Liens
ANNEX V Existing Debt/Existing Contingent Obligations
ANNEX VI Existing Preferred Stock
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B-1 -- Form of Opinion of Simpson, Thacher & Bartlett
EXHIBIT B-2 -- Form of Opinion of Beverly C. Chell, Esq.
EXHIBIT B-3 -- Form of Opinion of White & Case
EXHIBIT C -- Form of Officer's Certificate
EXHIBIT D -- Form of Subsidiary Guaranty
EXHIBIT E -- Form of Contribution Agreement
EXHIBIT F -- Form of Assignment and Assumption Agreement
EXHIBIT G -- Form of Subsidiary Assumption Agreement
(iv)
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CREDIT AGREEMENT, dated as of April 21, 1997, among K-III
COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company"), the lending
institutions listed from time to time on Annex I hereto (each a "Bank" and,
collectively, the "Banks"), THE BANK OF NEW YORK and BANKERS TRUST COMPANY, as
Co-Syndication Agents, THE BANK OF NOVA SCOTIA, as Documentation Agent and THE
CHASE MANHATTAN BANK, as Administrative Agent (the "Administrative Agent").
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 9 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available the credit facility provided for
herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees at any time and from time to time
on and after the Effective Date, to make a revolving loan or revolving loans
(each a "Revolving Loan" and, collectively, the "Revolving Loans") to the
Company, which Revolving Loans (i) shall, at the option of the Company, be Base
Rate Loans or Eurodollar Loans, provided that all Revolving Loans made as part
of the same Borrowing shall, unless otherwise specifically provided herein,
consist of Revolving Loans of the same Type, (ii) may be repaid and reborrowed
in accordance with the provisions hereof and (iii) shall not exceed for any Bank
at any time outstanding that aggregate principal amount which equals the
Revolving Loan Commitment of such Bank at such time.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount. More than
one Borrowing may be incurred on any day, provided that at no time shall there
be outstanding more than 5 Borrowings of Eurodollar Loans.
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1.03 Notice of Borrowing. (a) Whenever the Company desires to incur
Revolving Loans hereunder, it shall give the Administrative Agent at its Notice
Office, prior to 12:00 Noon (New York time), at least three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Eurodollar Loans and at least one Business Day's prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Base Rate Loans to be incurred hereunder. Each such notice (each a "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.10, shall be
irrevocable, and, in the case of each written notice and each confirmation of
telephonic notice, shall be in the form of Exhibit A, appropriately completed to
specify (i) the aggregate principal amount of the Revolving Loans to be made
pursuant to such Borrowing, (ii) the date of such Borrowing (which shall be a
Business Day) and (iii) whether the respective Borrowing shall consist of Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the Interest Period to
be initially applicable thereto. The Administrative Agent shall promptly give
each Bank written notice (or telephonic notice promptly confirmed in writing) of
each proposed Borrowing, of such Bank's proportionate share thereof, and of the
other matters covered by the Notice of Borrowing.
(b) Without in any way limiting the obligation of the Company to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the
Administrative Agent, in good faith to be from the chairman, a vice chairman,
the president, a vice president, a treasurer, an assistant treasurer or the
director of treasury operations of the Company. In each such case, the Company
hereby waives the right to dispute the Administrative Agent's record of the
terms of such telephonic notice.
1.04 Disbursement of Funds. No later than 1:00 P.M. (New York time)
on the date specified in each Notice of Borrowing, each Bank will make available
its Pro Rata Share of each Borrowing requested to be made on such date in the
manner provided below. All such amounts shall be made available to the
Administrative Agent in U.S. Dollars and immediately available funds at the
Payment Office and the Administrative Agent promptly will make available to the
Company by depositing to its account at the Payment Office the aggregate of the
amounts so made available in the type of funds received. Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Administrative
Agent its portion of the Borrowing or Borrowings to be made on such date, the
Administrative Agent may assume that such
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Bank has made such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without any obligation to do so) make available to
the Company a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Bank and the Administrative
Agent has made available same to the Company, the Administrative Agent shall be
entitled to recover such corresponding amount from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the Company, and
the Company shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
from the Bank or the Company, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Company to the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (x) if paid by such Bank, the overnight Federal Funds rate or (y)
if paid by the Company, the then applicable rate of interest, calculated in
accordance with Section 1.08, for the Revolving Loans. Nothing herein shall be
deemed to relieve any Bank from its obligation to fulfill its commitments
hereunder or to prejudice any rights which the Company may have against any Bank
as a result of any failure by such Bank to make Revolving Loans hereunder.
1.05 Register. (a) The Administrative Agent shall maintain a
register for the recordation of the Revolving Loan Commitments of the Banks from
time to time and the principal amount of the Revolving Loans owing to each Bank
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error. The Register shall be available for
inspection by the Company or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(b) The Company hereby agrees to provide a Note, promptly upon the
request of any Bank, to the extent such Bank has requested such Note in
connection with any pledge or assignment by such Bank of any or all of its
Revolving Loans hereunder to a Federal Reserve Bank.
1.06 Conversions. The Company shall have the option to convert on
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Revolving Loans into
a Borrowing or Borrowings of another Type of Revolving Loan; provided that (i)
no
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such partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of the Eurodollar Loans made pursuant to such
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
Base Rate Loans may not be converted into Eurodollar Loans if a Default or
Event of Default is in existence and the Administrative Agent and/or the
Required Banks have notified the Company that such a conversion will not be
permitted as a result thereof and (iii) Borrowings of Eurodollar Loans resulting
from this Section 1.06 shall be limited in number as provided in Section 1.02.
Each such conversion shall be effected by the Company by giving the
Administrative Agent at its Notice Office, prior to 12:00 Noon (New York time),
at least three Business Days (or one Business Day in the case of a conversion
into Base Rate Loans) prior written notice (or telephonic notice promptly
confirmed in writing) (each a "Notice of Conversion") specifying the Revolving
Loans to be so converted, the Type of Revolving Loans to be converted into and,
if to be converted into a Borrowing of Eurodollar Loans, the Interest Period to
be initially applicable thereto. The Administrative Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its Revolving
Loans.
1.07 Pro Rata Borrowings. All Borrowings of Revolving Loans under
this Agreement shall be made by the Banks pro rata on the basis of their
Revolving Loan Commitments. It is understood that no Bank shall be responsible
for any default by any other Bank of its obligation to make Revolving Loans
hereunder and that each Bank shall be obligated to make the Revolving Loans to
be made by it hereunder, regardless of the failure of any other Bank to make its
Revolving Loans hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Margin plus the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Margin plus the relevant Eurodollar Rate.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Revolving Loan shall bear interest at a rate per
annum equal to the Base Rate in effect from time to time plus the sum of (i) 2%
and (ii) the
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Applicable Margin for Base Rate Loans; provided that principal in respect of
Eurodollar Loans shall bear interest after the same becomes due (whether by
acceleration or otherwise) until the end of the applicable Interest Period for
such Eurodollar Loan at a per annum rate equal to 2% in excess of the rate of
interest applicable on the due date therefor.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Revolving Loan, on any prepayment or conversion (on
the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 11.07(b).
(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the Company and the Banks thereof.
1.09 Interest Periods. At the time the Company gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 12:00 Noon (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Company, be a one, two, three, six or, if
available to each of the Banks (as determined by each such Bank in good faith
based on prevailing conditions in the interbank Eurodollar market on any date of
determination thereof), nine month period. Notwithstanding anything to the
contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period
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occurring thereafter in respect of such Borrowing shall commence on the
day on which the next preceding Interest Period applicable thereto
expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond the Final Maturity Date;
and
(v) no Interest Period may be elected at any time when a Default or
Event of Default is then in existence and the Administrative Agent and/or
the Required Banks have notified the Company that such an election will
not be permitted as a result thereof.
If upon the expiration of any Interest Period, the Company has failed to elect a
new Interest Period to be applicable to the respective Borrowing of Eurodollar
Loans as provided above, or a Default or an Event of Default then exists and the
Administrative Agent and/or the Required Banks have given the notice referred to
in clause (v) above, the Company shall be deemed to have elected to convert such
Borrowing into a Borrowing of Base Rate Loans effective as of the expiration
date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in the case of
clause (i) below, the Administrative Agent or (y) in the case of clauses (ii)
and (iii) below, any Bank, shall have determined (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, adequate and fair
means do not
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exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans because of (x) any change since the date of this
Agreement in any applicable law, governmental rule, regulation, guideline,
order or request (whether or not having the force of law), or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, guideline, order or request
such as, for example, but not limited to, (A) a change since the Effective
Date in the basis of taxation of payment to any Bank of the principal of
or interest on the Revolving Loans or any other amounts payable hereunder
(except for changes with respect to Taxes and those taxes described in
clauses (x) and (y) of the proviso in the second sentence of Section 4.04)
or (B) a change since the Effective Date in official reserve requirements,
but, in all events, excluding reserves required under Regulation D
to the extent included in the computation of the Eurodollar Rate and/or
(y) other circumstances affecting such Bank, the interbank Eurodollar
market or the position of such Bank in such market; or
(iii) at any time since the Effective Date, that the making or
continuance of any Eurodollar Loan has become unlawful by compliance by
such Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law but with which
such Bank customarily complies even though the failure to comply therewith
would not be unlawful), or has become impracticable as a result of a
contingency occurring after the Effective Date which materially and
adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within 10 Business Days of
the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Company and (except in the case of clause (i)) to
the Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Company and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Company with respect to Eurodollar Loans which have not
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yet been incurred shall be deemed rescinded by the Company, (y) in the case of
clause (ii) above, the Company agrees to pay to such Bank, upon written demand
therefor (accompanied by the written notice referred to below), such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such increased costs
or reductions in amounts received or receivable hereunder (a written notice as
to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the Company by such Bank shall, absent
manifest error, be final and conclusive and binding upon all parties hereto) and
(z) in the case of clause (iii) above, the Company shall take one of the actions
specified in Section 1.10(b) as promptly as possible and, in any event, within
the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Company may (and in
the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Company shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Administrative
Agent telephonic notice (confirmed promptly in writing) thereof promptly (but in
any event no later than the later of (x) the Business Day next preceding the
date of such Borrowing and (y) one Business Day after the Company was notified
by a Bank pursuant to Section 1.10(a)(ii) or (iii)), or (ii) if the affected
Eurodollar Loan is then outstanding, upon at least three Business Days' notice
to the Administrative Agent, require the affected Bank to convert each such
Eurodollar Loan into a Base Rate Loan (which conversion, in the case of the
circumstances described in Section 1.10(a)(iii), shall occur no later than the
last day of the Interest Period then applicable to such Eurodollar Loan (or such
earlier date as shall be required by applicable law)); provided that if more
than one Bank is affected at any time, then all affected Banks must be treated
the same pursuant to this Section 1.10(b).
(c) (i) If any Bank shall have determined that after the Effective
Date, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Bank could
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have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), accompanied by the notice referred to in the last
sentence of this clause (i), the Company shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction. Each Bank,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Company, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish the Company's obligations to pay additional amounts pursuant
to this Section 1.10(c).
(ii) If (x) any Bank becomes a Defaulting Bank or otherwise defaults
in its obligations to make Revolving Loans, (y) any Bank has notified the
Company that one of its Eurodollar Loans is affected by the circumstances
described in Section 1.10(a)(ii) or (iii), or (z) any Bank is owed increased
costs or other amounts under Section 1.10(c)(i) or 3.04 and, in the case of such
clause (y) or (z), compensation or other action with respect to such event is
not otherwise requested generally by the other Banks, the Company shall have the
right, if no Default or Event of Default then exists and, in the case of a Bank
described in clause (y) or (z) above, such Bank has not changed its applicable
lending office with the effect of eliminating such increased cost, to replace
such Bank (the "Replaced Bank") with another commercial bank or banks or other
financial institutions (collectively, the "Replacement Bank") reasonably
acceptable to the Administrative Agent, provided that (i) at the time of any
replacement pursuant to this Section 1.10(c)(ii), the Replacement Bank shall
enter into one or more assignment agreements pursuant to Section 11.04(b) hereof
(and with all fees payable pursuant to said Section 11.04(b) to be paid by the
Replacement Bank) pursuant to which the Replacement Bank shall acquire all of
the Revolving Loan Commitments and outstanding Revolving Loans of the Replaced
Bank and, in connection therewith, shall pay to the Replaced Bank in respect
thereof an amount equal to the sum of (a) an amount equal to the principal of,
and all accrued interest on, all outstanding Revolving Loans of the Replaced
Bank and (b) an amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank pursuant to Section 2.01 hereof and (ii) all obligations of
the Company owing to the Replaced Bank (other than those specifically described
in clause (i) above in respect of which the assignment purchase price has been,
or is concurrently being, paid) shall be paid in full to such Replaced Bank
concurrently with such replacement. Upon the execution of the respective
assignment documentation pursuant to clause (i) above and the payment of amounts
referred to in clauses (i) above and (ii) above, the Replacement
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Bank shall become a Bank or Banks hereunder, as the case may be, and the
Replaced Bank shall cease to constitute a Bank hereunder, except with respect to
indemnification provisions (including, without limitation, Sections 1.10, 1.11,
3.04, 10.07 and 11.01 of this Agreement) under this Agreement, which shall
survive as to such Replaced Bank.
1.11 Compensation. The Company agrees to compensate each Bank in the
appropriate currency, upon its written request (which request shall set forth
the basis for requesting such compensation), for all reasonable losses, expenses
and liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Bank to fund its Eurodollar Loans but excluding loss of
anticipated profit with respect to any Revolving Loans) which such Bank may
sustain: (i) if for any reason (other than a default by such Bank or the
Administrative Agent) a Borrowing of Eurodollar Loans does not occur on a date
specified therefor in a Notice of Borrowing or Notice of Conversion (whether or
not withdrawn by the Company or deemed withdrawn pursuant to Section 1.10(a));
(ii) if any repayment, prepayment or conversion of any Eurodollar Loans occurs
on a date which is not the last day of an Interest Period applicable thereto;
(iii) if any prepayment of any Eurodollar Loans is not made on any date
specified in a notice of prepayment given by the Company; or (iv) as a
consequence of (x) any other default by the Company to repay its Revolving Loans
when required by the terms of this Agreement or (y) an election made pursuant to
Section 1.10(b). Calculation of all amounts payable to a Bank under this Section
1.11 shall be made as though that Bank had actually funded its relevant
Eurodollar Loan through the purchase of a Eurodollar deposit bearing interest at
the Eurodollar Rate in an amount equal to the amount of that Revolving Loan,
having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of that Bank to a
domestic office of that Bank in the United States of America; provided, however,
that each Bank may fund each of its Eurodollar Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c)(i) or 3.04 with respect to such Bank, it will, if
requested by the Company, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any
Revolving Loans affected by such event; provided that such designation is made
on such terms that in the sole judgment of such Bank, such Bank and its lending
office suffer no economic, legal or
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regulatory disadvantage, with the object of avoiding the consequences of the
event giving rise to the operation of any such Section. Nothing in this Section
1.12 shall affect or postpone any of the obligations of the Company or the right
of any Bank provided in Sections 1.10 or 3.04.
SECTION 2. Fees; Commitments.
2.01 Fees. (a) The Company agrees to pay to the Administrative
Agent for distribution to each Non-Defaulting Bank a commitment fee (the
"Commitment Fee") for the period from the Effective Date to but not including
the date the Total Revolving Loan Commitment has been terminated, computed at a
per annum rate equal to the Applicable Commitment Fee Percentage on the daily
average Aggregate Unutilized Revolving Loan Commitment of such Non-Defaulting
Bank. Accrued Commitment Fees shall be due and payable quarterly in arrears on
the last Business Day of March, June, September and December of the year
following the Effective Date and the date upon which the Total Revolving Loan
Commitment is terminated.
(b) The Company shall pay to the Administrative Agent, for its own
account, such other fees as have been agreed to in writing by the Company and
the Administrative Agent.
(c) All computations of Fees shall be made in accordance with
Section 11.07(b).
2.02 Voluntary Reduction of Commitments. Upon at least three
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) to the Administrative Agent at its Notice Office (which notice the
Administrative shall promptly transmit to each of the Banks), the Company shall
have the right, without premium or penalty, to terminate or partially reduce the
Total Unutilized Revolving Loan Commitment; provided that (x) any such
termination or partial reduction shall apply to proportionately and permanently
reduce the Revolving Loan Commitment of each of the Banks, (y) any partial
reduction pursuant to this Section 2.02 shall be in the amount of at least
$2,000,000 and (z) the reduction to the Total Unutilized Revolving Loan
Commitment shall in no case be in an amount which would cause the Revolving Loan
Commitment of any Bank to be reduced (as required by the preceding clause (x))
by an amount which exceeds the remainder of the Aggregate Unutilized Revolving
Loan Commitment of such Bank as in effect
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immediately before giving effect to such reduction.
2.03 Mandatory Reduction of Commitments, etc. (a) The Total
Revolving Loan Commitment (and the Revolving Loan Commitment of each Bank) shall
terminate in its entirety on the earlier of (i) the date which is the earlier of
(x) 30 days after any date on which a Specified Change of Control Event occurs
and (y) the date on which any Senior Notes or any other Indebtedness of the
Company or its Restricted Subsidiaries are required to be repurchased, redeemed
or prepaid as a result of any such Specified Change of Control Event and (ii)
the Final Maturity Date.
(b) Each reduction to the Total Revolving Loan Commitment pursuant
to this Section 2.03 shall be applied proportionately to reduce the Revolving
Loan Commitment of each Bank.
SECTION 3. Payments.
3.01 Voluntary Prepayments. The Company shall have the right to
prepay the Revolving Loans incurred by it, in whole or in part, without premium
or penalty except as otherwise provided in this Agreement, from time to time on
the following terms and conditions: (i) the Company shall give the
Administrative Agent at the Notice Office written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay the Revolving Loans, the
amount of such prepayment and (in the case of Eurodollar Loans) the specific
Borrowing(s) pursuant to which made, which notice shall be given by the Company
prior to 12:00 Noon (New York time) at least two Business Days prior to the date
of such prepayment, which notice shall promptly be transmitted by the
Administrative Agent to each of the Banks; (ii) each partial prepayment of any
Borrowing shall be in an aggregate principal amount of at least $1,000,000 and,
if greater, in an integral multiple of $500,000, provided that no partial
prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce the
aggregate principal amount of the Revolving Loans outstanding pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; and (iii) each prepayment in respect of any Revolving Loans made
pursuant to a Borrowing shall be applied pro rata among such Revolving Loans;
provided that at the Company's election in connection with any prepayment of
Revolving Loans pursuant to this Section 3.01, such prepayment shall not be
applied to any Revolving Loans of a Defaulting Bank.
3.02 Mandatory Repayments. (a) (i) If on any date the
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aggregate outstanding principal amount of Revolving Loans made by Non-Defaulting
Banks (in each case after giving effect to all other repayments thereof on such
date) exceeds the Adjusted Total Commitment as then in effect, the Company shall
repay on such date the principal of Revolving Loans of Non-Defaulting Banks in
an aggregate amount equal to such excess.
(ii) If on any date the aggregate outstanding principal amount
of Revolving Loans made by any Defaulting Bank exceeds the Revolving Loan
Commitment of such Defaulting Bank, the Company shall repay the Revolving Loans
of such Defaulting Bank in an amount equal to such excess.
(b) With respect to each repayment of Revolving Loans required
by this Section 3.02, the Company may designate the Types of Revolving Loans
which are to be repaid and the specific Borrowing(s) pursuant to which made;
provided that (i) Eurodollar Loans may be designated for repayment pursuant to
this Section 3.02 only on the last day of an Interest Period applicable thereto
unless all Eurodollar Loans with Interest Periods ending on such date of
required repayment and all Base Rate Loans have been paid in full; (ii) each
repayment of any Revolving Loans made pursuant to a Borrowing shall be applied
pro rata among such Revolving Loans; (iii) notwithstanding the provisions of the
preceding clause (ii), no repayment of Revolving Loans pursuant to Section
3.02(a)(i) shall be applied to the Revolving Loans of a Defaulting Bank; and
(iv) repayments of Revolving Loans of Defaulting Banks pursuant to Section
3.02(a)(ii) shall be applied pro rata among such Revolving Loans. In the absence
of a designation by the Company as described in the preceding sentence, the
Administrative Agent shall, subject to the above, make such designation in its
sole discretion with a view, but no obligation, to minimize breakage costs owing
under Section 1.11.
3.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable account of the Banks entitled thereto
(based on each Bank's Pro Rata Share, if any), no later than 1:00 P.M. (New York
time) on the date when due and shall be made in immediately available funds and
in lawful money of the United States of America at the Payment Office. Any
payments under this Agreement which are made later than 1:00 P.M. (New York
time) shall be deemed to have been made on the next succeeding Business Day;
provided, however, that to the extent that the Administrative Agent shall have
received any payment under this Agreement after 1:00 P.M. (New York time) on a
Business Day, the Administrative Agent shall use its best efforts to distribute
such payment as promptly as practicable
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on such date to the Banks (other than any Bank that has consented in writing to
waive its pro rata share of such payment) pro rata based upon their respective
shares, if any, of the Obligations with respect to which such payment was
received, and to the extent that any such Bank receives its portion of such
payment from the Administrative Agent on such same date by a time satisfactory
to such Bank, such payment to such Bank shall be deemed to have been made on
such date. Whenever any payment to be made hereunder shall be stated to be due
on a day which is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
3.04 Net Payments. All payments made by the Company hereunder will
be made without setoff, counterclaim or other defense. Promptly upon notice from
any Bank to the Company, the Company agrees to pay, prior to the date on which
penalties attach thereto, all present and future income, stamp and other taxes,
levies, or costs and charges whatsoever imposed, assessed, levied or collected
on or in respect of a Revolving Loan solely as a result of the interest rate
being determined by reference to the Eurodollar Rate, and/or the provisions of
this Agreement relating to the Eurodollar Rate, and/or the recording,
registration, notarization or other formalization of any thereof and/or any
payments of principal, interest or other amounts made on a Revolving Loan when
the interest rate is determined by reference to the Eurodollar Rate (all such
taxes, levies, costs and charges being herein collectively called "Taxes");
provided that Taxes shall not include (x) taxes imposed on or measured by the
overall net income or receipts of the Administrative Agent or any Bank by the
United States of America or any political subdivision or taxing authority
thereof or therein or (y) taxes on or measured by the overall net income of any
foreign office, branch or subsidiary of the Administrative Agent or that Bank by
any foreign country or subdivision thereof in which the Administrative Agent's
or that Bank's office, branch or subsidiary is doing business. The Company
agrees to also pay such additional amounts equal to increases in taxes payable
by that Bank described in the foregoing proviso which increases arise solely
from the receipt by that Bank of payments made by the Company described in the
immediately preceding sentence of this Section 3.04. Promptly after the date on
which payment of any such Tax is due pursuant to applicable law, the Company
will, at the request of that Bank, furnish to that Bank evidence, in form and
substance satisfactory to that Bank, that the Company has met its obligation
under this Section 3.04. The Company agrees to indemnify each Bank against, and
reimburse each Bank on demand for, any Taxes, as reasonably determined by that
Bank in its good faith. Such Bank shall provide the Company with appropriate
receipts for any payments or reimbursements made by the
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Company pursuant to this Section 3.04. Notwithstanding the foregoing, the
Company shall be entitled, to the extent it is required to do so by law, to
deduct or withhold and pay to the appropriate taxing authority within the time
prescribed by applicable law (and shall not be required to make payments as
otherwise required in this Section on account of such deductions or
withholdings) income or other similar taxes imposed by the United States of
America from interest, fees or other amounts payable hereunder for the account
of the Administrative Agent or any Bank other than the Administrative Agent or
any Bank (i) who is a U.S. Person for Federal income tax purposes or (ii) who
has the Prescribed Forms on file with the Company for the applicable year to the
extent deduction or withholding of such taxes is not required as a result of the
filing of such Prescribed Forms, provided that if the Company shall so deduct or
withhold any such taxes, it shall provide a statement to the Administrative
Agent and such Bank, setting forth the amount of such taxes so deducted or
withheld, the applicable rate and any other information or documentation which
the Administrative Agent or such Bank may reasonably request for assisting the
Administrative Agent or such Bank to obtain any allowable credits or deductions
for the taxes so deducted or withheld in the jurisdiction or jurisdictions in
which the Administrative Agent or such Bank is subject to tax.
