<PAGE>
REGISTRATION NO. 333-41169
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
T/SF COMMUNICATIONS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 8732 73-1341805
(Primary Standard (I.R.S. Employer
(State or Other Industrial Identification Number)
Jurisdictionof Classification Code
Incorporation or Number)
Organization) -------------------------
888 SEVENTH AVENUE, 28TH FLOOR, NEW YORK, NEW YORK 10106 (212) 247-5160
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
-------------------------
BRIAN A. MEYER, ESQ.
GENERAL COUNSEL T/SF COMMUNICATIONS CORPORATION 888 SEVENTH AVENUE, 28TH FLOOR
NEW YORK, NEW YORK 10106 (212) 247-5160
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Agent For Service)
-------------------------
WITH A COPY TO: BERTRAM A. ABRAMS, ESQ. PROSKAUER ROSE LLP 1585 BROADWAY NEW
YORK, NEW YORK 10036-8299
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
-------------------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF MAXIMUM MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
10 3/8% Series B Senior
Subordinated Notes Due
2007.................. $100,000,000 100% $100,000,000 $30,303.03(2)
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Senior Subordinated
Guarantees(3)......... -- -- -- --
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
(2) All of which was previously paid.
(3) The following subsidiaries of T/SF Communications Corporation are Co-
Registrants, organized in the state and having the IRS Employer
Identification Number indicated: T/SF Holdings, LLC, a Delaware limited
liability company (Application Pending), T/SF Operating, LLC, a Delaware
limited liability company (Application Pending), Galaxy Registration, LLC,
a Delaware limited liability company (Application Pending), Atwood
Publishing, LLC, a Delaware limited liability company (Application
Pending), GEM Gaming, LLC, a Delaware limited liability company
(Application Pending), GEM Nevada, LLC, a Nevada limited liability company
(Application Pending), Casino Executive, LLC, a Nevada limited liability
company (Application Pending), EXPO Magazine, LLC, a Delaware limited
liability company (Application Pending), Atwood Convention Publishing,
Inc., a Missouri corporation (43-1293631), Casino Publishing Company, a
Minnesota corporation (41-1843537), CORSEARCH, Inc., a Delaware
corporation (13-3170504), Crimesearch, Inc., an Oklahoma corporation (73-
1379996), EXPO Magazine, Inc., a Kansas corporation (48-1116767), Galaxy
Design & Printing, Inc., a Maryland corporation (52-1604593), Galaxy
Registration, Inc., a Maryland corporation (52-1233780), G.E.M.
Communications, Inc., an Oklahoma corporation (73-1288439), Transportation
Communications Services, Inc., an Oklahoma corporation (73-1290105), T/SF
Europe, Inc., an Oklahoma corporation (73-1282094, T/SF Investment Co., a
Delaware corporation (51-0331196), T/SF of Nevada, Inc., a Nevada
corporation (73-1483276), and Transportation Information Services, Inc.,
an Oklahoma corporation (73-1168954). The Co-Registrants unconditionally
guarantee, on an unsecured senior subordinated basis, the 10 3/8% Series B
Senior Subordinated Notes Due 2007. No additional consideration will be
paid in respect of these guarantees.
-------------------------
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
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<PAGE>
OFFER TO EXCHANGE
ALL OUTSTANDING
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
($100,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
10 3/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
OF
T/SF COMMUNICATIONS CORPORATION
----------------
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON MARCH 10, 1998, UNLESS
EXTENDED
----------------
T/SF Communications Corporation, a Delaware corporation (the "Issuer"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal," and together with this Prospectus, the "Exchange Offer"), to
exchange $1,000 principal amount of 10 3/8% Series B Senior Subordinated Notes
Due 2007 of the Issuer (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus
constitutes a part, for each $1,000 principal amount of the outstanding 10
3/8% Senior Subordinated Notes Due 2007 of the Issuer (the "Old Notes"), of
which $100,000,000 principal amount is outstanding. The New Notes and the Old
Notes are collectively referred to herein as the "Notes."
The Issuer will accept for exchange any and all Old Notes that are validly
tendered on or prior to 5:00 p.m., New York City time, on the date the
Exchange Offer expires, which will be March 10, 1998, unless the Exchange
Offer is extended (the "Expiration Date"). Tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the business
day prior to the Expiration Date, unless previously accepted for payment. The
Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange. However, the Exchange Offer is subject to
certain conditions which may be waived by the Issuer and to the terms and
provisions of the Registration Rights Agreement (as defined herein). See "The
Exchange Offer." Old Notes may be tendered only in denominations of $1,000 and
integral multiples thereof. The Issuer has agreed to pay the expenses of the
Exchange Offer.
The New Notes will be general unsecured obligations of the Issuer, entitled
to the benefits of the Indenture (as defined herein) relating to the Old
Notes, and ranking subordinate in right of payment to all existing and future
Senior Debt (as defined herein) of the Issuer and senior in right of payment
to any subordinated indebtedness of the Issuer. As of September 30, 1997,
after giving effect to the Transactions (as defined herein) and the issuance
of the Old Notes, the Issuer would have had approximately $3.7 million
aggregate principal amount of Senior Debt outstanding. In addition, the Issuer
would have had $25.0 million of additional borrowing availability under the
Senior Credit Facility (as defined herein). The Notes are unconditionally
guaranteed, on an unsecured senior subordinated basis, by certain Guarantors
(as defined herein). See "Description of the Transactions," "Capitalization"
and "Description of the New Notes--Subordination."
(continued on following page)
SEE "RISK FACTORS" BEGINNING ON PAGE 19 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE NOTES.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is February 9, 1998.
<PAGE>
The indenture under which the Notes are issued (the "Indenture") permits the
Issuer and its subsidiaries to incur additional indebtedness, subject to
certain limitations. The form and terms of the New Notes are identical in all
material respects to the form and terms of the Old Notes except that the New
Notes have been registered under the Securities Act and will not contain terms
with respect to transfer restrictions or interest rate increases as described
herein. In addition, following the completion of the Exchange Offer, none of
the Notes will be entitled to the benefits of the provisions of the Exchange
Offer Registration Rights Agreement (as defined herein) relating to contingent
increases in the interest rates provided for pursuant thereto. See "The
Exchange Offer."
Interest on each New Note will accrue from the last Interest Payment Date
(as defined herein) on which interest was paid on the Old Note tendered in
exchange therefor or, if no interest has been paid on such tendered Old Note,
from October 29, 1997. Holders of Old Notes whose Old Notes are accepted for
exchange will be deemed to have waived the right to receive any payment in
respect of interest on the Old Notes accrued from the last Interest Payment
Date or October 29, 1997 (as the case may be) to the date of the issuance of
the New Notes. Interest on the New Notes is payable semi-annually on May 1 and
November 1 of each year, accruing from the last Interest Payment Date or
October 29, 1997 (as the case may be) at a rate of 10 3/8% per annum.
The New Notes will mature on November 1, 2007, unless previously redeemed,
and will not be subject to any sinking fund requirement. The New Notes will be
redeemable in cash at the option of the Issuer, in whole or in part, at any
time on or after November 1, 2002, at the redemption prices set forth herein,
plus accrued and unpaid interest thereon to the date of redemption. Prior to
November 1, 2000, the Issuer, at its option, may redeem in the aggregate up to
35% of the original principal amount of the Notes at 110.375% of the aggregate
principal amount so redeemed plus accrued and unpaid interest thereon to the
redemption date with the Net Proceeds (as defined herein) of one or more
Public Equity Offerings (as defined herein); provided that at least 65% of the
principal amount of the Notes originally issued remain outstanding immediately
after the occurrence of any such redemption and that any such redemption
occurs within 90 days following the closing of any such Public Equity
Offering. See "Description of the New Notes--Redemption--Optional Redemption."
In the event of a Change of Control (as defined herein), holders of the
Notes will have the right to require the Issuer to purchase their Notes at
101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon to the purchase date. See "Description of the Notes--Change
of Control." In addition, the Issuer is obligated in certain instances to make
offers to repurchase the Notes at a purchase price in cash equal to 100% of
the principal amount thereof plus accrued and unpaid interest thereon to the
date of repurchase with the net cash proceeds of certain asset sales. See
"Description of the New Notes--Certain Covenants--Limitation on Asset Sales."
Based on an interpretation of the Securities Act by the staff of the
Division of Corporate Finance (the "Staff") of the Securities and Exchange
Commission (the "Commission") set forth in several no-action letters to third
parties, and subject to the immediately following sentence, the Issuer
believes that the New Notes issued pursuant to the Exchange Offer may be
offered for resale, resold and otherwise transferred by holders thereof
without further compliance with the registration and prospectus delivery
provisions of the Securities Act. However, any purchaser of Notes who is an
"affiliate" of the Issuer or who intends to participate in the Exchange Offer
for the purpose of distributing the New Notes (i) will not be able to rely on
the interpretation by the staff of the Commission set forth in the above
referenced no-action letters, (ii) will not be able to tender Old Notes in the
Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the New Notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
2
<PAGE>
Each holder of the Old Notes who wishes to exchange Old Notes for New Notes
in the Exchange Offer will be required to make certain representations,
including that (i) any New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of such holder's business, (ii) such
holder has no arrangements with any person to participate in the distribution
of such New Notes and (iii) such holder is not an "affiliate," as defined
under Rule 405 of the Securities Act, of the Issuer or, if such holder is an
affiliate, that such holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable. If the
holder is not a broker-dealer, it will be required to represent that it is not
engaged in, and does not intend to engage in, a distribution of New Notes. If
the holder is a broker-dealer (a "Participating Broker-Dealer") that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
it will be required to acknowledge that it has no arrangements with any person
to participate in the distribution of the New Notes and that it will deliver a
prospectus in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus, such holder will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
To date, the Staff has taken the position that Participating Broker-Dealers
may fulfill their prospectus delivery requirements with respect to New Notes
(other than a resale of an unsold allotment from the original sale of the Old
Notes) with this Prospectus. Under the Registration Rights Agreement, the
Issuer is required to allow Participating Broker-Dealers and other persons, if
any, subject to similar prospectus delivery requirements to use this
Prospectus in connection with the resale of such New Notes. A broker-dealer
which purchased Old Notes from the Issuer may not participate in the Exchange
Offer. The Issuer will not receive any proceeds from the Exchange, and no
underwriter is being utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE ISSUER ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
The New Notes will be new securities for which there currently is no market.
Although First Union Capital Markets Corp. has informed the Issuer that it
currently intends to make a market in the New Notes, it is not obligated to do
so, and any such market making may be discontinued at any time without notice.
Accordingly, there can be no assurance as to the development or liquidity of
any market for the New Notes. The Issuer does not intend to apply for listing
of the New Notes on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System. The
Notes have been designated for trading in the Private Offering, Resales and
Trading through Automated Linkages ("PORTAL") Market of the National
Association of Securities Dealers, Inc.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... i
Incorporation of Certain Documents by Reference.......................... ii
Cautionary Statement Regarding Industry Forecasts........................ iii
Cautionary Statement Regarding Forward-Looking Statements................ iii
Summary.................................................................. 1
Risk Factors............................................................. 19
Description of the Transactions.......................................... 25
Use of Proceeds.......................................................... 27
Capitalization........................................................... 27
Unaudited Pro Forma Consolidated Financial Information................... 28
Selected Historical Consolidated Financial Data.......................... 37
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 39
The Exchange Offer....................................................... 45
Business................................................................. 53
Management............................................................... 65
Certain Relationships and Related Transactions........................... 71
Security Ownership of Certain Beneficial Owners and Management........... 71
Description of the Senior Credit Facility................................ 72
Description of the New Notes............................................. 73
Certain U.S. Federal Income Tax Consequences............................. 98
Plan of Distribution..................................................... 100
Legal Matters............................................................ 100
Independent Public Accountants........................................... 100
Index to Financial Statements............................................ F-1
</TABLE>
AVAILABLE INFORMATION
While any Notes remain outstanding, the Issuer will make available upon
request, to any holder and any prospective purchaser of Notes, the information
required pursuant to Rule 144A(d)(4) under the Securities Act during any
period in which the Issuer is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any such
request should be directed to the Chief Financial Officer of the Issuer.
The Issuer is no longer subject to the informational requirements of the
Exchange Act and the rules and regulations thereunder, its application to the
Commission to deregister the Common Stock (as defined herein) under the
Exchange Act having become effective on January 7, 1998. In accordance with
the Exchange Act and the rules and regulations thereunder, the Issuer
previously filed reports and other information with the Commission via EDGAR
and will, upon the effectiveness of the Registration Statement (as defined
herein), again be obligated to file such reports and information and expects
to file with the Commission via EDGAR such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act while any Notes remain outstanding. Such reports and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, as well as regional offices of the Commission at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10007. Copies of such material may also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington D.C. 20549, at
prescribed rates. Materials filed electronically with the Commission via EDGAR
may also be accessed through the Commission's home page on the World Wide Web
at http://www.sec.gov. The Issuer has delisted the Common Stock from the
American Stock Exchange
i
<PAGE>
(the "AMEX"), where the trading of shares of Common Stock previously was
reported. As of September 4, 1997, there were 1,611,472 shares of Common Stock
publicly held (for purposes of the AMEX) and 273 holders of record of the
shares of Common Stock outstanding. Following the consummation of the Tender
Offer (as defined herein), there were 101,969 shares of Common Stock publicly
held (for purposes of the AMEX) and approximately 113 holders of record of the
shares of Common Stock outstanding. Following the Second Step Transaction (as
defined herein), the only holders of record of the Common Stock will be the
Equity Investors (as defined herein). Pursuant to the AMEX's published
guidelines, shares of common stock are not eligible to be included for listing
if, among other things, the number of shares publicly held falls below
250,000, the number of record and beneficial holders of shares falls below 300
or the aggregate market value of such publicly held shares is $1,000,000.
Shares held directly or indirectly by an officer or director of the issuer or
by any beneficial owner of more than 5% of the shares of the issuer ordinarily
will not be considered as being publicly held for this purpose.
This Prospectus constitutes a part of a registration statement (the
"Registration Statement") filed via EDGAR by the Issuer with the Commission
under the Securities Act. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information contained
in the Registration Statement and the exhibits and schedules thereto and
reference is hereby made to the Registration Statement and the exhibits and
schedules thereto for further information with respect to the Issuer and the
securities offered hereby. Statements contained herein concerning the
provisions of any documents filed as an exhibit to the Registration Statement
or otherwise filed with the Commission are not necessarily complete, and in
each instance reference is made to the copy of such document so filed. Each
such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated in this Prospectus by reference as of their
respective dates: (i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, (ii) Report on Form 10-K/A filed with the Commission on or
about April 29, 1997, and (iii) Quarterly Reports on Form 10-Q for the three
months ended March 31, 1997 and the three months ended June 30, 1997. All
documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Notes shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document that is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The making of a modifying or superseding statement shall not be deemed an
admission for any purposes that the modified or superseded statement, when
made, constituted a misrepresentation, an untrue statement or a material fact
or an omission to state a material fact that is required to be stated or that
is necessary to make a statement not misleading in light of the circumstances
in which it was made.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, on the request of such person, a copy of any or
all of the documents incorporated herein by reference (other than exhibits
hereto, unless such exhibits are specifically incorporated by reference into
such documents). Written requests for such copies should be directed to
Corporate Secretary, T/SF Communications Corporation, 888 Seventh Avenue, 28th
Floor, New York, New York 10106. Telephone inquiries may be directed to
Corporate Secretary, at (212) 247-5160.
ii
<PAGE>
CAUTIONARY STATEMENT REGARDING INDUSTRY FORECASTS
Market data and certain industry forecasts used throughout this Prospectus
were obtained from internal surveys, market research, publicly available
information and industry publications. Industry publications generally state
that the information contained therein has been obtained from sources believed
to be reliable, but that the accuracy and completeness of such information is
not guaranteed. Similarly, internal surveys, industry forecasts and market
research, while believed to be reliable, have not been independently verified
and the Issuer does not make any representation as to the accuracy of such
information.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain
forward-looking statements. When used in this Prospectus, the words
"estimate," "project," "anticipate," "expect," "intend," "believe," "seek,"
"plan," as well as variations of such words and similar expressions, are
intended to identify forward-looking statements. While management believes
these statements are reasonable, prospective purchasers of the Notes should be
aware that actual results could differ materially from those projected by such
forward-looking statements as a result of the risk factors set forth in this
Prospectus, including, without limitation, in "Risk Factors," "Business," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," or other factors.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE ISSUER OR THE EXCHANGE AGENT (AS DEFINED HEREIN).
NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF
TRANSMITTAL, OR BOTH TOGETHER, NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF. NEITHER THIS PROSPECTUS NOR THE
ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
iii
<PAGE>
SUMMARY
This summary is qualified in its entirety by the more detailed information
and financial statements, including the notes thereto, appearing elsewhere in
this Prospectus. Except as the context otherwise requires, as used in this
Prospectus, all references to the Company refer to T/SF Communications
Corporation, its subsidiaries and, following the Drop Down Restructuring, the
LLCs (as such terms are defined herein).
THE COMPANY
The Company is a diversified business media company which principally
operates two lines of business: (i) business and professional information
services ("Information Services") and (ii) business to business communications,
publishing and related services ("Business to Business Communications").
Information Services includes: (i) Transportation Information Services, Inc.
("TISI"), which, with its proprietary database, is the leading provider of pre-
employment screening information used by the trucking industry to facilitate
compliance with U.S. Government regulations and (ii) CORSEARCH(R), Inc.
("CORSEARCH"), the second largest provider in the United States of trademark
and trade name research to law firms and corporations. Business to Business
Communications is conducted through several individual businesses, each of
which is characterized by leading competitive positions within specialized
market niches. Business to Business Communications includes: (i) Atwood
Convention Publishing, Inc. (together with its subsidiary and affiliates,
"Atwood"), the largest domestic independent publisher of exposition and
association related publications and directories; (ii) Galaxy Registration,
Inc. ("Galaxy"), the largest independent provider of trade show and convention
registration, exhibitor information and "lead" management services in the
United States and (iii) G.E.M. Communications, Inc. (together with its
subsidiaries and affiliates, "GEM"), which owns and operates the World Gaming
Congress(R), the world's largest trade show catering to the legalized gaming
industry, and publishes trade magazines directed to the legalized gaming
industry, principally IGWB (formerly International Gaming and Wagering
Business), the leading publication catering to gaming industry executives. On a
pro forma basis, the Company's consolidated revenues and adjusted EBITDA (as
defined herein) for the twelve-month period ended September 30, 1997 were
approximately $78.9 million and $17.3 million, respectively. Of such pro forma
consolidated revenues, approximately 40% represented Information Services and
approximately 60% represented Business to Business Communications. Of such pro
forma adjusted EBITDA, 55% represented Information Services and 45% represented
Business to Business Communications.
INFORMATION SERVICES
Information Services provides specialized information and database management
services to precise market segments. From October 1, 1992 through September 30,
1997, Information Services' revenues have grown at a compounded annual growth
rate of 22% (without any pro forma adjustment).
TISI, which since 1983 has operated its transportation services business
under the trade name DAC Services ("DAC"), is the leading supplier of
comprehensive pre-employment screening information to the trucking industry and
a provider of driving record-related and other risk assessment and underwriting
information to the insurance industry. DAC, endorsed by the American Trucking
Associations since 1986 and the trucking associations of 41 states, currently
maintains a computer network providing on-line electronic access to a
proprietary employment history database of over 2.6 million job records
concerning over 1.4 million truck drivers. This proprietary database, which is
DAC's key asset, is operated as an information cooperative through which DAC's
approximately 2,000 transportation industry members contribute employment
records in return for an economic credit against DAC services and the ability
to access DAC's employment history database. The Company is not aware of any
comparable databases offered by competitors and believes its large cooperative
membership and proprietary database represent significant competitive
advantages which would take a potential competitor several years to replicate.
1
<PAGE>
Management believes the demand for the information in its DAC database is
driven primarily by federal government regulation, the Company's ability to
provide the information on a timely basis and the Company's success in
marketing to the "truckload" segment of the trucking industry, which
historically exhibits high driver turnover.
DAC is an integral component of the U.S. trucking industry, providing
information services to over 5,600 transportation-related customers, including
its 2,000 members and 93 of the largest 100 U.S. "for hire" carriers. In
addition, 40 of the 41 largest U.S. "truckload" carriers and 30 of the 59
largest "route" carriers are contributing members to DAC's employment records
database. Non-member customers are precluded from accessing the cooperative
employment records database; however, they are provided access to DAC's other
services, including motor vehicles records ("MVRs") and criminal records.
DAC provides comprehensive information which is used by transportation
industry customers to satisfy current U.S. Department of Transportation ("DOT")
pre-employment screening requirements. Due to public safety concerns, DOT
regulations currently require trucking companies to investigate the driving
history, previous three-year employment history and, since 1995, previous drug
and alcohol test results of prospective drivers, but do not require previous
employers to respond to such inquiries. If certain proposed DOT regulations,
which would require previous employers to respond to such inquiries, are
adopted, management believes there could be greater demand for DAC's services.
In addition to providing MVRs to the transportation industry, TISI supplies
MVRs to the insurance industry for the screening of insurance applications.
TISI, endorsed by the Professional Insurance Agents' Association, provides over
5,000 insurance industry customers access to TISI's computer network to request
MVRs and other information. Approximately 85% of these customers are insurance
agents, with the remaining 15% representing branch offices, managing general
agents, brokers and a small number of regional and home office locations. These
customers primarily utilize TISI's data in assessing insurance underwriting
risk and also purchase TISI's workers' compensation and credit report
information.
CORSEARCH, acquired by the Company in 1996, is the second largest provider of
trademark and trade name search services in the United States. CORSEARCH
provides comprehensive trademark and trade name searches for over 1,100 law
firm and corporate clients. Management believes the increase in recent filings
of applications for new trademarks and trade names, a greater corporate
emphasis on protecting existing trademarks and trade names, growing Internet
usage and the increased international expansion of U.S. companies collectively
have created greater demand for CORSEARCH's services, and provide significant
opportunities to expand CORSEARCH's database operations. The U.S. Patent and
Trade Office ("PTO") estimates that the number of domestic trademark filings
will increase at a rate of 12% per annum through the year 2000. The number of
basic trademark and trade name searches executed by CORSEARCH grew from 13,795
in 1992 to 19,491 in 1996, a 41% increase.
CORSEARCH's highly trained, industry-focused researchers use CORSEARCH's
proprietary software, proprietary CORBASE(R) and CORSTATE(R) databases, third
party databases and, to a lesser extent, published resources for completing
customer searches. Although the majority of the information contained in
CORSEARCH's databases is publicly available from governmental authorities and
others, management believes that because of the cycle of intellectual property
registration renewals, it likely would take a new competitor several years to
compile a database containing the state registration information currently
maintained by CORSEARCH and its two primary competitors. New competitors may
purchase the federal database from the PTO, but significant computer
programming would be needed to make it usable. Management believes that
CORSEARCH, which competes primarily on the quality, accuracy and timeliness of
its data, provides a consistently high level of service to its clients.
BUSINESS TO BUSINESS COMMUNICATIONS
Business to Business Communications, through several individual businesses,
provides a wide range of business to business communications, publishing and
related services.