SECTION 4. Conditions Precedent. The obligation of each Bank to make
each Revolving Loan to the Company hereunder is subject, at the time of the
making of each such Revolving Loan (except as otherwise hereinafter indicated),
to the satisfaction of the following conditions:
4.01 Execution of Agreement. On or prior to the Initial Borrowing
Date, this Agreement shall have been executed and delivered in accordance with
Section 11.10.
4.02 No Default; Representations and Warranties. At the time of the
making of each Revolving Loan and also after giving effect thereto (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents in effect at such
time shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the date
of such Revolving Loan, unless stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date.
4.03 Opinions of Counsel. On the Effective Date, the
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Administrative Agent shall have received opinions, addressed to each of the
Banks and dated the Effective Date, (i) from Simpson, Thacher & Bartlett,
special counsel to the Credit Parties, which opinion shall cover the matters
contained in Exhibit B-1 and such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably request, (ii)
from Beverly C. Chell, Esq., counsel to the Credit Parties, which opinion shall
cover the matters contained in Exhibit B-2 and such other matters incident to
the transactions contemplated herein as the Administrative Agent may reasonably
re quest, and (iii) from White & Case, special counsel to the Administrative
Agent, which opinion shall cover the matters contained in Exhibit B-3.
4.04 Corporate Proceedings. (a) On the Effective Date, the
Administrative Agent shall have received from the Company and each Subsidiary
Guarantor, a certificate, dated the Effective Date, signed by the chairman, a
vice chair man, the president, any vice-president or the treasurer of such
Person, and attested to by the secretary or any assistant secretary of such
Person, in the form of Exhibit C with appropriate insertions and, to the extent
required, together with copies of the Certificate of Incorporation, By-Laws and
the resolutions of such Person referred to in such certificate, and the
foregoing shall be satisfactory to the Administrative Agent.
(b) On the Effective Date, all corporate and legal proceedings and
all instruments and agreements in connection with the transactions contemplated
by this Agreement and the other Credit Documents shall be reasonably
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received all information and copies of all
certificates, documents and papers, including good standing certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Administrative Agent reasonably may have requested in connection therewith,
such documents and papers, where appropriate, to be certified by proper
corporate or governmental authorities.
4.05 Existing Credit Agreements. At the time of the making of each
Revolving Loan, the Indebtedness to be incurred by the Company under this
Agreement shall be permitted under (x) Section 8.04(j) of the $1,250,000,000
Credit Agreement and (y) Section 7.04(j) of the $250,000,000 Credit Agreement.
4.06 Subsidiary Guaranty. On the Effective Date, each Subsidiary
Guarantor shall have duly authorized, executed and delivered a guaranty in the
form of Exhibit D hereto (as amended, modified or supplemented from time to
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time in accordance with the terms hereof and thereof, the "Subsidiary
Guaranty"), and the Subsidiary Guaranty shall be in full force and effect.
4.07 Notice of Borrowing. The Administrative Agent shall have
received a Notice of Borrowing satisfying the requirements of Section 1.03 with
respect to any Borrowing of Revolving Loans.
4.08 Payment of Fees, etc. On the Effective Date, all costs, fees
and expenses, and all other compensation contemplated by this Agreement, due to
the Administrative Agent or the Banks shall have been paid to the extent due.
4.09 Contribution Agreement. On the Effective Date, the Subsidiary
Guarantors shall have entered into a contribution agreement in the form of
Exhibit E hereto (as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof, the "Contribution Agreement"), and
the Contribution Agreement shall be in full force and effect.
4.10 Existing Indebtedness Agreements. On or prior to the Initial
Borrowing Date, there shall have been delivered to (or made available for review
by) the Banks copies, certified (in the case of those delivered) as true and
correct by an appropriate officer of the Company making such delivery, of all
agreements evidencing or relating to the Existing Debt or the Existing
Contingent Obligations with respect to Indebtedness for borrowed money
(collectively, the "Existing Indebtedness Agreements").
The acceptance of the benefits of each Revolving Loan shall
constitute a representation and warranty by the Company to each of the Banks
that all of the applicable conditions specified above exist as of the date of
such Revolving Loan. All of the certificates, legal opinions and other documents
and papers referred to in this Section 4, unless otherwise specified, shall be
delivered to the Administrative Agent at its Notice Office for the account of
each of the Banks and in sufficient counterparts for each of the Banks and shall
be reasonably satisfactory in form and substance to the Administrative Agent.
SECTION 5. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Revolving Loans
provided for herein, the Company makes the following representations and
warranties to, and agreements with, the Banks, all of which shall survive the
execution and
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delivery of this Agreement, the making of the Revolving Loans (with the making
of each Revolving Loan on and after the Initial Borrowing Date being deemed to
constitute a representation and warranty that the matters specified in this
Section 5 are true and correct in all material respects on and as of the Initial
Borrowing Date and as of the date of each such Revolving Loan, unless stated to
relate to a specific earlier date):
5.01 Corporate Status. The Company and each of its Restricted Subsidiaries (i)
is a duly organized and validly existing corporation under the laws of the
jurisdiction of its organization and has the corporate power and authority to
own its property and assets and to transact the business in which it is engaged
and presently proposes to engage, (ii) is in good standing under the laws of the
jurisdiction of its organization and (iii) is duly qualified and is authorized
to do business and is in good standing in all jurisdictions where it is required
to be so qualified, except, in the cases of clauses (ii) and (iii) above, for
such failures to be in good standing and failures to be so qualified which, in
the aggregate, would not have a material adverse effect on the condition
(financial or other wise), operations, assets, liabilities or prospects of the
Company and its Restricted Subsidiaries taken as a whole.
5.02 Corporate Power and Authority. Each of the Company and each of
its Restricted Subsidiaries has the corporate power and authority to execute,
deliver and carry out the terms and provisions of the Credit Documents to which
it is a party and has taken all necessary corporate action to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. Each of the Company and each of its Restricted Subsidiaries has duly
executed and delivered each Credit Document to which it is a party and each such
Credit Document constitutes the legal, valid and binding obligation of such
Person enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
5.03 No Violation. Neither the execution, delivery or performance
by the Company or any of its Restricted Subsidiaries of the Credit Documents to
which it is a party nor compliance by them with the terms and provisions
thereof, nor the consummation of the transactions contemplated therein (i) will
contravene in any material respect any applicable provision of any law, statute,
rule or regulation, or any order, writ, injunction or decree of any court or
govern-
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mental instrumentality, (ii) will conflict or be inconsistent with or result in
any breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Company or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement, loan agreement or other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their respective property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
Certificate of Incorporation or By-Laws of the Company or any of its
Subsidiaries.
5.04 Litigation. There are no actions, suits or proceedings
pending, or, to the best knowledge of the Company, threatened, with respect to
the Company or any of its Subsidiaries (i) that are likely to have a material
adverse effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole or (ii) that could reasonably be expected to have a material adverse
effect on the rights or remedies of the Banks or the Administrative Agent or on
the ability of the Company or of the Subsidiary Guarantors, taken as a whole, in
either case, to perform its or their respective obligations hereunder and under
the other Credit Documents to which it is or they are, or will be, a party.
5.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
Revolving Loans shall be used for general corporate and working capital purposes
of the Company and its Subsidiaries (including, without limitation, to finance
Permitted Acquisitions and refinance Senior Notes and pay related costs and
expenses thereto).
(b) Neither the making of any Revolving Loan hereunder, nor the use
of the proceeds thereof, will violate the provisions of Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System and no part of the
proceeds of any Revolving Loan will be used to purchase or carry any Margin
Stock or to extend credit for the purpose of purchasing or carrying any Margin
Stock, provided that the Company may use the proceeds of Revolving Loans to
purchase Margin Stock in compliance with Regulations G, T, U and X, so long as
at the time of the making of such Revolving Loan, and after giving effect
thereto, not more than 25% of the value of the assets subject to the provisions
of Section 7 of the Company, or of the Company and its Restricted Subsidiaries
on a consolidated basis, shall constitute Margin Stock.
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5.06 Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
Credit Document, except those which have been obtained or made or those the
absence of which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on either (x) the condition
(financial or otherwise), operations, assets, liabilities or prospects of the
Company and its Restricted Subsidiaries taken as a whole or (y) the rights or
remedies of the Banks or the Administrative Agent or on the ability of the
Company or of the Subsidiary Guarantors, taken as a whole, in either case, to
perform its or their respective obligations hereunder and under the other Credit
Documents to which it is or they are, or will be, a party.
5.07 Investment Company Act. Neither the Company nor any of its
Restricted Subsidiaries is an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
5.08 Public Utility Holding Company Act. Neither the Company nor
any of its Restricted Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.09 True and Complete Disclosure. (a) All factual information
(taken as a whole) heretofore or contemporaneously furnished by the Company or
any of its Subsidiaries in writing to the Administrative Agent and/or any Bank
on or before the Initial Borrowing Date (including, without limitation, all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement or any transaction contemplated herein is true and complete
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time in light of
the circumstances under which such information was provided, it being understood
and agreed that for purposes of this Section 5.09(a), such factual information
shall not include projections and pro forma financial information.
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(b) The projections and pro forma financial information contained in
the factual information referred to in paragraph (a) above were based on good
faith estimates and assumptions believed by such Persons to be reasonable at the
time made, it being recognized by the Banks that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results.
5.10 Financial Statements; Financial Condition. (a) The consolidated balance
sheet of the Company and its Subsidiaries as at December 31, 1996 and the
related consolidated statements of income and cash flows of the Company and its
Subsidiaries for the fiscal year ended as of said date, which statements have
been examined by Deloitte & Touche, independent certified public accountants,
who delivered an unqualified opinion in respect thereof, present fairly the
financial position of the Company and its Subsidiaries at the date of said
statements and the results for the period covered thereby. All such financial
statements have been prepared in accordance with GAAP consistently applied
except to the extent provided in the notes to said financial statements.
(b) Since December 31, 1996 and after giving effect to the
incurrence of Indebtedness hereunder and the other transactions contemplated
hereby, there has been no material adverse change in the condition (financial or
otherwise), operations, assets, liabilities or prospects of the Company and its
Restricted Subsidiaries taken as a whole (other than any change in general
economic conditions or any change in conditions affecting the Business
generally).
5.11 Tax Returns and Payments. Each of the Company and each of its
Restricted Subsidiaries has filed all Federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and has
paid all Federal taxes and assessments shown to be due on such returns and all
other material taxes and assessments, domestic and foreign, in each case payable
by it which have become due, other than those not yet delinquent and except for
those contested in good faith and for which adequate reserves have been provided
in accordance with GAAP.
5.12 Compliance with ERISA. As of the Effective Date, there are no
Plans and neither the Company nor any of its Restricted Subsidiaries nor any
ERISA Affiliate has incurred any unpaid material liability or reasonably expects
to incur any material liability with respect to any "employee pension benefit
plan" (as defined in
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Section 3(2) of ERISA) covered by Title IV of ERISA. As of the date of each
subsequent Revolving Loan, each Plan is in substantial compliance with ERISA
and the Code; no Reportable Event has occurred with respect to a Plan; no Plan
is insolvent or in reorganization; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither the Company nor any of its Restricted
Subsidiaries nor any ERISA Affiliate has incurred or reasonably expects to incur
any liability to or on account of a Plan pursuant to ERISA or the Code; no
proceedings have been instituted by the PBGC to terminate any Plan; no condition
exists which presents a material risk to the Company, any of its Restricted
Subsidiaries or any ERISA Affiliate of incurring a liability to or on account of
a Plan pursuant to ERISA or the Code; no lien imposed under the Code or ERISA on
the assets of the Company, any of its Restricted Subsidiaries or any ERISA
Affiliate exists or is likely to arise on account of any Plan; and the Company
and its Restricted Subsidiaries do not maintain or contribute to any "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA), which provides
benefits to retired employees (other than as required by Section 601 of ERISA)
where, with respect to any of the foregoing representations in this Section
5.12, the liability for or the lien which could arise as a result of, the
particular circumstance or event which is the subject of the representation,
would be reasonably likely to result in a material adverse effect on the
condition (financial or otherwise), operations, assets, liabilities or prospects
of the Company and its Restricted Subsidiaries taken as a whole. Using actuarial
assumptions and computation methods consistent with subpart 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Company, its Restricted
Subsidiaries and ERISA Affiliates to all Plans which are "multiemployer plans"
(as defined in Section 4001(a)(3) of ERISA) (each a "Multiemployer Plan") in the
event of a complete withdrawal therefrom, as of the close of the most recent
fiscal year of each such Plan would not be reasonably likely to be an amount
that could result in a material adverse effect on the condition (financial or
otherwise), operations, assets, liabilities or prospects of the Company and its
Restricted Subsidiaries taken as a whole. Notwithstanding anything in this
Section 5.12 to the contrary, all representations and warranties made with
respect to any Plan which is a Multiemployer Plan shall be made to the best
knowledge of the Company.
5.13 Subsidiaries. On the Effective Date, the corporations listed on
Annex III under the name of the Company are the only Subsidiaries of the
Company. Annex III correctly sets forth, as of the Effective Date, the
percentage ownership (direct and indirect) of the Company in each class of
capital stock of each of its Subsidiaries and also identifies the direct owner
thereof.
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5.14 Intellectual Property. (a) The Company and each of its
Restricted Subsidiaries owns, or is licensed or otherwise authorized to sell,
distribute, use or exploit, all material copyrights, literary works, texts and
other works of authorship fixed in any tangible medium of expression necessary
for the present conduct of its business ("Copyrights"), except to the extent
that the failure to own or obtain licenses or authorizations with respect to
any of the foregoing, individually or in the aggregate, would not have a
material adverse effect on the condition (financial or otherwise), operations,
assets, liabilities or prospects of the Company and its Restricted Subsidiaries
taken as a whole.
(b) The Company and each of its Restricted Subsidiaries owns or is
licensed to use all the patents, trademarks, permits, service marks, trade
names, technology, know-how and formulas, or rights with respect to the
foregoing, necessary for the present conduct of its business, except to the
extent that the failure to own or obtain licenses with respect to any of the
foregoing, individually or in the aggregate, would not have a material adverse
effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole (together with the Copyrights, "Intellectual Property").
(c) All Intellectual Property is protected in all material respects
under the laws of the United States relating to such Intellectual Property and
has been duly and properly registered or filed with or issued by the
appropriate governmental offices and jurisdictions for such registrations,
filings or issuances, except to the extent that the failure to make or obtain
such registrations, filings or issuances would not have a material adverse
effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole.
(d) No material claim has been asserted by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property. The use of such Intellectual
Property by the Company or its Restricted Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements as do not,
individually or in the aggregate, give rise to any liabilities on the part of
the Company and its Restricted Subsidiaries that are material to the Company and
its Restricted Subsidiaries taken as a whole.
5.15 Compliance with Statutes, etc. The Company and each of its
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Restricted Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including compliance with all
applicable Environmental Laws with respect to any Real Property and the
requirements of any permits issued under such Environmental Laws with respect to
any such Real Property or the operations of the Company or any of its
Subsidiaries), except such noncompliances as would not, in the aggregate, have a
material adverse effect on the condition (financial or otherwise), operations,
assets, liabilities or prospects of the Company and its Restricted Subsidiaries
taken as a whole.
SECTION 6. Affirmative Covenants. The Company hereby covenants and
agrees that on the Effective Date and thereafter for so long as this Agreement
is in effect and until the Revolving Loan Commitments have terminated, no Notes
are outstanding and the Revolving Loans together with interest, Fees and all
other Obligations are paid in full:
6.01 Information Covenants. The Company will furnish to each Bank:
(a) Annual Financial Statements. Within 100 days after the close of
each fiscal year of the Company, the consolidated balance sheets of each
of (A) the Company and its Subsidiaries and of (B) the Company and its
Restricted Subsidiaries, as at the end of such fiscal year and, in each
case, the related consolidated statements of income and retained earnings
and of cash flows for such fiscal year, setting forth for such fiscal
year, in comparative form, the corresponding figures for the preceding
fiscal year and, in the case of the figures with respect to the Company
and its Restricted Subsidiaries the corresponding figures from the budget
for such fiscal year delivered pursuant to Section 6.01(c); all of which
shall be examined by Deloitte & Touche or such other independent certified
public accountants of recognized national standing as shall be acceptable
to the Administrative Agent, whose opinion shall not be qualified as to
the scope of audit or as to the status of the Company and its Subsidiaries
or of the Company and its Restricted Subsidiaries, as the case may be, as
a going concern, together with a certificate of such accounting firm
stating that in the course of its regular audit of the business of the
Company and its Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, no Default or Event
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of Default which has occurred and is continuing has come to its attention
or, if such a Default or Event of Default has come to its attention a
statement as to the nature thereof (provided that in no event shall such
accountants be liable as a result of this Agreement by reason of any
failure to obtain knowledge of any Default or Event of Default that would
not be disclosed in the course of their audit examination).
(b) Quarterly Financial Statements. As soon as available and in any
event within 50 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Company (beginning with the
quarterly accounting period ending March 31, 1997) and, at the sole option
of the Company, at any time prior to 100 days after the close of the
fourth quarterly accounting period in each fiscal year, the consolidated
balance sheet of each of (A) the Company and its Subsidiaries and of (B)
the Company and its Restricted Subsidiaries, as at the end of such
quarterly period and the related consolidated statements of income and
retained earnings and of cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such
quarterly period; all of which shall be in reasonable detail and certified
by the chief financial officer or other Authorized Officer of the Company
that they fairly present the financial condition of the Company and its
Subsidiaries or of the Company and its Restricted Subsidiaries, as the
case may be, as of the dates indicated and the results of their operations
and changes in their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end audit adjustments.
(c) Budgets; etc. Not more than 90 days after the commencement of
each fiscal year of the Company, budgets of the Company and its Restricted
Subsidiaries in reasonable detail for each of the four fiscal quarters of
such fiscal year setting forth Consolidated EBITDA and consolidated sales
and setting forth, with appropriate discussion, the principal assumptions
upon which such budgets are based.
(d) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 6.01(a) and (b), a
certificate of the chief financial officer, controller or chief accounting
officer of the Company (i) to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist,
specifying the nature and extent thereof, which certificate shall set
forth the calculations required to establish whether the Company and its
Subsidiaries were in compliance with the provisions of
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Sections 7.04(c), 7.05(d), 7.07 and Sections 7.09 through and including
7.11, as at the end of such fiscal quarter or year, as the case may be and
(ii) setting forth the calculations demonstrating (A) with respect to each
Affected Transaction consummated during the most recently ended fiscal
quarter, that the Company was in compliance, on a Pro Forma Basis, with
Sections 7.09, 7.10 and 7.11 and (B) with respect to each business sold
(or deemed sold) pursuant to Section 7.02(c) hereof, compliance by the
Company with clause (iii) of such Section 7.02(c). In addition, at the
time of the delivery of the financial statements provided for in Section
6.01(a) and (b), a certificate of the chief financial officer, controller
or chief accounting officer of the Company setting forth the amount of,
and calculations required to establish the amount of, Excess Cash Flow for
the respective fiscal year or quarter.
(e) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after any officer of the Company obtains
knowledge thereof, notice of (x) the occurrence of any event which
constitutes a Default or Event of Default, which notice shall specify the
nature thereof, the period of existence thereof and what action the
Company proposes to take with respect thereto and (y) the commencement of,
or threat of, or any significant development in, any litigation or
governmental proceeding pending against the Company or any of its
Subsidiaries which is likely to have a material adverse effect on the
condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and its Restricted Subsidiaries taken as a
whole, or the ability of the Company or of the Subsidiary Guarantors,
taken as a whole, in either case, to perform its or their respective
obligations hereunder or under any other Credit Document.
(f) Auditors' Reports. Promptly upon receipt thereof, a copy of each
report or "management letter" submitted to the Company or any of its
Subsidiaries by its independent accountants in connection with any annual,
interim or special audit made by them of the books of the Company or any
of its Subsidiaries.
(g) Other Information. Promptly upon transmission thereof, copies of
any filings and registrations with, and reports to, the SEC by the Company
or any of its Subsidiaries and, with reasonable promptness, such other
information or documents (financial or otherwise) as the Administrative
Agent on its own behalf or on behalf of the Required Banks may reasonably
request from time to time.
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6.02 Books, Records and Inspections. The Company will, and will
cause each of its Restricted Subsidiaries to, permit, upon notice to the chief
financial officer or other Authorized Officer of the Company, officers and
designated representatives of the Administrative Agent or the Required Banks to
visit and inspect any of the properties or assets of the Company and any of its
Restricted Subsidiaries in whomsoever's possession, and to examine the books of
account of the Company and any of its Restricted Subsidiaries and discuss the
affairs, finances and accounts of the Company and of any of its Restricted
Subsidiaries with, and be advised as to the same by, their officers and
independent accountants, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or the Required Banks may desire.
6.03 Payment of Taxes. The Company will pay and discharge, and will
cause each of its Restricted Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which material penalties attach thereto, and all lawful claims for sums that
have become due and payable which, if unpaid, might become a Lien not otherwise
permitted under Section 7.03(a) or charge upon any properties of the Company or
any of its Restricted Subsidiaries; provided that neither the Company nor any of
its Restricted Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
6.04 Corporate Franchises. The Company will do, and will cause each
of its Restricted Subsidiaries to do, or cause to be done, all things necessary
to preserve and keep in full force and effect its existence and its rights,
franchises, licenses, permits and Intellectual Property rights except to the
extent its failures to do so would not, in the aggregate, have a material
adverse effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole; provided, however, that any transaction permitted by Section 7.02 will
not constitute a breach of this Section 6.04.
6.05 Compliance with Statutes, etc. The Company will, and will
cause each of its Restricted Subsidiaries to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the
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ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls) other than
those the non-compliance with which would not have a material adverse effect on
the condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and its Restricted Subsidiaries taken as a whole or on
the ability of the Company or of the Subsidiary Guarantors, taken as a whole, in
either case, to perform its or their obligations hereunder or under any other
Credit Document.
6.06 ERISA. As soon as possible and, in any event, within 30 days
after the Company, any of its Restricted Subsidiaries or any ERISA Affiliate
knows or could reasonably be expected to know of the occurrence of any of the
following and where it could reasonably be expected that a material liability of
the Company and its Restricted Subsidiaries and ERISA Affiliates, taken as a
whole, could result in connection therewith, the Company will deliver to each of
the Banks a certificate of the chief financial officer or other Authorized
Officer of the Company setting forth details as to such occurrence and such
action, if any, which the Company, such Restricted Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any notices required or
proposed to be given to or filed with or by the Company, such Restricted
Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred; that
an accumulated funding deficiency has been incurred or an application is
reasonably likely to be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a Plan has been or is reasonably
likely to be terminated, reorganized, partitioned or declared insolvent under
Title IV of ERISA; that a Plan has an Unfunded Current Liability giving rise to
a lien under ERISA or the Code; that proceedings are reasonably likely to be or
have been instituted to terminate a Plan; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan;
or that the Company, any of its Restricted Subsidiaries or any ERISA Affiliate
will or is reasonably likely to incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409 or 502(i) or 502(1) of ERISA. At the request of any Bank, the
Company will deliver to such Bank a complete copy of the annual report (Form
5500) of each Plan required to be filed with the Internal Revenue Service.
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6.07 End of Fiscal Years; Fiscal Quarters. The Company will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
6.08 Use of Proceeds. All proceeds of the Revolving Loans shall be
used as provided in Section 5.05.
6.09 Ownership of Subsidiaries. The Company will, at all times,
maintain, directly or indirectly, ownership of at least a majority of the
capital stock of its Restricted Subsidiaries, except to the extent 100% of the
capital stock owned by the Company or any Restricted Subsidiary of any such
Restricted Subsidiary is sold, transferred or disposed of in a transaction
permitted by Section 7.02(c) or (j) or any such Restricted Subsidiary is merged,
consolidated or liquidated in a transaction permitted by Section 7.02(e),
provided that the Company shall not be required to own a majority of the capital
stock of Canadian Sailings Inc. so long as the Company continues to hold at
least as much of such capital stock as is held on the Effective Date.
6.10 Maintenance of Corporate Separateness. The Company will, and
will cause each of its Subsidiaries to, satisfy customary corporate formalities,
including the holding of regular board of directors' and shareholders' meetings
and the maintenance of corporate offices and records. Neither the Company nor
any Restricted Subsidiary shall make any payment to a creditor of any
Unrestricted Subsidiary in respect of any liability of such Unrestricted
Subsidiary, and no bank account of an Unrestricted Subsidiary shall be
commingled with any bank account of the Company or any of its Restricted
Subsidiaries. Any financial statements distributed to any creditors of an
Unrestricted Subsidiary shall clearly establish the separateness of such
Unrestricted Subsidiary from the Company and its Restricted Subsidiaries.
Finally, neither the Company nor any of its Subsidiaries shall take any action,
or conduct its affairs in a manner, which is likely to result in the corporate
existence of any Unrestricted Subsidiary which is a direct Subsidiary of the
Company or any Restricted Subsidiary being ignored by any court of competent
jurisdiction, or in the assets and liabilities of the Company or any Restricted
Subsidiary being substantively consolidated with those of any Unrestricted
Subsidiary in a bankruptcy, reorganization or other insolvency proceeding.
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SECTION 7. Negative Covenants. The Company hereby covenants and
agrees that as of the Effective Date, and thereafter for so long as this
Agreement is in effect and until the Revolving Loan Commitments have terminated,
no Notes are outstanding and the Revolving Loans, together with interest, Fees
and all other Obligations are paid in full:
7.01 Changes in Business. The Company will not, and will not permit
any of its Restricted Subsidiaries to, engage in any businesses other than
Businesses, provided that the Company and its Restricted Subsidiaries may engage
in businesses other than a Business so long as the businesses engaged in by the
Company and its Restricted Subsidiaries, taken as a whole, consist substantially
of Businesses.
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or any part of its
property or assets, or enter into any partnerships, joint ventures or
sale-leaseback transactions, or purchase or otherwise acquire (in one or a
series of related transactions) any part of the property or assets (other than
purchases or other acquisitions of inventory, materials and equipment (and, to
the extent consistent with industry practices, other tangible and intangible
assets) in the ordinary course of business) of any Person, except that the
following shall be permitted:
(a) any sale, transfer or other disposition of (x) inventory in the
ordinary course of business or (y) any other tangible or intangible asset
in the ordinary course of business of the Company and/or its Restricted
Subsidiaries;
(b) the advances, investments and loans permitted pursuant to
Section 7.05;
(c) Asset Sales constituting the disposition of a business
(including, without limitation, to the extent permitted in this Section
7.02(c), sales of the capital stock of a Restricted Subsidiary but
excluding sales of the stock of an Unrestricted Subsidiary); provided that
(i) no Default or Event of Default exists at such time or would exist
immediately after giving effect thereto; (ii) such sale, transfer or
disposition (or deemed sale, transfer or disposition pursuant to any
Permitted Restricted Subsidiary Conversion) (x) is for fair market value,
as determined in good faith by management of the Company (or, in the
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case of any Permitted Restricted Subsidiary Conversion or Permitted
Restricted Asset Sale, to the extent requested by the Administrative Agent
or the Required Banks, as determined by a written opinion of value
reasonably satisfactory to the Administrative Agent by an Appraisal Firm)
and (y) except in the case of a Permitted Restricted Subsidiary Conversion
otherwise permitted pursuant to the terms hereof, results in consideration
in the form of cash, promissory notes issued by the respective purchaser
and/or other assets, provided that, to the extent any such other assets
are received by the Company and/or its Restricted Subsidiaries in
connection with any such Asset Sale, (I) the market value of such other
assets, when added to the aggregate amount of other consideration received
in connection with such Asset Sale, shall equal or exceed the market value
of the assets so sold (such value to be set forth, to the extent requested
by the Administrative Agent or the Required Banks, in a written opinion of
value reasonably satisfactory to the Administrative Agent by an Appraisal
Firm) and (II) such assets are permitted to be acquired by the Company or
any of its Restricted Subsidiaries pursuant to Section 7.02(g) at the time
of consummation of such Asset Sale (both before and after giving effect to
such Asset Sale); (iii) the businesses sold (or deemed sold pursuant to
any Permitted Restricted Subsidiary Conversion) by the Company and/or its
Restricted Subsidiaries pursuant to this Section 7.02(c) in any fiscal
year of the Company shall not, in the aggregate, have EBITDA in the
immediately preceding fiscal year in an amount in excess of 25% of the
Consolidated EBITDA of the Company and its Restricted Subsidiaries for
such preceding fiscal year, determined on a pro forma basis as if (A) any
dispositions (or deemed dispositions pursuant to any Permitted Restricted
Subsidiary Conversion) consummated during such preceding fiscal year had
been consummated on the first day of such preceding fiscal year and (B)
any acquisitions consummated after the beginning of such preceding fiscal
year but prior to the date of any proposed Asset Sale pursuant to this
Section 7.02(c) had been consummated on the first day of such preceding
fiscal year; and (iv) to the extent such sale, transfer or disposition
constitutes a sale, transfer or disposition of less than 100% of the
capital stock of any Restricted Subsidiary of the Company, after giving
effect to such sale, transfer or disposition, the Company shall own at
least a majority of the capital stock of such Restricted Subsidiary;
(d) Asset Sales constituting the disposition of the capital stock
owned by the Company and its Restricted Subsidiaries of Unrestricted
Subsidiaries;
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(e) any Restricted Subsidiary may be merged or consolidated with or
into, or be liquidated into, the Company or any other Restricted
Subsidiary of the Company, or all or any part of its business, properties
and assets may be conveyed, leased, sold or otherwise transferred to the
Company or any other Restricted Subsidiary, provided that (v) in any such
merger or consolidation involving the Company, the Company shall be the
surviving corporation, (w) no Default or Event of Default exists or would
exist after giving effect thereto, (x) no Excluded Foreign Restricted
Subsidiary or Excluded Domestic Restricted Subsidiary may be the surviving
corporation of any such merger or consolidation (other than, in the case
of an Excluded Foreign Restricted Subsidiary, a merger or consolidation
with another Excluded Foreign Restricted Subsidiary and other than, in the
case of an Excluded Domestic Restricted Subsidiary, a merger or
consolidation with another Excluded Domestic Restricted Subsidiary), (y)
no businesses, properties or assets may be transferred to Excluded Foreign
Restricted Subsidiaries if after giving effect to such transfer the Net
Investments in Excluded Foreign Restricted Subsidiaries would exceed
$30,000,000 and (z) to the extent any business, properties or assets are
transferred to Excluded Domestic Restricted Subsidiaries in connection
with any such merger or consolidation the Company shall have determined,
with respect to such transaction, that the Company and its Restricted
Subsidiaries would have been in compliance, on a Pro Forma Basis, with
Sections 7.09, 7.10 and 7.11 of this Agreement;
(f) the Company and/or its Restricted Subsidiaries may lease real or
personal property (so long as such lease does not create Capitalized
Lease Obligations except as otherwise permitted by Section 7.04);
(g) so long as no Default or Event of Default exists or would result
therefrom, the Company and its Restricted Subsidiaries may acquire assets,
the capital stock of, or other ownership interests in, any Person (any
such acquisition permitted by this clause (g), a "Permitted Acquisition");
provided that (A) after giving effect to any such acquisition, the Company
and its Restricted Subsidiaries shall be in compliance with Section 7.01
hereof; (B) the Company shall have determined, with respect to such
acquisition, that, on a Pro Forma Basis, the Company and its Restricted
Subsidiaries would have been in compliance with Sections 7.09, 7.10 and
7.11 of this Agreement; and (C) to the extent that such acquisition is of
the capital stock of or other ownership interest in another Person (such
Person, the "Acquired Entity"), (I) such acquisition must be of at least a
majority of such capital stock or of such
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ownership interests, such Person shall constitute a Restricted Subsidiary
and all of the applicable provisions of Section 7.14 shall have been
complied with in respect of such Restricted Subsidiary and (II) the Board
of Directors or other governing body of the Acquired Entity shall not have
indicated, either publicly or privately to the Company or any of its
Restricted Subsidiaries, its opposition to the consummation by the Company
or such Subsidiary of such acquisition;
(h) the Company and its Restricted Subsidiaries may sell or
discount, in each case without recourse, accounts receivable arising in
the ordinary course of business, but only in connection with the
compromise or collection thereof;
(i) Capital Expenditures by the Company and/or its Restricted
Subsidiaries made in the ordinary course of business; and
(j) the Company and its Restricted Subsidiaries may sell assets (and
may effect Permitted Restricted Subsidiary Conversions) other than in the
ordinary course of business, so long as (x) each such asset is sold (or
deemed sold pursuant to any Permitted Restricted Subsidiary Conversion) at
fair market value, as determined in good faith by management of the
Company; (y) each such sale (or deemed sale pursuant to any Permitted
Restricted Subsidiary Conversion) results in consideration in the form of
cash, promissory notes issued by the respective purchaser and/or other
assets, provided that, to the extent any such other assets are received by
the Company and/or its Restricted Subsidiaries in connection with any such
asset sale, (I) the market value of such other assets, when added to the
aggregate amount of other consideration received in connection with such
asset sale, shall equal or exceed the market value of the assets so sold
and (II) such assets are permitted to be acquired by the Company or any of
its Restricted Subsidiaries pursuant to Section 7.02(g) at the time of
consummation of such asset sale (both before and after giving effect to
such asset sale); and (z) the aggregate value of all assets so sold (or
deemed sold pursuant to any Permitted Restricted Subsidiary Conversion) by
the Company and its Restricted Subsidiaries in any fiscal year shall not
exceed $25,000,000.
7.03 Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets of any kind (real or personal,
tangible or
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intangible) of the Company or its Restricted Subsidiaries, whether
now owned or hereafter acquired, or sell any such property or assets subject to
an understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable or notes with
recourse to the Company or any of its Restricted Subsidiaries) or assign any
right to receive income, except:
(a) Liens for taxes not yet due or Liens for taxes being contested
in good faith and by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP;
(b) Liens in respect of property or assets of the Company or any of
its Restricted Subsidiaries imposed by law which were incurred in the
ordinary course of business and which have not arisen to secure
Indebtedness for borrowed money, such as carriers', warehousemen's and
mechanics' Liens, statutory landlord's Liens, and other similar Liens
arising in the ordinary course of business, and which either (x) do not in
the aggregate materially detract from the value of such property or assets
or materially impair the use thereof in the operation of the business of
the Company or its Restricted Subsidiaries or (y) are being contested in
good faith by appropriate proceedings, which proceedings have the effect
of preventing the forfeiture or sale of the property or asset subject to
such Lien;
(c) Liens in existence on the Effective Date which are listed, and
the property subject thereto described, in Annex IV, without giving effect
to any extensions or renewal thereof ("Permitted Liens");
(d) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.08;
(e) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business (exclusive
of obligations in respect of the payment for borrowed money);
(f) leases or subleases granted to third Persons not interfering in
any material respect with the business of the Company or any of its
Restricted
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Subsidiaries;
(g) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries;
(h) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(i) purchase money Liens securing payables arising from the purchase
by the Company or any of its Restricted Subsidiaries of any equipment or
goods in the normal course of business, provided that such payables shall
not constitute Indebtedness;
(j) any interest or title of a lessor or sublessor under any lease
permitted by this Agreement;
(k) Liens created pursuant to Capital Leases permitted pursuant to
Section 7.04(c);
(l) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods so long as such Liens attach only to the imported
goods;
(m) Liens on assets acquired (or owned by a Restricted Subsidiary
acquired) after the Effective Date securing Indebtedness permitted under
Section 7.04(g), provided that at the time of such acquisition the value
of the assets subject to such Liens does not exceed 10% of the total value
of the assets so acquired, or of the assets of the Restricted Subsidiary
so acquired, as the case may be;
(n) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business;
(o) Liens created under this Agreement and/or the other Credit
Documents;
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(p) Liens created under the Existing Credit Agreements and the other
Additional Facility Documents; and
(q) Liens not otherwise permitted hereunder which secure
Indebtedness, Contingent Obligations or other obligations (in each case
permitted hereunder) not exceeding (as to the Company and its Restricted
Subsidiaries) $20,000,000 in the aggregate at any time outstanding.
7.04 Indebtedness. The Company will not, and will not permit any of
its Restricted Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Indebtedness incurred pursuant to the Existing Credit Agreements
and the other Additional Facility Documents;
(c) Capitalized Lease Obligations of the Company and its Restricted
Subsidiaries; provided that the aggregate Capitalized Lease Obligations
under all Capital Leases outstanding at any one time shall not exceed
$50,000,000;
(d) Existing Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Effective Date and listed on Part A of
Annex V hereto ("Existing Debt"), without giving effect to any subsequent
extension, renewal or refinancing thereof except pursuant to Section
7.04(i);
(e) Indebtedness to the extent permitted pursuant to Section
7.05(c);
(f) Indebtedness evidenced by the Subordinated Exchange Debentures
after the issuance thereof in an aggregate principal amount not to exceed
$500,000,000 at any time outstanding;
(g) Indebtedness of a Restricted Subsidiary acquired after the
Effective Date (or Indebtedness assumed at the time of an acquisition of
an asset securing such Indebtedness), provided that (i) such Indebtedness
was not incurred in connection with or in anticipation of such acquisition
and (ii) at the time of such acquisition such Indebtedness does not exceed
10% of the total value of the assets of the Restricted Subsidiary so
acquired, or of the asset so acquired,
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as the case may be;
(h) additional Indebtedness of the Company and its Restricted
Subsidiaries not otherwise permitted hereunder; provided that (A) in no
event shall the final maturity of such Indebtedness occur prior to June
30, 2004, (B) in no event shall such Indebtedness have a shorter average
life than the loans under the Existing Credit Agreements, (C) in no event
shall such Indebtedness contain terms and conditions (including, without
limitation, with respect to the obligor and guarantors, if any, in respect
of such Indebtedness, prepayment and redemption provisions, covenants,
defaults, security, remedies and, if applicable, subordination provisions)
materially less favorable to the Company and its Restricted Subsidiaries
or to the Banks than the terms and conditions of (I) in the case of
Indebtedness issued to the public or in accordance with Rule 144A or
similar rule under the Securities Act of 1933, as amended, the Senior
Notes, (II) in the case of other senior Indebtedness, this Agreement and
the other Credit Documents, and (III) in the case of other Indebtedness,
similar Indebtedness of the Company then outstanding or if no similar
Indebtedness of the Company is then outstanding, the Senior Notes (in each
case excluding the impact of market conditions on the interest rate and
other economic terms) and (D) the Company shall have determined, with
respect to the incurrence of such Indebtedness, that the Company and its
Restricted Subsidiaries would have been in compliance, on Pro Forma Basis,
with Sections 7.09, 7.10 and 7.11 of this Agreement (any Indebtedness
issued pursuant to this Section 7.04(h), "Additional Indebtedness"),
provided further, that the aggregate principal amount of any such
Additional Indebtedness incurred directly by the Subsidiary Guarantors
(taken as a whole), when added to the aggregate principal amount of
Indebtedness incurred directly by the Subsidiary Guarantors (taken as a
whole) pursuant to Section 7.04(j), shall not exceed $300,000,000 at any
time outstanding;
(i) Indebtedness of the Company and its Restricted Subsidiaries
constituting Permitted Refinancing Debt; and
(j) additional Indebtedness of the Company and its Restricted
Subsidiaries (including, but not limited to, Non-Facility Letter of Credit
Outstandings) not exceeding in an aggregate principal amount at any one
time outstanding an amount equal to (x) $150,000,000 less (y) the
aggregate principal amount of Revolving Loans outstanding pursuant to this
Agreement, provided that the aggregate principal amount of such
Indebtedness incurred by
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the Subsidiary Guarantors (taken as a whole), when added to the aggregate
principal amount of Additional Indebtedness incurred by the Subsidiary
Guarantors (taken as a whole) pursuant to Section 7.04(h), shall not
exceed $300,000,000 at any time outstanding.
7.05 Advances, Investments and Loans. The Company will not, and
will not permit any of its Restricted Subsidiaries to, lend money or credit or
make advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, except:
(a) the Company and its Restricted Subsidiaries may invest in cash
and Cash Equivalents;
(b) the Company or any of its Restricted Subsidiaries may acquire
and hold receivables owing to it, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms of the Company or such Restricted Subsidiary, as the
case may be;
(c) the Company may make intercompany loans and advances to any
Restricted Subsidiary, and any Restricted Subsidiary may make intercompany
loans and advances to any other Restricted Subsidiary or the Company
(collectively, "Intercompany Loans"), provided that (i) no Intercompany
Loan may be made to an Excluded Foreign Restricted Subsidiary at any time
if after giving effect to such Intercompany Loan the Net Investments in
Excluded Foreign Restricted Subsidiaries would exceed $30,000,000, and
(ii) no such Intercompany Loan may be made by the Company or a
Wholly-Owned Restricted Subsidiary to an Excluded Domestic Restricted
Subsidiary;
(d) so long as no Default or Event of Default exists or would result
therefrom, the Company and its Restricted Subsidiaries may make loans and
advances of cash to, or cash capital contributions in, any Unrestricted
Subsidiary of the Company; provided that (i) the sum of (A) the aggregate
amount of capital contributions made in, plus the aggregate principal
amount of loans or advances outstanding at any one time made to,
Unrestricted Subsidiaries after the Effective Date pursuant to this clause
(d) (such amount, the "Unrestricted Subsidiary Investment Amount") plus
(B) the Aggregate Conversion Amount at such time, shall not exceed the
Unrestricted Subsidiary Investment Limit then in effect, and (ii) the
Unrestricted Subsidiary receiving cash proceeds from such loan, advance or
contribution shall utilize the entire
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amount of cash so received to effectuate an acquisition of assets or
capital stock of a Person not an affiliate of the Company and its
Subsidiaries (other than pursuant to a Permitted Restricted Subsidiary
Conversion or a Permitted Restricted Asset Sale) or to develop the
Business and to finance the working capital needs of such Unrestricted
Subsidiary;
(e) the Company and its Restricted Subsidiaries shall be permitted
to (i) make Permitted Acquisitions, (ii) engage in any transaction to the
extent permitted by Section 7.02(e) and (iii) acquire and hold promissory
notes issued by the purchasers of assets sold in accordance with Section
7.02(c) or 7.02(j);
(f) the Company and any of its Restricted Subsidiaries may acquire
and own investments (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(g) the Company or any Subsidiary Guarantor may acquire capital
stock or other equity securities (or warrants, rights or options with
respect thereto) issued by any other Restricted Subsidiary;
(h) Interest Rate Protection Agreements permitted by Section 7.06(d)
shall be permitted;
(i) investments by the Company or Restricted Subsidiaries in (x)
Subsidiary Guarantors, provided that if the Subsidiary Guarantor in which
such investment is made is a newly-formed Subsidiary or a Partially-Owned
Restricted Subsidiary newly designated as a Subsidiary Guarantor pursuant
to Section 7.14(b)(x), all of the applicable provisions of Section 7.14
shall have been satisfied with respect to such Restricted Subsidiary, (y)
Excluded Domestic Restricted Subsidiaries, provided that, the Company
shall have determined, in connection with any such investment, that the
Company and its Restricted Subsidiaries would have been in compliance, on
a Pro Forma Basis, with Sections 7.09, 7.10 and 7.11 of this Agreement and
(z) in Excluded Foreign Restricted Subsidiaries, provided that no
investment in an Excluded Foreign Restricted Subsidiary may be made at any
time if after giving effect to such investment the Net Investments in
Excluded Foreign Restricted Subsidiaries would exceed $30,000,000;
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(j) the Company and its Restricted Subsidiaries may make loans and
advances to officers, employees and agents in the ordinary course of
business (i) constituting travel advances or (ii) otherwise equal in the
aggregate for the Company and its Restricted Subsidiaries, in the case of
all loans and advances pursuant to this clause (ii), to no more than
$10,000,000 at any one time out standing less the principal amount of all
Contingent Obligations then outstanding pursuant to Section 7.06(h);
(k) the Company may acquire obligations of, or make loans or
advances to, one or more management investors in connection with such
management investors' acquisition of shares of capital stock of the
Company, provided that (x) the aggregate amount of cash actually advanced
to all such management investors by the Company and its Restricted
Subsidiaries shall not exceed $10,000,000 at any time, and (y) the
aggregate principal amount of all such obligations, loans and advances
shall not exceed $25,000,000 at any one time outstanding; and
(l) advances, investments and loans not otherwise permitted
hereunder with an aggregate cost or principal amount, as the case may be,
not to exceed $25,000,000 at any time outstanding.
7.06 Contingent Obligations. The Company will not, and will not
permit any of its Restricted Subsidiaries to, contract, create, incur, assume or
suffer to exist any Contingent Obligations, except:
(a) any Subsidiary Guarantor may become liable as guarantor with
respect to any Indebtedness, obligation or liability of the Company or any
other Subsidiary Guarantor to the extent that such Indebtedness,
obligation or liability is otherwise permitted by this Agreement, provided
that a Subsidiary Guarantor (x) may not guaranty any Subordinated Exchange
Debentures and (y) may only guaranty Permitted Refinancing Debt if and to
the extent either (A) it guarantied the indebtedness refinanced thereby or
(B) such Subsidiary Guarantor would have guarantied the indebtedness
refinanced thereby if it had been a Subsidiary of the Company while such
indebtedness was outstanding;
(b) Contingent Obligations pursuant to the Subsidiary Guaranty;
(c) Contingent Obligations pursuant to the Additional Facility
Documents;
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(d) Contingent Obligations under Interest Rate Protection Agreements
with respect to the Revolving Loans, loans incurred under the Existing
Credit Agreements or any other floating rate Indebtedness of the Company
and its Restricted Subsidiaries otherwise permitted by this Agreement;
(e) Contingent Obligations pursuant to the Contribution Agreement;
(f) Contingent Obligations of the Company outstanding on the
Effective Date and listed on Part B of Annex V hereto ("Existing
Contingent Obligations"), without giving effect to any subsequent
extension, renewal or refinancing thereof;
(g) the Company may become liable as guarantor with respect to any
Indebtedness, obligation or liability of any Subsidiary Guarantor to the
extent that such Indebtedness, obligation or liability is otherwise
permitted by this Agreement;
(h) the Company and its Restricted Subsidiaries may guaranty in the
ordinary course of business loans and advances to officers, employees and
agents so long as the aggregate principal amount of the loans and advances
so guaranteed does not exceed $10,000,000 less the principal amount of all
loans and advances outstanding pursuant to Section 7.05(j); and
(i) additional Contingent Obligations (including, without
limitation, Contingent Obligations consisting of Non-Facility Letters of
Credit and reimbursement obligations with respect thereto) not otherwise
permitted hereunder not exceeding (for the Company and all of its
Restricted Subsidiaries) in aggregate principal amount at any time
outstanding an amount equal to the lesser of (x) $30,000,000 and (y) when
added to the aggregate principal amount of Indebtedness outstanding under
Sections 7.04(a) and 7.04(j) at such time, $150,000,000.