2
<PAGE>
Atwood, founded in 1982, is the leading independent publisher of daily trade
show and convention newspapers, directories and related publishing products
that are directed to the attendees of U.S. trade shows and conventions. During
1996, Atwood provided publishing, communications or promotional services to
approximately 7,000 exhibitors at approximately 207 trade shows and
conventions, including 44 of the "Tradeshow 200" exhibitions as named by the
1997 Tradeshow Week Data Book. Of the 207 trade shows to which Atwood provided
services in 1996, 81% represented trade shows served by Atwood in 1995. Atwood
also publishes the trade journal EXPO(R), The Magazine for Exposition
Management ("EXPO"), the official publication of the International Association
for Exposition Management.
Galaxy, founded in 1982, markets its comprehensive registration services,
automated "lead" management products and information services on an exclusive
basis to trade associations, promoters, exhibitors and attendees of
expositions, trade shows and conventions. Multiple versions of Galaxy's
"ExpoCards" (magnetic stripe or "smartcards") are utilized in the registration
process to allow convention and trade show exhibitors to digitally capture and
manipulate attendee information for "lead" management and follow-up. Galaxy can
provide the attendee information collected by its proprietary systems either in
the form of customized reports or digitally, so that the data can be
manipulated by its customers to meet their individual requirements. In 1996,
Galaxy provided services to 41 of the "Tradeshow 200" exhibitions, including
four of the top five such exhibitions. Of the 211 trade shows to which Galaxy
provided services in 1996, 84% represented trade shows served by Galaxy in
1995. Management believes that Galaxy, from its experience servicing a wide
variety of expositions, has developed a unique set of organizational skills and
technical expertise which provides Galaxy with competitive advantages.
To date, Atwood and Galaxy have focused primarily on North American trade
shows, which during 1996 represented approximately 4,300 shows, in excess of
101 million attendees and 1.25 million exhibiting companies. According to the
Center for Exhibition Industry Research, the number of trade shows and
attendees in North America is forecasted to increase to approximately 4,500 and
approximately 140 million, respectively, by the year 2000.
GEM, founded in 1986 as BMT Publications, Inc., is the leading global
provider of business information and marketing resources for the legalized
gaming industry. GEM owns and operates the World Gaming Congress, the largest
legalized gaming industry trade show in the world and the only trade show
endorsed by the American Gaming Association as the organization's official
trade show. In 1996, the World Gaming Congress sold over 185,000 square feet of
exhibition space and included over 21,700 attendees, an increase from 117,000
square feet and 17,500 attendees in 1994. GEM also publishes IGWB, which, with
a controlled circulation of over 26,000, is the leading trade journal directed
to the worldwide legalized gaming industry.
BUSINESS AND OPERATING STRATEGIES
Management has significant experience in the information services, exposition
services and publishing businesses and has developed a business and operating
strategy to: (i) maximize the strengths of the Company's core businesses; (ii)
expand into new products, services and geographic markets; (iii) expand through
selective acquisitions to enhance the Company's established business platforms
and (iv) improve operating efficiencies.
INFORMATION SERVICES
Management believes that both TISI and CORSEARCH have been successful because
they target well defined market niches and possess competitive advantages
through their proprietary databases, value added information products and
superior customer service. Management's growth strategy for expanding upon
these existing business platforms consists of:
. Broadening TISI's Customer Focus into Additional Trucking and
Transportation Segments. TISI has historically enjoyed success with
"truckload" carriers due to the high employee turnover rates associated
with this segment of the trucking industry. Management intends to
continue capitalizing on
3
<PAGE>
this success, but believes the employment history database can be more
aggressively marketed to the other segments of the U.S. trucking and
transportation industry. Specifically, management intends to expand
marketing of its database services to "private fleet" carriers, which
include approximately 14,000 trucking companies. Management believes
that, by expanding the number of employment records contained in the DAC
database, TISI will increase revenues and profits through higher
customer "hit rates" per search.
. Expanding DAC's Business Model to Other Industries. Management believes
that there are opportunities to expand the successful DAC pre-employment
screening business model and core competencies to other industries that
tend to raise public safety concerns, involve substantial financial
risks for employers or have high employee turnover rates. Management
plans to build employment history databases and market pre-employment
screening services to employers in industries possessing these
characteristics.
. Enhancing CORSEARCH's International Search Capabilities. CORSEARCH has
historically focused on providing domestic searches for U.S. and foreign
based clients. With the growing presence of global businesses and the
proliferation of Internet usage, there is a growing customer need for
international trademark database searches. As a result, CORSEARCH is in
the process of identifying international trademark and trade name
information sources and building databases similar to those used in its
domestic operations.
. Broadening CORSEARCH's On-Line Product Offering. Management believes
that by expanding CORSEARCH's on-line and Internet products to allow
customers to perform pre-screening searches, CORSEARCH can increase
revenues from existing customers who are currently utilizing these
products from competitors as well as attract new customers.
. Expanding into Patent Search Services. Management intends to expand its
product offering to include patent searches, likely through
acquisitions. Such acquisitions would provide the Company with greater
breadth of products for the intellectual property market and an
increased ability to serve its existing client base.
BUSINESS TO BUSINESS COMMUNICATIONS
Management believes that each of the business units comprising Business to
Business Communications is a leader in its respective markets and that there
are numerous opportunities to enhance the value of these existing franchises.
. Cross-Selling and Product Bundling Opportunities between Atwood and
Galaxy. Galaxy and Atwood have traditionally been operated as separate
entities and currently have only 13 mutual clients among the 75 clients
which Galaxy and Atwood collectively serve within the "Tradeshow 200."
Management intends to capitalize on the loyal customer base of both
Atwood and Galaxy by marketing both units' products on a packaged basis
to position Atwood and Galaxy as a comprehensive provider of multiple
media, information and exhibitor services to their customers.
. Expanding Atwood's Custom Publishing Customer Base. Atwood historically
has focused its custom publishing activities on the exposition and trade
association markets. Management has identified additional markets, such
as corporate publishing and corporate gatherings, where Atwood can
capitalize on its custom publishing capabilities.
. Augmenting Galaxy's Exhibitor Products and Services. Management intends
to expand the scope and level of information gathered with respect to
attendees to create additional value-added information products for
exhibitors and trade show managers. For example, Galaxy provided Sony
Electronics, Inc. ("Sony") with a series of sophisticated electronic
"lead" management tools at the 1997 National Association of Broadcasters
("NAB") trade show, which, according to TradeShow & Exhibit Manager
magazine, enabled Sony to increase the number of booth visitors it
"qualified" to 12,000 from 5,000 during the 1996 NAB show, representing
an increase of 140%.
4
<PAGE>
. Expanding Galaxy's Services to the European Marketplace. According to
1996 M&A Exhibition Directory, the exposition and trade show marketplace
in Europe is approximately five times as large as that in the U.S.
(based on total square footage of exhibition space). Galaxy has
historically provided registration and "lead" management services to the
European exposition marketplace through a licensee, Galaxy Expocard
Europe. The Company acquired 73% of Galaxy Expocard Europe in 1997 and
management intends to enhance Galaxy's international capabilities by
more aggressively marketing products to European exposition managers
through Galaxy Expocard Europe.
. Pursuing Selective Acquisitions of Exposition Services
Companies. Management believes that the exposition services industry is
highly fragmented and plans to pursue opportunistic acquisitions to
enhance Galaxy's existing service offerings so that Galaxy, in concert
with Atwood, can become a comprehensive provider of exposition media
services.
. Leveraging Key GEM Franchises. GEM's leading position in the legalized
gaming market is a direct result of its strong brand names. IGWB and the
World Gaming Congress are widely recognized domestically and
internationally as the leading sources of business information regarding
the legalized gaming market. Management intends to utilize this position
to increase revenues through (i) launching or acquiring additional
gaming-related trade publications targeting specific high-growth gaming
markets (e.g., slot machines and bingo), (ii) exploring the acquisition
or launch of trade shows complementary to the World Gaming Congress and
(iii) working closer with the American Gaming Association to develop
ancillary revenue sources.
. Rationalizing GEM's Overhead Costs. IGWB, GEM's flagship publication,
was formerly part of a group of five trade magazines, four of which were
sold in 1994 and 1995. Following this sale, IGWB continued to occupy the
same office space, although the organization's publishing revenue had
been reduced by approximately 71%. Management has identified
opportunities for cost savings through integration with other
publications.
. Expanding GEM to New Gaming Markets. Management believes portions of the
world's gaming markets are relatively immature and underserved. As a
result, management plans to capitalize on trade show and publishing
opportunities in Europe, Latin America, Asia and Sub-Saharan Africa. As
a first step, the Company recently purchased a 49% ownership stake in
Gaming for Africa, the leading trade show and magazine targeting the
legalized gaming industry in South Africa, one of the world's growing
gaming markets. Management intends to seek other acquisitions and joint
venture opportunities for worldwide expansion.
THE EQUITY INVESTORS
After giving effect to the Recapitalization (as defined below), VS&A-T/SF,
L.L.C. ("VS&A-T/SF") and The Fir Tree Value Fund, L.P. and its affiliates
(collectively, "Fir Tree" and together with VS&A-T/SF, the "Equity Investors")
will own 64% and 36% of the Common Stock, respectively. VS&A-T/SF is controlled
by VS&A Communications Partners II, L.P. ("VS&A Fund II"), a private equity
fund affiliated with Veronis, Suhler & Associates, Inc. ("VS&A"), an investment
banking and research firm specializing in the media and communications
industry. Other investors in VS&A-T/SF include two institutional investors and
an affiliate of Ian L. M. Thomas, the new President and Chief Executive Officer
of the Issuer.
Since its founding in 1981, VS&A has provided investment banking services to
media and communications companies in over 360 completed transactions totaling
approximately $20.0 billion in aggregate transaction value. The objective of
VS&A's private equity funds is to capitalize on the industry knowledge and
transactional experience of VS&A's professionals in order to enhance the value
of acquisitions and generate substantial capital appreciation. VS&A's first
private equity fund, VS&A Communications Partners, L.P. ("VS&A Fund I"), was a
$57.0 million fund formed in 1987. VS&A Fund I invested in eight entities in
the consumer and trade magazine publishing, television and radio broadcasting
and cable television industries and sold its last investment in 1996.
5
<PAGE>
According to Venture Economics, VS&A Fund I's performance placed it in the top
10% of peer equity funds during its time period. VS&A Fund II was formed in
1995 with a capital commitment of $330.0 million. As of September 30, 1997,
VS&A Fund II had invested or committed approximately $185.0 million in eight
entities in the trade magazine, exposition, cable television, information
services, radio broadcasting and advertising directories publishing industries.
Fir Tree has been an investor in the Issuer since 1994 and prior to the
Recapitalization owned 14.6% of the Issuer's common stock (the "Common Stock").
In connection with the Recapitalization, Fir Tree maintained its existing
ownership interest (the "Fir Tree Rollover") which, after the Recapitalization,
will constitute 36% of the Common Stock. Fir Tree is a private investment firm
formed in 1994 by Jeffrey D. Tannenbaum. Mr. Tannenbaum previously was an
investment professional with Kohlberg & Co.
The Equity Investors believe their collective transactional experience,
coupled with VS&A's specialized knowledge of media and communications and Fir
Tree's history with the Company, will provide the unique ability to identify
opportunities to grow the Company's core businesses.
THE TRANSACTIONS
The Recapitalization. Pursuant to a tender offer (the "Tender Offer")
completed on October 9, 1997 by the Issuer for its Common Stock, a purchase
consummated on October 9, 1997 (the "Stock Purchase") by a subsidiary of VS&A-
T/SF of 881,988 shares of Common Stock, the repurchase consummated on October
9, 1997 by the Issuer of certain employee stock options (the "Option
Repurchase"), the reverse stock split (which has not yet occurred) of the
shares of Common Stock that effectively will result in the elimination of all
shares of Common Stock other than those held by the Equity Investors (together
with certain related transactions, the "Second Step Transaction"), and the Drop
Down Restructuring (which has not yet occurred) described below, the Company
will be recapitalized and VS&A-T/SF and Fir Tree will own 64% and 36% of the
Common Stock, respectively. The Tender Offer, Stock Purchase, Option
Repurchase, Second Step Transaction and Drop Down Restructuring are
collectively referred to herein as the "Recapitalization." Unless otherwise
indicated, references herein to numbers of shares of Common Stock reflect the
capitalization of the Issuer before giving effect to the reverse stock split to
be effected as the Second Step Transaction. See "Description of the
Transactions."
As part of the Recapitalization, VS&A-T/SF and Fir Tree will cause the
Company, directly or indirectly, to contribute to T/SF Holdings, LLC ("Holdings
LLC") substantially all of the assets and liabilities of Atwood, Galaxy and GEM
in exchange for a $45.0 million preferred equity interest in Holdings LLC.
VS&A-T/SF and Fir Tree will contribute $4.5 million to acquire the common
equity interests in Holdings LLC and Operating LLC in the same proportion as
their ownership of the Common Stock immediately following the consummation of
the Recapitalization. The preferred equity interest to be held, directly or
indirectly, by the Issuer will carry an 11% annual distribution rate and give
the Issuer, directly or indirectly through its wholly-owned subsidiaries,
voting, operational and management control of Holdings LLC. Holdings LLC will
contribute substantially all of the assets of Galaxy, Atwood and GEM (together
with the Company's contribution of such assets to Holdings LLC, the "Drop Down
Restructuring") into several limited liability companies (the "Operating
LLCs"). 99% of the common equity interests of each Operating LLC will be owned
by Holdings LLC and will give Holdings LLC voting, operational and management
control of such entities and a 1% common equity interest of each Operating LLC
will be owned by T/SF Operating, LLC ("Operating LLC"). The preferred equity
interest in Operating LLC will be owned by Holdings LLC and give Holdings LLC
voting, operational and management control of Operating LLC and the common
equity interest of Operating LLC will be held by VS&A-T/SF and Fir Tree in the
same proportion as their ownership of the Common Stock immediately following
the consummation of the Recapitalization. Holdings LLC, Operating LLC and the
Operating LLCs are collectively referred to herein as the "LLCs." As a result
of the control, directly or indirectly, of the LLCs by the Issuer, the
financial results of the LLCs will be included in the consolidated financial
statements of the Company. Each of the LLCs has jointly and severally
unconditionally guaranteed, on an unsecured senior subordinated basis, the
payment of principal, premium, if any, and interest on the Notes, which
guarantees are subordinated to all Senior Debt of the LLCs and the other
Guarantors. After giving effect to the Recapitalization, the Company's
organizational structure will be as shown on the following chart:
6
<PAGE>
LOGO
The Financing Plan. The Offering (as defined herein) was part of a plan
designed to enable the Issuer to finance the Recapitalization. In connection
with the Recapitalization, the Issuer: (i) borrowed or will borrow $20.0
million under a $25.0 million revolving senior credit facility (the "Senior
Credit Facility") with First Union National Bank ("FUNB"), an affiliate of the
Initial Purchaser (as defined herein); (ii) issued $80.0 million aggregate
principal amount of notes pursuant to a facility (the "Bridge Financing
Facility") provided by First Union Corporation, an affiliate of the Initial
Purchaser; (iii) maintained Fir Tree's ownership interest through the Fir Tree
Rollover valued at approximately $19.6 million and (iv) received or will
receive $40.0 million(/2/) of equity contributions (the "Equity Contributions")
from VS&A-T/SF and Fir Tree. The Recapitalization, the borrowings under the
Senior Credit Facility and the Bridge Financing Facility, the Fir Tree Rollover
and the Equity Contributions are collectively referred to herein as the
"Transactions." The net proceeds of the Notes sold pursuant to the Offering
were applied to repay indebtedness incurred in connection with the
Recapitalization under the Senior Credit Facility and the Bridge Financing
Facility.
The following table sets forth the sources and uses of funds in connection
with the Recapitalization (dollars in thousands).
<TABLE>
<CAPTION>
SOURCES OF FUNDS:
- -----------------
<S> <C>
Senior Credit Facility..... $ 20,000
Bridge Financing Facility.. 80,000
Equity Contributions (2)... 40,000
Fir Tree Rollover.......... 19,600
--------
Total sources............ $159,600
========
</TABLE>
<TABLE>
<CAPTION>
USES OF FUNDS:
- --------------
<S> <C>
Share repurchase and other (1).................................... $130,067
Fir Tree Rollover................................................. 19,600
Fees and expenses (3)............................................. 8,250
Working capital................................................... 1,683
--------
Total uses...................................................... $159,600
========
</TABLE>
- --------
(1) Reflects consideration paid or to be paid to repurchase shares pursuant to
the Tender Offer, Option Repurchase and Second Step Transaction, as well
as severance and bonus expenses associated with the Recapitalization.
(2) The Equity Contributions consist of $35.5 million contributed by VS&A-T/SF
to the Issuer and $4.5 million to be contributed to Holdings LLC and
Operating LLC as part of the Drop Down Restructuring. Of the $4.5 million
to be contributed to Holdings LLC and Operating LLC, VS&A-T/SF and Fir
Tree will contribute approximately $2.9 million and $1.6 million,
respectively.
(3) Includes fees and expenses related to the Transactions and the Offering
(including the Initial Purchaser's discount).
7
<PAGE>
OFFERING OF THE OLD NOTES
On October 29, 1997, the Issuer completed the private sale to First Union
Capital Markets Corp. (the "Initial Purchaser") of $100.0 million principal
amount of the Old Notes at a price of 97% of the principal amount thereof. The
Initial Purchaser resold the Old Notes to a limited number of qualified
institutional buyers at an initial price to investors of 100% of the principal
amount thereof, with net proceeds to the Issuer of $97.0 million (the
"Offering"). The Offering was a private placement transaction exempt from the
registration requirements of the Securities Act pursuant to Rule 144A and
Section 4 thereof.
THE EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to $100,000,000 aggregate
principal amount of Old Notes for up to an equal aggregate principal amount of
New Notes. The New Notes will be obligations of the Issuer entitled to the
benefits of the Indenture relating to the Old Notes. The form and terms of the
New Notes are identical in all material respects to the form and terms of the
Old Notes except that the New Notes have been registered under the Securities
Act and will not contain terms with respect to transfer restrictions or
interest rate increases as described herein. In addition, following the
completion of the Exchange Offer, the Notes will not be entitled, except in
certain limited circumstances, to the benefits of the provisions of the
Exchange Offer Registration Rights Agreement relating to contingent increases
in the interest rates provided for pursuant thereto. See "Description of the
New Notes."
The Exchange Offer...... $1,000 principal amount of New Notes will be issued
in exchange for each $1,000 principal amount of Old
Notes validly tendered pursuant to the Exchange
Offer. As of the date hereof, $100,000,000 in
aggregate principal amount of Old Notes are
outstanding. The Issuer will issue the New Notes to
tendering holders of Old Notes on or promptly after
the Expiration Date.
Resale.................. The Issuer believes that the New Notes issued
pursuant to the Exchange Offer generally will be
freely transferable by the holders thereof without
registration or any prospectus delivery requirement
under the Securities Act, except that any of its
"affiliates" or any "dealer," as such terms are
defined under the Securities Act, that exchanges Old
Notes held for its own account (a "Restricted
Holder") may be required to deliver copies of this
Prospectus in connection with any resale of the New
Notes issued in exchange for such Old Notes (the
"Prospectus Delivery Requirement"). A broker-dealer
will be required to acknowledge that it has no
arrangements with any person to participate in the
distribution of the New Notes. A broker-dealer which
purchased Old Notes from the Issuer may not
participate in the Exchange Offer. See "The Exchange
Offer--General" and "Plan of Distribution."
Expiration Date.........
5:00 p.m., New York City time, on March 10, 1998,
unless the Exchange Offer is extended, in which case
the term "Expiration Date" means the latest date and
time to which the Exchange Offer is extended See "The
Exchange Offer--Expiration Date; Extensions;
Amendments."
Accrued Interest on the
New Notes and the Old Interest on each New Note will accrue from the last
Notes.................. Interest Payment Date on which interest was paid on
the Old Note tendered in exchange therefor or, if no
interest has been paid on such tendered Old Note,
from October 29, 1997. Holders of Old Notes whose Old
Notes are accepted for exchange will be deemed to
have waived the right to receive any payment
in respect of interest on such Old Notes accrued from
the last Interest
8
<PAGE>
Payment Date or October 29, 1997 (as the case may be)
to the date of the issuance of the New Notes.
Consequently, holders who exchange their Old Notes
for New Notes will receive the same interest payment
on the same Interest Payment Date that they would
have received had they not accepted the Exchange
Offer. See "The Exchange Offer--Interest on the New
Notes."
Termination of the
Exchange Offer......... The Issuer may terminate the Exchange Offer if it
determines that its ability to proceed with the
Exchange Offer could be materially impaired due to
any legal or governmental action, any new law,
statute, rule or regulation or any interpretation of
the staff of the Commission of any existing law,
statute, rule or regulation. Holders of Old Notes
will have certain rights against the Issuer under the
Registration Rights Agreement if the Issuer fails to
consummate the Exchange Offer. See "The Exchange
Offer--Termination." No federal or state regulatory
requirements must be complied with or approvals
obtained in connection with the Exchange Offer, other
than applicable requirements under federal and state
securities laws.
Procedures for
Tendering Old Notes.... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein and
therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the Old
Notes to be exchanged and any other required
documentation to IBJ Schroder Bank & Trust Company,
as Exchange Agent, at the address set forth herein
and therein or effect a tender of Old Notes pursuant
to the procedures for book-entry transfer as provided
for herein. See "The Exchange Offer--Procedures for
Tendering. "
Special Procedures for
Beneficial Holders..... Any beneficial holder whose Old Notes are registered
in the name of his broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender in the Exchange Offer should contact such
registered holder promptly and instruct such
registered holder to tender on his behalf. If such
beneficial holder wishes to tender on his own behalf,
such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering
his Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such
holder's name or obtain a properly completed bond
power from the registered holder. The transfer of
record ownership may take considerable time. See "The
Exchange Offer--Procedures for Tendering."
Guaranteed Delivery Holders of Old Notes who wish to tender their Old
Procedures.............. Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes (or
who cannot complete the procedure for book-entry
transfer on a timely basis) and a properly completed
Letter of Transmittal or any other documents required
by the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date may tender their Old
Notes according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed Delivery
Procedures."
9
<PAGE>
Withdrawal Rights....... Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
business day prior to the Expiration Date, unless
previously accepted for exchange. See "The Exchange
Offer--
Withdrawal of Tenders."
Acceptance of Old Notes
and Delivery of New Subject to certain conditions (as summarized above in
Notes.................. "Termination of the Exchange Offer" and described
more fully in "The Exchange Offer--Termination"), the
Issuer will accept for exchange any and all Old Notes
which are properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time, on the
Expiration Date. The New Notes issued pursuant to the
Exchange Offer will be delivered promptly following
the Expiration Date. See "The Exchange Offer--
General."
Certain Tax
Consequences............ The exchange pursuant to the Exchange Offer will
generally not be a taxable event for federal income
tax purposes. See "Certain U.S. Federal Income Tax
Consequences."
Exchange Agent.......... IBJ Schroder Bank & Trust Company, the Trustee under
the Indenture, is serving as exchange agent (the
"Exchange Agent") in connection with the Exchange
Offer. The mailing address of the Exchange Agent is:
IBJ Schroder Bank & Trust Company of New York, P.O.