7.07 Dividends, etc. The Company will not, and will not permit any
of its Restricted Subsidiaries to, declare or pay any dividends (other than
dividends payable solely in capital stock of such Person) or return any capital
to, its stockholders or authorize or make any other distribution, payment or
delivery of property or cash to its stockholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for a consideration, any
shares of any class of its
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capital stock now or here after outstanding (or any warrants for or options or
stock appreciation rights in respect of any of such shares), or set aside any
funds for any of the foregoing purposes, and the Company will not permit any of
its Restricted Subsidiaries to purchase or otherwise acquire for consideration
any shares of any class of the capital stock of the Company or any other
Subsidiary, as the case may be, now or hereafter outstanding (or any options or
warrants or stock appreciation rights issued by such Person with respect to its
capital stock) (all of the foregoing "Dividends"), except that:
(a) the Company may pay regularly accruing dividends on each
issuance of Preferred Stock through the issuance of additional shares of
such Preferred Stock, provided that the Company may pay such regularly
accruing dividends on its Preferred Stock in cash so long as no Default or
Event of Default exists at such time or would result therefrom;
(b) any Subsidiary of the Company may pay Dividends to the Company
or to any Wholly-Owned Restricted Subsidiary of the Company;
(c) any Partially-Owned Restricted Subsidiary may pay cash Dividends
to its stockholders, provided that the Company and its Restricted
Subsidiaries must receive at least their proportionate share of any
Dividends paid by such Subsidiary;
(d) so long as no Default or Event of Default exists at such time or
would result therefrom (x) the Company may issue its Subordinated Exchange
Debentures in exchange for its Senior Preferred Stock in accordance with
the terms thereof, (y) the Company may issue its Subordinated Exchange
Debentures in exchange for its Series B Preferred Stock in accordance with
the terms thereof and (z) the Company may issue its Subordinated Exchange
Debentures in exchange for its Series C Preferred Stock in accordance with
the terms thereof, provided that in each such case, the Company shall have
determined, with respect to such issuance, that the Company and its
Restricted Subsidiaries would have been in compliance, on a Pro Forma
Basis, with Sections 7.09, 7.10 and 7.11 of this Agreement;
(e) the Company may exchange shares of its common stock in
replacement for shares of outstanding Preferred Stock;
(f) the Company may issue Permitted Replacement Preferred Stock so
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long as either (x) such stock is issued in exchange for or (y) all of the
proceeds from such issuance are used to redeem or repurchase, shares of
outstanding Preferred Stock;
(g) the Company may redeem or repurchase shares of its common stock
from management investors; provided that (x) no Default or Event of
Default is then in existence or would arise therefrom and (y) the
aggregate amount of all cash paid in respect of all such shares and equity
interests so redeemed or repurchased does not exceed the sum of (i)
$5,000,000 in any fiscal year or $15,000,000 in the aggregate after the
Effective Date and (ii) the amount of cash proceeds received by the
Company in respect of the issuance of common equity to management
investors on or after the Effective Date;
(h) the Company and its Subsidiaries may enter into transactions
permitted under Section 7.05(g);
(i) the Company and its Restricted Subsidiaries may acquire the
capital stock of Unrestricted Subsidiaries in accordance with the
provisions of this Agreement;
(j) so long as no Default or Event of Default exists at such time or
would result therefrom, the Company may redeem or repurchase shares of its
Preferred Stock at a price equal to the liquidation preference thereof
plus accrued but unpaid dividends thereon and any applicable premium with
respect thereto in exchange for, or with the proceeds of, Additional
Preferred Stock and/or Indebtedness incurred under Sections 7.04(h) and/or
7.04(j) (it being understood and agreed that such redemption and/or
repurchase need not occur contemporaneously with the issuance of such
Additional Preferred Stock or Indebtedness);
(k) so long as no Default or Event of Default exists at such time or
would result therefrom, the Company may declare and pay cash Dividends to
the holders of its common stock (including, without limitation,
repurchases of shares of its common stock), provided that (x) the
aggregate amount of cash Dividends paid pursuant to this clause (k) during
any fiscal year of the Company does not exceed $25,000,000 and (y) the
Company shall have determined, in connection with such Dividend, that the
Company and its Restricted Subsidiaries would have been in compliance, on
a Pro Forma Basis, with Sections 7.09, 7.10 and 7.11 of this Agreement;
and
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(l) the Company may pay additional cash Dividends to the holders of
its common stock so long as (x) no Default or Event of Default exists at
such time or would result therefrom, (y) the Leverage Ratio at such time
is less than 4.00:1.00 and (z) the Company shall have determined, in
connection with such Dividend, that the Company and its Restricted
Subsidiaries would have been in compliance, on a Pro Forma Basis, with
Sections 7.09, 7.10 and 7.11 of this Agreement.
7.08 Transactions with Affiliates. The Company will not, and will
not permit any of its Restricted Subsidiaries to, enter into any transaction or
series of transactions, whether or not in the ordinary course of business, with
any Affiliate (other than the Company or any Restricted Subsidiary) other than
on terms and conditions substantially as favorable to the Company or such
Restricted Subsidiary as would be obtainable by the Company or such Restricted
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate; provided that (i) the Company may pay management and
transaction fees to KKR or its affiliates which have been disclosed in writing
to the Banks prior to the Effective Date; (ii) the payment of transaction fees
to KKR for the rendering of financial advice and services in connection with
acquisitions, dispositions and financings by the Company and its Restricted
Subsidiaries in amounts which are in accordance with past practices shall be
permitted; (iii) loans and advances to officers, employees and agents in the
ordinary course of business shall be permitted; (iv) customary fees may be paid
to non-officer directors of the Company and/or its Restricted Subsidiaries; (v)
the loans, advances and contributions made (or deemed made) in Unrestricted
Subsidiaries in compliance with Section 7.05(d) shall be permitted; and (vi)
transactions specifically permitted by the provisions of this Agreement to occur
between the Company, its Restricted Subsidiaries and their respective Affiliates
shall be permitted to the extent so otherwise specifically permitted.
7.09 Fixed Charge Coverage Ratio. The Company will not permit the
ratio of (i) Consolidated EBITDA of the Company and its Restricted Subsidiaries
to (ii) Consolidated Fixed Charges of the Company and its Restricted
Subsidiaries, for any Test Period, to be less than 1.05 to 1.0.
7.10 Interest Coverage Ratio. The Company will not permit the ratio
of (i) Consolidated EBITDA of the Company and its Restricted Subsidiaries to
(ii) Consolidated Interest Expense of the Company and its Restricted
Subsidiaries for any Test Period ending during a period listed below to be less
than the ratio set forth opposite such period below:
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Period Ratio
------ -----
Effective Date to and including
June 30, 1999 1.80 to 1.00
July 1, 1999 to and including
June 30, 2000 2.00 to 1.00
July 1, 2000 to and including
June 30, 2001 2.25 to 1.00
July 1, 2001 and thereafter 2.50 to 1.00
7.11 Leverage Ratio. The Company will not permit the ratio (the
"Leverage Ratio") of (i) Consolidated Debt of the Company and its Restricted
Subsidiaries at any date of determination thereof to (ii) Consolidated EBITDA of
the Company and its Restricted Subsidiaries for the Test Period then last ended,
to exceed, at any time during a period set forth below, the ratio set forth
opposite such period below:
Period Ratio
------ -----
Effective Date to and including
June 30, 1999 6.00 to 1.00
July 1, 1999 to and including
June 30, 2000
5.50 to 1.00
July 1, 2000 to and including
June 30, 2001 5.00 to 1.00
July 1, 2001 and thereafter 4.50 to 1.00
7.12 Issuance of Stock. The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, issue, sell,
assign, pledge or otherwise encumber or dispose of any shares of its or such
Restricted Subsidiary's preferred or preference stock or other redeemable equity
securities (or warrants,
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rights or options to acquire shares of any of the foregoing) except:
(a) in the case of shares of capital stock of the Company and its
Restricted Subsidiaries, to the extent permitted by Section 7.02, 7.03,
7.05, 7.07 or 7.13(b);
(b) issuances by Restricted Subsidiaries to the Company or to
Wholly-Owned Restricted Subsidiaries; and
(c) issuances by the Company of additional preferred stock not
otherwise permitted hereunder; provided that (A) in no event shall such
preferred stock contain any provision requiring mandatory redemption or
permitting any put with respect to all or any portion of such stock prior
to June 30, 2004, (B) in no event shall such preferred stock contain terms
and conditions (including, without limitation, pay-in-kind features,
liquidation preferences, voting rights and exchange rights) materially
less favorable to the Company and its Restricted Subsidiaries or to the
Banks than the terms and conditions of the Existing Preferred Stock
(excluding the impact of market conditions on the dividend rate and other
economic terms) and (C) the Company shall have determined, in connection
with such issuance, that the Company and its Restricted Subsidiaries would
have been in compliance, on a Pro Forma Basis, with Sections 7.09, 7.10
and 7.11 of this Agreement, provided that, for purposes of the calculation
of compliance with Section 7.09, the ratio set forth in Section 7.09 shall
be deemed to equal 1.25 to 1.0 (any Preferred Stock issued pursuant to
this Section 7.12(c), "Additional Preferred Stock").
7.13 Modifications of Certain Agreements, etc. The Company will not,
and will not permit any of its Subsidiaries to: (a) after the issuance thereof,
amend or modify (or permit the amendment or modification) of any of the terms or
provisions of the Senior Notes, the Additional Facility Documents, the Preferred
Stock, the Subordinated Exchange Debentures, any Additional Indebtedness, any
Permitted Refinancing Debt or any agreement related to any of the foregoing
other than pursuant to a Permitted Amendment and/or (b) make (or give any notice
in respect thereof) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due) or exchange of any Subordinated Exchange
Debentures, or any Permitted Refinancing Debt (to the extent issued to refinance
Subordinated Exchange
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Debentures), provided that the Subordinated Exchange Debentures and any
Permitted Refinancing Debt previously issued to refinance same may be (i)
refinanced with (A) Additional Indebtedness (to the extent that such Additional
Indebtedness would have qualified as Permitted Refinancing Debt in respect
thereof if it had been issued contemporaneously with such refinancing) and/or
Permitted Refinancing Debt or (B) the proceeds from a common equity issuance by
the Company or an issuance by the Company of Additional Preferred Stock, in each
case, after the Effective Date or (ii) exchanged for Additional Preferred Stock
or non-redeemable common equity of the Company (it being understood and agreed
that any refinancing of such Indebtedness need not occur contemporaneously with
the issuance of such Additional Indebtedness, Additional Preferred Stock and/or
common equity). In addition, the Company will not, and will not permit any of
its Restricted Subsidiaries to, agree to modify, supplement, amend, rescind or
otherwise alter the terms, conditions or provisions of its Certificate of
Incorporation (including, without limitation, by the filing of any certificate
of designation) or its By-Laws in any material respect, other than such
modifications, supplements or amendments that would not materially adversely
affect the interests of the Banks under this Agreement or the other Credit
Documents.
7.14 Limitation on the Creation of Subsidiaries; Redesignation of
Partially-Owned Restricted Subsidiaries. (a) Notwithstanding anything to the
contrary contained in this Agreement, the Company shall not, and shall not
permit any Subsidiary to, establish, create or acquire after the Effective Date
any Subsidiary unless (w) such Subsidiary is an Unrestricted Subsidiary; (x)
such Subsidiary is an Excluded Foreign Restricted Subsidiary; (y) such
Subsidiary is a Partially-Owned Restricted Subsidiary and at the time of
creation or acquisition thereof, the Company shall have made a Non-Guarantor
Designation with respect to such Partially-Owned Restricted Subsidiary in
accordance with the terms hereof; or (z) such Subsidiary is a Restricted
Subsidiary (other than a Restricted Subsidiary of the type described in clauses
(x) or (y) above) and each such new Restricted Subsidiary becomes a party to the
Subsidiary Guaranty by executing a Subsidiary Assumption Agreement in the form
of Exhibit G hereto.
(b) At any time and from time to time, (x) the Company may
redesignate any Excluded Domestic Restricted Subsidiary as a Subsidiary
Guarantor by giving notice thereof to the Administrative Agent and by causing
such Subsidiary to become a party to the Subsidiary Guaranty by executing a
Subsidiary Assumption Agreement in the form of Exhibit G hereto, and (y) the
Company may redesignate any Subsidiary Guarantor which is a Partially-Owned
Restricted Subsidiary as an Excluded Domestic Restricted Subsidiary by making a
Non-Guarantor Designation
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with respect to such Subsidiary in accordance with the terms hereof.
(c) At the time of the creation of any Subsidiary described in
clause (z) of Section 7.14(a) and at the time of any redesignation pursuant to
clause (x) of Section 7.14(b), each such new Subsidiary Guarantor shall execute
and deliver, or cause to be executed and delivered, in each case to the extent
not previously executed and delivered, all other relevant documentation of the
type described in Section 4 as such new Subsidiary Guarantor would have had to
deliver if such new Restricted Subsidiary had been a Restricted Subsidiary and a
Subsidiary Guarantor on the Effective Date.
(d) Notwithstanding anything to the contrary contained in this
Section 7.14 or elsewhere in this Agreement, in no event shall any Subsidiary of
the Company guaranty any Indebtedness of the Company or any Wholly-Owned
Subsidiary unless such Subsidiary is a party to the Subsidiary Guaranty;
provided that, to the extent not prohibited by Section 7.04 hereof, (x) Excluded
Foreign Restricted Subsidiaries may guaranty Indebtedness of other Excluded
Foreign Restricted Subsidiaries and (y) Unrestricted Subsidiaries may guaranty
Indebtedness of other Unrestricted Subsidiaries.
7.15 Limitation on Payments Under the Non-Compete Notes. The Company
will not, and will not permit any of its Subsidiaries to, make any payment
representing the principal of, or interest on, any Non-Compete Note at any time
when any Default or Event of Default exists or would exist immediately after
giving effect to such payment.
SECTION 8. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
8.01 Payments. (a) The Company shall (i) default in the payment
when due of any principal of the Revolving Loans or (ii) default, and such
default shall continue for five or more days, in the payment when due of any
interest on the Revolving Loans or any Fees or any other amounts owing hereunder
or under any other Credit Document or (b) any Subsidiary Guarantor shall default
in the payment when due of any amount in respect of any payment of the type
described in clause (a)(ii) above pursuant to the Subsidiary Guaranty, and such
default shall continue for five or more days; or
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8.02 Representations, etc. Any representation, warranty or
statement made by the Company or any Subsidiary Guarantor herein or in any other
Credit Document or in any statement or certificate delivered pursuant hereto or
thereto shall prove to be untrue in any material respect on the date as of which
made or deemed made; or
8.03 Covenants. The Company shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.08 or 7, or (b) default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in Section 8.01,
8.02 or clause (a) of this Section 8.03) contained in this Agreement and such
default shall continue unremedied for a period of at least 30 days after notice
to the defaulting party by the Administrative Agent or the Required Banks; or
8.04 Default Under Other Agreements. (a) The Company or any of its
Restricted Subsidiaries shall (i) default in any payment with respect to any
Indebtedness or Contingent Obligation (other than the Obligations) beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness or Contingent Obligation was created or (ii) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or Contingent Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or Contingent Obligation (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness or Contingent Obligation to become due
prior to its stated maturity; or (b) any Indebtedness or Contingent Obligation
(other than the Obligations) of the Company or any of its Restricted
Subsidiaries shall be declared to be due and payable, or shall be required to be
prepaid other than by a regularly scheduled required prepayment or as a
mandatory prepayment (unless such required prepayment or mandatory prepayment
results from a default thereunder or an event of the type that constitutes an
Event of Default), prior to the stated maturity thereof, provided that it shall
not constitute an Event of Default pursuant to clause (a) or (b) of this Section
8.04 unless the principal amount of any one issue of such Indebtedness or
Contingent Obligation exceeds $7,500,000 or the aggregate amount of all such
Indebtedness and Contingent Obligations referred to in clauses (a) and (b) above
exceeds $15,000,000 at any one time; or
8.05 Bankruptcy, etc. The Company or any of its Restricted
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the
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United States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Company or any of its Restricted Subsidiaries and the petition is
not controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Company or any of its Restricted Subsidiaries; or the Company or any of its
Restricted Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company or any of its Restricted Subsidiaries; or there
is commenced against the Company or any of its Restricted Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or the Company or
any of its Restricted Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Company or any of its Restricted Subsidiaries suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or the Company or any
of its Restricted Subsidiaries makes a general assignment for the benefit of
creditors; or any corporate action is taken by the Company or any of its
Restricted Subsidiaries for the purpose of effecting any of the foregoing; or
8.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code; any Plan is, shall have been or is likely to be terminated or the
subject of termination proceedings under ERISA; any Plan shall have an Unfunded
Current Liability; or the Company, any Restricted Subsidiary or any ERISA
Affiliate has incurred or is likely to incur a liability to or on account of a
Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code; or the
Company or any Restricted Subsidiary has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as defined
in Section 3(1) of ERISA) which provide benefits to retired employees (other
than as required by Section 601 of ERISA); and (b) there shall result from any
such event or events the imposition of a lien, the granting of a security
interest, or a liability or a material risk of incurring a liability, on the
part of the Company, any of its Restricted Subsidiaries or any ERISA Affiliate,
which lien, security interest or liability will have a material adverse effect
on the condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and its Restricted Subsidiaries taken as a whole; or
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8.07 Subsidiary Guaranty. (a) The Subsidiary Guaranty or any
provision thereof shall cease to be in full force and effect, or any Subsidiary
Guarantor thereunder or any Person acting on behalf of such Subsidiary Guarantor
shall deny or disaffirm such Subsidiary Guarantor's obligations under such
Subsidiary Guaranty or (b) except as otherwise provided in Section 8.01(b), any
Subsidiary Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed pursuant to
the Subsidiary Guaranty, provided that in the case of Section 13 of the
Subsidiary Guaranty, if the default constitutes a failure to perform or comply
with any provision, covenant or agreement contained in Section 6 (other than
Section 6.08) of this Agreement, such default shall continue unremedied for a
period of at least 30 days after notice to the defaulting Subsidiary Guarantor
by the Administrative Agent or the Required Banks; or
8.08 Judgments. One or more judgments or decrees shall be entered
against the Company or any of its Restricted Subsidiaries involving a liability
of $8,000,000 or more in the case of any one such judgment or decree or
$20,000,000 or more in the aggregate for all such judgments and decrees for the
Company and its Restricted Subsidiaries (not paid or to the extent not covered
by insurance) and any such judgments or decrees shall not have been vacated,
discharged or stayed or bonded pending appeal within 60 days from the entry
thereof; or
8.09 Ownership. A Change of Control Event shall have occurred;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Banks, by written notice to the Company, take any or all
of the following actions, without prejudice to the rights of the Administrative
Agent or any Bank to enforce its claims against the Company, except as otherwise
specifically provided for in this Agreement (provided that if an Event of
Default specified in Section 8.05 shall occur with respect to the Company, the
result which would occur upon the giving of written notice by the Administrative
Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Revolving Loan
Commitment (or the unutilized portion thereof) terminated, whereupon the
Revolving Loan Commitment of each Bank (or the unutilized portion thereof) shall
forthwith terminate immediately and any Commitment Fees shall forthwith become
due and payable without any other notice of any kind; and (ii)
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declare the principal of and any accrued interest in respect of all Revolving
Loans and all obligations owing hereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company.
SECTION 9. Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Additional Facility Documents" shall mean and include each of the
documents and other agreements entered into by the Company or any of its
Subsidiaries in connection with the Existing Credit Agreements (including,
without limitation, the Existing Credit Agreements and any guaranty or
guaranties relating thereto), as in effect on the Effective Date and as the same
may be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
"Additional Indebtedness" shall have the meaning provided in Section
7.04(h).
"Additional Preferred Stock" shall have the meaning provided in
Section 7.12(c).
"Adjusted Total Commitment" shall mean at any time the Total
Revolving Loan Commitment less the aggregate Revolving Loan Commitments of all
Defaulting Banks.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 10.10.
"Affected Period" shall mean, with respect to each Affected
Transaction, the period commencing on the date occurring twelve months prior to
the last day of the then most recently ended fiscal quarter of the Company and
ending on the date such Affected Transaction is consummated.
"Affected Transaction" shall mean and include each of the following:
(i) any transfer of assets to an Excluded Domestic Restricted Subsidiary in
connection
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with a transaction permitted pursuant to Section 7.02(e), (ii) any Permitted
Acquisition, (iii) any incurrence of Additional Indebtedness, (iv) any
investment in an Excluded Domestic Restricted Subsidiary pursuant to Section
7.05(d), (v) any issuance of Subordinated Exchange Debentures, (vi) the payment
of any Dividend as permitted by Section 7.07(k) or (l), (vii) any issuance of
Additional Preferred Stock, (viii) any Permitted Restricted Subsidiary
Conversion or Non-Guarantor Designation and (ix) any designation of an
Unrestricted Subsidiary as a Restricted Subsidiary pursuant to the definition of
"Restricted Subsidiaries."
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Aggregate Conversion Amount" shall mean, at any time, the sum of
the Conversion Value Amount with respect to each Permitted Restricted Subsidiary
Conversion consummated after the Effective Date but on or prior to the date of
determination thereof.
"Aggregate Unutilized Revolving Loan Commitment" with respect to any
Bank at any time shall mean such Bank's Revolving Loan Commitment at such time
less the aggregate outstanding principal amount of all Revolving Loans made by
such Bank.
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time modified, amended and/or supplemented.
"Applicable Commitment Fee Percentage" shall mean 1/8 of 1%.
"Applicable Margin" shall mean, at any time, (a) with respect to
Base Rate Loans, the margin set forth below under the heading Applicable Base
Rate Margin and (b) with respect to Eurodollar Loans, the margin set forth below
under the heading Applicable Eurodollar Margin, in each case, opposite the ratio
of (i) Consolidated Debt as of the last day of the most recent fiscal year or
fiscal quarter in respect of which the Banks shall have received Section 6.01
Financials to (ii)
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Consolidated EBITDA for the Test Period ending on the last day of such fiscal
year or fiscal quarter (it being under stood that each Applicable Margin shall
be in effect from the date the respective Section 6.01 Financials are required
to be delivered to the Banks until the date the next such Section 6.01
Financials are required to be delivered to the Banks at which time the
Applicable Margin shall be reset in accordance with the foregoing provisions of
this definition):
Applicable Applicable
Eurodollar Base Rate
Debt/EBITDA Ratio Margin Margin
- ----------------- ------ ------
5.50:1 or Greater 1-1/2% 1/8 of 1%
Less than 5.50:1 but equal
to or greater than 5.00:1 1-1/8% 0%
Less than 5.00:1 but equal
to or greater than 4.50:1 7/8 of 1% 0%
Less than 4.50:1 but equal
to or greater than 4.00:1 5/8 of 1% 0%
Less than 4.00:1 1/2 of 1% 0%
; provided that if (A) any Section 6.01 Financials are not delivered when
required (the "Late Section 6.01 Financials") and such Late Section 6.01
Financials establish that any Applicable Margin would have been increased or
reduced to an amount set forth in the table above on the date that such Late
Section 6.01 Financials were required to have been delivered (the "Required
Delivery Date") and (B) the Company shall have made any interest payment during
the period from the Required Delivery Date to the actual date of delivery of
such Late Section 6.01 Financials based upon any such lower or higher Applicable
Margin, then (x) in the case of actual payments based on any such lower
Applicable Margin, the Company shall pay in the form of a supplemental interest
payment, an amount which equals the difference between the amount of interest
which would otherwise have been paid determined as if the Late Section 6.01
Financials were delivered on the Required Delivery Date and the amount of such
interest so paid, which supplemental interest payment shall be due and payable
on the date of delivery of the Late Section 6.01 Financials and (y) in the case
of actual payments made based on such higher Applicable Margin, the Banks shall
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retain all such amounts so paid.
"Appraisal Firm" shall mean an independent appraisal firm (which may
be an investment banking firm of national recognition) selected by, and at the
expense of, the Company and reasonably satisfactory to the Administrative Agent.
"Asset Sale" shall mean any sale, transfer or other disposition by
the Company or any of its Restricted Subsidiaries to any Person other than the
Company or any Restricted Subsidiary of any asset (including, without
limitation, any capital stock or other securities of another Person, but
excluding any sale, transfer or other disposition by the Company of its capital
stock) of the Company or such Restricted Subsidiary, including, without
limitation, a Permitted Restricted Asset Sale and any sale, transfer or other
disposition deemed made pursuant to a Permitted Restricted Subsidiary Conversion
(other than (x) any sale, transfer or disposition of Cash Equivalents; and (y)
any sale, transfer or disposition permitted by Section 7.02(a), (e) or (h)).
"Authorized Officer" shall mean any officer of the Company
designated as such in writing to the Administrative Agent by the Company, in
each case to the extent reasonably acceptable to the Administrative Agent.
"Bank" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or (ii) a
Bank having notified the Administrative Agent and/or the Company that it does
not intend to comply with the obligations under Section 1.01, in the case of
either (i) or (ii) as a result of the appointment of a receiver or conservator
with respect to such Bank at the direction or request of any regulatory agency
or authority.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Base Rate" at any time shall mean the higher of (x) the rate which
is 1/2 of 1% in excess of the Federal Funds Effective Rate and (y) the Prime
Lending Rate as in effect from time to time.
"Base Rate Loan" shall mean each Revolving Loan bearing interest at
the rates provided in Section 1.08(a).
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"Borrowing" shall mean a borrowing of Revolving Loans from all Banks
on a given date (or resulting from conversions on a given date), in each case,
as required by the provisions of this Agreement, being of a single Type of
Revolving Loans and having, in the case of Eurodollar Loans, the same Interest
Period, provided that Base Rate Loans incurred pursuant to Section 1.10(b) shall
be considered part of any related Borrowing of Eurodollar Loans.
"Business" shall mean and include the communications, information,
education, publishing and/or media businesses.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Expenditures" shall mean, for any period, any expenditures
(whether paid in cash or accrued as liabilities and including in all events all
amounts expended or capitalized under Capital Leases) by any Person during that
period that, in conformity with GAAP, are or are required to be included in the
property, plant or equipment reflected in the balance sheet of such Person.
"Capital Lease," as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Company or any of its Restricted Subsidiaries in each case
taken at the amount thereof accounted for as liabilities in accordance with
GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of
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deposit and bankers acceptances of (x) any Bank, (y) any commercial bank of
recognized standing having capital and surplus in excess of $500,000,000 or (z)
any bank whose short-term commercial paper rating from Standard & Poor's Ratings
Group ("S&P") is at least A-2 or the equivalent thereof or from Moody's
Investors Service, Inc. ("Moody's") is at least P-2 or the equivalent thereof
(any such bank or Bank, an "Approved Bank"), in each case with maturities of not
more than one year from the date of acquisition, (iii) commercial paper issued
by any Approved Bank or by the parent company of any Approved Bank and
commercial paper issued by, or guaranteed by, any industrial or financial
company with a short-term commercial paper rating of at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's,
or guaranteed by any industrial company with a long term unsecured debt rating
of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as
the case may be, and in each case maturing within one year after the date of
acquisition, (iv) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's and (v) investments in
money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (iv) above.
"Change of Control Event" shall mean (a) any "Change of Control" or
similar term as defined in the indentures governing the terms of the Senior
Notes as in effect on the Effective Date or in any agreement governing any
Indebtedness incurred pursuant to Section 7.04(f), (h), (i) or (j), (b) KKR or
one or more Affiliates of KKR shall cease to own (directly or indirectly) at
least 25% on a fully diluted basis of the economic and voting interest in the
Company's common stock or (c) any Person or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended)
becomes the "beneficial owner" (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of more of the voting common stock of the
Company than that owned (directly or indirectly) by KKR and its Affiliates.
"Chase" shall mean The Chase Manhattan Bank or any successor thereto
by merger.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
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supplemental thereto or substituted therefor.
"Commitment Fee" shall have the meaning provided in Section 2.01(a).
"Company" shall have the meaning provided in the first paragraph of
this Agreement.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all Capital Expenditures by the Company and its Restricted
Subsidiaries at such time determined on a consolidated basis.
"Consolidated Current Assets" shall mean, at any time, the current
assets (other than cash and Cash Equivalents, and deferred income taxes to the
extent included in current assets) of the Company and its Restricted
Subsidiaries at such time determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time, the
current liabilities of the Company and its Restricted Subsidiaries determined on
a consolidated basis, but excluding (i) all short-term Indebtedness for borrowed
money, (ii) the current portion of any long-term Indebtedness of the Company or
its Restricted Subsidiaries, (iii) deferred income taxes, (iv) liabilities
arising from cash overdrafts and (v) liabilities arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business, provided that such
liabilities are extinguished within three Business Days of their incurrence; in
each case to the extent included in current liabilities.
"Consolidated Debt" shall mean all Indebtedness of the Company and
its Restricted Subsidiaries, determined on a consolidated basis, other than
Indebtedness owing by the Company to any of its Restricted Subsidiaries or by
any of the Company's Restricted Subsidiaries to the Company or any other
Restricted Subsidiary of the Company, provided that, for purposes of this
definition, (x) only the principal amount of Indebtedness outstanding under the
Non-Compete Notes issued as of the date of determination (net of the amount of
any reduction to the amounts owed under such Non-Compete Notes made in
accordance with the terms of the Non-Competition Agreement referred to in the
definition of Non-Compete Notes) shall be included and (y) Indebtedness of any
Partially-Owned Restricted Subsidiary shall be included in Consolidated Debt in
an aggregate amount equal to the percentage equity ownership of the Company in
such Partially-Owned Restricted Subsidiary multiplied by the
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aggregate Indebtedness of such Partially-Owned Restricted Subsidiary.
"Consolidated EBITDA" shall mean, for any period, (A) the sum
(without duplication) of the amounts for such period of (i) the net income (or
loss) of the Company and its Restricted Subsidiaries on a consolidated basis for
such period taken as a single accounting period, provided that, except as
provided in clauses (I) through (III) below, there shall be excluded from
Consolidated EBITDA (x) the net income (or loss) of all Unrestricted
Subsidiaries and all Partially-Owned Restricted Subsidiaries for such period and
(y) all cash or other payments received during such period by the Company and
its Restricted Subsidiaries from any Unrestricted Subsidiaries from dividends or
distributions (including tax sharing payments), in each case to the extent
otherwise included, (ii) provisions for taxes based on income, (iii)
Consolidated Interest Expense, (iv) amortization or write-off of deferred
financing costs, (v) losses on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary losses, (vi) non-cash amounts
charged as compensation for "phantom stock" arrangements, (vii) all non-cash
interest expense not included in the foregoing clause (vi), (viii) depreciation
expense and (ix) amortization expense, in the case of each of clauses (ii)
through (ix) above to the extent deducted in determining net income (or loss)
pursuant to clause (i) above for such period, less (B) the amount for such
period of gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains, in each case, to the extent included in
determining net income (or loss) pursuant to clause (A)(i) above for such
period, all as determined on a consolidated basis; provided, however, that (I)
for purposes of Section 7.11 and the definitions of Applicable Margin, (1) there
shall be included in determining Consolidated EBITDA for any period (x) the net
income (or loss) of any person, business, property or asset (other than an
Unrestricted Subsidiary) acquired and not subsequently sold or otherwise
disposed of (but not including the net income (or loss) of any related person,
business, property or assets to the extent not so acquired) by the Company or
one of its Restricted Subsidiaries during such period (each such person,
business, property or asset acquired and not subsequently disposed of, an
"Acquired Entity or Business"), and the net income (or loss) of any Unrestricted
Subsidiary that is converted into a Restricted Subsidiary during such period
(each, a "Converted Restricted Subsidiary"), in each case based on the actual
net income (or loss) of such Acquired Entity or Business or Converted Restricted
Subsidiary for the entire period (including the portion thereof occurring prior
to such acquisition or conversion) and (y) an increase in respect of each
Acquired Entity or Business acquired during such period equal to the cost
adjustment amount applicable to the relevant period determined by the Company to
represent the savings secured by the Company in connection with its reduction of
salary and other employment
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expenses and lease and other contractual expenses with respect to such Acquired
Entity or Business and (2) there shall be excluded in determining Consolidated
EBITDA for any period the net income (or loss) of any person, business, property
or asset (other than an Unrestricted Subsidiary) sold or disposed of by the
Company or one of its Restricted Subsidiaries during such period (each such
person, business, property or asset so sold or disposed of, a "Sold Entity or
Business"), and the net income (or loss) of any Restricted Subsidiary that is
converted into an Unrestricted Subsidiary during such period (each, a "Converted
Unrestricted Subsidiary"), in each case based on the actual net income (or loss)
of such Sold Entity or Business or Converted Unrestricted Subsidiary for the
entire period (including the portion thereof occurring prior to such sale,
disposition or conversion), (II) for purposes of this definition, subject to
clause (III) below, there shall be included or excluded any of the items
described in the above clauses (A) and (B) attributable to a Partially-Owned
Restricted Subsidiary, but only to the extent of the equity percentage ownership
of the Company in such Partially-Owned Restricted Subsidiary and (III) in the
event the aggregate portion of Consolidated EBITDA for any period attributable
to Partially-Owned Restricted Subsidiaries (the "Limited EBITDA Component")
exceeds an amount equal to 15% of the aggregate amount of Consolidated EBITDA of
the Company and its Restricted Subsidiaries for such period, the Limited EBITDA
Component (and accordingly Consolidated EBITDA), in each case, for such period,
shall be reduced such that the Limited EBITDA Component for such period equals
15% of the aggregate amount of such Consolidated EBITDA for such period.
"Consolidated Fixed Charges" shall mean, for any period, the sum,
without duplication, of the amounts for such period of (i) Consolidated Interest
Expense, plus consolidated cash Dividend expense payable in respect of all
Preferred Stock and common stock of the Company, (ii) provisions for taxes based
on income other than (x) changes in deferred taxes, (y) taxes on gains resulting
from sales of assets (other than sales in the ordinary course of business) and
(z) taxes on gains on extraordinary items, (iii) Consolidated Capital
Expenditures paid in cash, (iv) scheduled payments on Indebtedness for borrowed
money (including the term loans outstanding under the Existing Credit Agreements
but excluding the revolving loans outstanding under the Existing Credit
Agreements) and on the Non-Compete Notes (other than, in the case of any
payments referred to in this clause (iv), any interest payments to the extent
included in Consolidated Interest Expense) and (v) the Net Maximum Exposure
Reduction, if positive, for such period; all as determined on a consolidated
basis for the Company and its Restricted Subsidiaries; provided that for
purposes of this definition, fixed charges of the type referred to in clauses
(i)-(v) above of any Partially-Owned Restricted Subsidiary shall be included in
Consolidated
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Fixed Charges in an aggregate amount equal to the percentage equity ownership of
the Company in such Partially-Owned Restricted Subsidiary multiplied by the
fixed charges of the type referred to above of such Partially-Owned Restricted
Subsidiary for the respective period.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP but excluding non-cash interest expenses) of the Company and its
Restricted Subsidiaries determined on a consolidated basis with respect to all
outstanding Indebtedness of the Company and its Restricted Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs (i.e., costs minus benefits) under Interest Rate Protection
Agreements, but excluding, however, amortization of deferred financing costs to
the extent included in total interest expense, all as determined on a
consolidated basis; provided that for purposes of this definition, interest
expense of the type referred to above of any Partially-Owned Restricted
Subsidiary shall be included in Consolidated Interest Expense in an aggregate
amount equal to the percentage equity ownership of the Company in such
Partially-Owned Restricted Subsidiary multiplied by the interest expense of the
type referred to above of such Partially-Owned Restricted Subsidiary for the
respective period.
"Contingent Obligations" shall mean as to any Person (i) any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof
and (ii) any Interest Rate Protection Agreement; provided, how ever, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in
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respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Contribution Agreement" shall have the meaning provided in Section
4.09.
"Conversion Value Amount" shall have the meaning set forth in the
definition of Permitted Restricted Subsidiary Conversion.
"Copyrights" shall have the meaning provided in Section 5.14(a).
"Credit Documents" shall mean this Agreement, any Notes to the
extent issued, the Subsidiary Guaranty and the Contribution Agreement.
"Credit Party" shall mean the Company and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividends" shall have the meaning provided in Section 7.07.
"EBITDA" shall mean, for any Restricted Subsidiary or business, for
any period, the portion of Consolidated EBITDA attributable to such Restricted
Subsidiary or business.
"Effective Date" shall have the meaning provided in Section 11.10.
"Environmental Law" shall mean any federal, state, provincial or
local statute, law, rule, regulation, ordinance, code, policy or rule of common
law now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to the environment, health, safety
or Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and the
rulings
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issued thereunder. Section references to ERISA are to ERISA as in effect at the
date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Company or any Subsidiary of the Company would
be deemed to be a "single employer" within the meaning of Section 414(b), (c),
(m) or (o) of the Code.
"Eurodollar Loans" shall mean each Revolving Loan bearing interest
at the rates provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period
for a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest 1/100
of 1%) of the offered quotation to first-class banks in the interbank Eurodollar
market by each Reference Bank for U.S. dollar deposits of amounts in same day
funds comparable to the outstanding principal amount of the Eurodollar Loan of
such Reference Bank for which an interest rate is then being determined with
maturities comparable to the Interest Period to be applicable to such Eurodollar
Loan, determined as of 10:00 A.M. (New York time) on the date which is two
Business Days prior to the commencement of such Interest Period divided (and
rounded upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage
equal to 100% minus the then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable to any member bank of the Federal Reserve System
in respect of Eurocurrency liabilities as defined in Regulation D (or any
successor category of liabilities under Regulation D); provided that if one or
more of the Reference Banks fails to provide the Administrative Agent with its
aforesaid rate, then the Eurodollar Rate in respect of Revolving Loans shall be
determined based on the rate or rates provided to the Administrative Agent by
the other Reference Banks or Bank.
"Event of Default" shall have the meaning provided in Section 8.
"Excess Cash Flow" shall mean, for any period, the remainder of (x)
the sum of (i) Consolidated EBITDA for such period and (ii) the decrease, if
any, in Working Capital from the first day to the last day of such period, minus
(y) the sum of (i) the amount of Consolidated Fixed Charges for such period (but
in the case of Consolidated Capital Expenditures included therein, only to the
extent such expenditures are not financed by Indebtedness (other than Revolving
Loans
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hereunder)) and (ii) the increase, if any, in Working Capital from the first day
to the last day of such period, provided that in calculating the amount referred
to in clause (x)(ii) or (y)(ii) above, as the case may be, (A) for any period
during which the Company and/or any of its Restricted Subsidiaries have
consummated an Asset Sale pursuant to Section 7.02(c) or a Permitted
Acquisition, the portion of the change in Working Capital for such period
attributable to the entity or business sold or purchased shall be based (x) in
the case of an Asset Sale, on the change in Working Capital attributable to the
entity or business sold from the first day of such period to the date of the
consummation of such sale and (y) in the case of an acquisition, on the change
in Working Capital attributable to the entity or business acquired from the date
of consummation of such acquisition to the last day of such period and (B)
Working Capital shall only include the assets and liabilities of a
Partially-Owned Restricted Subsidiary to the extent of the percentage equity
interest of the Company in such Partially-Owned Restricted Subsidiary.
"Excess Cash Flow Amount" shall mean an amount which initially shall
be zero and which shall be (i) increased on the date of delivery of Section 6.01
Financials in respect of the first three fiscal quarters in each year of the
Company (commencing with the fiscal quarter ended June 30, 1996) by an amount
(if positive) equal to 75% of Excess Cash Flow for the fiscal quarter in respect
of which such Section 6.01 Financials are delivered, provided that in the event
that Excess Cash Flow for the first and/or second fiscal quarter in any fiscal
year is negative, then for purposes of this clause (i) the Excess Cash Flow for
the third fiscal quarter in such fiscal year shall be deemed to be reduced by
the amount of such negative Excess Cash Flow for such first and/or second
quarter, and (ii) increased on the date of delivery of Section 6.01 Financials
in respect of each fiscal year of the Company by an amount (if positive) equal
to 75% of the Excess Cash Flow for such fiscal year less an amount (if any)
equal to the aggregate amount by which the Excess Cash Flow Amount was increased
pursuant to clause (i) above in respect of the first, second and third quarters
in such fiscal year.
"Excluded Domestic Restricted Subsidiary" shall mean any
Partially-Owned Restricted Subsidiary with respect to which the Company shall
have made a Non-Guarantor Designation in accordance with the provisions hereof.
"Excluded Foreign Restricted Subsidiaries" shall mean (i) Daily
Racing Form of Canada Ltd., a Canada corporation, (ii) Admirefruit Limited, a
U.K. corporation, (iii) Canadian Red Book, Inc., a Canada corporation, (iv)
Canadian Sailings Inc., a Canada corporation and (v) each Restricted Subsidiary
of the
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Company established, created or acquired after the Effective Date which is
incorporated in a jurisdiction outside the United States, except to the extent
the requirements set forth in clause (z) of 7.14(a), and Section 7.14(c), are
satisfied with respect to such Subsidiary.
"Existing Contingent Obligations" shall have the meaning provided in
Section 7.06(f).
"Existing Credit Agreements" shall mean and include each of the
$1,250,000,000 Credit Agreement and the $250,000,000 Credit Agreement.
"Existing Debt" shall have the meaning provided in Section 7.04(d).
"Existing Indebtedness Agreements" shall have the meaning provided
in Section 4.10.
"Existing Preferred Stock" shall include preferred stock of the
Company issued prior to the Effective Date and listed on Annex VI hereto,
without giving effect to any extension or replacement thereof, as the same may
be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
"Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean (i) all amounts payable pursuant to, or referred
to in, Section 2.01 and (ii) all other fees payable to the Administrative Agent
or any Bank as may be agreed to from time to time between the Company and the
Administrative Agent or such Bank, as the case may be.
"Final Maturity Date" shall mean April 20, 1998.
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"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of Section 7,
including defined terms as used therein, are subject (to the extent provided
therein) to Section 11.07(a).
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "restricted hazardous materials," "extremely hazardous
wastes," "restrictive hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar import, under
any applicable Environmental Law.
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person, (iii) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (v) all Capitalized Lease Obligations of such Person and (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, provided that Indebtedness shall not include (x) trade payables
and accrued expenses, in each case arising in the ordinary course of business
and (y) any obligations under Interest Rate Protection Agreements.
"Initial Borrowing Date" shall mean the date on or after the
Effective Date upon which the initial Borrowing of Revolving Loans hereunder
occurs.
"Intellectual Property" shall have the meaning provided in Section
5.14(b).
"Intercompany Loan" shall have the meaning provided in Section
7.05(c).
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"Interest Period" with respect to any Eurodollar Loan, shall mean
the interest period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedging agreement or other similar agreement or arrangement
designed to protect the Company or any of its Subsidiaries against fluctuations
in interest rates.
"KKR" shall mean Kohlberg Kravis Roberts & Co., a Delaware limited
partnership.
"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Leverage Ratio" shall have the meaning provided in Section 7.11.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Margin Stock" shall have the meaning provided in Regulation U.
"Minimum Borrowing Amount" shall mean $3,000,000.
"Minimum Retention Amount" shall mean, at any time, $5,000,000
multiplied by a fraction (i) the numerator of which shall be the Total Revolving
Loan Commitment at such time and (ii) the denominator of which shall be
$100,000,000.
"Net Investments in Excluded Foreign Restricted Subsidiaries" shall
mean the remainder of (i) the sum of (x) the aggregate value of all businesses,
properties and assets transferred by the Company and/or its Restricted
Subsidiaries (other than Excluded Foreign Restricted Subsidiaries) to Excluded
Foreign Restricted Subsidiaries after the Effective Date, (y) the aggregate
outstanding principal amount of all Intercompany Loans made to Excluded Foreign
Restricted Subsidiaries by the Company and/or its Restricted Subsidiaries (other
than Excluded Foreign Restricted Subsidiaries) after the Effective Date and (z)
the aggregate amount of all investments
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by the Company and its Restricted Subsidiaries (other than Excluded Foreign
Restricted Subsidiaries) in Excluded Foreign Restricted Subsidiaries after the
Effective Date, minus (ii) the sum of (x) the aggregate value of all businesses,
properties and assets transferred by Excluded Foreign Restricted Subsidiaries to
the Company and/or its Restricted Subsidiaries (other than Excluded Foreign
Restricted Subsidiaries) after the Effective Date and (y) the aggregate amount
of all cash dividends and other cash distributions on common stock paid by
Excluded Foreign Restricted Subsidiaries to the Company and its Restricted
Subsidiaries (other than Excluded Foreign Restricted Subsidiaries) after the
Effective Date.
"Net Maximum Exposure Reduction" shall have the meaning provided
therefor in the $1,250,000,000 Credit Agreement.
"Non-Compete Notes" shall mean the promissory notes issued by K-III
Holdings Corporation III pursuant to the Non-Competition Agreement, dated as of
June 17, 1991, among K-III Holdings Corporation III, News America Holdings
Incorporated and the other parties thereto in an aggregate principal amount not
to exceed $50,000,000, as such notes may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Non-Facility Letter of Credit Outstandings" shall mean, at any
time, the sum of (i) the aggregate maximum amount available to be drawn
(regardless of whether any conditions for drawing could then be met) under all
outstanding Non-Facility Letters of Credit and (ii) the aggregate amount of all
Non-Facility Unpaid Drawings.
"Non-Facility Letters of Credit" shall mean each letter of credit
(other than any letter of credit issued pursuant to the Existing Credit
Agreements) issued for the account of the Company or any of its Restricted
Subsidiaries, provided that the reimbursement obligations of the Company or such
Restricted Subsidiary with respect to such letter of credit may be secured only
to the extent permitted by Section 7.03(q).
"Non-Facility Unpaid Drawings" shall mean all amounts paid or
disbursed by the issuers of Non-Facility Letters of Credit which have not been
reimbursed.
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"Non-Guarantor Designation" shall mean and include each of (x) the
designation by the Company of any newly created or acquired Partially-Owned
Restricted Subsidiary and (y) the redesignation of any existing Partially-Owned
Restricted Subsidiary which is a Subsidiary Guarantor, in each case, as an
Excluded Domestic Restricted Subsidiary by delivery of a written notice to the
Administrative Agent of such designation or redesignation, as the case may be;
provided that the Company may only make a Non-Guarantor Designation hereunder
if, at the time of such designation (i) no Default or Event of Default exists or
would result therefrom and (ii) the Company shall have determined, with respect
to such designation, that the Company and its Restricted Subsidiaries would have
been in compliance, on a Pro Forma Basis, with Sections 7.09, 7.10 and 7.11 of
this Agreement.
"Note" shall mean and include each promissory note, in the form
agreed by the Company and the Administrative Agent prior to the Effective Date,
to the extent issued pursuant to Section 1.05(b) hereof.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent at
1 Chase Manhattan Plaza, New York, New York 10081, or such other office as the
Administrative Agent may designate to the Company and the Banks from time to
time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent or any Bank pursuant to the terms of this Agreement or
any other Credit Document.
"$1,250,000,000 Credit Agreement" shall mean the Credit Agreement,
dated as of May 24, 1996, among the Company, Canadian Sailings Inc., a Canada
corporation, various lending institutions, The Bank of Nova Scotia, as the
Canadian lender, The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent, and The
Chase Manhattan Bank, as Administrative Agent, as amended, modified,
supplemented or
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extended from time to time in accordance with the terms thereof.
"Partially-Owned Restricted Subsidiary" shall mean any Restricted
Subsidiary of the Company to the extent that the Company and its Wholly-Owned
Restricted Subsidiaries shall own less than 100% of the capital stock of such
Restricted Subsidiary.
"Payment Office" shall mean the office of the Administrative Agent
at 1 Chase Manhattan Plaza, New York, New York 10081, or such other office as
the Administrative Agent may designate to the Company and the Banks from time to
time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in Section
7.02(g).
"Permitted Amendments" shall mean, to any amendment or supplement to
or waiver of the documents governing or evidencing (x) any issue of Indebtedness
which does not (i) add, directly or indirectly, any new covenant, event of
default, collateral requirement or repayment requirement (including pursuant to
any put arrangement), (ii) modify in any manner materially adverse to the issuer
or guarantors thereof any existing covenant, event of default, collateral
requirement or repayment requirement (including any shortening or any
amortization requirements), (iii) increase the interest rate thereon or modify
in any manner the time or manner of payment of such interest (including any
option or right to pay such interest in kind), (iv) modify any of the
subordination provisions or (v) contain any provision which, in the opinion of
the Administrative Agent, is materially adverse to the interests of the Banks,
(y) any issue of Preferred Stock which does not (i) add, directly or indirectly,
any new covenant, default, voting, redemption, exchange or put provision, (ii)
modify in any manner adverse to the issuer thereof any existing covenant,
default, voting, redemption, exchange or put provision, (iii) increase the
dividend rate thereon or modify in any manner the time or manner of payment of
such dividends (including any option or right to pay such dividends in kind) or
(iv) contain any provision which, in the opinion of the Administrative Agent, is
materially adverse to the interests of the Banks or (z) the sole effect of which
is to (i) delete covenants or events of default and/or (ii) add to, or in crease
existing, exceptions to the covenants contained therein, or waive any of the
covenants contained therein or any rights of the
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holders of such Indebtedness or Preferred Stock, as the case may be, set forth
therein.
"Permitted Liens" shall have the meaning provided in Section
7.03(c).