Box 84, Bowling Green Station, New York, NY 10274-
0084, Attention: Reorganization Operations
Department; and deliveries by hand or overnight
courier should be addressed to IBJ Schroder Bank &
Trust Company of New York, One State Street, New
York, NY 10004, Attention: Securities Processing
Window, Subcellar One (SC-1). For information with
respect to the Exchange Offer and confirmation of
facsimile transmissions, the telephone number for the
Exchange Agent is (212) 858-2103 and the facsimile
number for the Exchange Agent is (212) 858-2611.
Use of Proceeds.........
There will be no cash proceeds payable to the Issuer
from the issuance of the New Notes pursuant to the
Exchange Offer. The Company incurred $80.0 million of
indebtedness under the Bridge Financing Facility and
borrowed or will borrow $20.0 million pursuant to the
Senior Credit Facility pending the issuance and sale
of the Old Notes. The Company applied the net
proceeds from the sale of the Old Notes to repay the
indebtedness incurred under the Bridge Financing
Facility and the Senior Credit Facility in connection
with the Recapitalization. The Bridge Financing
Facility bore interest at the rate of 10.25% per
annum. An affiliate of the Initial Purchaser was the
lender under the Bridge Financing Facility.
10
<PAGE>
THE NEW NOTES
Securities Offered...... $100.0 million principal amount of 10 3/8% Series B
Senior Subordinated Notes Due 2007.
Maturity Date........... November 1, 2007.
Interest Payment Each May 1 and November 1, commencing May 1, 1998.
Dates..................
Optional Redemption..... The Notes will be redeemable at the option of the
Issuer, in whole or in part, at any time on or after
November 1, 2002, at the redemption prices set forth
herein, plus accrued and unpaid interest thereon to
the date of redemption.
Prior to November 1, 2000, the Issuer, at its option,
may redeem in the aggregate up to 35% of the original
principal amount of the Notes at 110.375% of the
aggregate principal amount so redeemed, plus accrued
and unpaid interest thereon to the redemption date,
with the Net Proceeds of one or more Public Equity
Offerings; provided that at least 65% of the
principal amount of Notes originally issued remain
outstanding immediately after the occurrence of any
redemption and that any such redemption occurs within
90 days following the closing of any such Public
Equity Offering. See "Description of the New Notes--
Redemption--Optional Redemption."
Change of Control....... In the event of a Change of Control, holders of the
Notes will have the right to require the Issuer to
purchase the Notes at a purchase price equal to 101%
of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon to the date of
purchase. See "Description of the New Notes--Change
of Control."
Ranking................. The New Notes will be general unsecured obligations
of the Issuer, subordinated in right of payment to
all existing and future Senior Debt of the Issuer and
senior in right of payment to any subordinated
indebtedness of the Issuer. As of September 30, 1997,
after giving effect to the Transactions and the
issuance of the Old Notes, the Issuer would have had
(i) approximately $3.7 million aggregate principal
amount of Senior Debt outstanding and (ii) $25.0
million of borrowing availability under the Senior
Credit Facility. See "Description of the New Notes--
Subordination."
Guarantees.............. The Notes are unconditionally guaranteed, on an
unsecured senior subordinated basis, as to the
payment of principal, premium, if any, and interest,
jointly and severally (collectively, the
"Guarantees"), by each of the Issuer's subsidiaries
and each of the LLCs (collectively, the
"Guarantors"). The Guarantees are subordinated to all
Senior Debt of the Guarantors. See "Description of
the New Notes--Guarantees."
Asset Sale Proceeds..... The Issuer is obligated in certain instances to make
offers to repurchase the Notes at a purchase price in
cash equal to 100% of the principal amount thereof,
plus accrued and unpaid interest thereon to the date
of repurchase, with the net cash proceeds of certain
asset sales. See "Description of the New Notes--
Certain Covenants--Limitation on Asset Sales."
11
<PAGE>
Certain Covenants....... The Indenture (as defined herein), under which the
Notes will be issued, will contain covenants for the
benefit of the holders of the Notes that, among other
things, will restrict the ability of the Issuer and
the Guarantors to: (i) incur additional indebtedness;
(ii) pay dividends, distributions and other
restricted payments; (iii) issue stock of or other
interests in subsidiaries; (iv) make certain
investments; (v) repurchase stock; (vi) create
certain liens; (vii) enter into certain transactions
with affiliates; (viii) merge or consolidate the
Issuer or any Guarantor and (ix) transfer or sell
assets. These covenants are subject to a number of
important qualifications and exceptions, including
the permitting of Permitted Tax Distributions (as
defined therein) by the LLCs. See "Description of the
New Notes--Certain Covenants."
Registration Rights.....
Pursuant to a Registration Rights Agreement among the
Issuer, the Guarantors and the Initial Purchaser (the
"Exchange Offer Registration Rights Agreement"), the
Issuer and the Guarantors agreed to use their best
efforts to file within 30 days, and cause to become
effective within 150 days, of the date of the
original issuance of the Old Notes (the "Issue
Date"), an Exchange Offer Registration Statement (as
defined herein) with respect to an offer to exchange
the Old Notes for notes of the Issuer with terms
(other than those with respect to restrictions on
transfer) substantially identical to those of the Old
Notes. The Issuer, upon the Exchange Offer
Registration Statement becoming effective, will be
obligated to commence the Exchange Offer and to cause
the Exchange Offer to remain open for acceptance for
not less than 20 business days after the date of
commencement. In addition, under certain
circumstances the Issuer may be required to file a
Shelf Registration Statement (as defined herein).
Among other provisions, in the event that: (i) the
Exchange Offer Registration Statement or Shelf
Registration Statement has not been filed with the
Commission within 30 days after the Issue Date; (ii)
the Exchange Offer Registration Statement or Shelf
Registration Statement is not declared effective
within 150 days after the Issue Date or (iii) the
Exchange Offer is not consummated within 30 days
after the Exchange Offer Registration Statement is
declared effective (each such event referred to in
clauses (i) through (iii) above is a "Registration
Default"), the sole remedy available to holders of
the Notes will be immediate assessment of additional
interest ("Additional Interest") as follows: the per
annum interest rate on the Notes will increase by
0.5% and the per annum interest rate will increase by
an additional 0.25% for each subsequent 90-day period
during which the Registration Default remains
uncured, up to a maximum additional interest rate of
2% in excess of the initial 10 3/8% interest rate per
annum except that such Additional Interest shall not
be payable under certain circumstances. All
Additional Interest will be payable to holders of the
Notes in cash on each May 1 and November 1,
commencing with the first such date occurring after
any such Additional Interest commences to accrue, and
continuing until such Registration Default is cured.
After the date on which such Registration Default is
cured, the interest rate on the Notes will revert to
the interest rate originally borne by the Notes. See
"The Exchange Offer."
12
<PAGE>
The Notes have been designated for trading on the
Trading................. Private Offerings, Resales and Tradings through
Automated Linkages ("PORTAL") Market.
THE ISSUER
T/SF Communications Corporation is a Delaware corporation. The Issuer's
principal executive offices currently are located at 888 Seventh Avenue, 28th
floor, New York, New York 10106 and its telephone number is (212) 247-5160.
RISK FACTORS
Prospective purchasers of the Notes should carefully consider the specific
matters set forth under "Risk Factors" as well as the other information and
data included in this Prospectus in evaluating an investment in the Notes.
13
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The following summary unaudited pro forma statement of operations data of the
Company give effect to, among other things, the Transactions and the Offering,
as if they had occurred at January 1, 1996. The following unaudited pro forma
condensed balance sheet data of the Company give effect to, among other things,
the Transactions and the Offering, as if they had occurred on September 30,
1997. Certain management assumptions and adjustments relating to the
Transactions and this Offering are described in the accompanying notes hereto
and elsewhere in this Prospectus. This pro forma information is not necessarily
indicative of the results that would have occurred had the Transactions and the
Offering been completed on the dates indicated or the Company's actual or
future results or financial position. The summary unaudited pro forma statement
of operations, balance sheet and other financial data should be read in
conjunction with the information contained in the financial statements of the
Company and the notes thereto, "Unaudited Pro Forma Consolidated Financial
Information," "Selected Historical Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
YEAR ENDED ------------------ TWELVE MONTHS ENDED
DECEMBER 31, 1996 1996 1997 SEPTEMBER 30, 1997
----------------- -------- -------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues
Business to Business
Communications........ $45,594 $28,464 $29,825 $46,955
Information Services... 28,838 21,629 24,388 31,597
Corporate and other in-
come.................. 23 438 749 334
------- -------- -------- -------
Total revenues........ 74,455 50,531 54,962 78,886
------- -------- -------- -------
Expenses
Operating costs........ 43,900 30,868 33,684 46,716
General and administra-
tive expenses......... 16,203 11,510 12,889 17,582
Depreciation and amor-
tization.............. 4,895 3,662 3,643 4,876
------- -------- -------- -------
Total expenses........ 64,998 46,040 50,216 69,174
------- -------- -------- -------
Operating income....... 9,457 4,491 4,746 9,712
Interest expense....... 11,498 8,630 8,477 11,345
------- -------- -------- -------
Loss before income tax-
es.................... (2,041) (4,139) (3,731) (1,633)
Income tax benefit..... 913 1,519 1,221 615
------- -------- -------- -------
Net loss............... $(1,128) $ (2,620) $ (2,510) $(1,018)
======= ======== ======== =======
OTHER FINANCIAL DATA:
Pro forma EBITDA (1)
(2)................... $14,352 $ 8,153 $ 8,389 $14,588
Pro forma EBITDA margin
(1) (2)............... 19.3% 16.1% 15.3% 18.5%
Adjusted pro forma
EBITDA (1) (3) ....... $17,171 $ 10,277 $10,377 $17,271
Adjusted pro forma
EBITDA margin (1) (3)
...................... 23.1% 20.3% 18.9% 21.9%
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL RATIOS:
<S> <C>
Ratio of net debt to adjusted pro forma EBITDA (4)........................ 5.5x
Ratio of adjusted pro forma EBITDA to cash interest expense (5) .......... 1.6x
</TABLE>
AS OF
SEPTEMBER 30, 1997
------------------
BALANCE SHEET
DATA:
Cash and
equivalents.. $ 8,577
Total assets.. 74,612
Total long-
term debt.... 103,656
Stockholders'
deficit...... (53,088)
14
<PAGE>
- --------
(1) Historical EBITDA, as shown below, represents operating income plus
depreciation and amortization. EBITDA is included because management
understands that such information is considered by certain investors to be
an additional basis on which to evaluate the Company's ability to pay
interest expense, repay debt and make capital expenditures. Excluded from
EBITDA are interest expense, income taxes, depreciation and amortization,
each of which can significantly affect the Company's results of operations
and liquidity and should be considered in evaluating the Company's
financial performance. EBITDA is not intended to represent and should not
be considered more meaningful than, or an alternative to, measures of
operating performance as determined in accordance with generally accepted
accounting principles.
(2) Pro forma EBITDA, as presented, reflects the following pro forma
adjustments and does not reflect additional anticipated cost savings
related to management's business and operating strategy, which is currently
planned. Pro forma EBITDA margin represents pro forma EBITDA as a
percentage of total pro forma revenues.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
SEPTEMBER 30, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Historical EBITDA (1)............................... $14,046
Pro forma adjustments:
Acquisitions of CORSEARCH, Casino Publishing and
Galaxy Expocard Europe (a)......................... (260)
Non-operating gain on sale of real estate (b)....... (316)
General and administrative expenses and other (c)... 1,118
-------
Total pro forma adjustments......................... 542
-------
Pro forma EBITDA.................................... $14,588
=======
</TABLE>
--------
(a) This adjustment gives effect to the acquisition of Casino Publishing
Co. in February 1997 and Galaxy Expocard Europe B.V. in May 1997 as if
they occurred at the beginning of the period indicated.
(b) Represents the elimination of $316,000 gain on the sale of certain
Company assets, consisting mainly of real estate.
(c) Pro forma adjustments to general and administrative and other expenses
are as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
SEPTEMBER 30, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
VS&A management fee................................. $ (90)
Elimination of management position (i).............. 353
Nonrecurring write-down of investment (ii).......... 575
Other (iii)......................................... 280
------
$1,118
======
</TABLE>
--------
(i) Represents the elimination of salary, bonus, payroll taxes and
employee benefits associated with one management position which was
principally devoted to nonoperational tasks including the
Transactions. Management eliminated this position as part of the
Transactions.
(ii) Represents a nonrecurring charge associated with the write-down of
Midwest Energy Companies, Inc. ("MECI") common stock received in
exchange for land sold to MECI in March 1995 and a write-off of an
investment in a vendor used by the Company who filed for
bankruptcy.
(iii) Represents (a) the elimination of certain general and
administrative costs, mainly transactional consulting fees, during
the year ended December 31, 1996 and the nine months ended
September 30, 1997 and (b) the elimination of amortization income
associated with covenants-not-to-compete arising from the sale of
the New York Shopper (as defined herein) and trade journal
operations.
15
<PAGE>
(3) Management believes the following additional adjustments are relevant to
evaluating the future operating performance of the Company. The following
additional adjustments, which eliminate the impact of certain items which
management believes are nonrecurring and also reflects the estimated impact
of management's business and operating strategy, are based on estimates and
assumptions made and believed to be reasonable by management and are
inherently uncertain and subject to change. Pro forma adjusted EBITDA
margin represents pro forma adjusted EBITDA as a percentage of total pro
forma revenues. The following calculation should not, therefore, be viewed
as indicative of actual or future results. The following table reflects the
effect of these items:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
SEPTEMBER 30, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Pro forma EBITDA...................................... $14,588
Additional adjustments:
Net personnel costs (a)............................... 1,271
Reorganization of loss-producing magazines (b)........ 616
Excess information acquisition costs (c).............. 196
Shut down of business operations (d).................. 418
Other net savings (e)................................. 182
-------
Total additional adjustments.......................... 2,683
-------
Adjusted pro forma EBITDA............................. $17,271
=======
</TABLE>
--------
(a) Represents the net reduction in personnel costs for: (i) elimination of
the Tulsa, Oklahoma corporate office and the related compensation and
benefits for 13 individuals; (ii) addition of new management team
located at a new corporate office in New York and the related
compensation, benefits, occupancy and administrative costs; (iii)
addition of short-term consulting agreement expenses with former
officers to aid the new management in the transition phase and (iv)
elimination of non-recurring costs related to the search for and hiring
of research oriented personnel at CORSEARCH.
(b) Represents losses incurred by the Company during the periods presented
in connection with two magazine operations: IGWB and Casino Executive.
While these publications are projected to be profitable in fiscal 1998,
in the event that such publications continue to generate losses,
management expects to take one or more of the following actions: (i)
reorganize the publications to reduce costs; (ii) merge the
publications with another party; (iii) enter into strategic alliances
or partnerships with a third party or (iv) other alternatives.
Management expects a decision regarding this segment will be made
during fiscal 1998.
(c) Effective for fiscal 1997, CORSEARCH changed the terms of a contract
with one of its database vendors. This adjustment reflects information
acquisition costs during the nine months ended September 30, 1997 under
a variable pricing structure consistent with an August 1, 1997
amendment to that agreement with that vendor.
(d) Represents losses in TISI's NESS division, a high-end employment
screening service which was abandoned by the Company in fiscal 1997.
(e) During fiscal 1996 and 1997, certain consulting costs were incurred in
connection with one-time acquisition searches and one-time executive
searches; a system evaluation project that was never completed; a
satellite office study that was not implemented and an option and study
of the feasibility of a new publication. In addition, severance costs
for the officer of a closed division were incurred.
(4) The ratio of net debt to adjusted pro forma EBITDA represents total pro
forma long-term debt, including current maturities, less pro forma cash and
cash equivalents divided by adjusted pro forma EBITDA.
(5) The ratio of adjusted pro forma EBITDA to cash interest expense represents
adjusted pro forma EBITDA divided by the sum of the cash interest expense
associated with the Notes plus actual cash interest paid by the Company.
16
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following table presents summary historical financial data for each of
the five years in the period ended December 31, 1996 that have been derived
from the audited consolidated financial statements of the Company. The
statements of operations and changes in stockholders' equity and statements of
cash flows for each of the three years in the period ended December 31, 1996
and the notes thereto appear elsewhere in this Prospectus. The summary
historical balance sheet data as of September 30, 1997 and the summary
historical statement of operations data for the nine months ended September 30,
1997 and 1996 of the Company have been derived from unaudited financial
statements, which, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for the unaudited interim periods. Results for the
nine months ended September 30, 1997 and 1996 are not necessarily indicative of
results that may be expected for the entire year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA (1):
Revenues
Information Services
(a)................... $ 13,643 $ 14,499 $ 15,091 $ 17,950 $ 24,273 $ 17,064 $ 24,388
Business to Business
Communications (b).... 80,643 42,911 39,665 53,089 42,891 26,313 29,323
Corporate and other.... 1,020 1,570 2,163 1,039 1,478 1,728 955
-------- -------- -------- -------- -------- -------- --------
Total revenues........ 95,306 58,980 56,919 72,078 68,642 45,105 54,666
-------- -------- -------- -------- -------- -------- --------
Expenses
Operating costs........ 64,613 49,658 35,069 39,665 40,314 27,549 33,474
General and
administrative
expenses.............. 21,341 15,361 11,862 11,841 15,207 10,289 13,000
Depreciation and
amortization.......... 7,378 3,779 3,118 3,601 4,018 2,843 3,564
-------- -------- -------- -------- -------- -------- --------
Total expenses........ 93,332 68,798 50,049 55,107 59,539 40,681 50,038
-------- -------- -------- -------- -------- -------- --------
Operating income
(loss)................ 1,974 (9,818) 6,870 16,971 9,103 4,424 4,628
Interest expense....... 2,692 1,921 736 859 581 413 401
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes and other
items................. (718) (11,739) 6,134 16,112 8,522 4,011 4,227
Unusual gain (2)....... 24,412 -- -- -- -- -- --
Income tax (provision)
benefit............... (10,569) 4,097 (2,589) (58) (3,101) (1,578) (1,803)
Minority interest in
consolidated
subsidiaries.......... (3,983) 1,929 (981) (266) -- -- --
Discontinued
operations, net (3)... (790) (4,800) (2,816) 37 -- -- --
Extraordinary loss, net
of tax of $340 (4).... -- (560) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...... $ 8,352 $(11,073) $ (252) $ 15,825 $ 5,421 $ 2,433 $ 2,424
======== ======== ======== ======== ======== ======== ========
Weighted average common
shares outstanding.... 4,208 3,801 3,733 3,766 3,543 3,537 3,564
EARNINGS (LOSS) PER
SHARE:
Continuing operations.. $ 2.17 $ (1.54) $ 0.65 $ 4.19 $ 1.53 $ 0.69 $ 0.68
Discontinued
operations............ (0.19) (1.26) (0.75) .01 -- -- --
Extraordinary loss..... -- (0.15) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
$ 1.98 $ (2.95) $ (0.10) $ 4.20 $ 1.53 $ 0.69 $ 0.68
======== ======== ======== ======== ======== ======== ========
OTHER FINANCIAL DATA
(1):
Capital expenditures... $ 1,402 $ 5,564 $ 4,382 $ 2,589 $ 2,641 $ 1,955 $ 5,460
EBITDA (5)............. 9,352 (6,039) 9,988 20,572 13,121 7,267 8,192
EBITDA margin (5)...... 9.8% (10.2)% 17.5% 28.5% 19.1% 16.1% 15.0%
Ratio of earnings to
fixed charges (6)..... 9.8x -- 9.3x 19.8x 15.7x 10.7x 11.2x
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1997
------------------
<S> <C>
BALANCE SHEET DATA:
Cash and equivalents........................................ $ 6,894
Total assets................................................ 62,828
Total debt.................................................. 4,862
Stockholders' equity........................................ 39,628
</TABLE>
17
<PAGE>
- --------
(1) In the merger of Tribune/Swab-Fox Companies, Inc. ("Tribune/Swab Fox"),
then the owner of 78% of the Common Stock, with and into the Issuer on May
25, 1995, the Issuer was the surviving entity, from a legal standpoint.
However, from an accounting standpoint, the transaction was treated as a
downstream merger. Thus, for financial reporting purposes, the transaction
was treated as a recapitalization of Tribune/Swab-Fox, with Tribune/Swab-
Fox as the survivor. Accordingly, the historical financial statements of
the Company, as the surviving legal entity, are those historical financial
statements of Tribune/Swab-Fox prior to the merger. In addition, the
Company was a party to several events/transactions which affect the
comparability of the historical information presented above. See the Notes
to Consolidated Financial Statements for additional information on certain
of these events/transactions.
--------
(a)With respect to Information Services, the Company acquired CORSEARCH in
August 1996.
(b) With respect to Business to Business Communications, the Company: (i)
ceased publishing "The Tulsa Tribune" in September 1992 as a result of
the termination of a joint operating agreement; (ii) sold the operating
assets of Marks-Roiland Communications, Inc. (the "New York Shopper"),
one of the Company's shopper-newspaper operations, in November 1993;
(iii) acquired the stock of Galaxy in March 1994; (iv) sold the assets
of Shopper's Guide, Inc. (the "New Jersey Shopper"), its other shopper-
newspaper operation, in April 1994; (v) sold three trade journals and
related assets in July 1995; (vi) acquired Casino Publishing Co.
effective February 1, 1997 and (vii) acquired Galaxy Expocard Europe,
B.V. in May 1997.
(2) Gain from early termination of newspaper joint operating agreement between
the Company's newspaper and World Publishing Company, net of termination
costs.
(3) Restated to reflect real estate as a discontinued operation as of November
30, 1994.
(4) Prepayment penalty on early retirement of long-term debt.
(5) EBITDA, as presented, represents operating income plus depreciation and
amortization. EBITDA is included because management understands that such
information is considered by certain investors to be an additional basis on
which to evaluate the Company's ability to pay interest expense, repay debt
and make capital expenditures. Excluded from EBITDA are interest expense,
income taxes, depreciation and amortization, unusual gain, minority
interest in consolidated subsidiaries, discontinued operations, net and
extraordinary loss, net of tax, each of which can significantly affect the
Company's results of operations and liquidity and should be considered in
evaluating the Company's financial performance. EBITDA is not intended to
represent and should not be considered more meaningful than, or an
alternative to, measures of operating performance as determined in
accordance with generally accepted accounting principles. EBITDA margin
represents EBITDA as a percentage of total revenues.
(6) In computing the ratio of earnings to fixed charges: (a) earnings have been
based on income from continuing operations before income taxes and fixed
charges and (b) fixed charges consist of interest and amortization of debt
discount and expense. The coverage deficiency for the year ended December
31, 1993 was approximately $11.7 million.
18
<PAGE>
RISK FACTORS
CONSEQUENCES OF FAILURE TO EXCHANGE
Untendered Old Notes not exchanged for New Notes pursuant to the Exchange
Offer will remain subject to the existing restrictions upon transfer of such
Old Notes. Additionally, holders of any Old Notes not tendered in the Exchange
Offer prior to the Expiration Date will not be entitled to require the Issuer
to file the Shelf Registration Statement and the stated interest rate on such
Old Notes will remain at its initial level of 10 3/8%.