"Permitted Refinancing Debt" shall mean Indebtedness issued in
connection with a refinancing of any or all of the Existing Debt, the
Subordinated Exchange Debentures, any Additional Indebtedness or any other
Permitted Refinancing Debt; provided that (i) such Indebtedness has a longer
average life than the Indebtedness being refinanced and (ii) such Indebtedness,
and the agreements and other documents entered into by the Company and/or any of
its Restricted Subsidiaries in connection therewith shall contain terms and
conditions (including, without limitation, with respect to the obligor and
guarantors, if any, in respect of such Indebtedness, amortization schedules,
interest rates, redemption provisions, covenants, defaults, security, remedies
and, if the Indebtedness so refinanced is subordinated to any other Indebtedness
of the Company or its Restricted Subsidiaries, subordination provisions) not
materially less favorable to the Company and its Restricted Subsidiaries or to
the Banks than the terms and conditions of the Indebtedness so refinanced
(excluding, for purposes of this clause (ii), the impact of market conditions on
the interest rate and other economic terms).
"Permitted Replacement Preferred Stock" shall mean preferred stock
of the Company issued in connection with the replacement and cancellation of any
outstanding Preferred Stock; provided that such preferred stock and the
agreements, certificates of designation and other documents entered into by the
Company in connection therewith shall contain terms and conditions (including,
without limitation, dividend rates, pay-in-kind features, redemption provisions,
put rights, liquidation preferences, voting rights and exchange rights) not
materially less favorable to the Company or to the Banks than the terms and
conditions of the preferred stock being replaced (excluding the impact of market
conditions on the dividend rate and other economic terms), as such preferred
stock may be amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
"Permitted Restricted Asset Sale" shall mean any sale, transfer or
other disposition by the Company or any of its Restricted Subsidiaries (other
than Canadian Sailings Inc.) to any Unrestricted Subsidiary of any asset
(including, without limitation, any capital stock or other securities of another
Person, but excluding any sale, transfer or other disposition by the Company of
its capital stock) of the Company or such Restricted Subsidiary; provided that
the Company or such Restricted Subsidiary shall only be permitted to effectuate
a Permitted Restricted
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Asset Sale so long as (i) no Default or Event of Default exists or would result
therefrom, (ii) the Company shall have delivered to the Administrative Agent the
opinion of value of an Appraisal Firm to the extent required by Section 7.02(c)
and (iii) the Company shall have, or shall have caused such Restricted
Subsidiary to have, complied with the other terms and conditions of Section
7.02(c) or (j), as the case may be.
"Permitted Restricted Subsidiary Conversion" shall mean the
redesignation by the Company of a Restricted Subsidiary (other than Canadian
Sailings Inc.) of the Company as an Unrestricted Subsidiary of the Company
pursuant to a written notice to the Administrative Agent and the Banks; provided
that any such redesignation of a Restricted Subsidiary as an Unrestricted
Subsidiary shall be deemed to constitute a sale of all of the assets of the
respective Restricted Subsidiary for all purposes of this Agreement; provided
further, that the Company shall only be permitted to effectuate a Permitted
Restricted Subsidiary Conversion so long as (i) no Default or Event of Default
exists or would result therefrom, (ii) the Company shall have delivered to the
Administrative Agent the opinion of value of management of the Company or, to
the extent required by Section 7.02(c), the Appraisal Firm required by such
Section (the value set forth in any such opinion, the "Conversion Value
Amount"), (iii) the Company shall have complied with the other terms and
conditions of Section 7.02(c) or (j), as the case may be, (iv) the Aggregate
Conversion Amount at such time, when added to the Unrestricted Subsidiary
Investment Amount at such time shall not exceed the Unrestricted Subsidiary
Investment Limit then in effect and (v) the Company shall have determined, with
respect to such conversion, that the Company and its Restricted Subsidiaries
would have been in compliance, on a Pro Forma Basis, with Sections 7.09, 7.10
and 7.11 of this Agreement.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) the Company, any Restricted
Subsidiary or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the Company, any Restricted
Subsidiary or an ERISA Affiliate maintained, contributed to or had an obligation
to contribute to such plan.
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"Preferred Stock" shall mean and include the Existing Preferred
Stock and, once issued, any Additional Preferred Stock and any Permitted
Replacement Preferred Stock.
"Prescribed Forms" shall mean such duly executed form(s) or
statement(s), and in such number of copies, which may, from time to time, be
prescribed by law and which, pursuant to applicable provisions of (a) an income
tax treaty between the United States and the country of residence of the Bank
providing the form(s) or statement(s), (b) the Code or (c) any applicable rule
or regulation under the Code, permit the Company to make payments hereunder for
the account of such Bank free of deduction or withholding of income or similar
taxes.
"Prime Lending Rate" shall mean the rate which the Administrative
Agent announces from time to time as its prime commercial lending rate, the
Prime Lending Rate to change when and as such prime commercial lending rate
changes. The Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. The
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, with respect to each Affected
Transaction in connection with which any calculation of compliance with any
financial covenant or financial term is required, the calculation thereof on a
pro forma basis, for the Test Period ended on the last day of the most recently
ended fiscal quarter, determined as if (x) such Affected Transaction, each other
Affected Transaction effected by Company during the Affected Period and any
reduction of Consolidated Debt during such Affected Period effected with the
proceeds received by the Company and/or its Restricted Subsidiaries of (A) the
issuance of common equity by the Company or (B) the sale of the capital stock or
other ownership interest of the Company in an Unrestricted Subsidiary (to the
extent not otherwise included in Consolidated EBITDA), in each case, had
occurred on the first day of such Affected Period and (y) with respect to any
Affected Transaction involving the issuance of Indebtedness or Preferred Stock,
such Indebtedness and/or Preferred Stock had remained outstanding at all times
during such Affected Period.
"Pro Rata Share" shall mean, for each Bank, the percentage obtained
by dividing such Bank's Revolving Loan Commitment by the Total Revolving Loan
Commitment; provided that, if at any time of the determination of a Bank's "Pro
Rata Share," any Revolving Loan Commitments under this Agreement shall have been
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terminated, Pro Rata Share shall be calculated with reference to the amount of
Revolving Loans outstanding rather than such Revolving Loan Commitments.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Reference Banks" shall mean Chase, The Bank of New York and Bankers
Trust Company.
"Register" shall have the meaning provided in Section 1.05(a).
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Replaced Bank" shall have the meaning provided in Section
1.10(c)(ii).
"Replacement Bank" shall have the meaning provided in Section
1.10(c)(ii).
"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan other than those events as to which the 30-day
notice is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
Revolving Loan Commitments (or after the termination thereof, the then total
outstanding Revolving Loans) constitute at least 51% of the Adjusted Total
Commitment (or after the termination thereof, the then total outstanding
Revolving Loans of Non-Defaulting Banks).
"Restricted Subsidiaries" shall mean (x) all of the Subsidiaries of
the Company in existence on the Effective Date, including, without limitation,
Canadian
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Sailings Inc., (y) any Subsidiary owned (directly or indirectly) by the Company
that is created, established or acquired after the Effective Date and which does
not constitute an Unrestricted Subsidiary on the date of the creation,
establishment and/or acquisition thereof and (z) any Unrestricted Subsidiary of
the Company to the extent designated by the Company as a Restricted Subsidiary
hereunder by written notice to the Administrative Agent; provided that the
Company shall only be permitted to so designate a new Restricted Subsidiary so
long as (i) no Default or Event of Default exists or would result therefrom,
(ii) at least 51% of the capital stock of such newly-designated Restricted
Subsidiary is owned by the Company or one or more Wholly-Owned Restricted
Subsidiaries and all of the applicable provisions of Section 7.14 shall have
been complied with in respect of such newly-designated Restricted Subsidiary,
(iii) the Company shall have determined, with respect to such designation, that
the Company and its Restricted Subsidiaries would have been in compliance, on a
Pro Forma Basis, with Sections 7.09, 7.10 and 7.11 of this Agreement and (iv)
such Unrestricted Subsidiary is permitted to be designated a Restricted
Subsidiary pursuant to the Senior Note Documents; provided further, that, at the
time of any Permitted Restricted Subsidiary Conversion or the sale of 100% of
the capital stock owned by the Company or any Restricted Subsidiary of a
Restricted Subsidiary to an Unrestricted Subsidiary pursuant to a Permitted
Restricted Asset Sale, the Restricted Subsidiary so converted or sold shall no
longer constitute a Restricted Subsidiary hereunder.
"Revolving Loan" shall have the meaning provided in Section 1.01.
"Revolving Loan Commitment" shall mean, with respect to each Bank,
the amount set forth opposite such Bank's name in Annex I hereto directly below
the column entitled "Revolving Loan Commitment", as same may be reduced from
time to time pursuant to Sections 2.02, 2.03 and/or 8.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 6.01 Financials" shall mean the financial statements
delivered, or to be delivered, pursuant to Section 6.01(a) or (b).
"Senior Note Documents" shall mean and include each of the documents
and other agreements entered into by the Company or any of its Subsidiaries
(including, without limitation, the indentures pursuant to which each issuance
of the Senior Notes are issued and any guaranty or guaranties relating
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thereto) relating to the issuance by the Company of any Senior Notes, as in
effect on the Effective Date and as the same may be modified, supplemented or
amended from time to time pursuant to the terms hereof and thereof.
"Senior Notes" shall mean and include the Company's (x) 10-5/8%
Senior Secured Notes due 2002, (y) 10-1/4% Senior Notes due 2004 and (z) 8-1/2%
Senior Notes due 2006, in each case, as in effect on the Effective Date and as
the same may be modified, supplemented or amended from time to time pursuant to
the terms hereof and thereof.
"Senior Preferred Stock" shall mean the Company's $2.875 Senior
Exchangeable Preferred Stock, as in effect on the Effective Date and as the same
may be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
"Series B Preferred Stock" shall mean the Company's $11.625 Series B
Exchangeable Preferred Stock, as in effect on the Effective Date and as the same
may be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
"Series C Preferred Stock" shall mean the Company's Series C
Exchangeable Preferred Stock, as in effect on the Effective Date and as the same
may be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
"Specified Change of Control Event" shall mean a Change of Control
Event of the type described in clause (a) of the definition thereof.
"Subordinated Exchange Debentures" shall mean and include the
Company's (x) 11-1/2% Subordinated Debentures due 2004, (y) 11-5/8% Class B
Subordinated Exchange Debentures due 2005 and (z) 10% Subordinated Exchange
Debentures due 2008, in each case, in the form delivered to the Banks on the
Effective Date and as the same may be modified, supplemented or amended from
time to time pursuant to the terms hereof and thereof.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation
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shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or indirectly through
Subsidiaries and (ii) any partnership, association, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries, has
more than a 50% equity interest at the time, provided that Canadian Sailings
Inc. shall be deemed to be a Subsidiary of the Company for all purposes.
"Subsidiary Guarantor" shall mean (i) each Restricted Subsidiary in
existence on the Effective Date (other than Excluded Foreign Restricted
Subsidiaries) and (ii) each Restricted Subsidiary of the Company formed after
the Effective Date and each Excluded Domestic Restricted Subsidiary designated
as such by the Company, in each case, which has executed and delivered a
counterpart of the Subsidiary Guaranty to the Administrative Agent on behalf of
the Banks, provided that any such Restricted Subsidiary which is a
Partially-Owned Restricted Subsidiary shall cease to constitute a Subsidiary
Guarantor to the extent the Company shall have made a Non-Guarantor Designation
with respect to such Subsidiary in accordance with the terms hereof.
"Subsidiary Guaranty" shall have the meaning provided in Section
4.06.
"Taxes" shall have the meaning provided in Section 3.04.
"Test Period" shall mean the four consecutive fiscal quarters of the
Company then last ended.
"Total Revolving Loan Commitment" shall mean the sum of the
Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, the Total Revolving Loan Commitment at such time less the aggregate
principal amount of all Revolving Loans at such time.
"$250,000,000 Credit Agreement" shall mean the Credit Agreement,
dated as of May 24, 1996, among the Company, various lending institutions, The
Bank of New York and Bankers Trust Company, as Co-Syndication Agents, The Bank
of Nova Scotia, as Documentation Agent, and The Chase Manhattan Bank, as
Administrative Agent, as amended, modified, supplemented or extended from time
to time in accordance with the terms thereof.
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"Type" shall mean any type of Revolving Loan determined with respect
to the interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar
Loan.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
such Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Unrestricted Subsidiary" shall mean (i) any Subsidiary of the
Company that is formed or acquired after the Effective Date, which is funded
through loans, advances and/ or capital contributions as permitted by, and in
compliance with, Section 7.05(d), provided that at the time of the initial loan,
advance or capital contribution by the Company or any Restricted Subsidiary to
such Subsidiary (x) the Company designates such Subsidiary as an Unrestricted
Subsidiary in a written notice to the Administrative Agent and (y) such
Subsidiary and the Company shall have entered into a tax sharing agreement in
form and substance reasonably satisfactory to the Required Banks, (ii) any
Restricted Subsidiary of the Company redesignated as an Unrestricted Subsidiary
pursuant to a Permitted Restricted Subsidiary Conversion and any Restricted
Subsidiary sold to an Unrestricted Subsidiary pursuant to a Permitted Restricted
Asset Sale, in each case to the extent consummated in accordance with the terms
of the respective definitions thereof and Section 7.02(c) or 7.02(j), as the
case may be, and (iii) each Subsidiary of an Unrestricted Subsidiary; provided
that, at the time of any designation of the type described in clause (z) of the
definition of "Restricted Subsidiary," the Subsidiary so designated shall no
longer constitute an Unrestricted Subsidiary hereunder.
"Unrestricted Subsidiary Investment Amount" shall have the meaning
provided in Section 7.05(d).
"Unrestricted Subsidiary Investment Limit" shall mean, at any time,
the sum of (i) $200,000,000, (ii) the Excess Cash Flow Amount at such time,
(iii) an amount equal to all cash or other payments received by the Company and
its
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Restricted Subsidiaries from Unrestricted Subsidiaries from dividends or
distributions after the Effective Date (provided that for purposes of this
clause (iii), cash and other payments received by a Partially-Owned Restricted
Subsidiary shall be added to the Unrestricted Subsidiary Investment Limit only
to the extent of the equity percentage ownership of the Company in such
Partially-Owned Restricted Subsidiary), plus (iv) an amount equal to the
aggregate net proceeds received by the Company from the issuance of equity
securities of the Company after the Effective Date, provided that if the net
proceeds from any such equity issuance are not utilized to make a loan or
advance to, or a cash capital contribution in, an Unrestricted Subsidiary
pursuant to Section 7.05(d) within 30 days following the date of such equity
issuance, then the net proceeds from such equity issuance shall no longer be
added to the Unrestricted Subsidiary Investment Limit.
"U.S. Dollars" and "$" shall mean freely transferable lawful money
of the United States of America.
"Wholly-Owned Restricted Subsidiary" shall mean any Restricted
Subsidiary of the Company which is not a Partially-Owned Restricted Subsidiary.
"Working Capital" shall mean the excess of Consolidated Current
Assets over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, telecopier device, telegraph
or cable.
SECTION 10. The Administrative Agent.
10.01 Appointment. Each Bank hereby irrevocably designates and
appoints Chase as Administrative Agent of such Bank and to act as specified
herein and in the other Credit Documents, and each such Bank hereby irrevocably
authorizes Chase as the Administrative Agent for such Bank, to take such action
on its behalf under the provisions of this Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent agrees to act as such upon the
express conditions contained in this Section 10. Notwithstanding any provision
to the contrary elsewhere in this
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Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other Credit
Documents, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The provisions of this Section 10 are solely for the benefit of the
Administrative Agent and the Banks, and neither the Company nor any of its
Subsidiaries shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Administrative Agent shall act solely as agent of the Banks and the
Administrative Agent neither assumes and nor shall it be deemed to have assumed
any obligation or relationship of agency or trust with or for the Company or any
of its Subsidiaries.
10.02 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by Section 10.03.
10.03 Exculpatory Provisions. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or the
other Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by the Company, any
of its Subsidiaries or any of their respective officers contained in this
Agreement or the other Credit Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Credit Document or for any failure of the Company or any of its Subsidiaries or
any of their respective officers to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or the other
Credit Documents, or to inspect the properties, books or records of the Company
or any of its Subsidiaries. The Administrative Agent shall not be responsible to
any Bank for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this
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Agreement or any other Credit Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent to the Banks or by or on behalf of
the Company to the Administrative Agent, or any Bank or be required to ascertain
or inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the use
of the proceeds of the Revolving Loans or of the existence or possible existence
of any Default or Event of Default.
10.04 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Credit Documents in
accordance with a request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Banks.
10.05 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default here under unless the Administrative Agent has actually received notice
from a Bank or the Company referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a "notice of default." In
the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Banks. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks; provided
that, unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
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Event of Default as it shall deem advisable in the best interests of the Banks.
10.06 Non-Reliance on Administrative Agent and Other Banks. Each
Bank expressly acknowledges that neither the Administrative Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Company or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Bank. Each Bank
represents to the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, assets, operations, property, financial
and other condition, prospects and creditworthiness of the Company and its
Subsidiaries and made its own decision to make its Revolving Loans hereunder and
enter into this Agreement. Each Bank also represents that it will, independently
and without reliance upon the Administrative Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries. The Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of the Company or any of its
Subsidiaries which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.07 Indemnification. The Banks agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective "percentages" (which shall equal, for each Non-Defaulting Bank, that
percentage determined by dividing such Bank's Revolving Loan Commitment by the
Adjusted Total Commitment, it being understood and agreed that references to
Revolving Loan Commitments (as well as to the Adjusted Total Commitment) at a
time when any such Revolving Loan Commitment (or Adjusted Total Commitment) has
been terminated shall be references to such terminated Revolving Loan Commitment
(or Adjusted Total Commitment, as the case may be) as in effect immediately
prior to such termination), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of
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any kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against the Administrative Agent in its capacity as such in any way
relating to or arising out of this Agreement or any other Credit Document, or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted to be taken by the
Administrative Agent under or in connection with any of the foregoing, but only
to the extent that any of the foregoing is not paid by the Company or any of its
Subsidiaries; provided that no Bank shall be liable to the Administrative Agent
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the gross negligence or willful misconduct of the
Administrative Agent. If and to the extent any amount paid to the Administrative
Agent is subsequently recovered by the Administrative Agent from the Company or
any of its Subsidiaries, the Administrative Agent shall promptly pay to each
Bank to the extent such Bank paid the Administrative Agent, its "percentage" of
the amount so recovered. If any indemnity furnished to the Administrative Agent
for any purpose shall, in the opinion of the Administrative Agent be
insufficient or become impaired, the Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The agreements in this
Section 10.07 shall survive the payment of all Obligations.
10.08 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its respective affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Company and
its Subsidiaries as though the Administrative Agent were not the Administrative
Agent hereunder. With respect to the Revolving Loans made by it and all
Obligations owing to it, the Administrative Agent shall have the same rights and
powers under this Agreement as any Bank and may exercise the same as though it
were not the Administrative Agent, and the terms "Bank" and "Banks" shall
include the Administrative Agent in its individual capacity.
10.09 Holders. The Administrative Agent may deem and treat the payee
of any Note which has been issued hereunder as the owner thereof for all
purposes hereof unless and until a written notice of the assignment, transfer or
endorsement thereof, as the case may be, shall have been filed with the
Administrative Agent. Any request, authority or consent of any Person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any such Note shall be conclusive and binding on any subsequent
holder, transferee, assignee or indorsee, as the case may be, of such Note or of
any Note or Notes issued in exchange therefor.
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10.10 Resignation of the Administrative Agent; Successor Agent. The
Administrative Agent may resign as the Administrative Agent upon 20 days' notice
to the Banks. Upon the resignation of the Administrative Agent, the Required
Banks shall appoint from among the Banks a successor Administrative Agent for
the Banks subject to prior approval by the Company (such approval not to be
unreasonably withheld), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall include such successor agent effective upon its
appointment, and the resigning Administrative Agent's rights, powers and duties
as the Administrative Agent shall be terminated, without any other or further
act or deed on the part of such former Administrative Agent or any of the
parties to this Agreement. After the resignation of the Administrative Agent
hereunder, the provisions of this Section 10 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.
SECTION 11. Miscellaneous.
11.01 Payment of Expenses, etc. The Company agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and disbursements of White & Case) in connection
with the negotiation, preparation, execution and delivery of the Credit
Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto and in connection with the
Administrative Agent's syndication efforts with respect to this Agreement; (ii)
pay all reasonable out-of-pocket costs and expenses of the Administrative Agent
and each of the Banks in connection with the enforcement of the Credit Documents
and the documents and instruments referred to therein and, after an Event of
Default shall have occurred and be continuing, the protection of the rights of
the Administrative Agent and each of the Banks thereunder (including, without
limitation, the reasonable fees and disbursements of counsel (including in-house
counsel) for the Administrative Agent and for each of the Banks); (iii) pay and
hold each of the Banks harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing matters and save
each of the Banks harmless from and against any and all liabilities with respect
to or resulting from any delay or omission (other than to the extent
attributable to such Bank) to pay such taxes; and (iv) indemnify the
Administrative Agent and each Bank, its officers, directors, employees,
represent-
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tives and agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not the Administrative Agent or any
Bank is a party thereto) related to the entering into and/or performance of any
Credit Document or the use of the proceeds of any Revolving Loans hereunder or
the consummation of any other transactions contemplated in any Credit Document
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified).
11.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Bank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Company or any of its Subsidiaries or
to any other Person, any such notice being hereby expressly waived, to set off
and to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of any Credit Party against and on account of the
Obligations and liabilities of such Credit Party to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Credit Party purchased by such
Bank pursuant to Section 11.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
11.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including facsimile communication) and mailed, facsimilied or delivered, if to
the Company, at the address specified opposite its signature below or in the
other relevant Credit Documents, as the case may be; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, facsimilied or
cabled or sent by overnight courier, and shall be effective when received.
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11.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that the Company may not assign or
transfer any of its respective rights or obligations hereunder without the prior
written consent of the Banks. Each Bank may at any time grant participations in
any of its rights hereunder to another financial institution; provided further,
that, in the case of any such participation, the participant shall not have any
rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Company hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to receive the additional amounts under
Sections 1.10, 1.11 and 3.04 of this Agreement to, and only to, the extent that
such Bank would be entitled to such benefits if the participation had not been
entered into or sold; and provided further, that no Bank shall transfer, grant
or assign any participation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (i) extend the
final scheduled maturity of any Revolving Loan in which such participant is
participating (it being understood that any waiver of an installment on, or the
application of any prepayment or the method of application of any prepayment to
the amortization of the Revolving Loans shall not constitute an extension of the
final scheduled maturity date), or reduce the rate or extend the time of payment
of interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Revolving Loan Commitment over the amount thereof then in effect (it
being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in the Total Revolving Loan Commitment shall not constitute
a change in the terms of any Revolving Loan Commitment and that an increase in
any Revolving Loan Commitment shall be permitted without the consent of any
participant if such participant's participation is not increased as a result
thereof), (ii) release all or substantially all of the Subsidiary Guarantors
from the Subsidiary Guaranty (except as expressly provided in the Credit
Documents) or (iii) in each case consent to the assignment or transfer by the
Company or any other Subsidiaries of the Company of any of its rights and
obligations under this Agreement or any other Credit Document except in
accordance with the terms hereof and thereof.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its Revolving Loans and/or Revolving Loan Commitment and its rights
and
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obligations hereunder to its parent corporation and/or any affiliate of such
Bank which is at least 50% owned by such Bank and/or its parent company and (y)
with the consent of the Administrative Agent and the Company (which consents
shall not be unreasonably withheld), any Bank may assign all or a portion of its
Revolving Loans and/or Revolving Loan Commitment and its rights and obligations
hereunder to one or more commercial banks or other financial institutions
(including one or more Banks). No assignment pursuant to the immediately
preceding sentence shall (x) to the extent such transaction represents an
assignment to an institution other than one or more Banks hereunder, be in an
aggregate amount less than the minimum of $5,000,000 or (y) so long as no
Default or Event of Default then exists, reduce the Revolving Loan Commitments
of the assigning Bank to an aggregate amount less than the Minimum Retention
Amount unless the same are reduced to $0. If any Bank so sells or assigns all or
a part of its rights here under, any reference in this Agreement or the other
Credit Documents to such assigning Bank shall thereafter refer to such Bank and
to the respective assignee Bank to the extent of their respective interests and
the respective assignee Bank shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights and benefits as it would if
it were such assigning Bank. Each assignment pursuant to this Section 11.04(b)
shall be effected by the assigning Bank and the assignee Bank executing an
Assignment and Assumption Agreement substantially in the form of Exhibit F
(appropriately completed). At the time of any such assignment, (i) Annex I
shall be deemed to be amended to reflect the Revolving Loan Commitments of the
respective assignee Bank (which shall result in a direct reduction to the
respective Revolving Loan Commitments of the assigning Bank) and of the other
Banks, (ii) the Administrative Agent shall record such assignment and the
resultant effects thereof on the Revolving Loans and/or Revolving Loan
Commitments of the assigning Bank and the assignee Bank in the Register and
(iii) the Administrative Agent shall receive from the assigning Bank and/or the
assignee Bank at the time of each assignment the payment of a nonrefundable
assignment fee in an aggregate amount of $3,000 with respect to each such
assignment (provided that in the event of simultaneous assignments relating to
this Agreement and the Existing Credit Agreements, the fees for such assignments
shall total $3,000). Each Bank and the Company agree to execute such documents
(including, without limitation, amendments to this Agreement and the other
Credit Documents) as shall be necessary to effect the foregoing. Promptly
following any assignment pursuant to this Section 11.04(b), the assigning Bank
shall promptly notify the Company thereof. Nothing in this Section 11.04(b)
shall prevent or prohibit any Bank from pledging its Revolving Loans or, if
issued, Notes hereunder to a Federal Reserve Bank in support of borrowings made
by such Bank from such Federal Reserve Bank.
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(c) Notwithstanding any other provisions of this Section 11.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Company to file a registration statement
with the SEC or to qualify the Revolving Loans under the "Blue Sky" laws of any
State.
11.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Administrative Agent or any Bank in exercising any right, power or
privilege here under or under any other Credit Document and no course of dealing
between the Company and the Administrative Agent or any Bank shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Bank would otherwise have. No notice to or demand on the Company in
any case shall entitle the Company to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Banks to any other or further action in any
circumstances without notice or demand.
11.06 Payments Pro Rata. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of the Company in
respect of any Obligations of the Company hereunder, it shall, except as
otherwise provided in this Agreement, distribute such payment to the Banks
(other than any Bank that has consented in writing to waive its pro rata share
of such payment) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Revolving Loans or Fees, of a sum which with respect to the related sum
or sums received by other Banks is in a greater proportion than the total of
such Obligation then owed and due to such Bank bears to the total of such
Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the Company to such Banks in such amount as shall result in a
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proportional participation by all of the Banks in such amount; provided that if
all or any portion of such excess amount is there after recovered from such
Bank, such purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 11.06(a) and (b) shall be subject to the
express pro visions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
11.07 Calculations; Computations. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by the Company
to the Banks); provided that except as otherwise specifically provided herein,
all computations determining compliance with Section 7, including definitions
used therein, shall utilize accounting principles and policies in effect at the
time of the preparation of, and in conformity with those used to prepare, the
December 31, 1996 historical financial statements delivered to the Banks
pursuant to Section 6.10(a); provided further, that in the event that the
Accounting Standards Executive Committee of the AICPA adopts the statement of
position (substantially in the proposed form as of the Effective Date) relating
to computer software developed or obtained for internal use, and the Company's
independent auditors concur with such accounting change as it relates to the
presentation of the Company's financial statements, then compliance with Section
8 will thereafter be determined giving effect to such statement of position.
(b) All computations of interest (other than interest on Base Rate
Loans) and Fees hereunder shall be made on the actual number of days elapsed
over a year of 360 days. All computations of interest on Base Rate Loans
hereunder shall be made on the actual number of days elapsed over a year of 365
days.
11.08 Governing Law; Submission to Jurisdiction; Venue. (a) THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the
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Southern District of New York, and, by execution and delivery of this Agreement,
the Company hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Company hereby further irrevocably waives any claim that any such
courts lack jurisdiction over the Company, and agrees not to plead or claim, in
any legal action or proceeding with respect to this Agreement or any other
Credit Document brought in any of the aforesaid courts, that any such court
lacks jurisdiction over the Company. The Company irrevocably consents to the
service of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Company, at its
address for notices pursuant to Section 11.03, such service to become effective
30 days after such mailing. The Company hereby irrevocably waives and agrees not
to plead or claim in any action or proceeding commenced hereunder or under any
other Credit Document that service of process was in any way invalid or
ineffective. The Company hereby represents and warrants that its chief executive
office is located at 745 Fifth Avenue, New York, New York 10151, and the Company
hereby further agrees that it shall not move its chief executive office unless
it shall give the Administrative Agent not less than 30 days' prior written
notice of its intention so to do. The Company agrees that (x) prior to moving
its chief executive office outside New York City and (y) and if for any reason
any designee, appointee and agent previously appointed pursuant to this sentence
shall cease to be available to act as such, the Company shall designate a
designee, appointee and agent or replacement designee, appointee and agent, as
the case may be, in New York City on the terms and for the purposes of this
provision satisfactory to the Administrative Agent. Nothing herein shall affect
the right of the Administrative Agent, any Bank or the holder of any Note to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction.
(b) The Company hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
11.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
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<PAGE>
shall together constitute one and the same instrument. A complete set of
counterparts executed by all the parties hereto shall be lodged with the Company
and the Administrative Agent.
11.10 Effectiveness. This Agreement shall become effective on the
date (the "Effective Date") on which the Company, the Administrative Agent and
each of the Banks shall have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Administrative Agent at its
Notice Office or, in the case of the Banks, shall have given to the
Administrative Agent telephonic (confirmed in writing), written or facsimile
notice (actually received) at such office that the same has been signed and
mailed to it. The Administrative Agent will give the Company and each Bank
prompt written notice of the occurrence of the Effective Date.
11.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
11.12 Amendment or Waiver. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Company and the Required Banks; provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) affected thereby, (i) extend the final scheduled
maturity of any Revolving Loan (it being understood that any waiver of the
application of any prepayment of or the method of application of any prepayment
to the amortization of the Revolving Loans shall not constitute any such
extension), or reduce the rate or extend the time of payment of interest (other
than as a result of waiving the applicability of any post-default increase in
interest rates) or Fees thereon, or reduce the principal amount thereof, or
increase the Revolving Loan Commitments of any Bank over the amount thereof then
in effect (it being understood that a waiver of any Default or Event of Default
or of a mandatory repayment or reduction in the Total Revolving Loan Commitment
shall not constitute a change in the terms of any Commitment of any Bank), (ii)
release all or substantially all of the Subsidiary Guarantors from the
Subsidiary Guaranty (except as expressly provided in the Credit Documents),
(iii) amend, modify or waive any provision of this Section, or Section 1.10,
1.11, 3.04, 8.01, 10.07, 11.01, 11.02, 11.04, 11.06 or 11.07(b), (iv) reduce the
percentage specified in, or otherwise modify, the definition of, Required Banks,
or (v) consent to the assignment or transfer by any Credit Party of any of its
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rights and obligations under this Agreement or any other Credit Document except
in accordance with the terms hereof or thereof. No provision of Section 11 may
be amended without the consent of the Administrative Agent.
11.13 Survival. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 3.04, 10.07 or 11.01, shall survive the
execution and delivery of this Agreement and the making and repayment of the
Revolving Loans and the satisfaction of all other Obligations.
11.14 Domicile of Revolving Loans. Each Bank may transfer and carry
its Revolving Loans at, to or for the account of any branch office, subsidiary
or affiliate of such Bank, provided, that the Company shall not be responsible
for costs arising under Sections 1.10, 1.11 or 3.04 resulting from any such
transfer (other than a transfer pursuant to Section 1.12) to the extent such
costs would not otherwise be applicable to such Bank in the absence of such
transfer.
11.15 Confidentiality. Each of the Banks agrees that it will use its
best efforts not to disclose without the prior consent of the Company (other
than to its employees, auditors, counsel or other professional advisors, to
affiliates or to another Bank if the Bank or such Bank's holding or parent
company in its sole discretion deter mines that any such party should have
access to such information) any information with respect to the Company or any
of its Subsidiaries which is furnished pursuant to this Agreement and which is
designated by the Company to the Banks in writing as confidential, provided that
any Bank may disclose any such information (a) as has become generally available
to the public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state, provincial or Federal regulatory
body having or claiming to have jurisdiction over such Bank or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors,
(c) as may be required or appropriate in response to any summons or subpoena or
in connection with any litigation, (d) in order to comply with any law, order,
regulation or ruling applicable to such Bank and (e) to any prospective
transferee in connection with any contemplated transfer of any of the Revolving
Loans and/or Revolving Loan Commitments or any interest herein by such Bank,
provided that such prospective transferee agrees to be bound by the provisions
of this Section.
11.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING
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<PAGE>
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
* * *
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
Address:
745 Fifth Avenue
New York, NY 10151 K-III COMMUNICATIONS
CORPORATION
Telephone No.: (212) 745-0101
Telecopier No.: (212) 745-0199 By _____________________________
Attention: Beverly Chell, Esq. Title:
THE CHASE MANHATTAN
BANK, Individually
and as Administrative Agent
By _____________________________
Title:
BANKERS TRUST COMPANY,
Individually and as
Co-Syndication Agent
By _____________________________
Title:
BANK OF AMERICA NT&SA
By _____________________________
Title:
<PAGE>
BANK OF MONTREAL,
CHICAGO BRANCH
By _____________________________
Title:
CAISSE NATIONALE DE
CREDIT AGRICOLE
By _____________________________
Title:
CREDIT LYONNAIS
NEW YORK BRANCH
By _____________________________
Title:
CREDIT SUISSE FIRST BOSTON
By _____________________________
Title:
By _____________________________
Title:
FLEET NATIONAL BANK
By _____________________________
Title:
<PAGE>
LTCB TRUST COMPANY
By _____________________________
Title:
NATIONSBANK OF TEXAS, N.A.
By _____________________________
Title:
ROYAL BANK OF CANADA
By _____________________________
Title:
SOCIETE GENERALE
By _____________________________
Title:
THE BANK OF NEW YORK,
Individually and as
Co-Syndication Agent
By _____________________________
Title:
<PAGE>
THE BANK OF NOVA SCOTIA,
Individually and as
Documentation Agent
By _____________________________
Title:
THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By _____________________________
Title:
THE INDUSTRIAL BANK OF
JAPAN, LIMITED
By _____________________________
Title:
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
By _____________________________
Title:
TORONTO DOMINION
(NEW YORK), INC.
By _____________________________
Title:
<PAGE>
ANNEX I
LIST OF BANKS
Revolving Loan
Bank Commitment
- ---- ----------
The Chase Manhattan Bank $8,333,333.39
Bankers Trust Company 8,333,333.33
Bank of America NT&SA 8,333,333.33
Bank of Montreal 8,333,333.33
Caisse Nationale de 8,333,333.33
Credit Agricole
Credit Lyonnais 8,333,333.33
New York Branch
Credit Suisse First Boston 8,333,333.33
Fleet National Bank 8,333,333.33
LTCB Trust Company 8,333,333.33
NationsBank of Texas, N.A 8,333,333.33
Royal Bank of Canada 8,333,333.33
Societe Generale 8,333,333.33
<PAGE>
ANNEX I
Page 2
The Bank of New York 8,333,333.33
The Bank of Nova Scotia 8,333,333.33
The Dai-Ichi Kangyo Bank, 8,333,333.33
Ltd., New York Branch
The Industrial Bank of 8,333,333.33
Japan, Limited
The Sanwa Bank, Limited, 8,333,333.33
New York Branch
Toronto Dominion 8,333,333.33
(New York), Inc.
<PAGE>
ANNEX II
BANK ADDRESSES
Bank Address
- ---- -------
The Chase Manhattan Bank 270 Park Avenue
New York, New York 10017
Telephone No.: (212) 270-8945
Telecopier No.: (212) 270-4164
Attention: James R. Kuster
Bankers Trust Company One Bankers Trust Plaza
New York, New York 10006
Telephone No.: (212) 250-7199
Telecopier No.: (212) 250-7200
Attention: Jeff Bennett
Bank of America NT&SA 335 Madison Avenue
5th Floor
New York, New York 10017
Telephone No.: (212) 503-8352
Telecopier No.: (212) 503-7173
Attention: Amy Trapp
Bank of Montreal 430 Park Avenue
New York, New York 10022
Telephone No.: (212) 605-1426
Telecopier No.: (212) 605-1621
Attention: Virginia Davies
Caisse Nationale de Credit Agricole 520 Madison Avenue
New York, New York 10022
Telephone No.: (212) 418-2217
Telecopier No.: (212) 418-2228
Attention: John McCloskey
Credit Lyonnais 1301 Avenue of the Americas
New York Branch New York, New York 10019
Telephone No.: (212) 261-7863
Telecopier No.: (212) 459-3176
Attention: Nick Bellamy
Credit Suisse First Boston 11 Madison Avenue
New York, New York 10010
Telephone No.: (212) 325-9174
<PAGE>
Telecopier No.: (212) 325-8314
Attention: Judy Smith
- ---------------------------------------------------------------------------
Fleet National Bank 75 State Street
Boston, Massachusetts 02109
Telephone No.: (617) 346-3761
Telecopier No.: (617) 346-3777
Attention: Alex Ivanov
LTCB Trust Company 165 Broadway
49th Floor
New York, New York 10006
Telephone No.: (212) 335-4453
Telecopier No.: (212) 608-2371
Attention: Hisao Inagawa
NationsBank of Texas, N.A. Communications Finance Division
901 Main Street, 64th Floor
Dallas, Texas 75202
Telephone No.: (214) 508-0517
Telecopier No.: (214) 508-9390
Attention: Tony Cacheria
Royal Bank of Canada One Financial Square
New York, New York 10005-3531
Telephone No.: (212) 428-6288
Telecopier No.: (212) 428-6460
Attention: Barbara Meijer
Societe Generale 1221 Avenue of the Americas
New York, New York 10020
Telephone No.: (212) 278-6852
Telecopier No.: (212) 278-6240
Attention: Elaine Khalil
- ---------------------------------------------------------------------------
The Bank of New York 1 Wall Street
16th Floor
New York, New York 10286
Telephone No.: (212) 635-8608
Telecopier No.: (212) 635-8595
Attention: Ted Ryan
The Bank of Nova Scotia One Liberty Plaza,
26th Floor
New York, New York 10006
Telephone No.: (212) 225-5042
Telecopier No.: (212) 225-5090
Attention: Vincent Fitzgerald
Canadian Notice Office and
Canadian Payment Office:
<PAGE>
International Banking Division
Loan Administration and Agency Services
44 Kings Street West, 14th Floor
Toronto, Ontario
Canada M5H 1H1
Telephone No.: (416) 866-5901/2816/4089
Telecopier No.: (416) 866-5991
Attention: Wallace Yeung/Nancy
Buccat/Nancy Tong
The Dai-Ichi Kangyo Bank, Ltd., One World Trade Center
New York Branch New York, New York 10048
Telephone No.: (212) 432-6655
Telecopier No.: (212) 524-0579
Attention: Michael Wellington
The Industrial Bank of 1251 Avenue of the Americas
Japan, Limited New York, New York 10020-1104
Telephone No.: (212) 282-3517
Telecopier No.: (212) 282-4490
Attention: Patricia Carrenard
The Sanwa Bank, Limited, New York Park Avenue Plaza
Branch 55 East 52nd Street
New York, New York 10055
Telephone No.: (212) 339-6204
Telecopier No.: (212) 754-1304
Attention: Shayn March
907 Fannin Street
Houston, Texas 77010
Telephone No.: (713) 653-8242
Telecopier No.: (713) 951-9921
Attention: Jorge Garcia
with a copy to:
31 West 52nd Street
New York, New York 10019
Telephone No.: (212) 468-0731
Toronto Dominion (New York), Telecopier No.: (212) 262-1928
Inc. Attention: David Oliver
<PAGE>
ANNEX III
SUBSIDIARIES
<PAGE>
ANNEX IV
LIENS
<PAGE>
ANNEX V
PART A. EXISTING DEBT
[To include existing Senior Notes and Non-Compete Notes]
PART B. EXISTING CONTINGENT OBLIGATIONS
<PAGE>
ANNEX VI
EXISTING PREFERRED STOCK
<PAGE>
SUBSIDIARY GUARANTY
GUARANTY, dated as of April 21, 1997, made by the undersigned (each
a "Guarantor" and together with any other entity that becomes a party hereto
pursuant to Section 26 hereof, the "Guarantors"). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as hereinafter
defined) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, K-III Communications Corporation (the "Company"), various
financial institutions (the "Banks"), The Bank of New York and Bankers Trust
Company, as Co-Syndication Agents, The Bank of Nova Scotia, as Documentation
Agent, and The Chase Manhattan Bank, as Administrative Agent (the
"Administrative Agent"), have entered into a Credit Agreement, dated as of April
21, 1997 (as amended, modified or supplemented from time to time, the "Credit
Agreement"), providing for the making of Revolving Loans as contemplated therein
(the Banks, the Co-Syndication Agents, the Documentation Agent and the
Administrative Agent herein called the "Bank Creditors");
WHEREAS, on the date hereof the Company is a party to certain
Interest Rate Protection Agreements with one or more Banks and/or an affiliate
of one or more Banks and in the future the Company may enter into one or more
additional Interest Rate Protection Agreements with one or more Banks and/or an
affiliate of one or more Banks (any such Bank or affiliate of a Bank party to
any such Interest Rate Protection Agreement (even if the respective Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason) and
their subsequent assigns, if any, herein called an "Interest Rate Protection
Creditor", and all Interest Rate Protection Creditors, together with the Bank
Creditors, collectively herein called the "Creditors");
<PAGE>
WHEREAS, the Company owns, directly or indirectly, 100% of the
capital stock of each Guarantor;
WHEREAS, it is a condition precedent to the making of Revolving
Loans under the Credit Agreement that each Guarantor shall have executed and
delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of
Revolving Loans by the Company under the Credit Agreement and, accordingly,
desires to execute this Guaranty in order to satisfy the conditions described in
the preceding paragraph and to induce the Banks to make Revolving Loans to the
Company;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:
1. Each Guarantor, jointly and severally, irrevocably and
unconditionally, guarantees (i) to the Bank Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the Revolving Loans made to (and to the
extent issued, the Notes issued by) the Company under the Credit Agreement and
(y) all other obligations (including obligations which, but for the automatic
stay under Section 362(a) of the Bankruptcy Code, would become due) and
liabilities owing by the Company to the Bank Creditors under the Credit
Agreement (including, without limitation, indemnities, Fees and interest
thereon) now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement or any other Credit Document and the due
performance and compliance with the terms of the Credit Documents by the Company
(all such principal, interest, liabilities and obligations being herein
collectively called the "Credit Agreement Obligations") and (ii) to each
Interest Rate Protection Creditor the full and prompt payment when due (whether
at the stated maturity, by acceleration or otherwise) of all obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) and liabilities owing by the Company
under any Interest Rate Protection Agreements, whether now in existence or
hereafter arising, and the
3
<PAGE>
due performance and compliance by the Company with all terms, conditions and
agreements contained therein (all such obligations and liabilities being herein
collectively called the "Interest Rate Protection Obligations", and together
with the Credit Agreement Obligations, collectively, the "Guaranteed
Obligations"). Each Guarantor understands, agrees and confirms that the
Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against each Guarantor without proceeding against any other
Guarantor or the Company, against any security for the Guaranteed Obligations,
or under any other guaranty covering all or a portion of the Guaranteed
Obligations. All payments by each Guarantor under this Guaranty shall be made on
the same basis as payments by the Company under Sections 3.03 and 3.04 of the
Credit Agreement.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations of the Company to the Creditors whether or not due or
payable by the Company upon the occurrence in respect of the Company of any of
the events specified in Section 8.05 of the Credit Agreement, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Creditors, or order, on demand, in lawful money of
the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of the
Company whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other party, and the liability of each Guarantor hereunder
shall not be affected or impaired by (a) any direction as to application of
payment by the Company or by any other party, (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the indebtedness of the Company, (c) any payment on or in reduction of any
such other guaranty or undertaking, (d) any dissolution, termination or
increase, decrease or change in personnel by the Company or (e) any payment made
to any Creditor on the indebtedness which any Creditor repays the Company
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.
4. The obligations of each Guarantor hereunder are independent of
the obligations of any other Guarantor, any other guarantor or the Company, and
a separate action or actions may be brought and prosecuted against each
Guarantor
4
<PAGE>
whether or not action is brought against any other Guarantor, any other
guarantor or the Company and whether or not any other Guarantor, any other
guarantor or the Company be joined in any such action or actions. Each Guarantor
waives, to the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by the Company or other circumstance which operates to toll any statute
of limitations as to the Company shall operate to toll the statute of
limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by the Administrative Agent or any other Creditor against, and any other notice
to, any party liable thereon (including such Guarantor or any other guarantor).
6. Any Creditor may at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
there against;
(c) exercise or refrain from exercising any rights against the
Company or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations, any
5
<PAGE>
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Company to creditors of such
Company;
(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Company to the Creditors regardless of
what liabilities of the Company remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements, the Credit
Documents or any of the instruments or agreements referred to therein, or
otherwise amend, modify or supplement any of the Interest Rate Protection
Agreements, the Credit Documents or any of such other instruments or agree
ments; and/or
(g) act or fail to act in any manner referred to in this Guaranty
which may deprive such Guarantor of its right to subrogation against the
Company to recover full indemnity for any payments made pursuant to this
Guaranty.
7. No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any Guarantor
in any case shall entitle such Guarantor to any other further notice or demand
in similar or other circumstances or
6
<PAGE>
constitute a waiver of the rights of any Creditor to any other or further action
in any circum stances without notice or demand. It is not necessary for any
Creditor to inquire into the capacity or powers of the Company or any of their
Subsidiaries or the officers, directors, partners or agents acting or purporting
to act on their behalf, and any indebtedness made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.
9. Any indebtedness of the Company now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Company to the
Creditors; and such indebtedness of the Company to any Guarantor, if the
Administrative Agent, after an Event of Default has occurred, so requests, shall
be collected, enforced and received by such Guarantor as trustee for the
Creditors and be paid over to the Creditors on account of the indebtedness of
the Company to the Creditors, but without affecting or impairing in any manner
the liability of such Guarantor under the other provisions of this Guaranty.
Prior to the transfer by any Guarantor of any note or negotiable instrument
evidencing any indebtedness of the Company to such Guarantor, such Guarantor
shall mark such note or negotiable instrument with a legend that the same is
subject to this subordination. Without limiting the generality of the foregoing,
each Guarantor hereby agrees with the Creditors that it will not exercise any
right of subrogation which it may at any time otherwise have as a result of this
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until the Total Revolving Loan Commitment has terminated and all
Guaranteed Obligations have been irrevocably paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be required
by applicable statute and cannot be waived) to require the Creditors to (A)
proceed against the Company, any other Guarantor, any other guarantor or any
other party, (B) proceed against or exhaust any security held from the Company,
any other Guarantor, any other guarantor or any other party or (C) pursue any
other remedy in the Creditors' power whatsoever. Each Guarantor waives any
defense based on or arising out of any defense of the Company, any other
Guarantor, any other guarantor or any other party other than payment in full of
the Guaranteed Obligations, including without limitation any defense based on or
arising out of the disability of the Company, any other Guarantor, any other
guarantor or any other party, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Company other than payment in full of the Guaranteed
Obligations. The Creditors may, at their election, foreclose on any security
held by the Administrative Agent or the other Creditors by one or more
7
<PAGE>
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy the Creditors may have against the
Company or any other party, or any security, without affecting or impairing in
any way the liability of any Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid in full. Each Guarantor waives any defense
arising out of any such election by the Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against the Company or any other party
or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Company's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
11. The Creditors agree that this Guaranty may be enforced only by
the action of the Administrative Agent acting upon the instructions of the
Required Banks and that no Creditor shall have any right individually to seek to
enforce or to enforce this Guaranty, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent for the benefit
of the Creditors upon the terms of this Guaranty. The Creditors further agree
that this Guaranty may not be enforced against any director, officer, employee
or stockholder of any Guarantor.