SUBSTANTIAL LEVERAGE
The Company incurred significant debt in connection with the Transactions
and the issuance of the Old Notes. As of September 30, 1997, after giving pro
forma effect to the Transactions and the issuance of the Old Notes, the
Company would have had outstanding indebtedness of $103.7 million. The
Company's leveraged financial position poses substantial consequences to
holders of the Notes, including the risks that: (i) a substantial portion of
the Company's cash flow from operations will be dedicated to the payment of
interest on the Notes and the payment of amounts due under the Senior Credit
Facility; (ii) the Company's leveraged position may impede its ability to
obtain financing in the future for working capital, capital expenditures and
general corporate purposes and (iii) the Company's highly leveraged financial
position may make it more vulnerable to economic downturns and may limit its
ability to withstand competitive pressures. Management believes that it will
have sufficient capital to carry on its business and will be able to meet its
scheduled debt service requirements. However, there can be no assurance that
the future cash flow of the Company will be sufficient to meet the Company's
obligations and commitments. In addition, the Senior Credit Facility
contemplates that all borrowings thereunder will become due by 2004. If the
Company is unable to generate sufficient cash flow from operations in the
future to service its indebtedness and to meet its other commitments, the
Company will be required to adopt one or more alternatives, such as
refinancing or restructuring its indebtedness, selling material assets or
operations or seeking to raise additional debt or equity capital. There can be
no assurance that any of these actions could be effected, or that if they are
effected, that they could be effected on a timely basis or on satisfactory
terms, or that these actions would enable the Company to continue to satisfy
its capital requirements. In addition, the terms of existing or future debt
agreements, including the Indenture and the Senior Credit Facility, may
prohibit the Company from adopting any of these alternatives. Management's
strategy contemplates strategic acquisitions, and a portion of the cost of
such acquisitions may be financed through the incurrence of additional
indebtedness. There can be no assurance that financing will continue to be
available on terms acceptable to the Company or at all. In the absence of such
financing, the Company's ability to respond to changing business and economic
conditions, to fund scheduled investments and capital expenditures, to make
future acquisitions and to absorb adverse operating results may be adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources," "Description of the
Senior Credit Facility," "Business--Business and Operating Strategies" and
"Description of the New Notes."
DEPENDENCE UPON DISTRIBUTIONS FROM SUBSIDIARIES AND LLCS
The ability of the Issuer to perform its obligations with respect to the
Notes will be dependent on several factors. The Issuer will be dependent on
its subsidiaries and the LLCs for funds with which to pay principal and
interest on the Notes. The terms of the Guarantees, the Indenture and the
Senior Credit Facility expressly permit the Issuer's subsidiaries and the LLCs
to make certain distributions to the Issuer in connection with the Issuer's
obligations with respect to the Notes. There can be no assurance, however,
that the Issuer's subsidiaries or the LLCs will be profitable such that such
entities are able to make distributions to the Issuer sufficient for the
payment of the Issuer's obligations with respect to the Notes. Subject to the
considerations described below under "Risk of Fraudulent Transfer," the
Guarantees will provide the holders of the Notes with a direct claim against
the Guarantors.
19
<PAGE>
FULL IMPLEMENTATION OF BUSINESS AND OPERATING STRATEGY
Following the consummation of the Tender Offer and Stock Purchase, the
Company employed a new senior management team and adopted a refined business
and operating strategy. See "Business--Business and Operating Strategies" and
"Management." This business and operating strategy includes the implementation
of certain intended operating improvements and the adoption of new strategies.
There can be no assurance that the Company will be able to implement fully
this new business and operating strategy or that the anticipated results of
this strategy will be realized. In addition, after gaining experience with the
Company's operations under its new strategy, the Company and the new senior
management team may decide to alter or discontinue certain aspects of this
strategy. Implementation of this strategy could also be affected adversely by
a number of factors beyond the Company's control, such as operating
difficulties, increased operating costs, regulatory developments, general
economic conditions or increased competition. Any such failure to implement
this strategy could have a material adverse effect on the Company's ability to
service its indebtedness, including principal and interest payments on the
Notes.
The Company has reflected on a pro forma basis for the year ended December
31, 1996 and the nine-month periods ended September 30, 1996 and 1997 the
anticipated benefits from the operating improvements and cost reduction
measures included in management's business and operating strategy. These
adjustments are based on a number of estimates and assumptions that, while
considered reasonable by management, should not be viewed as indicative of the
results that would actually have occurred had the Company's business and
operating strategy been implemented on the dates indicated or of the Company's
actual or future results or financial position. Prospective purchasers of the
Notes are cautioned not to place undue reliance on these adjustments. See
"Unaudited Pro Forma Consolidated Financial Information."
SUBORDINATION OF NOTES
The Notes will be unsecured and subordinated to the prior right of payment
of all existing and future Senior Debt of the Issuer, including obligations
under the Senior Credit Facility. The indebtedness under the Senior Credit
Facility will also become due prior to the time the principal obligations
under the Notes become due. Subject to certain limitations, the Indenture will
permit the Issuer to incur additional Senior Debt. See "Description of the
Notes--Certain Covenants--Limitation on Incurrence of Additional
Indebtedness." As a result of the subordination provisions contained in the
Indenture, in the event of a liquidation or insolvency, the assets of the
Issuer will be available to pay obligations on the Notes only after all Senior
Debt has been paid in full, and there may not be sufficient assets remaining
to pay amounts due on any or all of the Notes then outstanding. In addition,
substantially all of the assets of the Issuer and its subsidiaries may in the
future be pledged to secure other indebtedness of the Company. See
"Description of the Senior Credit Facility" and "Description of the New
Notes."
RESTRICTIONS IMPOSED BY THE SENIOR CREDIT FACILITY AND THE INDENTURE
The Senior Credit Facility and the Indenture impose certain operating and
financial restrictions on the Company. The Senior Credit Facility requires the
Company to maintain specified financial ratios and tests, among other
obligations, including a maximum leverage ratio, a maximum senior leverage
ratio, a minimum interest coverage ratio and a minimum fixed charge coverage
ratio, each as defined in the Senior Credit Facility. In addition, the Senior
Credit Facility restricts, among other things, the Issuer's ability to: (i)
declare dividends or redeem or repurchase capital stock; (ii) prepay, redeem
or purchase debt; (iii) incur liens and engage in sale-leaseback transactions;
(iv) make loans and investments; (v) issue more debt; (vi) amend or otherwise
alter debt and other material agreements; (vii) make capital expenditures;
(viii) engage in mergers, acquisitions and asset sales; (ix) transact with
affiliates and (x) alter its lines of business. A failure to comply with the
restrictions contained in the Senior Credit Facility could lead to an event of
default thereunder which could result in an acceleration of such indebtedness.
Such an acceleration would constitute an event of default under the Indenture.
In addition, the Indenture restricts, among other things, the Company's
ability to: (i) incur additional indebtedness; (ii) pay dividends,
distributions and other restricted payments; (iii) issue stock of or other
interests
20
<PAGE>
in subsidiaries; (iv) make certain investments; (v) repurchase stock; (vi)
create certain liens; (vii) enter into certain transactions with affiliates;
(viii) merge or consolidate the Issuer or any Guarantor and (ix) transfer or
sell assets. A failure to comply with the restrictions in the Indenture could
result in an event of default under the Indenture. See "Description of the
Senior Credit Facility" and "Description of the New Notes."
VARIABILITY OF OPERATING RESULTS
The Company's revenues and operating results may vary significantly from
quarter to quarter and from year to year as a result of a number of factors.
The Company's Business to Business Communications segment is affected by the
timing of conventions and trade shows, with most shows operating during March
to May and September to November. In addition, many conventions and trade
shows are held only in certain years (e.g., bi-annually, tri-annually, etc.),
which affects the comparability of the Company's revenues and other operating
results from year to year. World Gaming Congress, the Company's largest owned
trade show, traditionally is held in the fourth quarter of each year, and the
results of the Business to Business Communications segment are significantly
impacted by this timing. As a result of these variances, the Company's results
of operations are subject to significant fluctuations and its results of
operations for any particular quarter or year may not be indicative of results
of operations for future periods.
COMPETITION
Certain of the business lines in which the Company is engaged are highly
competitive and certain of the Company's competitors are larger and have
greater financial resources than the Company. There can be no assurance that
the Company will be able to continue to compete successfully or that such
competition will not have a material adverse effect on the Company's business
or financial results. See "Business--Competition."
CONTROLLING EQUITYHOLDER
The Common Stock currently is held approximately 60% by VS&A-T/SF and 33% by
Fir Tree. It is anticipated that the Common Stock will be held 64% by VS&A-
T/SF and 36% by Fir Tree following the consummation of the Second Step
Transaction. As a result, VS&A-T/SF currently has the ability to control the
policies and operations of the Company. Circumstances may occur in which the
interests of VS&A-T/SF, as the principal equity holder of the Issuer, could be
in conflict with the interests of the holders of the Notes. In addition, the
equity investors may have an interest in pursuing acquisitions, divestitures
or other transactions that, in their judgment, could enhance their equity
investment, even though such transactions might involve risks to the holders
of the Notes. See "Security Ownership of Certain Beneficial Owners and
Management."
LIMITATIONS ON CHANGE OF CONTROL
In the event of a Change of Control, the Issuer will be required to make an
offer for cash to repurchase the Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest thereon and Additional Interest, if
any, thereon to the repurchase date. Certain events involving a Change of
Control may result in an event of default under the Senior Credit Facility or
other indebtedness of the Company that may be incurred in the future.
Moreover, the exercise by the holders of the Notes of their right to require
the Issuer to repurchase the Notes would cause an event of default under the
Senior Credit Facility (and may cause an event of default under such other
indebtedness), even if the Change of Control does not. The Issuer's
obligations under this provision of the Indenture could delay, deter or
prevent a sale of the Issuer or the Guarantors which might otherwise be
advantageous to the holders of the Notes. Finally, there can be no assurance
that the Issuer will have the financial resources necessary to repurchase the
Notes upon a Change of Control. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Description of the New Notes--Change of Control."
UNCERTAIN IMPACT OF ACQUISITION PLANS
The Company intends to implement its business and operating strategy of
targeted expansion through the acquisition of compatible businesses and
product lines and the formation of strategic alliances, joint ventures and
other business combinations. There can be no assurance that the Company can
successfully complete or finance any future acquisition. Should the Company
complete any material acquisition, the Company's success or failure in
integrating the operations of the acquired business may have a material impact
on the future growth or success of the Company.
21
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The success of the Company's operations will depend, in part, on the success
of the assimilation of Mr. Thomas, Steven J. Hunt, the new Chief Financial
Officer of the Company, Brian A. Meyer, the new General Counsel of the
Company, and the new management team (some of whom have limited experience in
certain of the specific businesses in which the Company is engaged) into the
Company's organization, the ability of the Company to retain other managers of
the Company's businesses and its ability to attract additional experienced
managers as its businesses expand and it pursues the implementation of its new
business and operating strategy. The Company currently is actively engaged in
a search for a new chief executive officer of CORSEARCH, having reached
agreement with Robert Frank, the current President and Chief Executive Officer
of CORSEARCH, for Mr. Frank's resignation from such positions in May 1998 and
his provision of consulting services thereafter through 1999. Following such
time as his U.S. Visa is transferred from VS&A to the Issuer, Mr. Thomas will
enter into an employment agreement which will provide for his employment as
President, Chief Executive Officer and a Director through October 2002.
Currently, Mr. Thomas' services are provided to the Company by VS&A, with whom
Mr. Thomas has an employment arrangement, and the Company reimburses VS&A for
such services at cost. Mr. Hunt and Mr. Meyer have each entered into
employment agreements which provide for their employment as Chief Financial
Officer and General Counsel, respectively, for five-year terms. On the closing
date of the Tender Offer, the Company entered into interim consulting
agreements with three senior executives of the Company. Although the Company
believes it could replace key employees in an orderly fashion should the need
arise, the loss of key personnel could have a material adverse effect on the
Company. The Company will not maintain key person insurance for any of its
officers, employees or directors. See "Management."
GOVERNMENT REGULATION
As a "consumer reporting agency," the Company's TISI subsidiary is subject
to the provisions of the Fair Credit Reporting Act (the "FCRA") and similar
acts existing in the states and is regulated by the Federal Trade Commission
(the "FTC") under the Federal Trade Commission Act. All TISI reports are
treated by TISI as consumer reports for purposes of the FCRA. The FCRA
provides for civil liabilities sanctions against a consumer reporting agency
by a consumer for willful or negligent noncompliance with the FCRA. The FCRA
was amended in 1997, effective October 1, 1997. Such amendments require DAC's
customers to increase their compliance activities and may limit, under certain
circumstances, their ability to access certain information sold by DAC, in
particular certain criminal records over seven years old. While the effect of
such amendments is not expected by DAC to impact materially its business or
prospects, primarily because further amendments to the FCRA are anticipated
(and draft legislation of such amendments has been submitted to the U.S.
Congress), the need for customers to revamp procedures and for the industry to
adjust to the new regulations thus far has had a negative impact on the use of
DAC's services and such negative impact may, if the foregoing further
amendments are not adopted, are adopted materially later than anticipated by
management, or are adopted in materially different form than previously
proposed, have a material and adverse effect on the use of DAC's services and
on its results of operations. It is not possible at this time to predict
accurately the extent of such effect.
The Americans with Disabilities Act (the "ADA") contains pre-employment
inquiry and confidentiality restrictions designed to prevent discrimination
against individuals in the hiring process. Although TISI's business is not
directly regulated by the ADA, the use by its customers of certain information
sold to them by TISI, such as workers' compensation histories or drug and
alcohol test results, is regulated, both with respect to the type of
information and the timing of its use. Similar state laws also affect TISI's
business. Some states have human rights laws that provide more protection than
the ADA. A large number of states also regulate the type of information which
can be made available to the public or to a third party or impose conditions
to the release of the information.
In the 14 years it has been in business, TISI has not been found liable for
any violations of the FCRA, the ADA or similar state laws. The Company did
settle one case out of court for a nominal amount to avoid litigation
expenses. There can be no assurance, however, that the Company will not be
found liable for any such violations
22
<PAGE>
and that, if found so liable, the Company will not be subject to adverse
judgments in substantial amounts. Although management believes that TISI's
treatment of its reports as consumer reports for purposes of the FCRA is
appropriate and valid, there can be no assurance that such position would
withstand legal challenge. The 1997 amendments to the FCRA require TISI's
customers to increase their compliance activities and may, under certain
circumstances, limit their ability to access certain information sold by TISI,
in particular certain criminal records more than seven years old. In addition,
there can be no assurance that the FCRA, the ADA or similar state laws will
not be amended or subjected to different judicial or administrative
interpretation in the future. It is not possible at this time to predict the
impact that any such change might have on the Company's results of operations,
financial condition or liquidity.
The DOT is in the process of proposing and promulgating revised regulations
which, among other things, concern the requirements for pre-employment
screening of truck drivers. Although it is not possible at this time to
predict the impact that such regulations, if adopted, might have on the
Company's results of operations, financial condition or liquidity, management
believes that the regulations are not likely to have an adverse effect on the
foregoing. See "Business--Government Regulation" and "--Information Services--
TISI."
RISK OF FRAUDULENT TRANSFER
Under applicable provisions of the U.S. Bankruptcy Code or comparable
provisions of state fraudulent transfer or conveyance laws, if the Issuer, at
the time it issued the Notes, or any of the Guarantors, at the time it
incurred the indebtedness represented by the Guarantees: (i) incurred such
indebtedness with intent to hinder, delay or defraud creditors or (ii)(a)
received less than reasonably equivalent value or fair consideration for
incurring such indebtedness and (b)(1) was insolvent at the time of
incurrence, (2) was rendered insolvent by reason of such incurrence (and the
application of the proceeds thereof), (3) was engaged or was about to engage
in a business or transaction for which the assets remaining with such entity
constituted unreasonably small capital to carry on its businesses or (4)
intended to incur, or believed that it would incur, debts beyond its ability
to pay such debts as they mature, then, in each case, a court of competent
jurisdiction could void, in whole or in part, the Notes or the Guarantee, as
the case may be, or, in the alternative, subordinate the Notes or the
Guarantee, as the case may be, to existing and future indebtedness of the
Issuer or the applicable Guarantor, as the case may be. The measure of
insolvency for purposes of the foregoing will vary depending upon the law
applied in such case. Generally, however, an entity would be considered
insolvent if the sum of its debts, including contingent liabilities, was
greater than all of its assets at fair valuation or if the present fair
saleable value of its assets was less than the amount that would be required
to pay the probable liability on its existing debts, including contingent
liabilities, as they become absolute and mature.
Management believes that, for purposes of the U.S. Bankruptcy Code and state
fraudulent transfer or conveyance laws, the Notes are being issued, and the
Guarantees entered into, without the intent to hinder, delay or defraud
creditors and for proper purposes and in good faith and that each of the
Issuer and the Guarantors, after the issuance of the Notes and the application
of the proceeds thereof, will be solvent, will have sufficient capital for
carrying on its business and will be able to pay its debts as they mature.
There can be no assurance, however, that a court passing on such questions
would agree with management's view.
LACK OF PUBLIC MARKET
The New Notes will be a new issue of securities for which there is currently
no trading market. The New Notes have been designated for trading in the
PORTAL Market. The Company has been advised by the Initial Purchaser that it
currently intends to make a market in the New Notes, but that it is not
obligated to do so and, if such market making is commenced, it may be
discontinued at any time without notice. In addition, such market making
activity will be subject to the limits imposed by the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and may be
limited during the Exchange Offer and the pendency of any Shelf Registration
Statement. Although the Notes have been designated for trading in the PORTAL
Market, there can be no assurance as to the development or liquidity of any
market for the Notes. If a market were to exist, the Notes could trade at
prices that may be lower than the initial offering price thereof, depending on
many
23
<PAGE>
factors, including prevailing interest rates and the markets for similar
securities, general economic conditions and the financial condition and
performance of, and prospects for, the Company. The Company does not intend to
apply for listing or quotation of the Notes on any securities exchange or
stock market. Prospective investors in the Notes should be aware that they may
be required to bear the financial risks of such investment for an indefinite
period of time. See "Description of the New Notes."
STOCKHOLDER LITIGATION IN CONNECTION WITH THE SECOND STEP TRANSACTION
The effectuation of the Second Step Transaction as a reverse stock split of
the Common Stock may result in claims by stockholders of the Issuer that each
share of Common Stock had a value in excess of their right to receive $40.25
in cash for each pre-split whole share of Common Stock or that the Second Step
Transaction was effected in an improper manner. Although the Company believes
that the Second Step Transaction will be effected in a proper manner and that
$40.25 per share represents the fair value of such rights because, among other
things, the amount exceeds the trading price of the Common Stock on the AMEX
prior to the Tender Offer and is equal to the amount paid by the Issuer in the
Tender Offer, the amount paid by the Issuer in the Option Repurchase and the
amount paid by VS&A-T/SF in the Stock Purchase, due to the inherent
uncertainty of litigation there can be no assurance, in the event such claims
are raised, that the Company would not incur significant litigation or
settlement costs in connection with such claims or that there will not be a
determination adverse to the Company in connection with such claims.
24
<PAGE>
DESCRIPTION OF THE TRANSACTIONS
THE RECAPITALIZATION
The Recapitalization will be effected by a series of transactions, including
the Tender Offer, Stock Purchase, Option Repurchase, Second Step Transaction
and Drop Down Restructuring, as described below.
The Tender Offer
On September 8, 1997, the Issuer commenced the Tender Offer to purchase all
of its outstanding shares of Common Stock for $40.25 in cash per share of
Common Stock. On October 9, 1997, the Issuer consummated the purchase of
2,742,092 shares of Common Stock pursuant to the Tender Offer. After the
consummation of the Tender Offer, shareholders of the Issuer other than VS&A-
T/SF and Fir Tree owned an aggregate of 101,969 shares of the Common Stock.
The Stock Purchase
Pursuant to a Stock Purchase Agreement, dated as of August 15, 1997 (the
"Stock Purchase Agreement"), among the Issuer, VS&A Fund II and VS&A-T/SF,
simultaneously with the consummation of the Tender Offer on October 9, 1997,
the Issuer consummated the Stock Purchase and sold to VS&A-T/SF 881,988 newly-
issued shares of Common Stock for $40.25 in cash per share (or an aggregate
purchase price of $35.5 million).
The Option Repurchase
As a result of the consummation of the Tender Offer, the holder of each
outstanding employee stock option to purchase Common Stock granted under the
Issuer's 1994 Incentive Stock Plan (other than Richard Wimbish with respect to
options to purchase 16,750 shares) and the Issuer's Incentive Stock Option
Plan, which in the aggregate total options with respect to 343,750 shares of
Common Stock, exercised such options and received an amount equal to (i) the
product of the number of shares of Common Stock issuable upon exercise of such
options, multiplied by $40.25, less (ii) the exercise price of such options.
Accordingly, no shares of Common Stock will be issued with respect to these
options. The Issuer's Incentive Stock Plan was terminated following the
closing of the Tender Offer; the Issuer's 1994 Incentive Stock Plan was not
terminated because of the survival of certain options held by Mr. Wimbish
issuable under such plan. The plan will survive solely with respect to such
options. No further options are outstanding, or will be granted, under such
plan. See "Management."
The Second Step Transaction
After giving effect to the consummation of the Tender Offer and the Stock
Purchase, VS&A-T/SF and Fir Tree beneficially owned approximately 60% and 33%
of the outstanding Common Stock, respectively.
VS&A-T/SF and Fir Tree have agreed to cause the Issuer, as soon as
practicable, to consummate the Second Step Transaction pursuant to which,
among other things, a reverse stock split of the Common Stock will be effected
such that each then outstanding share of Common Stock (other than treasury
shares and shares owned by the Equity Investors) will be converted into the
right to receive $40.25 in cash for each pre-split whole share of Common
Stock. Upon consummation of the Second Step Transaction, the Common Stock
outstanding will be held 64% by VS&A-T/SF and 36% by Fir Tree.
The Drop Down Restructuring
As part of the Recapitalization, VS&A-T/SF and Fir Tree will cause the
Issuer to effect the Drop Down Restructuring by causing the contribution of
substantially all of the assets and liabilities of Atwood, Galaxy and GEM to
Holdings LLC in exchange for a $45.0 million preferred equity interest in
Holdings LLC to be held, directly or indirectly, by the Issuer. The common
equity interests in Holdings LLC will be owned by VS&A-T/SF
25
<PAGE>
and Fir Tree in the same proportion as their ownership of the Common Stock
immediately following the consummation of the Second Step Transaction. The
preferred interest to be held, directly or indirectly, by the Issuer will
carry an 11% annual distribution rate and give the Issuer, directly or
indirectly through its wholly-owned subsidiaries, voting, operational and
management control of Holdings LLC. Holdings LLC in turn will contribute
substantially all of the assets of Galaxy, Atwood and GEM into the Operating
LLCs. 99% of the common equity interests of each Operating LLC will be owned
by Holdings LLC and will give Holdings LLC voting, operational and management
control of such entities and a 1% common equity interest of each Operating LLC
will be owned by Operating LLC. The preferred equity interest of Operating LLC
will be owned by Holdings LLC and give Holdings LLC voting, operational and
management control of Operating LLC and the common equity interest of
Operating LLC will be held by VS&A-T/SF and Fir Tree in the same proportion as
their ownership of the Common Stock immediately following the consummation of
the Recapitalization. As a result of the control, directly or indirectly, of
the LLCs by the Issuer, the financial results of the LLCs will be included in
the consolidated financial statements of the Company. Each of the LLCs has
jointly and severally unconditionally guaranteed, on an unsecured senior
subordinated basis, the payment of principal, premium, if any, and interest on
the Notes, which guarantees are subordinated to all Senior Debt of the LLCs
and the other Guarantors. As part of the Drop Down Restructuring, VS&A-T/SF
and Fir Tree will contribute to Holdings LLC and Operating LLC $2.9 million
and $1.6 million, respectively, for their common interests in Holdings LLC and
Operating LLC.