12. In order to induce the Banks to make Revolving Loans pursuant to
the Credit Agreement, and in order to induce the Interest Rate Protection
Creditors to execute, deliver and perform the Interest Rate Protection
Agreements, each Guarantor represents, warrants and covenants that:
(a) Such Guarantor and each of its Restricted Subsidiaries (i) is a
duly organized and validly existing corporation under the laws of the
jurisdiction of its incorporation and has the corporate power and
authority to own its property and assets and to transact the business in
which it is engaged and presently
8
<PAGE>
proposes to engage (ii) is in good standing under the laws of the
jurisdiction of its organization and (iii) is duly qualified and is
authorized to do business and is in good standing in all jurisdictions
where it is required to be so qualified, except, in the case of clauses
(ii) and (iii) above, for such failures to be in good standing and
failures to be so qualified which, in the aggregate, would not have a
material adverse effect on the condition (financial or otherwise),
operations, assets, liabilities or prospects of the Company and its
Restricted Subsidiaries taken as a whole.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and has
taken all necessary corporate action to authorize the execution, delivery
and performance by it of this Guaranty. Such Guarantor has duly executed
and delivered this Guaranty, and this Guaranty constitutes the legal,
valid and binding obligation of such Guarantor enforceable in accordance
with its terms, except to the extent that the enforceability hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at
law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty, nor compliance by it with the terms and provisions
hereof, (i) will contravene in any material respect any applicable
provision of any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of any of
the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of such
Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or
other material agreement or instrument to which such Guarantor or any of
its Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the Certificate of Incorporation or By-Laws of such Guarantor
or any of its Subsi diaries.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by,
any
9
<PAGE>
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Guaranty, or (ii) the
legality, validity, binding effect or enforceability of this Guaranty,
except those which have been obtained or made.
13. Each Guarantor covenants and agrees that on and after the date
hereof and until the termination of the Total Revolving Loan Commitment and all
Interest Rate Protection Agreements and when no Note remains outstanding and all
Guaranteed Obligations have been paid in full, such Guarantor shall take, or
will refrain from taking, as the case may be, all actions that are necessary to
be taken or not taken so that no violation of any provision, covenant or
agreement contained in Section 6 or 7 of the Credit Agreement, and so that no
Event of Default, is caused by the actions of such Guarantor or any of its
Subsidiaries.
14. The Guarantors hereby jointly and severally agree to pay all
reasonable out-of-pocket costs and expenses (x) of each Creditor in connection
with the enforcement of this Guaranty and, after an Event of Default shall have
occurred and be continuing, the protection of such Creditor's rights hereunder
and (y) of the Administrative Agent in connection with any amendment, waiver or
consent relating hereto (including, without limitation, the reasonable fees and
disbursements of counsel (including in-house counsel) employed by any of the
Creditors or by the Administrative Agent, as the case may be).
15. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
16. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of the Required
Banks (or to the extent required by Section 11.12 of the Credit Agreement, with
the written consent of each Bank) and each Guarantor affected thereby (it being
understood that the addition or release of any Guarantor hereunder shall not
constitute a change, waiver, discharge or termination affecting any Guarantor
other than the Guarantor so added or released).
17. Each Guarantor acknowledges that an executed (or conformed) copy
of each of the Credit Documents has been made available to its principal
executive
10
<PAGE>
officers and such officers are familiar with the contents thereof.
18. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement or
any payment default under any Interest Rate Protection Agreement continuing
after any applicable grace period), each Creditor is hereby authorized at any
time or from time to time, without notice to any Guarantor or to any other
Person, any such notice being expressly waived, to set off and to appropriate
and apply any and all deposits (general or special) and any other indebtedness
at any time held or owing by such Creditor to or for the credit or the account
of such Guarantor, against and on account of the obligations and liabilities of
such Guarantor to such Creditor under this Guaranty, irrespective of whether or
not such Creditor shall have made any demand hereunder and although said
obligations, liabilities, deposits or claims, or any of them, shall be
contingent or unmatured.
19. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the Credit Agreement, (ii)
in the case of any Guarantor, at its address set forth opposite its signature
below and (iii) in the case of any Interest Rate Protection Creditor, at such
address as such Interest Rate Protection Creditor shall have specified in
writing to the Guarantors; or in any case at such other address as any of the
Persons listed above may hereafter notify the others in writing.
20. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (b) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Company), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
of any other instrument evidenc ing any liability of the Company, and such
Guarantor shall be and remain liable to the
11
<PAGE>
aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee.
21. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE CREDITORS
AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty or any other Credit Document may be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Guaranty,
each Guarantor hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts and
hereby irrevocably waives any right it may have to object to the laying of venue
of any such action or proceeding in the aforesaid courts and hereby further
irrevocably waives and agrees not to plead or claim that any such action or
proceeding has been brought in an inconvenient forum. Each Guarantor irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
each Guarantor at its address set forth opposite its signature below; such
service to become effective 30 days after such mailing. Each Guarantor hereby
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
any of the Creditors to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any Guarantor in any
other jurisdiction.
22. In the event that (x) all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 7.02 of the Credit Agreement (or such sale or other
disposition has been approved in writing by the Required Banks (or all Banks if
required by Section 11.12 of the Credit Agreement)) and the proceeds of such
sale, disposition or liquidation are applied in accordance with the provisions
of the Credit Agreement, to the extent applicable, or (y) the Company designates
any Guarantor which is a Partially-Owned Restricted Subsidiary as an Excluded
Domestic Restricted Subsidiary by making a Non-Guarantor Designation with
respect to such Guarantor in accordance with the terms of the Credit Agreement,
such Guarantor shall be released from this Guaranty and this Guaranty shall, as
to each such Guarantor or Guarantors, terminate, and have no further force or
effect (it being understood and agreed that the sale of any Person that owns,
directly or indirectly, the capital stock of any Guarantor shall be deemed to be
a sale of such Guarantor for the purposes of this Section 22).
12
<PAGE>
23. This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Guarantors and the Administrative
Agent.
24. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
25. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense.
26. At each time that (x) each Restricted Subsidiary of the Company
is formed or acquired after the Initial Borrowing Date except, with respect to
any newly formed or acquired Partially-Owned Restricted Subsidiary, to the
extent the Company shall have made a Non-Guarantor Designation as to such
Partially-Owned Restricted Subsidiary or (y) any Excluded Domestic Restricted
Subsidiary is designated by the Company as a Subsidiary Guarantor, in each case,
in accordance with the terms of the Credit Agreement, it shall (unless otherwise
agreed in writing by the Required Banks, or to the extent required by Section
11.12 of the Credit Agreement, by all of the Banks) upon execution of a
counterpart of this Guaranty or of a Subsidiary Assumption Agreement become a
Guarantor for all purposes of this Guaranty.
* * * *
13
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
<PAGE>
Address for each Guarantor
- --------------------------
745 Fifth Avenue
New York, New York 10151
Attention: Beverly Chell, Esq.
Telephone No.: (212) 745-0101 ARGUS PUBLISHERS CORPORATION
AMERICAN HEAT VIDEO PRODUCTIONS, INC.
Telecopier No.: (212) 745-0199 ASTN, INC.
A WEP COMPANY
BACON'S INFORMATION, INC.
BANKERS CONSULTING COMPANY
CHANNEL ONE COMMUNICATIONS
CORPORATION
DAILY RACING FORM, INC.
DATA BOOK, INC.
DRF FINANCE, INC.
THE ELECTRONICS SOURCE BOOK, INC.
EXCELLENCE IN TRAINING CORPORATION
FUNK & WAGNALLS YEARBOOK CORP.
GARETH STEVENS, INC.
HAAS PUBLISHING COMPANIES, INC.
HEALTH & SCIENCES NETWORK, INC.
IDTN LEASING CORPORATION
INDUSTRIAL TRAINING SYSTEMS
CORPORATION
INTERMODAL PUBLISHING COMPANY, LTD.
INTERTEC MARKET REPORTS, INC.
INTERTEC PRESENTATIONS, INC.
INTERTEC PUBLISHING CORPORATION
K-III DIRECTORY CORPORATION
K-III HOLDINGS CORPORATION III
K-III HPC, INC.
K-III KG CORPORATION - MASSACHUSETTS
K-III MAGAZINE CORPORATION
<PAGE>
K-III MAGAZINE FINANCE CORPORATION
K-III PRIME CORPORATION
K-III REFERENCE CORPORATION
THE KATHARINE GIBBS CORPORATION -
MELVILLE
THE KATHARINE GIBBS CORPORATION -
NEW YORK
THE KATHARINE GIBBS SCHOOL OF
MONTCLAIR, INC.
THE KATHARINE GIBBS SCHOOL OF
NORWALK, INC.
THE KATHARINE GIBBS SCHOOL OF
PISCATAWAY, INC.
THE KATHARINE GIBBS SCHOOL OF
PROVIDENCE, INC.
THE KATHARINE GIBBS SCHOOLS, INC.
KRAMES COMMUNICATIONS INCORPORATED
LAW ENFORCEMENT TELEVISION NETWORK,
INC. (Texas)
LAW ENFORCEMENT TELEVISION NETWORK,
INC. (Delaware)
LIFETIME LEARNING SYSTEMS, INC.
LOCKERT JACKSON & ASSOCIATES, INC.
MCMULLEN ARGUS PUBLISHING, INC.
MH WEST,INC.
MUSICAL AMERICAN PUBLISHING, INC.
NELSON INFORMATION, INC.
NEWBRIDGE COMMUNICATIONS, INC.
PARAMOUNT PUBLISHING, INC.
PJS PUBLICATIONS, INC.
QWIZ ACQUISITION CORPORATION
R.E.R. PUBLISHING CORPORATION
STAGEBILL, INC.
STRAIGHT DOWN, INC.
SYMBOLS OF EXCELLENCE PUBLISHERS, INC.
TEL-A-TRAIN, INC.
TI-IN ACQUISITION CORPORATION
TUNNELL PUBLICATIONS, INC.
<PAGE>
WEEKLY READER CORPORATION
WESTCOTT COMMUNICATIONS, INC.
WESTCOTT COMMUNICATIONS MICHIGAN,
INC.
WESTCOTT ECI, INC.
WESTERN EMPIRE PUBLICATIONS, INC.
By______________________________________
Title
<PAGE>
Accepted and Agreed to:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By____________________________
Title:
<PAGE>
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT, dated as of April 21, 1997, among each of
the Subsidiary Guarantors (as defined in the Credit Agreement referred to below)
of K-III Communications Corporation (the "Company") listed on the signature
pages hereto (each a "Guarantor" and together with any other entity that becomes
a party hereto pursuant to Section 11 hereof, the "Guarantors"). As used herein,
the term "Contributor" shall mean each of the Guarantors required to make any
payment to any other Guarantor pursuant to Section 1 of this Contribution
Agreement. Except as otherwise defined herein, capitalized terms used herein and
not otherwise defined shall have the meaning assigned to those terms in the
Credit Agreement (as hereinafter defined).
W I T N E S S E T H :
WHEREAS, the Company, various lending institutions from time to time
party thereto (the "Banks"), The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent, and The
Chase Manhattan Bank, as Administrative Agent, have entered into a Credit
Agreement, dated as of April 21, 1997 (as amended, modified or supplemented from
time to time, the "Credit Agreement"), providing for the making of Revolving
Loans as contemplated therein;
WHEREAS, it is a condition precedent to the making of Revolving
Loans under the Credit Agreement that each Guarantor shall have executed and
delivered the Subsidiary Guaranty;
WHEREAS, each Guarantor will obtain benefits from the incurrence of
Revolving Loans by the Company under the Credit Agreement and, accordingly, each
Guarantor has executed and delivered the Subsidiary Guaranty in order to satisfy
the condition precedent described in the preceding paragraph and to induce the
Banks to
<PAGE>
make Revolving Loans to the Company;
WHEREAS, pursuant to the Subsidiary Guaranty, each of the Guarantors
has agreed unconditionally and irrevocably, and jointly and severally, to
guaranty as primary obligor and not merely as surety the Guaranteed Obligations
(as defined in the Subsidiary Guaranty); and
WHEREAS, the Guarantors wish to enter into this Contribution
Agreement to effect an equitable sharing of the Guaranteed Obligations;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. CONTRIBUTION. At any time a payment in respect of the Guaranteed
Obligations is made under the Subsidiary Guaranty, the right of contribution, if
any, of each Guarantor against each Contributor shall be determined as provided
in the immediately following sentence, with the right of contribution of each
Guarantor to be revised and restated as of each date on which a payment (a
"Relevant Payment") is made on the Guaranteed Obligations under the Subsidiary
Guaranty. At any time that a Relevant Payment is made by a Guarantor that
results in the aggregate payments made by such Guarantor in respect of the
Guaranteed Obligations to and including the date of the Relevant Payment
exceeding such Guarantor's Contribution Percentage (as hereinafter defined) of
the aggregate payments made by all Guarantors in respect of the Guaranteed
Obligations to and including the date of the Relevant Payment (such excess, the
"Aggregate Excess Amount"), each such Guarantor shall have a right of
contribution against each Contributor who has made payments in respect of the
Guaranteed Obligations to and including the date of the Relevant Payment in an
aggregate amount less than such Contributor's Contribution Percentage of the
aggregate payments made to and including the date of the Relevant Payment by all
Guarantors in respect of the Guaranteed Obligations (the aggregate amount of
such deficit, the "Aggregate Deficit Amount") in an amount equal to (x) a
fraction the numerator of which is the Aggregate Excess Amount of such Guarantor
and the denominator of which is the Aggregate Excess Amount of all Guarantors
multiplied by (y) the Aggregate Deficit Amount of such Contributor. A
Guarantor's right of contribution, if any, pursuant to the preceding sentences
shall arise at the time of each computation, subject to adjustment to the time
of any subsequent computation; provided, that no Guarantor may take any action
to enforce such right until the Guaranteed Obligations have been paid in full
and the Total Revolving Loan Commitment has been terminated, it being expressly
recognized and agreed by all parties hereto that any Guarantor's right of
contribution arising pursuant to this
2
<PAGE>
Contribution Agreement against any Contributor shall be expressly junior and
subordinate to such Contributor's obligations and liabilities in respect of the
Guaranteed Obligations and any other obligations owing under the Subsidiary
Guaranty. As used in this Agreement, (i) each Contributor's "Contribution
Percentage" shall mean the percentage obtained by dividing (x) the Adjusted Net
Worth of such Contributor by (y) the aggregate Adjusted Net Worth of all
Guarantors; (ii) the "Adjusted Net Worth" of each Guarantor shall mean the
greater of (x) the Net Worth of such Guarantor or (y) zero; and (iii) the "Net
Worth" of each Guarantor shall mean the amount by which the fair salable value
of such Guarantor's assets on the Initial Borrowing Date exceeds its existing
debts and other liabilities (including contingent liabilities, but without
giving effect to (1) any Guaranteed Obligations arising under the Subsidiary
Guaranty, (2) the obligations of such Guarantor in respect of the Additional
Facility Documents, (3) any obligations arising under Article 10 of the
respective indentures governing the terms of the Senior Notes and (4) any
obligations of such Guarantor in respect of the Company's other Indebtedness for
borrowed money), in each case after giving effect to the transactions occurring
on the Initial Borrowing Date.
2. NO OTHER CONTRIBUTION OR SUBROGATION RIGHTS. All parties hereto
recognize and agree that, except for any right of contribution arising pursuant
to Section 1, each Guarantor who makes any payment in respect of the Guaranteed
Obligations shall have no right of contribution or subrogation against any other
Guarantor in respect of such payment, any such right of contribution or
subrogation arising under law or otherwise being expressly waived by all
Guarantors.
3. CONTRIBUTION RIGHT AS AN ASSET. Each of the Guarantors recognizes
and acknowledges that the rights to contribution arising hereunder shall
constitute an asset in favor of the party entitled to such contribution. In this
connection, each Guarantor has the right to waive its contribution right against
any other Guarantor to the extent that after giving effect to such waiver such
Guarantor would remain solvent, in the determination of the Required Banks.
4. AMENDMENT OR WAIVER. Any provision of this Contribution Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the parties hereto and consented to by the Required Banks.
5. BENEFIT OF AGREEMENT. The provisions of this Contribution
Agreement shall be binding upon and inure to the benefit of the parties hereto
and
3
<PAGE>
their respective successors and assigns. To the extent any such successor shall
be a successor to all or part of the assets of a Guarantor, such successor shall
also constitute a Guarantor, with a Contribution Percentage equal to the
Contribution Percentage of the predecessor corporation or as otherwise consented
to by the Required Banks.
6. PRESERVATION OF RIGHTS. This Contribution Agreement shall not
limit any right which any Guarantor may have against any other Person which is
not a party hereto.
7. TERMINATION. This Contribution Agreement, as it may be amended,
supplemented or otherwise modified from time to time, shall remain in effect and
shall not be terminated as to any Guaranteed Obligation until such Guaranteed
Obligation has been discharged or otherwise satisfied in accordance with the
laws of the State of New York.
8. GOVERNING LAW. THIS CONTRIBUTION AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
9. COUNTERPARTS. This Contribution Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
10. EFFECTIVENESS. This Contribution Agreement shall become
effective upon execution hereof by each such party and delivery of executed
counterparts hereof by them to the Administrative Agent.
11. ADDITIONAL GUARANTORS. At each time that (x) each Restricted
Subsidiary of the Company is formed or acquired after the Initial Borrowing Date
except, with respect to any newly formed or acquired Partially-Owned Restricted
Subsidiary, to the extent the Company shall have made a Non-Guarantor
Designation as to such Partially-Owned Restricted Subsidiary or (y) any Excluded
Domestic Restricted Subsidiary is designated by the Company as a Subsidiary
Guarantor, in each case, in accordance with the terms of the Credit Agreement,
it shall upon execution of a counterpart hereof or of a Subsidiary Assumption
Agreement become a Guarantor for all purposes of this Contribution Agreement.
4
<PAGE>
* * * *
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Contribution
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
<PAGE>
ARGUS PUBLISHERS CORPORATION
AMERICAN HEAT VIDEO PRODUCTIONS, INC.
ASTN, INC.
A WEP COMPANY
BACON'S INFORMATION, INC.
BANKERS CONSULTING COMPANY
CHANNEL ONE COMMUNICATIONS
CORPORATION
DAILY RACING FORM, INC.
DATA BOOK, INC.
DRF FINANCE, INC.
THE ELECTRONICS SOURCE BOOK, INC.
EXCELLENCE IN TRAINING CORPORATION
FUNK & WAGNALLS YEARBOOK CORP.
GARETH STEVENS, INC.
HAAS PUBLISHING COMPANIES, INC.
HEALTH & SCIENCES NETWORK, INC.
IDTN LEASING CORPORATION
INDUSTRIAL TRAINING SYSTEMS
CORPORATION
INTERMODAL PUBLISHING COMPANY, LTD.
INTERTEC MARKET REPORTS, INC.
INTERTEC PRESENTATIONS, INC.
INTERTEC PUBLISHING CORPORATION
K-III DIRECTORY CORPORATION
K-III HOLDINGS CORPORATION III
K-III HPC, INC.
K-III KG CORPORATION - MASSACHUSETTS
K-III MAGAZINE CORPORATION
K-III MAGAZINE FINANCE CORPORATION
K-III PRIME CORPORATION
K-III REFERENCE CORPORATION
THE KATHARINE GIBBS CORPORATION -
MELVILLE
<PAGE>
THE KATHARINE GIBBS CORPORATION -
NEW YORK
<PAGE>
THE KATHARINE GIBBS SCHOOL OF
MONTCLAIR, INC.
THE KATHARINE GIBBS SCHOOL OF
NORWALK, INC.
THE KATHARINE GIBBS SCHOOL OF
PISCATAWAY, INC.
THE KATHARINE GIBBS SCHOOL OF
PROVIDENCE, INC.
THE KATHARINE GIBBS SCHOOLS, INC.
KRAMES COMMUNICATIONS INCORPORATED
LAW ENFORCEMENT TELEVISION NETWORK,
INC. (Texas)
LAW ENFORCEMENT TELEVISION NETWORK,
INC. (Delaware)
LIFETIME LEARNING SYSTEMS, INC.
LOCKERT JACKSON & ASSOCIATES, INC.
MCMULLEN ARGUS PUBLISHING, INC.
MH WEST,INC.
MUSICAL AMERICAN PUBLISHING, INC.
NELSON INFORMATION, INC.
NEWBRIDGE COMMUNICATIONS, INC.
PARAMOUNT PUBLISHING, INC.
PJS PUBLICATIONS, INC.
QWIZ ACQUISITION CORPORATION
R.E.R. PUBLISHING CORPORATION
STAGEBILL, INC.
STRAIGHT DOWN, INC.
SYMBOLS OF EXCELLENCE PUBLISHERS, INC.
TEL-A-TRAIN, INC.
TI-IN ACQUISITION CORPORATION
TUNNELL PUBLICATIONS, INC.
WEEKLY READER CORPORATION
WESTCOTT COMMUNICATIONS, INC.
<PAGE>
WESTCOTT COMMUNICATIONS MICHIGAN,
INC.
WESTCOTT ECI, INC.
WESTERN EMPIRE PUBLICATIONS, INC.
By__________________________
Title:
<PAGE>
Exhibit 21
SUBSIDIARIES OF K-III
The Apartment Guide of Nashville, Inc.
Argus Publishers Corporation
American Heat Video Productions, Inc.
ASTN, Inc.
A WEP Company
Bacon's Information, Inc.
Bankers Consulting Company
Cardinal Business Media, Inc.
Cardinal Business Media Holdings, Inc.
Channel One Communications Corp.
Cover Concepts Marketing Services, LLC
CSK Publishing Company Incorporated
DRF Finance, Inc.
Daily Racing Form, Inc.
Data Book, Inc.
The Electronics Source Book, Inc.
Excellence in Training Corporation
Films for the Humanities & Sciences, Inc.
Funk & Wagnalls Yearbook Corp.
Gareth Stevens, Inc.
GO LO Entertainment, Inc.
Guinn Communications, Inc.
Haas Publishing Companies, Inc.
Health & Sciences Network, Inc.
Intermodal Publishing Company, Ltd.
IDTN Leasing Corporation
Industrial Training Systems Corporation
IntelliChoice, Inc.
Intertec Market Reports, Inc.
Intertec Presentations, Inc.
Intertec Publishing Corporation
K-III HPC, Inc.
K-III Prime Corporation
Law Enforcement Television Network, Inc.
Lifetime Learning Systems, Inc.
Little Rock Apartment Guide, Inc.
Lockert Jackson & Associates, Inc.
McMullen Argus Publishing, Inc.
Memphis Apartment Guide, Inc.
Musical America Publishing, Inc.
Nelson Information, Inc.
Park Avenue Publishing, Inc.
Pictorial, Inc.
Plaza Communications, Inc.
PRIMEDIA Holdings III Inc.
PRIMEDIA Information Inc.
PRIMEDIA Magazines Inc.
PRIMEDIA Magazines Finance Inc.
PRIMEDIA Reference Inc.
PRIMEDIA Special Interest Publications Inc
PRIMEDIA Workplace Learning, Inc.
QWIZ, Inc.
R.E.R. Publishing Corporation
Straight Down, Inc.
Symbol of Excellence Publishers, Inc.
Tel-A-Train, Inc.
TI-IN Aquisition Corporation
Weekly Reader Corporation
Westcott Communications Michigan, Inc.
Westcott ECI, Inc.
Western Empire Publications, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000884382
<NAME> PRIMEDIA INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 22,978
<SECURITIES> 0
<RECEIVABLES> 236,819
<ALLOWANCES> 37,530
<INVENTORY> 27,597
<CURRENT-ASSETS> 322,500
<PP&E> 209,812
<DEPRECIATION> 93,451
<TOTAL-ASSETS> 2,485,990
<CURRENT-LIABILITIES> 468,745
<BONDS> 1,656,541
470,280
0
<COMMON> 785,865
<OTHER-SE> (943,712)
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<RESTATED>
<CIK> 0000884382
<NAME> PRIMEDIA INC.
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<S> <C> <C>
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<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 DEC-31-1996
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231,606 442,729
0 0
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