THE FINANCING PLAN
The Offering was part of a plan designed to enable the Issuer to finance the
Recapitalization. In connection with the Recapitalization, the Issuer: (i)
borrowed or will borrow $20.0 million under the Senior Credit Facility; (ii)
issued $80.0 million aggregate principal amount of notes pursuant to the
Bridge Financing Facility; (iii) maintained Fir Tree's ownership interest
through the Fir Tree Rollover valued at approximately $19.6 million and (iv)
received or will receive $40.0 million(/2/) in Equity Contributions from VS&A-
T/SF and Fir Tree. The net proceeds of the Old Notes sold pursuant to the
Offering were applied to repay indebtedness incurred under the Senior Credit
Facility and the Bridge Financing Facility in connection with the
Recapitalization.
The following table sets forth the sources and uses of funds in connection
with the Recapitalization (dollars in thousands).
<TABLE>
<CAPTION>
SOURCES OF FUNDS:
-----------------
<S> <C>
Senior Credit Facility..... $ 20,000
Bridge Financing Facility.. 80,000
Equity Contributions (2)... 40,000
Fir Tree Rollover.......... 19,600
--------
Total sources............ $159,600
========
</TABLE>
<TABLE>
<CAPTION>
USES OF FUNDS:
--------------
<S> <C>
Share repurchase and other (1).................................. $130,067
Fir Tree Rollover............................................... 19,600
Fees and expenses............................................... 8,250
Working capital................................................. 1,683
--------
Total uses.................................................... $159,600
========
</TABLE>
- --------
(1) Reflects consideration paid or to be paid to repurchase shares pursuant to
the Tender Offer, Option Repurchase and Second Step Transaction as well as
severance and bonus expenses associated with the Recapitalization.
(2) The Equity Contributions consist of $35.5 million contributed by VS&A-T/SF
to the Issuer and $4.5 million to be contributed to Holdings LLC and
Operating LLC as part of the Drop Down Restructuring. Of the $4.5 million
to be contributed to Holdings LLC and Operating LLC, VS&A-T/SF and Fir
Tree will contribute approximately $2.9 million and $1.6 million,
respectively.
(3) Includes fees and expenses related to the Transactions and the Offering
(including the Initial Purchaser's discount).
26
<PAGE>
USE OF PROCEEDS
The Issuer will not receive any cash proceeds from the issuance of the New
Notes offered hereby. In consideration for issuing the New Notes as
contemplated in this Prospectus, the Issuer will receive in exchange Old Notes
in like principal amount, the terms of which are identical in all material
respects to the New Notes (except that the New Notes have been registered
under the Securities Act and will not contain terms with respect to transfer
restrictions or interest rate increases as described herein). The Old Notes
surrendered in exchange for the New Notes will be retired and cancelled and
cannot be reissued. Accordingly, issuance of the New Notes will not result in
any increase in the indebtedness of the Issuer. The Company incurred $80.0
million of indebtedness under the Bridge Financing Facility and borrowed $20.0
million pursuant to the Senior Credit Facility pending the issuance and sale
of the Old Notes. The Company applied the net proceeds from the sale of the
Old Notes to repay the indebtedness incurred under the Bridge Financing
Facility and the Senior Credit Facility in connection with the
Recapitalization. The Bridge Financing Facility bore interest at the rate of
10.25% per year. An affiliate of the Initial Purchaser was the lender under
the Bridge Financing Facility.
CAPITALIZATION
The following table sets forth the capitalization of the Issuer as of
September 30, 1997: (i) on a historical basis, (ii) on a pro forma basis to
give effect to the Transactions and (iii) as adjusted to give pro forma effect
to both the Transactions and this Offering. The information in this table
should be read in conjunction with "Unaudited Pro Forma Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the financial statements and related notes thereto
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
--------------------------------
PRO FORMA
FOR THE PRO FORMA
ACTUAL TRANSACTIONS AS ADJUSTED
------- ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C>
LONG-TERM DEBT (INCLUDING CURRENT PORTION):
Senior Credit Facility (1).................. $ -- $ 20,000 $ --
Bridge Financing Facility................... -- 80,000 --
Notes....................................... -- -- 100,000
Other long-term debt........................ 4,862 3,656 3,656
------- --------- ---------
Total long-term debt...................... 4,862 103,656 103,656
------- --------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $10.00 par value; 1,000
shares authorized; no shares outstanding at
September 30, 1997......................... -- -- --
Common Stock, $0.10 par value; 10,000 shares
authorized; 3,332 shares outstanding at
September 30, 1997 (2)..................... 331 421 421
Additional paid-in capital.................. 12,773 48,185 48,185
Retained earnings........................... 26,524 19,128 19,128
Less: Treasury shares at cost (2)........... -- (120,822) (120,822)
------- --------- ---------
Total stockholders' equity (deficit)...... 39,628 (53,088) (53,088)
------- --------- ---------
Total capitalization.................... $44,490 $ 50,568 $ 50,568
======= ========= =========
</TABLE>
- --------
(1) The Senior Credit Facility provides for a $25.0 million revolving credit
facility. On a pro forma as adjusted basis, as of September 30, 1997, the
Company would have had $25.0 million of borrowing availability under the
Senior Credit Facility.
(2) Before giving effect to the reverse stock split, Common Stock and treasury
shares outstanding on a pro forma basis giving effect to the Transactions
(including the repurchase by the Company of fractional shares in the
Second Step Transaction) are 4,214 and 2,844, respectively.
27
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information of the Company (the "Pro Forma Financial Information") has been
prepared to give effect to the Transactions and the Offering. The pro forma
adjustments presented are based upon available information and certain
assumptions that management believes are reasonable under the circumstances.
The unaudited pro forma condensed consolidated balance sheet of the Company
as of September 30, 1997 (the "Pro Forma Balance Sheet") gives effect to the
Transactions and the Offering, assuming that the realization and application
of the net proceeds had occurred on September 30, 1997. The unaudited pro
forma condensed consolidated statements of operations of the Company for the
year ended December 31, 1996 and the nine months ended September 30, 1996 and
1997 (the "Pro Forma Statements of Operations") give effect to the
Transactions and the Offering as if they had occurred as of January 1, 1996,
and January 1, 1997, respectively.
The Transactions have been accounted for as leveraged recapitalization which
will have no impact on the historical basis of the Company's assets and
liabilities. The Pro Forma Financial Information should be read in conjunction
with "Use of Proceeds," "Selected Historical Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical consolidated financial statements of the
Company and notes thereto all included elsewhere in this Prospectus. The Pro
Forma Financial Information and related notes are provided for informational
purposes only and do not purport to be indicative of the Company's financial
condition or results of operations that would have actually been obtained had
the Transactions and the Offering been consummated as of the assumed dates and
for the periods presented, nor are they indicative of the Company's financial
condition or results of operations for any future period.
28
<PAGE>
T/SF COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS FOR THE
----------------------- PRO FORMA
HISTORICAL TRANSACTIONS OFFERING AS ADJUSTED
---------- ------------ -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash
equivalents.............. $ 6,894 $ 1,683 (a) $ -- (a) $ 8,577
Accounts receivable....... 11,275 -- -- 11,275
Deferred tax assets....... 674 6,476 (b) -- 7,150
Current contract
receivables and other
current assets........... 3,096 -- -- 3,096
------- -------- -------- --------
Total current assets.... 21,939 8,159 -- 30,098
------- -------- -------- --------
CONTRACT AND NOTES
RECEIVABLE AND
INVESTMENTS................ 1,116 -- -- 1,116
PROPERTY, PLANT AND
EQUIPMENT, net............. 7,414 -- -- 7,414
INTANGIBLES AND OTHER
ASSETS, net................ 32,359 3,625 (c) -- 35,984
------- -------- -------- --------
Total assets............ $62,828 $ 11,784 $ -- $ 74,612
======= ======== ======== ========
CURRENT LIABILITIES:
Notes payable............. $ 20 -- -- $ 20
Accounts payable.......... 4,903 -- -- 4,903
Accrued liabilities....... 3,081 -- -- 3,081
Deferred revenue.......... 9,010 -- -- 9,010
Current portion of long-
term debt................ 1,149 -- -- 1,149
------- -------- -------- --------
Total current
liabilities............ 18,163 -- -- 18,163
SENIOR CREDIT FACILITY...... -- 20,000 (d) (20,000)(d) --
BRIDGE FINANCING FACILITY... -- 80,000 (e) (80,000)(e) --
NOTES....................... -- -- 100,000 (f) 100,000
OTHER LONG-TERM DEBT........ 3,713 (1,206)(g) -- 2,507
DEFERRED CONTRACT
LIABILITIES AND CREDITS.... 1,324 1,206 (g) -- 2,530
------- -------- -------- --------
Total liabilities....... 23,200 100,000 -- 123,200
MINORITY INTEREST........... -- 4,500(h) -- 4,500
STOCKHOLDERS' EQUITY........ 39,628 (92,716)(i) -- (53,088)
------- -------- -------- --------
Total liabilities and
stockholders' equity... $62,828 $ 11,784 $ -- $ 74,612
======= ======== ======== ========
</TABLE>
29
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(a) The net increase in cash reflects the following (dollars in thousands):
<TABLE>
<CAPTION>
TRANSACTIONS OFFERING
------------ --------
<S> <C> <C>
SOURCES:
Senior Credit Facility............................ $ 20,000 $ --
Bridge Financing Facility......................... 80,000 --
Notes offered hereby.............................. -- 100,000
Equity Contributions (1).......................... 40,000 --
Fir Tree Rollover................................. 19,600 --
-------- --------
$159,600 $100,000
======== ========
USES:
Senior Credit Facility............................ $ -- $ 20,000
Bridge Financing Facility......................... -- 80,000
Share repurchase and other........................ 130,067 --
Fir Tree Rollover................................. 19,600 --
Estimated fees and expenses (2)................... 8,250 --
-------- --------
$157,917 $100,000
======== ========
Net increase in cash............................ $ 1,683 $ --
======== ========
</TABLE>
-------
(1) Includes $35.5 million contributed by VS&A-T/SF to the Issuer and $4.5
million to be contributed by VS&A-T/SF and Fir Tree to Holdings LLC and
Operating LLC as part of the Drop Down Restructuring.
(2) Includes fees and expenses related to the Transactions and the Offering
(including the Initial Purchaser's discount).
(b) Reflects deferred tax benefits related to tax deductible expenses
including severance, bonus and related payroll taxes, deferred stock
option expense, transaction structuring fees and deferred financing costs
at an effective corporate tax rate of 38%.
(c) Reflects deferred financing costs of $3.6 million associated with the
Company's financing of the Recapitalization.
(d) Reflects the indebtedness incurred under the Senior Credit Facility in
connection with the Recapitalization and the subsequent repayment of such
indebtedness from the net proceeds of the Offering. On a pro forma basis,
after giving effect to the Transactions and the Offering, at September 30,
1997, the Company would have no borrowings under the Senior Credit
Facility, and the Company's unused availability under the Senior Credit
Facility would have been $25.0 million.
(e) Reflects the indebtedness incurred under the Bridge Financing Facility in
connection with the Recapitalization and the subsequent repayment of such
indebtedness from the net proceeds of the Offering.
(f) Represents gross proceeds of $100.0 million from issuance of the Notes.
(g) Reflects the reclassification of certain acquisition contingent
consideration from other long-term debt to deferred contract liabilities
at September 30, 1997.
(h) Reflects the Company's distribution of certain net assets comprising its
Business to Business Communications segment to Holdings LLC. In exchange
for the net assets distributed, the Issuer will receive, directly or
indirectly, a $45.0 million preferred interest in Holdings LLC with a
cumulative annual distribution of 11%. The preferred interest includes
features which provide the Company with effective control of Holdings LLC
and, therefore, Holdings LLC is included in the consolidated financial
statements of the Company. The minority interest represents the $4.5
million of equity contributions from VS&A-T/SF and Fir Tree to Holdings
LLC and Operating LLC.
(i) The pro forma adjustment to stockholders' equity reflects the following
(dollars in thousands):
<TABLE>
<S> <C>
Share repurchase and other..................................... $(130,067)
Equity Contribution............................................ 35,500
Estimated transactional fees and expenses...................... (4,625)
Tax effect of certain fees and expenses........................ 6,476
---------
$ (92,716)
=========
</TABLE>
30
<PAGE>
T/SF COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS (A) FORMA
---------- --------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
REVENUES:
Business to Business Communications..... $29,323 $ 74 (b) $29,825
428 (d)
Information Services.................... 24,388 -- 24,388
Corporate and other..................... 955 (206)(e) 749
------- ------- -------
Total revenues........................ 54,666 296 54,962
------- ------- -------
COSTS AND EXPENSES:
Operating costs......................... 33,474 47 (b) 33,684
163 (d)
General and administrative.............. 13,000 50 (b) 12,889
335 (d)
(496)(j)
Depreciation and amortization........... 3,564 7 (b) 3,643
72 (d)
------- ------- -------
Total expenses........................ 50,038 178 50,216
------- ------- -------
Operating income (loss)................. 4,628 118 4,746
Interest................................ 401 8,067 (k) 8,477
9 (d)
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES......... 4,227 (7,958) (3,731)
INCOME TAX BENEFIT (PROVISION)............ (1,803) 3,024 (l) 1,221
------- ------- -------
NET INCOME (LOSS) (m)..................... $ 2,424 $(4,934) $(2,510)
======= ======= =======
NET INCOME (LOSS) PER SHARE............... $ 0.68 $ (1.83)
======= =======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING.............................. 3,564 1,369
======= =======
OTHER DATA:
EBITDA (n).............................. $ 8,192 $ 8,389
EBITDA margin (o)....................... 15.0% 15.3%
Adjusted pro forma EBITDA (p)........... $10,377
Adjusted pro forma EBITDA margin (o).... 18.9%
</TABLE>
31
<PAGE>
T/SF COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS (A) FORMA
---------- --------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
REVENUES:
Business to Business Communications..... $26,313 $ 679 (b) $28,464
1,472 (d)
Information Services.................... 17,064 4,565 (c) 21,629
Corporate and other..................... 1,728 (677)(e) 438
(240)(g)
(373)(h)
------- ------- -------
Total revenues........................ 45,105 5,426 50,531
------- ------- -------
COSTS AND EXPENSES:
Operating costs......................... 27,549 502 (b) 30,868
2,121 (c)
696 (d)
General and administrative.............. 10,289 487 (b) 11,510
680 (c)
565 (d)
(511)(j)
Depreciation and amortization........... 2,843 5 (b) 3,662
595 (c)
219 (d)
------- ------- -------
Total expenses........................ 40,681 5,359 46,040
------- ------- -------
Operating income (loss)................. 4,424 67 4,491
Interest................................ 413 36 (d) 8,630
114 (i)
8,067 (k)
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES......... 4,011 (8,150) (4,139)
INCOME TAX BENEFIT (PROVISION)............ (1,578) 3,097 (l) 1,519
------- ------- -------
NET INCOME (LOSS) (m)..................... $ 2,433 $(5,053) $(2,620)
======= ======= =======
NET INCOME (LOSS) PER SHARE............... $ 0.69 $ (1.91)
======= =======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING.............................. 3,537 1,369
======= =======
OTHER DATA:
EBITDA (n).............................. $ 7,267 $ 8,153
EBITDA margin (o)....................... 16.1% 16.1%
Adjusted pro forma EBITDA (p)........... $10,277
Adjusted pro forma EBITDA margin (o).... 20.3%
</TABLE>
32
<PAGE>
T/SF COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS (A) FORMA
---------- --------------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
REVENUES:
Business to Business Communications... $42,891 $ 996 (b) $ 45,594
1,707 (d)
Information Services.................. 24,273 4,565 (c) 28,838
Corporate and other................... 1,478 (526)(e) 23
(316)(f)
(240)(g)
(373)(h)
------- -------- --------
Total revenues...................... 68,642 5,813 74,455
------- -------- --------
COSTS AND EXPENSES:
Operating costs....................... 40,314 685 (b) 43,900
2,121 (c)
780 (d)
General and administrative............ 15,207 (1,188)(j) 16,203
656 (b)
680 (c)
848 (d)
Depreciation and amortization......... 4,018 14 (b) 4,895
595 (c)
268 (d)
------- -------- --------
Total expenses...................... 59,539 5,459 64,998
------- -------- --------
Operating income...................... 9,103 354 9,457
Interest.............................. 581 10,754 (k) 11,498
49 (d)
114 (i)
------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES....... 8,522 (10,563) (2,041)
INCOME TAX BENEFIT (PROVISION).......... (3,101) 4,014 (l) 913
------- -------- --------
NET INCOME (LOSS) (m)................... $ 5,421 $ (6,549) $ (1,128)
======= ======== ========
NET INCOME (LOSS) PER SHARE............. $ 1.53 $ (0.82)
======= ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING............................ 3,543 1,369
======= ========
OTHER DATA:
EBITDA (n)............................ $13,121 $ 14,352
EBITDA margin (o)..................... 19.1% 19.3%
Adjusted pro forma EBITDA (p)......... $ 17,171
Adjusted pro forma EBITDA margin (o).. 23.1%
</TABLE>
33
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(a) The pro forma adjustments exclude approximately $10.1 million of estimated
transaction fees and expenses and other acquisition considerations
incurred in connection with the Transactions and the Offering. These fees
and expenses are non-recurring and will be recorded in the consolidated
statement of operations during the period in which the Transactions are
consummated.
(b) Reflects the consolidation of the Company's purchase of an additional 69%
of Casino Publishing's common stock in February 1997. Subsequent to this
purchase, the Company owned 100% of Casino Publishing. This adjustment
reflects the purchase as if it had occurred on January 1, 1996.
(c) Reflects the consolidation of the Company's acquisition of CORSEARCH in
August 1996. This adjustment reflects the acquisition as if it had
occurred on January 1, 1996.
(d) Reflects the consolidation of the Company's acquisition of Galaxy Expocard
Europe B.V. in May 1997. This adjustment reflects the purchase as if it
had occurred on January 1, 1996.
(e) Represents the elimination of amortization income associated with
covenants-not-to-compete arising from the sale of Marks-Roiland and trade
journal operations in 1993 and 1995, respectively.
(f) Represents the elimination of $316,000 gain on the sale of certain Company
assets, consisting mainly of real estate.
(g) Represents the elimination of other income associated with the elimination
of a reserve related to the 1995 sale of the operations of three trade
journals of GEM.
(h) Reflects the elimination of investment income on cash which was used in
the August 1996 acquisition of CORSEARCH as if such cash had been used
assuming CORSEARCH was acquired on January 1, 1996.
(i) Reflects the incremental interest expense in 1996 associated with the
August 1996 acquisition of CORSEARCH assuming CORSEARCH was acquired on
January 1, 1996. The Company incurred debt of $900,000 and $327,000 at
7.5% and 8.5%, respectively, in conjunction with the acquisition.
(j) Pro forma adjustments to general and administrative expenses are as
follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------ YEAR ENDED
1997 1996 DECEMBER 31, 1996
-------- -------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
VS&A and Fir Tree management fee..... $ 68 $ 68 $ 90
Elimination of management position
(1)................................. (237) (174) (290)
Nonrecurring write-off of receivable
(2)................................. -- (405) (405)
Nonrecurring write-down of investment
(3)................................. -- -- (575)
Other adjustments (4)................ (327) -- (8)
-------- -------- -------
Total adjustments.................. $ (496) $ (511) $(1,188)
======== ======== =======
</TABLE>
--------
(1) Represents the elimination of salary, bonus, payroll taxes and employee
benefits associated with one management position which was principally
devoted to nonoperational tasks including the Transactions. Management
intends to eliminate this position as part of the Transactions.
(2) Represents a nonrecurring charge associated with the write-off recorded
in 1996 of a receivable recorded in conjunction with the Company's sale
of the assets of Shopper's Guide, Inc. in April 1994.
(3) Represents a nonrecurring charge associated with the write-down of MECI
common stock received in exchange for land sold to MECI in March 1995
and a write-off of an investment in a vendor used by the Company who
filed for bankruptcy.
(4) Represents the elimination of certain general and administrative costs,
mainly transactional consulting fees, during the year ended December
31, 1996 and the nine months ended September 30, 1997. These costs are
considered by the Company to be directly attributable to the
Transactions and, therefore, nonrecurring in nature.
34
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED)
(k) Reflects the interest expense on indebtedness incurred by the Company in
connection with the Transactions and the Offering, as if the Transactions
and the Offering had been consummated as of the beginning of the periods
presented, based on the borrowings and their rates expected to be in
effect at the offering date, as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------- YEAR ENDED
RATE AMOUNT 1997 1996 DECEMBER 31, 1996
------ -------- -------- -------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Notes................... 10.375% $100,000 $ 7,782 $ 7,782 $10,375
Amortization of financ-
ing costs.............. 285 285 379
-------- -------- -------
Interest expense...... $ 8,067 $ 8,067 $10,754
======== ======== =======
</TABLE>
(1) Reflects the pro forma income tax benefit associated with the pro forma
adjustments at an assumed corporate tax rate of 38.0%.
(m) The net income of Holdings LLC was less than the amount of distributions
payable for the periods on the preferred interest held by the Company.
Accordingly, no minority interest in the net income of Holdings LLC has
been reflected.
(n) EBITDA, as presented, represents operating income plus depreciation and
amortization. EBITDA is included because management understands that such
information is considered by certain investors to be an additional basis
on which to evaluate the Company's ability to pay interest expense, repay
debt and make capital expenditures. Excluded from EBITDA are interest
expense, income taxes, and depreciation and amortization, each of which
can significantly affect the Company's results of operations and liquidity
and should be considered in evaluating the Company's financial
performance. EBITDA is not intended to represent and should not be
considered more meaningful than, or an alternative to, measures of
operating performance as determined in accordance with generally accepted
accounting principles.
(o) EBITDA margin and adjusted EBITDA margin represent EBITDA and adjusted
EBITDA as percentages of total revenues.
(p) Management believes the following additional adjustments to pro forma
EBITDA are relevant to evaluating the future operating performance of the
Company. The following additional adjustments, which eliminate the impact
of certain nonrecurring charges and reflect the estimated impact of
management's business and operating strategy, are based on estimates and
assumptions made and believed to be reasonable by management and are
inherently uncertain and subject to change. The following calculation
should not be viewed as indicative of actual or future results. The
following table reflects the effects of these items.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------- YEAR ENDED
1997 1996 DECEMBER 31, 1996
-------- -------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Pro forma EBITDA....................... $ 8,389 $ 8,153 $14,352
Additional adjustments:
Net personnel costs (1)................ 599 529 1,201
Reorganization of loss-producing
magazines (2)......................... 874 1,005 747
Excess information acquisition costs
(3)................................... 196 -- --
Shut down of business operations (4)... 156 234 496
Other net savings (5).................. 163 356 375
-------- -------- -------
Total additional adjustments........... 1,988 2,124 2,819
-------- -------- -------
Adjusted pro forma EBITDA.............. $ 10,377 $ 10,277 $17,171
======== ======== =======
</TABLE>
35
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED)
--------
(1) Represents the net reduction in personnel costs for: (i) elimination of
the Tulsa, Oklahoma corporate office and the related compensation and
benefits for 13 individuals; (ii) addition of new management team
located at a new corporate office in New York and the related
compensation, benefits, occupancy and administrative costs; (iii)
addition of short-term consulting agreement expenses with former
officers to aid the new management in the transition phase and (iv)
elimination of non-recurring costs related to the search for and hiring
of research oriented personnel at CORSEARCH.
(2) Represents losses incurred by the Company during the periods presented
in connection with two magazine operations: IGWB and Casino Executive.
While these publications are projected to be profitable in fiscal 1998,
in the event that such publications continue to generate losses,
management expects to take one or more of the following actions: (a)
reorganize the publications to reduce costs; (b) merge the publications
with another party; (c) enter into strategic alliances or partnerships
with a third party or (d) other alternatives. Management expects a
decision regarding this segment will be made during fiscal 1998.
(3) Effective for fiscal 1997, CORSEARCH changed the terms of a contract
with one of its database vendors. This adjustment reflects information
acquisition costs during the nine months ended September 30, 1997 under
a variable pricing structure consistent with an August 1, 1997
amendment to that agreement with that vendor.
(4) Represents losses in TISI's NESS division, a high-end employment
screening service which was abandoned by the Company in fiscal 1997.
(5) During fiscal 1996 and 1997, certain consulting costs were incurred in
connection with one-time acquisition and executive searches; a system
evaluation project that was never completed; a satellite office study
that was not implemented and an option and study of the feasibility of
a new publication. In addition, severance costs for the officer of a
closed division were incurred.
36
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following tables present selected consolidated historical financial data
for each of the five years in the period ended December 31, 1996 that have
been derived from the audited consolidated financial statements of the
Company. The statements of operations and changes in stockholders' equity and
statements of cash flows for each of the three years in the period ended
December 31, 1996 and the notes thereto appear elsewhere in this Prospectus.
The selected historical statement of operations and balance sheet data as of
and for the nine months ended September 30, 1997 and 1996 have been derived
from unaudited financial statements, which, in the opinion of management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results for the unaudited interim
periods. Results for the nine months ended September 30, 1997 and 1996 are not
necessarily indicative of results that may be expected for the entire year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA (1):
Revenues
Information Services
(a)................... $ 13,643 $ 14,499 $ 15,091 $ 17,950 $ 24,273 $ 17,064 $ 24,388
Business to Business
Communications (b).... 80,643 42,911 39,665 53,089 42,891 26,313 29,323
Corporate and other.... 1,020 1,570 2,163 1,039 1,478 1,728 955
-------- -------- -------- -------- -------- -------- --------
Total revenues........ 95,306 58,980 56,919 72,078 68,642 45,105 54,666
-------- -------- -------- -------- -------- -------- --------
Expenses
Operating costs........ 64,613 49,658 35,069 39,665 40,314 27,549 33,474
General and
administrative
expenses.............. 21,341 15,361 11,862 11,841 15,207 10,289 13,000
Depreciation and
amortization.......... 7,378 3,779 3,118 3,601 4,018 2,843 3,564
-------- -------- -------- -------- -------- -------- --------
Total expenses........ 93,332 68,798 50,049 55,107 59,539 40,681 50,038
-------- -------- -------- -------- -------- -------- --------
Operating income
(loss)................ 1,974 (9,818) 6,870 16,971 9,103 4,424 4,628
Interest expense....... 2,692 1,921 736 859 581 413 401
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes and other
items................. (718) (11,739) 6,134 16,112 8,522 4,011 4,227
Unusual gain (2)....... 24,412 -- -- -- -- -- --
Income tax (provision)
benefit............... (10,569) 4,097 (2,589) (58) (3,101) (1,578) (1,803)
Minority interest in
consolidated
subsidiaries.......... (3,983) 1,929 (981) (266) -- -- --
Discontinued
operations, net (3)... (790) (4,800) (2,816) 37 -- -- --
Extraordinary loss, net
of tax of $340 (4).... -- (560) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...... $ 8,352 $(11,073) $ (252) $ 15,825 $ 5,421 $ 2,433 $ 2,424
======== ======== ======== ======== ======== ======== ========
Weighted average common
shares outstanding.... 4,208 3,801 3,733 3,766 3,543 3,537 3,564
Earnings (loss) per
share:
Continuing
operations........... $ 2.17 $ (1.54) $ 0.65 $ 4.19 $ 1.53 $ 0.69 $ 0.68
Discontinued
operations........... (0.19) (1.26) (0.75) .01 -- -- --
Extraordinary loss.... -- (0.15) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
$ 1.98 $ (2.95) $ (0.10) $ 4.20 $ 1.53 $ 0.69 $ 0.68
======== ======== ======== ======== ======== ======== ========
OTHER FINANCIAL DATA
(1):
Capital expenditures... $ 1,402 $ 5,564 $ 4,382 $ 2,589 $ 2,641 $ 1,955 $ 5,460
EBITDA (5)............. 9,352 (6,039) 9,988 20,572 13,121 7,267 8,192
EBITDA margin (5)...... 9.8% (10.2)% 17.5% 28.5% 19.1% 16.1% 15.0%
Ratio of earnings to
fixed charges (6)..... 9.8x -- 9.3x 19.8x 15.7x 10.7 11.1x
BALANCE SHEET DATA:
Cash and equivalents... $ 9,763 $ 2,808 $ 4,585 $ 13,383 $ 2,257 $ 5,236 $ 6,894
Total assets........... 88,102 60,059 53,581 53,444 55,982 59,354 62,828
Total debt............. 20,913 11,153 6,156 5,795 4,626 4,657 4,862
Stockholders' equity... 38,288 26,450 23,855 32,486 38,186 35,004 39,628
</TABLE>
37
<PAGE>
--------
(1) In the merger of Tribune/Swab-Fox then the owner of 78% of the Common
Stock, with and into the Issuer on May 25, 1995, the Issuer was the
surviving entity from a legal standpoint. However, from an accounting
standpoint, the transaction was treated as a downstream merger. Thus,
for financial reporting purposes, the transaction was treated as a
recapitalization of Tribune/Swab-Fox, with Tribune/Swab-Fox as the
survivor. Accordingly, the historical financial statements of the
Company, as the surviving legal entity, are those historical financial
statements of Tribune/Swab-Fox prior to the merger. In addition, the
Company was a party to several events/transactions which affect the
comparability of the historical information presented above. See the
Company's Notes to Consolidated Financial Statements for additional
information on certain of these events/transactions.
--------
(a) With respect to Information Services, the Company acquired
CORSEARCH in August 1996.
(b) With respect to Business to Business Communications, the Company:
(i) ceased publishing "The Tulsa Tribune" in September 1992 as a
result of the termination of a joint operating agreement; (ii) sold
the operating assets of the "New York Shopper," one of the
Company's shopper-newspaper operations, in November 1993; (iii)
acquired the stock of Galaxy in March 1994; (iv) sold the assets of
the "New Jersey Shopper", its other shopper-newspaper operation, in
April 1994; (v) sold three trade journals and related assets in
July 1995; (vi) acquired its majority interest in Casino Publishing
Co. effective February 1, 1997 and (vii) acquired additional shares
of Galaxy Expocard Europe, B.V. in May 1997.
(2) Gain from early termination of newspaper joint operating agreement
between the Company's newspaper and World Publishing Company, net of
termination costs.
(3) Restated to reflect real estate as a discontinued operation as of
November 30, 1994.
(4) Prepayment penalty on early retirement of long-term debt.
(5) EBITDA, as presented, represents operating income plus depreciation and
amortization. EBITDA is included because management understands that
such information is considered by certain investors to be an additional
basis on which to evaluate the Company's ability to pay interest
expense, repay debt and make capital expenditures. Excluded from EBITDA
are interest expense, income taxes, depreciation and amortization,
unusual gain, minority interest in consolidated subsidiaries,
discontinued operations, net and extraordinary loss, net of tax, each
of which can significantly affect the Company's results of operations
and liquidity and should be considered in evaluating the Company's
financial performance. EBITDA is not intended to represent and should
not be considered more meaningful than, or an alternative to, measures
of operating performance as determined in accordance with generally
accepted accounting principles. EBITDA margin represents EBITDA as a
percentage of total revenues.
(6) In computing the ratio of earnings to fixed charges: (a) earnings have
been based on income from continuing operations before income taxes and
fixed charges and (b) fixed charges consist of interest and
amortization of debt discount and expense. The coverage deficiency for
the year ended December 31, 1993 was approximately $11.7 million.
38
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a diversified business media company which principally
operates two lines of business: (i) business and professional information
services and (ii) business to business communications, publishing and related
services. On May 25, 1995, Tribune/Swab-Fox, parent of the Issuer, merged with
and into the Issuer. Though the Issuer was the surviving legal entity in the
merger because Tribune/Swab-Fox owned 78% of the Issuer's Common Stock prior
to the merger, the transaction is accounted for as a recapitalization of
Tribune/Swab-Fox with Tribune/Swab-Fox as the survivor (i.e., a downstream
merger). Accordingly, the historical financial statements of the Company, as
the surviving legal entity, are those historical financial statements of
Tribune/Swab-Fox.
In February 1997, the Issuer increased its ownership in Casino Publishing
Company, publisher of the trade journal, Casino Executive, to 88%, which is
included in the Issuer's consolidated operations since that date. Effective
January 31, 1998, the Issuer acquired the remaining interests in Casino
Publishing Company. Effective May 1, 1997, the Issuer acquired a majority
ownership in Galaxy Expocard Europe B.V. and increased its ownership to 73%
effective July 1, 1997. On August 15, 1996, the Issuer acquired 100% of the
outstanding capital stock of CORSEARCH, which has been accounted for as a
purchase. CORSEARCH provides trademark and trade name research and is included
in the Issuer's consolidated operations since that date.
PROFITABILITY
The following table summarizes the Company's historical results of
operations as a percentage of revenue for the years ended December 31, 1994,
1995 and 1996 and for the nine month periods ended September 30, 1996 and
1997:
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------- --------------
1994 1995 1996 1996 1997
-------- -------- -------- ------ ------
<S> <C> <C> <C> <C> <C>
Revenues:
Information Services........... 26.5% 24.9% 35.4% 37.8% 44.6%
Business to Business
Communications................ 69.7 73.7 62.5 58.4 53.7
Corporate and other............ 3.8 1.4 2.1 3.8 1.7
-------- -------- -------- ------ ------
Total revenues............... 100.0 100.0 100.0 100.0 100.0
Expenses:
Operating costs................ 61.6 55.0 58.7 61.1 61.2
General and administrative
expenses...................... 20.8 16.4 22.2 22.8 23.8
Depreciation and amortization.. 5.5 5.0 5.8 6.3 6.5
-------- -------- -------- ------ ------
Total expenses............... 87.9 76.4 86.7 90.2 91.5
-------- -------- -------- ------ ------
Operating Income................. 12.1% 23.6% 13.3% 9.8% 8.5%
======== ======== ======== ====== ======
EBITDA........................... 17.5% 28.5% 19.1% 16.1% 15.0%
======== ======== ======== ====== ======
</TABLE>
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1997 Versus Nine Months Ended September 30,
1996
Revenues. Revenues of $54.7 million for the nine months ended September 30,
1997 were $9.6 million, or 21.2%, higher than the nine months ended September
30, 1996. Information Services revenue increased approximately $7.3 million,
or 42.9%, for the nine months ended September 30, 1997 as compared with the
nine months ended September 30, 1996, of which approximately $4.6 million is
attributable to CORSEARCH
39
<PAGE>
and $2.7 million is attributable to continued growth in TISI's employment
histories volume and criminal record volume, and higher average prices from
MVRs attributable to a continued increase in the volume of TISI's premium
service, "MVR Express." Business to Business Communications revenue increased
$3.0 million, or 11.4%, for the nine months ended September 30, 1997 as
compared with the nine months ended September 30, 1996, consisting mainly of
an increase in trade show directories produced during the second quarter of
1997, the effect of higher fees effective in early 1996 for exhibitor
services, and Casino Executive trade journal revenue from the date that a
majority of Casino Publishing Company was acquired by the Issuer, reduced by
lower registration services due to a higher number of bi-annual trade shows in
1996, fewer pages of advertising in IGWB due to the loss of several large
advertisers in the lottery segment of the gaming industry and elimination of
two trade shows in 1997.
Interest and other income for the nine months ended September 30, 1997 was
approximately $0.8 million, or 44.7%, lower than the nine months ended
September 30, 1996, which is substantially all attributable to the reduction
in interest earned in 1997 since the cash and short-term investments in 1996
were used to acquire CORSEARCH, partially offset by equity earnings in 1997
from the Issuer's interest in Gaming for Africa and interest income related to
an income tax refund.
Operating Costs. Operating costs for the nine months ended September 30,
1997 were $5.9 million, or 21.5%, higher than the nine months ended September
30, 1996. Information Services costs increased approximately $3.3 million, or
34.0%, for the nine months ended September 30, 1997 as compared with the nine
months ended September 30, 1996, which consists of $2.2 million related to
CORSEARCH, with substantially all of the remainder related to the criminal
records volume increase and new product costs. Business to Business
Communications costs increased approximately $2.7 million, or 14.9%, during
the nine months ended September 30, 1997 as compared with the nine months
ended September 30, 1996, attributable to the direct costs of the increase in
directories published during the nine months ended September 30, 1997,
additional payroll costs in 1997 related to the increase in operating
personnel throughout 1996 and early 1997, and Casino Executive costs in 1997,
reduced by lower trade show costs due to the elimination in 1997 of two trade
shows.
General and Administrative Expenses. General and administrative expenses
were $2.7 million, or 26.3%, higher for the nine months ended September 30,
1997, as compared with the nine months ended September 30, 1996, substantially
all of which is attributable to CORSEARCH and Casino Executive. Information
Services expenses, exclusive of CORSEARCH, were approximately $0.3 million, or
16.0%, higher in the nine months ended September 30, 1997 as compared with the
nine months ended September 30, 1996, primarily attributable to growth.
Included in the nine months ended September 30, 1996 was a $0.3 million
provision for losses on prepaid production costs for Business to Business
Communications that had been paid to a digital information vendor during 1995
and early 1996 and a $0.4 million loss on the remaining receivables from the
sale of the Shopper's Guide assets in 1994.
Depreciation and Amortization. Depreciation and amortization were $0.7
million, or 25.4%, higher for the nine months ended September 30, 1997, as
compared with the nine months ended September 30, 1996, substantially all
related to CORSEARCH, including amortization of goodwill related to this
acquisition.
Interest Expense. Interest expense did not change significantly during the
nine months ended September 30, 1997, as compared with the nine months ended
September 30, 1996, because the decrease in interest expense attributable to a
reduction in debt from principal payments during the past year was offset by
interest on new debt incurred related to the acquisition of CORSEARCH.
Year Ended December 31, 1996 Versus Year Ended December 31, 1995
General. Operations for the year ended December 31, 1996 have two major
variations from the same period ended December 31, 1995. First, operations of
CORSEARCH, which was acquired on August 15, 1996, are included in Information
Services in 1996 from the acquisition date. Second, the sale of three trade
journals by GEM, effective July 1, 1995, resulted in a pre-tax gain of $11.7
million in 1995 and, as a result of such sale, GEM operations for the last
half of 1995 for the Business to Business Communications segment includes only
IGWB, the related conference and trade show, World Gaming Congress, and
related activities.
40
<PAGE>
Revenues. Revenues of $68.6 million for 1996 were $3.4 million, or 4.7%,
lower than for 1995. If the $11.7 million pre-tax gain in 1995 is excluded,
revenues increased $8.3 million, or 13.8%, in 1996 as compared with 1995.
Information Services revenue increased $6.3 million, or 35.2%, in 1996 as
compared with 1995, consisting of $2.7 million of CORSEARCH revenue for the
four and one-half months in 1996 that it was owned by the Issuer and $1.0
million from increases in employment histories due to increased volumes; $1.6
million from criminal records due to increased volumes and a regional provider
of criminal records acquired in 1996; $0.5 million of motor vehicle reports
primarily from the higher revenue product MVR Express; and most other pre-
employment screening products also had higher volumes and revenues in 1996, as
compared with 1995. Business to Business Communications revenue increased
approximately $1.5 million, or 3.6%, in 1996 as compared with 1995, mainly
consisting of increases in registration services, data management services and
trade show publishing for several large bi-annual trade shows and conventions;
an increase in price for data management services in mid-1995 resulting in an
average increase in data management services revenue of approximately 30% in
1996 as compared with 1995; and an increase in the number of trade show
directories in 1996 as compared with 1995 from both bi-annual trade shows and
other new trade shows reduced by lower revenue of approximately $5.5 million
related to the sale of three trade journals effective July 1, 1995. An
increase in advertising pages and revenue for the remaining trade journal
partially offset the loss of revenue in 1996 as compared with 1995 from the
three trade journals sold.
Operating Costs. Operating costs were $0.6 million, or 1.5%, higher in 1996,
as compared with 1995. Information Services operating costs were $1.9 million,
or 17.3%, higher in 1996, as compared with 1995, consisting of $1.0 million of
CORSEARCH operating costs for the four and one-half months in 1996 that it was
owned by the Issuer, $0.7 million of cost increases attributable to criminal
record volume increases and cost increases attributable to higher volumes of
other pre-employment screening products. Business to Business Communications
costs were $1.2 million, or 4.3%, lower in 1996, as compared with 1995, since
the increase in number of trade shows (both bi-annual and annual) for
registration services, data management services, convention publishing
services and directory publishing were more than offset by the decrease in
costs of $3.6 million in 1996 related to the three publications sold in 1995.
General and Administrative Expenses. General and administrative expenses
were $3.4 million, or 28.8%, higher in 1996, as compared with 1995.
Information Services' general and administrative expenses increased $1.8
million, or 88.7%, as compared with 1995, which includes CORSEARCH expenses of
$1.0 million for the four and one-half months that it was owned by the Issuer
and an increase in expenses of pre-employment screening services of $0.8
million, which mainly represent a full year of personnel costs and related
expenses for employees added throughout 1995. Business to Business
Communications' general and administrative expenses increased $0.5 million, or
7.5%, in 1996 as compared with 1995, attributable to additional employee costs
(both full year costs for employees added in 1995 and new employees in 1996)
and related expenses required for the continued growth in number of trade
shows, conventions and services and products net of the decrease in costs
attributable to the three trade journals sold in 1995. Corporate general and
administrative expenses increased approximately $1.1 million in 1996 as
compared to 1995 resulting from the write-off of $0.5 million in connection
with the final settlement with the buyer of Shopper's Guide of future amounts
due the Issuer, compensation recorded related to stock options granted and
additional consulting costs related to investor relations, acquisition search,
and income tax examinations.
Depreciation and Amortization. Depreciation and amortization increased $0.4
million, or 11.1%, in 1996, as compared with 1995, of which $0.3 million
relates to equipment depreciation and goodwill amortization of CORSEARCH for
the four and one-half months that it was owned by the Issuer. The balance of
the increase is related to capital expenditures for each operation,
substantially offset by lower gaming media services depreciation and
amortization due to the sale of the three trade journals in 1995.
Interest Expense. Interest expense decreased $0.3 million, or 33.3%, in
1996, as compared with 1995, resulting from principal payments on debt during
1996 and lower average interest rates on variable debt, offset by increased
interest on new debt related to the CORSEARCH acquisition.
41
<PAGE>
Year Ended December 31, 1995 Versus Year Ended December 31, 1994
General. Operations for the year ended December 31, 1995 have three major
variations from the same period ended December 31, 1994. First, the merger of
the Issuer and Tribune/Swab-Fox was completed in May 1995, which is treated as
a downstream merger for accounting, tax and financial reporting purposes.
Accordingly, the Issuer was able to utilize substantially all of the income
tax net operating loss carryforwards which Tribune/Swab-Fox had prior to the
merger, and this significantly reduced the 1995 income tax provision. Second,
the sale of three GEM trade journals, effective July 1, 1995, resulted in a
pre-tax gain of $11.7 million and as a result of such sale, the GEM operations
in the Business to Business Communications segment for the last half of 1995
only included IGWB and the related conference and trade show, World Gaming
Congress, and related activities. Third, operations of Galaxy, acquired
effective March 1, 1994, are included in Business to Business Communications
for twelve months in 1995 as compared with only ten months in 1994.
Revenues. Revenues of $72.1 million for 1995 were $15.2 million, or 26.7%,
higher than for 1994. The major revenue increase is the $11.7 million pre-tax
gain on the sale of the three GEM trade journals. Business to Business
Communications revenue increased $1.7 million, or 4.3%, in 1995 as compared
with 1994, exclusive of the gain on the sale of the three trade journals,
consisting of significant growth in the trade show registration and publishing
portion of this segment in 1995, including two more months of Galaxy's
operations, offset by a decrease of $5.2 million in revenues 1995, primarily
as a result of the sale of the three trade journals. Thus in the last half of
1995, as compared with 1994, the GEM portion of the operations included
revenue from only one trade journal. In addition, an increase in advertising
pages and two new executive seminars in 1995 as compared with 1994 partially
offset the decrease from the trade journals sold. Revenue from the World
Gaming Congress increased approximately $1.0 million in 1995 as compared with
1994. Information Services revenue increased $2.9 million, or 19.2%, in 1995
as compared with 1994 with most of the increase relating to an increase in the
volume of employment histories and criminal records sold. Long distance
telephone resale revenue was approximately $0.7 million lower in 1995 as a
result of the Issuer exiting this business during the latter part of the first
quarter of 1994 due to competitive and regulatory considerations. Other
revenue is mainly interest income related to the contract receivable from the
World Publishing Company ("World Publishing") which is approximately $0.4
million lower in 1995 as compared with 1994 because of continued payments
received on the contract receivable, although interest income on cash received
from the sale of the trade journals substantially offsets this reduction.
Operating Costs. Operating costs were $4.6 million, or 13.1%, higher in
1995, as compared with 1994. Business to Business Communications operating
costs were $2.2 million, or 8.3%, higher in 1995 as compared with 1994. The
decrease in Business to Business Communications operating costs related to the
three trade journals sold in 1995 reduced by the effect of the following cost
increases: costs related to the European executive seminar, the costs related
to the increase in advertising pages, the significant increase in the cost of
paper, a postal rate increase, direct cost increase related to the World
Gaming Congress which increased as a result of continued expansion of this
trade show in 1995, an increase in printing costs for the convention
publishing business of $1.0 million related to the higher cost of paper and an
increase in the number of conventions, directories and services provided, the
increase in the number of personnel at both Galaxy and Atwood (approximately
$2.0 million increase in combined personnel costs) in order to continue to
provide high quality service to their customers and to handle the increase in
the number of trade shows serviced and the inclusion of Galaxy for twelve
months of operations in 1995 versus ten months in 1994. Information Services
operating costs were $2.4 million, or 27.1%, higher for 1995, as compared with
1994. The increases in such costs were related primarily to approximately $0.7
million from the new employment screening service approximately $0.4 million
from the increase in criminal record volume and additional personnel related
to higher volumes and new product development costs. Netted against these
increases is a decrease of approximately $0.5 million in 1995 related to long
distance telephone resale costs because of exiting this business in the latter
part of the first quarter of 1994.
General and Administrative Expenses. General and administrative expenses
were approximately the same in 1995 as in 1994. The reduction in general and
administrative expenses from the Business to Business
42
<PAGE>
Communications segment during the last half of 1995, and the reduction of
expenses in 1995 resulting from the merger, as compared with 1994, were
generally offset by Galaxy's general and administrative expenses for the
twelve months in 1995, as compared with ten months in 1994, and the accrual
for potential costs under the indemnity provisions of the Termination
Agreement among the Issuer, World Publishing and Newspaper Printing
Corporation ("NPC") as related to settlement of lawsuits against World
Publishing and NPC.
Depreciation and Amortization. Depreciation and amortization increased $0.5
million, or 16.1%, for 1995, as compared with 1994, substantially all related
to the depreciable assets of Galaxy, both the number of months Galaxy was
included in each year and depreciation related to Galaxy's 1994 and 1995
capital expenditures needed to handle Galaxy's growth in 1994 and 1995.
Interest Expense. Interest expense increased $0.1 million, or 14.3%, for
1995, as compared with 1994, resulting from higher average interest rates on
variable rate debt during 1995, partially reduced by principal payments on
debt during the past year. Also, in late May 1995, the Issuer borrowed $2.0
million under its bank lines of credit in connection with the merger and the
related acquisition of equivalent shares for cash, which borrowings were
repaid in early August 1995.
PROVISION FOR INCOME TAXES
Provision for income taxes as a percentage of income before income taxes for
all periods presented is lower than the statutory federal income tax rate
mainly because of the reduction in the valuation reserve related to net
operating loss carryforwards and higher tax basis in the trade journals sold
reduced by goodwill amortization related to acquisitions not being deductible
for federal and state income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity. The Company's principal sources of funds following the
Recapitalization are anticipated to be cash flows from operating activities
and borrowings under the Senior Credit Facility. Based upon the successful
implementation of management's business and operating strategy, the Company
believes that these funds will provide the Company with sufficient liquidity
and capital resources for the Company to meet its current and future financial
obligations, including the payment of principal and interest on the Notes, as
well as to provide funds for the Company's working capital, capital
expenditures and other needs. No assurance can be given, however, that this
will be the case. As of September 30, 1997, after giving effect to the
Transactions and the Offering, the Issuer would have had $25.0 million of
availability under the Senior Credit Facility. The Company's future operating
performance and ability to service or refinance the Notes and to repay, extend
or refinance the Senior Credit Facility will be subject to future economic
conditions and to financial, business and other factors, many of which are
beyond the Company's control. In addition, any future acquisitions by the
Company would likely require additional financing. See "Risk Factors--
Substantial Leverage," "--Dependence Upon Distributions from Subsidiaries and
LLCs" and "--Uncertain Impact of Acquisition Plans."
In the event of a Change of Control, the Company will be required to make an
offer for cash to repurchase the Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest and Additional Interest, if any,
thereon to the repurchase date. Certain events involving a Change of Control
would result in an event of default under the Senior Credit Facility or other
indebtedness of the Company that may be incurred in the future. Moreover, the
exercise by the holders of the Notes of their right to require the Company to
repurchase the Notes may cause an event of default under the Senior Credit
Facility or such other indebtedness, even if the Change of Control does not.
Finally, there can be no assurance that the Company will have the financial
resources necessary to repurchase the Notes upon a Change of Control. See
"Risk Factors--Limitations on Change of Control" and "Description of the New
Notes--Change of Control."
Capital Expenditures. Management anticipates that capital expenditures in
1997 will be approximately $6.5 million. Other than the Information Services
division, the primary capital expenditures will be for computers, software,
furniture and office equipment and to acquire additional "reader boxes" at
Galaxy. With regard to the Information Services division, the Issuer will
incur capital expenditures to develop software
43
<PAGE>
and purchase the computers for CORSEARCH to launch an on-line trademark and
trade name search business. TISI continues to offer its customers in the
trucking industry credits for providing employment information to be utilized
in its database, which credits can be used against charges for future services
from such division. All of the credits earned are considered capital
expenditures for the acquisition of such data. In addition, the Company
invested approximately $1.1 million to acquire interests in Galaxy Expocard
Europe and Casino Executive. Any other acquisitions would require additional
investments. Management anticipates positive cash flow from operations in
1997, even after the anticipated capital expenditures for 1997. Thus, with the
Issuer's available cash reserves and cash flow, management does not anticipate
a need for capital during 1997 except for possible, and as yet unidentified,
acquisitions.
INFLATION
Management anticipates the effect of inflation on the Company's operations
during 1997 will be primarily limited to the effects which general inflation
will have on costs in most areas in which the Company operates.
44
<PAGE>
THE EXCHANGE OFFER
GENERAL
The Issuer entered into the Exchange Offer Registration Rights Agreement
with the Initial Purchaser pursuant to which the Issuer and the Guarantors
agreed, for the benefit of the holders of the Old Notes, at the Issuer's cost,
(i) to use their best efforts to file with the Commission the Exchange Offer
Registration Statement within 30 days after the date of the original issuance
of the Old Notes with respect to the Exchange Offer for the New Notes, which
will have terms substantially identical to the Old Notes (except that the New
Notes will not contain terms with respect to transfer restrictions or interest
rate increases as described herein) and (ii) to use their best efforts to
cause the Exchange Offer Registration Statement to be declared effective under
the Securities Act within 150 days after the date of the original issuance of
the Old Notes. The Exchange Offer Registration Rights Agreement provides that
promptly after the Exchange Offer Registration Statement has been declared
effective, the Issuer will offer the New Notes in exchange for surrender of
the Old Notes and that the Issuer will keep the Exchange Offer open for not
less than 20 business days (or longer if required by applicable law) after the
date notice of the Exchange Offer is mailed to the holders of the Old Notes.
For each Old Note validly tendered to the Issuer pursuant to the Exchange
Offer and not withdrawn by the holder thereof, the holder of such Old Note
will receive a New Note having a principal amount equal to that of the
tendered Old Note. Interest on each New Note will accrue from the last
Interest Payment Date on which interest was paid on the Old Note tendered in
exchange therefor or, if no interest has been paid on such tendered Old Note,
from October 29, 1997.
Based on existing interpretation of the Securities Act by the Staff set
forth in several no-action letters to third parties, and subject to the
immediately following sentence, the Issuer believes that the New Notes issued
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof without further compliance with the
registration and prospectus delivery provisions of the Securities Act.
However, any holder of Old Notes who is an "affiliate" of the Issuer or who
intends to participate in the Exchange Offer for the purpose of distributing
the New Notes (i) will not be able to rely on the interpretation by the Staff
set forth in the above referenced no-action letters, (ii) will not be able to
tender Old Notes in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the New Notes, unless such sale or
transfer is made pursuant to an exemption from such requirements.
Each holder of the Old Notes who wishes to exchange Old Notes for New Notes
in the Exchange Offer will be required to make certain representations,
including that (i) any New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of such holder's business, (ii) such
holder has no arrangements with any person to participate in the distribution
of such New Notes and (iii) such holder is not an "affiliate," as defined
under Rule 405 of the Securities Act of the Issuer or, if such holder is an
affiliate, that such holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable. If the
holder is not a broker-dealer, it will be required to represent that it is not
engaged in, and does not intend to engage in, a distribution of New Notes. If
the holder is a Participating Broker-Dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it has no arrangements with any person to participate in the
distribution of the New Notes and that it will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, such holder will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
To date, the Staff has taken the position that Participating Broker--Dealers
may fulfill their prospectus delivery requirements with respect to
transactions involving an exchange of securities such as the exchange pursuant
to the Exchange Offer (other than a resale of an unsold allotment from the
original sale of the Old Notes) with this Prospectus. A Participating Broker--
Dealer which delivers this Prospectus to purchasers in connection with resales
of the Old Notes will be subject to certain of the civil liability provisions
under the Securities Act, and will be bound by the provisions of the Exchange
Offer Registration Rights Agreement (including certain indemnification rights
and obligations). Under the Exchange Offer Registration Rights Agreement, the
Issuer is required to allow Participating Broker-Dealers and other persons, if
any, subject to
45
<PAGE>
similar prospectus delivery requirements to use this Prospectus in connection
with the resale of such New Notes. A broker-dealer which purchased Old Notes
from the Issuer may not participate in the Exchange Offer.
The Exchange Offer Registration Rights Agreement provides that, in the event
that any changes in law or the applicable interpretations of the Staff do not
permit the Issuer to effect the Exchange Offer or if for any other reason the
Exchange Offer Registration Statement is not declared effective within 150
days after the original issuance of the Old Notes or the Exchange Offer is not
consummated within 180 days after the original issue of the Old Notes or upon
the request of the Initial Purchaser under certain circumstances, the Issuer
and the Guarantors will, in lieu of effecting the registration of the New
Notes pursuant to the Exchange Offer Registration Statement and at the
Issuer's cost, (a) as promptly as practicable, file with the Commission the
Shelf Registration Statement covering resales of the Old Notes, (b) use their
best efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act by the 180th day after the original issue
of the Old Notes (or promptly in the event of a request by the Initial
Purchaser) and (c) use their best efforts to keep effective the Shelf
Registration Statement for a period of two years after its effective date (or
for a period of one year after such effective date if such Shelf Registration
Statement is filed at the request of the Initial Purchaser or, for such
shorter period, when all of the Old Notes covered by the Shelf Registration
Statement have been sold pursuant thereto). The Issuer will, in the event of
the filing of a Shelf Registration Statement, provide to each holder of the
Old Notes copies of the prospectus which is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for
the Old Notes has become effective and take certain other actions as are
required to permit unrestricted resales of the Old Notes. A holder of Old
Notes who sells such Old Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling securityholder in the
related prospectus and to deliver the prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Exchange Offer Registration Rights Agreement which are applicable to such a
holder (including certain indemnification obligations). In addition, each
holder of the Old Notes will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on
the Shelf Registration Statement within the time periods set forth in the
Exchange Offer Registration Rights Agreement in order to have their Old Notes
included in the Shelf Registration Statement and to benefit from the
provisions regarding the increase in interest rate set forth in the following
paragraph.
In the event that either (i) the Exchange Offer Registration Statement is
not filed with the Commission on or prior to the 30th day following the date
of original issue of the Old Notes, (ii) the Exchange Offer Registration
Statement is not declared effective on or prior to the 150th day following the
date of original issue of the Old Notes or (iii) either (A) the Issuer has not
exchanged New Notes for all Old Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to 30 days after the date on which the
Exchange Offer Registration Statement was declared effective or (B) the
Exchange Offer Registration Statement ceases to be effective at any time prior
to the time that the Exchange Offer is consummated for a period of 15
consecutive days without being succeeded immediately by an additional
Registration Statement, filed and declared effective or (C) if applicable, the
Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time prior to the second
anniversary of its effective date for a period of 15 consecutive days without
being succeeded immediately by an additional Shelf Registration Statement
filed and declared effective, then, as liquidated damages, the interest rate
stated on the Old Notes shall be increased by one-half of one percent per
annum, which rate will be increased by an additional one quarter of one
percent per annum for each subsequent 90-day period that any such additional
interest continues to accrue, up to a maximum additional interest rate of 2%
in excess of the original 10 3/8% interest rate per year. Upon (x) the filing
of the Exchange Offer Registration Statement in the case of clause (i) above,
(y) the effectiveness of the Exchange Offer Registration Statement in the case
of clause (ii) above or (z) the day before the date of the consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, in the case of clause (iii) above, the interest rate stated on
the Old Notes from the date of such filing, effectiveness or day before the
date of the consummation, as the case may be, will be reduced to the original
interest rate of the Old Notes; provided, however, that, if after any such
reduction in interest rate, a different event specified in clause (i), (ii) or
(iii) above occurs, the interest rate may again be increased pursuant to the
foregoing provisions.
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<PAGE>
The summary herein of certain provisions of the Exchange Offer Registration
Rights Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Registration Rights Agreement, a copy of which has been filed as an exhibit to
the Exchange Offer Registration Statement.
Notwithstanding the foregoing, to the extent applicable, there shall be
added to all time limitation periods that number of days representing delays
in the Issuer's filings with the Commission caused by events beyond the
Issuer's control despite its best efforts in either of the following
categories: (i) events affecting issuers generally, such as the temporary
closure of federal agencies; or (ii) events directly affecting the Issuer,
such as its inability to obtain all information of an acquisition entity
constituting a significant subsidiary within a time period that would permit
independent auditors to prepare required audited information on a timely
basis. In addition, if at any time counsel to the Issuer has determined in
good faith that it is reasonable to conclude that the filing of the Exchange
Offer Registration Statement or the Shelf Registration Statement or the
compliance by the Issuer with its disclosure obligations in connection with
the Exchange Offer Registration Statement or the Shelf Registration Statement
may require the disclosure of information which the Board of Directors of the
Issuer has identified as material and which the Board of Directors has
determined that the Issuer has a bona fide business purpose for preserving as
confidential, then the Issuer and the Guarantors may delay the filing or the
effectiveness of the Exchange Offer Registration Statement or Shelf
Registration Statement (if not then filed or effective, as applicable) and
shall not be required to maintain the effectiveness thereof or amend or
supplement the Exchange Offer Registration Statement or Shelf Registration
Statement for a period expiring upon the earlier to occur of (A) the date on
which such material information is disclosed to the public or ceases to be
material or the Issuer is able to so comply with its disclosure obligations
and Commission requirements or (B) 30 days after the Issuer notifies the
holders of such good faith determination.
As of the date of this Prospectus, $100,000,000 aggregate principal amount
of the Old Notes is outstanding. In connection with the issuance of the Old
Notes, the Issuer arranged for the Old Notes initially purchased by qualified
institutional buyers, as defined pursuant in Rule 144A under the Securities
Act ("Qualified Institutional Buyers"), to be issued and transferable in book-
entry form through the facilities of DTC, acting as depositary. The New Notes
also will be issuable and transferable in book-entry form through DTC.
This Prospectus, together with the accompanying Letter of Transmittal, is
being sent to all registered holders of Old Notes as of February 4, 1998 (the
"Record Date").
The Issuer shall be deemed to have accepted validly tendered Old Notes when,
as and if the Issuer has given oral or written notice thereof to the Exchange
Agent. See "Exchange Agent." The Exchange Agent will act as agent for the
tendering holders of Old Notes for the purpose of receiving New Notes from the
Issuer and delivering New Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders of Old Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Issuer will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean March 10, 1998, unless the Issuer, in
its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended. In order to extend the Expiration Date, the Issuer will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Notes an announcement thereof, each prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Such announcement may state that the Issuer is extending the
Exchange Offer for a specified period of time.
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The Issuer reserves the right (i) to delay acceptance of any Old Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and to refuse to
accept Old Notes not previously accepted, if any of the conditions set forth
herein under "Termination" shall have occurred and shall not have been waived
by the Issuer (if permitted to be waived by the Issuer), by giving oral or
written notice of such delay, extension or termination to the Exchange Agent
and (ii) to amend the terms of the Exchange Offer in any manner deemed by it
to be advantageous to the holders of the Old Notes. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly
as practicable by oral or written notice thereof. If the Exchange Offer is
amended in a manner determined by the Issuer to constitute a material change,
the Issuer will promptly disclose such amendment in a manner reasonably
calculated to inform the holders of the Old Notes of such amendment.
Without limiting the manner in which the Issuer may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the Exchange Offer, the Issuer shall have no obligation to publish,
advertise or otherwise communicate any such public announcement, other than by
making a timely release to the Dow Jones News Service.
INTEREST ON THE NEW NOTES
Interest on each New Note will accrue from the last Interest Payment Date on
which interest was paid on the Old Note tendered in exchange therefor or, if
no interest has been paid on such tendered Old Note, from October 29, 1997.
Holders of Old Notes whose Old Notes are accepted for exchange will be deemed
to have waived the right to receive any payment in respect of interest on the
Old Notes accrued from the last Interest Payment Date or October 29, 1997 (as
the case may be) to the date of the issuance of the New Notes. Consequently,
holders who exchange their Old Notes for New Notes will receive the same
interest payment on the same Interest Payment Date that they would have
received had they not accepted the Exchange Offer. Interest on the New Notes
is payable semi-annually on May 1 and November 1 of each year accruing from
the last Interest Payment Date or, in the case of the first payment, October
29, 1997, at a rate of 10 3/8% per annum.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes (unless such tender is being effected pursuant to the procedure for
book-entry transfer described below) and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the Old Notes by causing DTC
to transfer such Old Notes into the Exchange Agent's account in accordance
with DTC's procedure for such transfer. Although delivery of Old Notes may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
the Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received or confirmed by the Exchange Agent at its addresses set forth
herein under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The tender by a holder of Old Notes will constitute an agreement between
such holder and the Issuer in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its address
set forth herein. Holders may also request that their respective brokers,
dealers, commercial banks, trust companies or nominees effect such tender for
such holders.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders. Instead of delivery by mail, it is recommended that holders use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery. No Letter of Transmittal or Old Notes
should be sent to the Issuer.
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Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
The term "holder" with respect to the Exchange Offer means any person in whose
name Old Notes are registered on the books of the Issuer or any other person
who has obtained a properly completed bond power from the registered holder,
or any person whose Old Notes are held of record by DTC who desires to deliver
such Old Notes by book-entry transfer at DTC.
Any beneficial holder whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial holder wishes to
tender on his own behalf, such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in such
holder's name or obtain a properly completed bond power from the registered
holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act (an "Eligible Institution") unless the Old
Notes tendered pursuant thereto are tendered (i) by a registered holder
(including any participant in DTC whose name appears on a security position
listed as the owner of Old Notes) who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by appropriate bond powers which authorize such person to tender
the Old Notes on behalf of the registered holder, in either case signed as the
name of the registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Issuer,
evidence satisfactory to the Issuer of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Notes will be
determined by the Issuer in its sole discretion, which determination will be
final and binding. The Issuer reserves the absolute right to reject any and
all Old Notes not properly tendered or any Old Notes the Issuer's acceptance
of which would, in the opinion of counsel for the Issuer, be unlawful. The
Issuer also reserves the absolute right to waive any irregularities or
conditions of tender as to particular Old Notes. The Issuer's interpretation
of the terms and conditions of the Exchange Offer (including the instructions
in the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
must be cured within such time as the Issuer shall determine. Neither the
Issuer, the Exchange Agent nor any other person shall be under any duty to
give notification of defects or irregularities with respect to tenders of Old
Notes nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost by
the Exchange Agent to the tendering holder of such Old Notes unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, the Issuer reserves the right in its sole discretion to (a)
purchase or make offers for any Old Notes that remain outstanding subsequent
to the Expiration Date, or, as set forth under "Termination," to terminate the
Exchange Offer and (b) to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
Exchange Offer.
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GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent prior to
the Expiration Date, or if such holder cannot complete the procedure for book-
entry transfer on a timely basis, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting
forth the name and address of the holder of the Old Notes, the certificate
number or numbers of such Old Notes and the principal amount of Old Notes
tendered, stating that the tender is being made thereby, and guaranteeing
that, within five business days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof), together with the certificate(s)
representing the Old Notes to be tendered in prior form for transfer and any
other documents required by the Letter of Transmittal, will be deposited by
the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or facsimile
thereof), together with the certificate(s) representing all tendered Old Notes
in proper form for transfer (or confirmation of a book-entry transfer into the
Exchange Agent's account at DTC of Old Notes delivered electronically) and all
other documents required by the Letter of Transmittal are received by the
Exchange Agent within five business days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the business day prior
to the Expiration Date, unless previously accepted for exchange.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the business day prior to the Expiration Date and prior to acceptance for
exchange thereof by the Issuer. Any such notice of withdrawal must (i) specify
the name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number or numbers and principal amount of such Old Notes), (iii)
be signed by the Depositor in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to permit the Trustee with respect to the Old Notes to register the
transfer of such Old Notes into the name of the Deposit or withdrawing the
tender and (iv) specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such withdrawal
notices will be determined by the Issuer, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the Exchange Offer and no New Notes
will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Any Old Notes which have been tendered but which are not
accepted for exchange will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described above under
"Procedures for Tendering" at any time prior to the Expiration Date.
TERMINATION
Notwithstanding any other term of the Exchange Offer, the Issuer will not be
required to accept for exchange, or exchange New Notes for, any Old Notes not
theretofore accepted for exchange, and may terminate or amend the Exchange
Offer as provided herein before the acceptance of such Old Notes if: (i) any
action or proceeding is instituted or threatened in any court or by or before
any governmental agency with respect to the
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Exchange Offer, which, in the Issuer's judgment, might materially impair the
Issuer's ability to proceed with the Exchange Offer or (ii) any law, statute,
rule or regulation is proposed, adopted or enacted, or any existing law,
statute, rule or regulation is interpreted by the staff of the Commission in a
manner, which, in the Issuer's judgment, might materially impair the Issuer's
ability to proceed with the Exchange Offer.
If the Issuer determines that it may terminate the Exchange Offer, as set
forth above, the Issuer may (i) refuse to accept any Old Notes and return any
Old Notes that have been tendered to the holders thereof, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the Expiration Date
of the Exchange Offer, subject to the rights of such holders of tendered Old
Notes to withdraw their tendered Old Notes, (iii) waive such termination event
with respect to the Exchange Offer and accept all properly tendered Old Notes
that have not been withdrawn. If such waiver constitutes a material change in
the Exchange Offer, the Issuer will disclose such change by means of a
supplement to this Prospectus that will be distributed to each registered
holder of Old Notes, and the Issuer will extend the Exchange Offer for a
period of five to 10 business days, depending upon the significance of the
waiver and the manner of disclosure to the registered holders of the Old
Notes, if the Exchange Offer would otherwise expire during such period.
EXCHANGE AGENT
IBJ Schroder Bank& Trust Company of New York, the Trustee under the
Indenture, has been appointed as Exchange Agent for the Exchange Offer.
Questions and requests for assistance and requests for additional copies of
this Prospectus or of the Letter of Transmittal should be directed to the
Exchange Agent addressed as follows:
By Registered or Certified Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, NY 10274-0084
Attention: Reorganization Operations Department
By Hand or Overnight Courier:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Securities Processing Window
Subcellar One (SC-1)
For Information, call:
Information and Facsimile Confirmation: (212) 858-2103
Facsimile (212) 858-2611 (Eligible Institutions Only)
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Issuer. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and regular employees of the Issuer and its affiliates in person, by
telegraph or telephone.
The Issuer will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Issuer, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Issuer may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, Letters of
Transmittal and related documents to the beneficial owners of the Old Notes
and in handling or forwarding tenders for exchange.
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The expenses to be incurred in connection with the Exchange Offer, including
fees and expenses of the Exchange Agent and Trustee and accounting and legal
fees, will be paid by the Issuer.
The Issuer will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or
issued in the name of, any person other than the registered holder of the Old
Notes tendered, or if tendered Old Notes are registered in the name of any
person other than the person signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
ACCOUNTING TREATMENT
No gain or loss for accounting purposes will be recognized by the Issuer
upon the consummation of the Exchange Offer. The expenses of the Exchange
Offer will be amortized by the Issuer over the term of the New Notes under
generally accepted accounting principles. Unamortized expenses relating to the
Old Notes will be deferred and amortized over the life of the New Notes.
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BUSINESS
GENERAL
The Company is a diversified business media company which principally
operates two lines of business: (i) Information Services and (ii) Business to
Business Communications. Information Services includes: (i) TISI, which, with
its proprietary database, is the leading provider of pre-employment screening
information used by the trucking industry to facilitate compliance with U.S.
Government regulations and (ii) CORSEARCH, the second largest provider in the
United States of trademark and trade name research to law firms and
corporations. Business to Business Communications are conducted through
several individual businesses, each of which is characterized by leading
competitive positions within specialized market niches. Business to Business
Communications includes: (i) Atwood, the largest domestic independent
publisher of exposition and association related publications and directories;
(ii) Galaxy, the largest independent provider of trade show and convention
registration, exhibitor information and "lead" management services in the
United States and (iii) GEM, which owns and operates the World Gaming
Congress, the world's largest trade show catering to the legalized gaming
industry, and publishes trade magazines directed to the legalized gaming
industry, principally IGWB, the leading publication catering to gaming
industry executives. On a pro forma basis, the Company's consolidated revenues
and adjusted EBITDA for the twelve month period ended September 30, 1997 were
approximately $78.9 million and $17.3 million, respectively. Of such pro forma
consolidated revenues, approximately 40% represented Information Services and
approximately 60% represented Business to Business Communications. Of such pro
forma adjusted EBITDA, 55% represented Information Services and 45%
represented Business to Business Communications.
INFORMATION SERVICES
Information Services provides specialized information and database
management services to precise market segments. TISI is a leading supplier of
pre-employment screening information to the trucking industry and a provider
of risk assessment and underwriting information to agents, underwriters and
others in the insurance industry. CORSEARCH, acquired by the Company in 1996,
is the second largest supplier in the United States of trademark and trade
name searches and information research.
TISI
Pre-Employment Screening Services
TISI, which since 1983 has operated its transportation services business
under the trade name DAC Services ("DAC"), is the leading supplier of
comprehensive pre-employment screening information to the trucking industry
and a provider of driving record-related and other risk assessment and
underwriting information to the insurance industry. DAC, endorsed by the
American Trucking Associations since 1986 and the trucking associations of 41
states, currently maintains a computer network providing on-line electronic
access to a proprietary employment history database of over 2.6 million job
records concerning over 1.4 million truck drivers. Management believes the
demand for the information in its DAC database is driven primarily by federal
government regulation, the Company's ability to provide the information on a
timely basis and the Company's success in marketing to the "truckload" segment
of the trucking industry, which historically exhibits high driver turnover.
"Truckload" carriers, such as J.B. Hunt and Schneider, typically are
differentiated from "route" carriers and "private fleet" carriers in that
"truckload" carriers are hired by third parties and do not have the steady,
predetermined routes of a "route" carrier, nor do they operate as an
individual corporation's captive "private fleet" (e.g., a retailer's "private
fleet" of delivery trucks). As a result, the Company believes the
unpredictable nature of a driver's job for a "truckload" carrier leads to
inherently high driver turnover, which can be more than 100% per year for some
trucking companies. As federal regulations require extensive screening of new
truck drivers, this high turnover rate creates demand for DAC's services.
DAC currently has over 5,600 transportation-related customers, including 93
of the largest 100 U.S. "for hire" carriers which consist of both "truckload"
and "route" carriers. DAC's key asset is its proprietary
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database which is operated as an information cooperative through which DAC's
approximately 2,000 transportation industry members, including 40 of the 41
largest "truckload" carriers and 30 of the 59 largest "route" carriers,
contribute employment records in return for an economic credit against DAC
services and the ability to access DAC's employment history database. Members
pay for each employment record accessed and do not pay if no record is found.
Therefore, as the database grows, the "hit" rate increases and the Company's
revenues and profits are favorably impacted. The Company is not aware of any
comparable database offered by competitors and believes its large cooperative
membership and proprietary database represent significant competitive
advantages which would take a potential competitor several years to replicate.
Non-member customers are precluded from accessing the employment records
database; however, they are provided access to DAC's motor vehicle records as
well as criminal records and drug testing databases.
DAC's services provide comprehensive information which is used by
transportation industry customers to satisfy current DOT pre-employment
screening requirements. Due to public safety concerns, DOT regulations
currently require trucking companies to investigate the driving history,
previous three-year employment history and, since 1995, previous drug and
alcohol test results of prospective drivers. Current regulations require
employers to inquire of previous employers, but do not require previous
employers to respond to such inquiries. Under proposed DOT regulations,
trucking companies would be required to provide certain information concerning
the job histories of drivers in response to inquiries made by prospective
employers. If adopted in their current form, management believes such
regulations could provide greater demand for the Company's services, including
access to employment history and drug and alcohol test results of truck
drivers. There can be no assurance, however, that such regulations will be
adopted in their current form or at all, or if adopted that they will be
beneficial to DAC. Previous forms of such regulations, if they had been
adopted, would have been significantly burdensome to DAC's customers. While
DAC was successful in working with the American Trucking Associations in
modifying such regulations, there can be no assurance that new government
regulation will not be adopted which could have a significant adverse effect
on DAC or its customers' use of DAC services. See "Risk Factors--Government
Regulation."
DAC has virtually instantaneous computer access to MVRs maintained by 27
states and alternative methods to access the MVRs of the remaining 23 states.
In addition, DAC maintains a database which contains certain workers'
compensation records from 17 states, which may be used by prospective
employers either to detect employers that have been omitted by a prospective
employee in his or her employment application or to determine job suitability.
In 1998, DAC intends to implement manual searching capability for many of
those states of which the workers' compensation records are not in DAC's
database.
Criminal records are maintained by approximately 3,300 jurisdictions in the
U.S. and there is no single source for all such records. However, DAC can
access for its customers criminal records from any U.S. jurisdiction requested
by a customer. Management believes that the database of criminal records being
created by DAC will become an increasingly valuable asset, and may provide DAC
access to providing criminal records and other data to industries other than
trucking and insurance.
DAC obtains its MVRs, workers' compensation and criminal records information
from state or county archives, utilizing a nationwide network of agents and
representatives, direct computer connections and proprietary databases. The
information is resold at a mark-up over state and county fees for such
information. In 1996, the information was resold to more than 14,000
customers, including 89% of the customers who requested information in 1995.
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The following table sets forth certain volume data for DAC for each of the
five years ended December 31, 1996 and for the nine months ended September 30,
1996 and 1997:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
----- ----- ----- ------ ------ -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Records sold (1)............ 8,857 9,530 9,946 10,322 10,975 8,430 8,635
Employment history records
maintained................. 1,196 1,414 1,693 1,940 2,251 2,179 2,478
</TABLE>
- --------
(1)Includes employment records, MVRs and criminal records.
Employers who access DAC's services have the option to choose only those
records that meet their specific information needs. In addition, DAC offers a
"Total Applicant Screening Services" product which provides a customized
package of DAC's pre-employment screening products.
For customers that want to perform their own background checks, the Company
publishes The Guide, a publication available to the general public. The Guide
lists thousands of telephone numbers and addresses for criminal record
jurisdictions, state motor vehicle departments and colleges and universities,
among others, which may be found helpful to those conducting their own
background searches.
Insurance Industry Services
In addition to providing MVRs to the transportation industry, the Company is
also a leading supplier of MVRs to the insurance industry for the screening of
insurance applications. The Company, endorsed by the Professional Insurance
Agents' Association, provides over 5,000 insurance industry customers access
to the Company's computer network to request MVRs and other information.
Approximately 85% of these customers are insurance agents, with the remaining
15% representing branch offices, managing general agents, brokers and a small
number of regional and home office locations. These customers primarily
utilize the Company's data in assessing insurance underwriting risk and also
purchase the Company's workers' compensation and credit report information. In
its effort to provide more complete information to its insurance industry
customers, DAC recently became a licensed reseller of the CLUE(R) database, an
insurance company database of previous insurance claims which allows insurance
companies to access claims data for underwriting purposes.
Electronic Data Interchange Services
DAC also has begun to develop a product line called MessageXpress(R), which
provides electronic business communication services to transportation motor
carriers. Electronic Data Interchange ("EDI") automates manual paper-based
processes, reduces errors and reduces data transfer times. Transportation
companies are increasingly required by their customers to send and receive
documents via EDI. Because the installation and implementation of EDI
technology is expensive and time-consuming, this requirement has been
burdensome on smaller carriers. As a result, in the first quarter of 1996,
TISI introduced its EDI services, tailored to small and medium sized carriers,
which allow such carriers to choose among three different services to match
their technical abilities, volume requirements and budget. This service
handles technical details such as programming and establishing communication
links with one or more shippers, and a carrier need only provide MessageXpress
with the information otherwise provided on a paper document.
CORSEARCH
CORSEARCH, acquired by the Company in 1996, is the second largest provider
of trademark and trade name research services in the United States. CORSEARCH
provides comprehensive trademark and trade name searches for 1,100 law firm
and corporate clients. Management believes the increase in recent filings of
applications for new trademarks and trade names, a greater corporate emphasis
on protecting existing trademarks
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and trade names, growing Internet usage and the increased international
expansion of U.S. companies collectively have created greater demand for
CORSEARCH's services, and provide significant opportunities to expand
CORSEARCH's database operations. The PTO estimates that the number of domestic
trademark filings will increase at a rate of 12% per annum through the year
2000. The number of basic trademark and trade name searches executed by
CORSEARCH grew from 13,795 in 1992 to 19,491 in 1996 (a 41% increase) and
CORSEARCH's revenues grew from $4.2 million in 1992 to $7.2 million in 1996 (a
69.1% increase).
CORSEARCH currently searches three major classifications of trademark
information for its customers: (i) through its proprietary database, CORBASE,
the Company searches all federal trademarks that have been filed with and
registered by the PTO; (ii) through its proprietary database CORSTATE, the
Company searches trademarks that have been filed with the Secretary of State
offices of the 50 states and Puerto Rico and (iii) through databases licensed
to the Company by third parties, the Company searches for common law usages of
company names, product names, trade names and brand names appearing in
thousands of magazines, monographs, journals, newspapers, press releases and
periodicals.
The prices for CORSEARCH's basic search services vary depending upon the
turn-around time requested by the client for the particular search performed.
CORSEARCH provides five levels of pricing of basic searches which increase
incrementally for the five levels of timing provided, from CORSEARCH's
"standard" three to four day service to "ultrarush" (two hour same day
service). As the costs for each search remains substantially constant,
CORSEARCH's profit margins on searches increase along with the prices charged
for such services when services are ordered on a "rush" basis. A typical
search may consist of a search of the federal, state and common law usage
databases of trade names and trademarks.
CORSEARCH's highly trained, industry-focused researchers use CORSEARCH's
proprietary software, proprietary CORBASE and CORSTATE databases, third party
databases and, to a lesser extent, published resources for completing customer
searches. Although the majority of the information contained in CORSEARCH's
state databases is publicly available from governmental authorities and
others, management believes that because of the cycle of intellectual property
registration renewals, it likely would take a new competitor several years to
compile a database containing the state registration information currently
maintained by CORSEARCH and its two primary competitors. New competitors may
purchase the federal database from the PTO but significant computer
programming would be needed to make it usable. Management believes that
CORSEARCH, which competes primarily on the quality, accuracy and timeliness of
its data, provides a consistently high level of service to its clients.
CORSEARCH's customers include small to mid-size law firms and corporations as
well as major companies.
CORSEARCH recently has added international search capabilities, primarily in
selected European countries, Canada and Mexico, and is in the process of
implementing an Internet online search service which began beta-testing in
December 1997 and is to become operational during 1998. The online service is
expected to serve as a quick and easy research tool for clients to "screen"
the availability of trademarks and trade names before undertaking more
expensive searches. Access to an international database of pharmaceutical
trademarks in use in 49 countries also recently has been added.
BUSINESS TO BUSINESS COMMUNICATIONS
The Company's Business to Business Communications operations are conducted
through several individual businesses, each of which is characterized by
leading competitive positions within specialized market niches. Business to
Business Communications includes: (i) Atwood, the largest domestic independent
publisher of exposition and association related publications and directories;
(ii) Galaxy, the largest independent provider of trade show and convention
registration, exhibitor information and "lead" management services in the
United States and (iii) GEM, the owner and operator of the World Gaming
Congress, the world's largest trade show catering to the legalized gaming
industry and the publisher of trade magazines directed to the legalized gaming
industry, principally IGWB, catering to gaming industry executives.
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Atwood
Atwood, founded in 1982, is the leading independent publisher of daily trade
show and convention newspapers, directories, and related publishing products
that are directed to the attendees of U.S. trade shows and conventions. Atwood
competes primarily with trade magazines and the owners and operators of
expositions with in-house publishing capabilities who participate only in
their particular industry and do not have diverse markets or the capabilities
of Atwood. Atwood also publishes the trade journal EXPO, the official
publication of the International Association of Exposition Management, and
maintains an Internet website which is a database for trade show managers and
exhibitors.
Approximately 69% of Atwood's 1996 revenues were derived from its
publication of dailies and directories. During 1996, Atwood provided
publishing, communication or promotional services to approximately 7,000
exhibitors at approximately 207 trade shows and conventions, including 44 of
the "Tradeshow 200" exhibitions. Of the 207 trade shows to which Atwood
provided services in 1996, 81% represented trade shows served by Atwood in
1995. Related products provided by Atwood include pre- and post- convention
materials, literature kiosks and LeSack, a plastic bag filled with literature,
publications, product samples and other marketing information that is
distributed to attendees. Atwood also produces advertising and marketing
products such as Internet Guides, specialty products and restaurant and city
guides distributed to show attendees. Atwood provides magazine publishing
related services to trade associations, including editorial content, layout
and design of trade publications, advertising sales and circulation services.
Atwood's digital group provides CD ROMs, Internet applications, electronic
conference planners and buyer's guides.
Atwood has recently provided the rental of Marketing-oriented Interactive
Kiosks for Exhibitors ("MIKE"). MIKE permits exhibitors to create customized
interactive multimedia programs which are accessed by show attendees via
touchscreen technology on a kiosk that takes up minimal floor space. The
program can be customized to include survey questions that elicit information
from attendees, which allows exhibitors to qualify leads.
Galaxy
Galaxy, founded in 1982, markets its comprehensive registration services,
automated "lead" management products and information services on an exclusive
basis to trade associations, promoters, exhibitors and attendees of exposition
and trade shows and conventions. In 1996, Galaxy provided services to 41 of
the "Tradeshow 200" exhibitions, including four of the top five such
exhibitions. Of the 211 trade shows Galaxy provided services to in 1996, 84%
represented trade shows served by Galaxy in 1995. Management believes Galaxy,
from its experience servicing a wide variety of expositions, has developed a
unique set of organizational skills and technical expertise which provides
Galaxy with competitive advantages.
Multiple versions of Galaxy's "Expocards" (magnetic stripe or "smartcards")
are utilized in the registration process to allow convention and trade show
exhibitors to digitally capture and manipulate attendee information for "lead"
management and follow-up. Galaxy's Expocard technology encodes attendee
registration data on a magnetic stripe attached to a plastic card or on a
computer chip "smartcard" which can be read by trade show and convention
exhibitors renting Galaxy's Expocard readers. The Expocard provides lead data
to exhibitors in electronic form and allows for other product applications.
For example, attendees can leave and retrieve messages at a message center
kiosk established by the Company on site for a fee. The Expocard permits the
conference host (usually a trade association or a for-profit show manager) to
receive information including demographic data, attendance results and exhibit
visitation patterns.
"Smartcards," which have more data storage area, but are more expensive than
the magnetic stripe Expocards, can be utilized to store additional demographic
or other data and can give some "write-on" capability to Expocard. In
addition, the "smartcard" can provide the capability to store credits
redeemable at vending machines and is usable for the purchase of meals,
convention products and paper and media convention materials (outlines, taped
seminars, etc.), for attendance at pre-paid continuing education and other
seminars and
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for collecting and disseminating seminar evaluations. Most customers prefer
the lower-cost magnetic stripe version of Expocard. Galaxy is currently
seeking to acquire a lower cost Smartcard that more customers would find
economically attractive.
Galaxy's "Expocard Connect" is a PC-based system that reads the Expocard's
magnetic strip, allows the exhibitor to add qualifying information to the data
file, saves the data to the PC hard drive in a format compatible with any data
management program and, when networked, can transfer data directly to a data
management program.
Galaxy's InfoStation product is a touchscreen kiosk which allows a show
attendee to insert an Expocard, request product information, record comments
and complete a questionnaire. The database is fully customized and can be
transmitted offsite for fulfillment. The InfoStation package includes
programming, software and hardware and on-site services. The Company's newest
product, still in the test marketing stage, is the iGoExpo, a portable lead
gathering tool, which can be custom designed as a combination card reader and
data input vehicle, a card reader and information service, etc. This hand-held
Personalized Digital Assistant product was used first by Sony at the NAB show
in Las Vegas in the spring of 1997 to make the lead qualification process more
user-friendly, streamline its literature distribution process, improve traffic
flow through its exhibit and more efficiently track buyer interest. According
to TradeShow & Exhibit Manager magazine, this enabled Sony to increase the
number of booth visitors it "qualified" during the show from 5,000 in 1996 to
12,000 in 1997, representing an increase of 140%.
Galaxy Classics provides graphic design and printing services to its and
Atwood's convention and trade show and trade association customers, as well as
to select customers in the geographic areas surrounding Galaxy's headquarters
in Frederick, Maryland. Services include customized graphic design for
multimedia use and printing services, primarily for promotional and marketing
purposes.
Several of Galaxy's customers hold trade shows on a bi-annual or tri-annual
basis. Consequently, Galaxy's revenues vary from year to year. The following
table sets forth, for the years ended December 31, 1994, 1995 and 1996, the
percentage of revenues of Galaxy generated from trade shows of varying
frequencies.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Annual Shows.............................. 87% 97% 85%
Bi-Annual Shows........................... 13 2 11
Tri-Annual Shows.......................... -- -- 3
Other Shows............................... -- 1 1
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
GEM
GEM, founded in 1986 as BMT Publications, Inc., is the leading global
provider of business information and marketing resources for the legalized
gaming industry. GEM owns and operates the World Gaming Congress, the largest
legalized gaming industry trade show in the world and the only trade show
endorsed by the American Gaming Association as the organization's official
trade show. The conference traditionally has been held annually in Las Vegas
during the fourth quarter of each year. Consequently, GEM's financial results
are heavily skewed towards the fourth quarter. In 1996, the World Gaming
Congress sold over 185,000 square feet of exhibition space and included over
21,700 attendees, an increase from 117,000 square feet and 17,500 attendees in
1994.
GEM publishes several trade magazines directed to the legalized gaming
industry, including IGWB. IGWB, with a qualified circulation of over 26,000,
is the leading trade journal directed to the worldwide legalized gaming
industry. In addition, the Company has a 100% interest in Casino Publishing
Company, the publisher of Casino Executive, a trade magazine directed to
casino management executives in North America.
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The following table sets forth certain information with respect to World
Gaming Congress and IGWB:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1994 1995 1996
------- -------- -------- --------
<S> <C> <C> <C> <C>
World Gaming Congress:
Exhibitor companies......................... 360 454 540 609
Booths...................................... 640 1,162 1,540 1,850
Net square footage.......................... 64,000 117,100 154,000 185,000
Total attendance............................ 10,836 17,479 21,767 21,700
IGWB:
Advertising pages........................... 350 411 497 572
</TABLE>
GEM has a 49% interest in Gaming for Africa Expo, a gaming trade show and
conference held in South Africa, and Gaming for Africa, the leading trade
magazine for gaming in Sub-Saharan Africa. GEM also has entered into a
partnership with a European publishing company. In 1997, the partnership, in
association with European Gaming Organization, a European gaming supplier
trade group, produced the European Casino Executive Congress, a conference
targeted at senior executives in the European casino industry. The optimal
frequency of this conference is currently being evaluated by management.
BUSINESS AND OPERATING STRATEGIES
Management has significant experience in the information services,
exposition services and publishing businesses and has developed a business and
operating strategy to: (i) maximize the strengths of the Company's core
businesses; (ii) expand into new products, services and geographic markets;
(iii) expand through selective acquisitions to enhance the Company's
established business platforms and (iv) improve operating efficiencies.
INFORMATION SERVICES
Management believes that both TISI and CORSEARCH have been successful
because they target well defined market niches and possess competitive
advantages through their proprietary databases, value added information
products and superior customer service. Management's growth strategy for
expanding upon these existing business platforms consists of:
. Broadening TISI's Customer Focus into Additional Trucking and
Transportation Segments. TISI has historically enjoyed success with
"truckload" carriers due to the high employee turnover rates associated
with this segment of the trucking industry. Management intends to
continue capitalizing on this success, but believes the employment
history database can be more aggressively marketed to the other segments
of the U.S. trucking and transportation industry. Specifically,
management intends to expand marketing of its database services to
"private fleet" carriers, which include approximately 14,000 trucking
companies. Management believes that, by expanding the number of
employment records contained in the DAC database, TISI will increase
revenues and profits through higher customer "hit rates" per search.
. Expanding DAC's Business Model to Other Industries. Management believes
that there are opportunities to expand the successful DAC pre-employment
screening business model and core competencies to other industries that
tend to raise public safety concerns, involve substantial financial
risks for employers or have high employee turnover rates. Management
plans to build employment history databases and market pre-employment
screening services to employers in industries possessing these
characteristics.
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. Enhancing CORSEARCH's International Search Capabilities. CORSEARCH has
historically focused on providing domestic searches for U.S. and foreign
based clients. With the growing presence of global businesses and the
proliferation of Internet usage, there is a growing customer need for
international trademark database searches. As a result, CORSEARCH is in
the process of identifying international trademark and trade name
information sources and building databases similar to those used in its
domestic operations.
. Broadening CORSEARCH's On-Line Product Offering. Management believes
that by expanding CORSEARCH's on-line and Internet products to allow
customers to perform pre-screening searches, CORSEARCH can increase
revenues from existing customers who are currently utilizing these
products from competitors and attract new customers.
. Expanding into Patent Search Services. Management intends to expand its
product offering to include patent searches, likely through
acquisitions. Such acquisitions would provide the Company with greater
breadth of products for the intellectual property market and an
increased ability to serve its existing client base.
BUSINESS TO BUSINESS COMMUNICATIONS
Management believes that each of the business units comprising Business to
Business Communications is a leader in its respective markets and that there
are numerous opportunities to enhance the value of these existing franchises.
. Cross-Selling and Product Bundling Opportunities between Atwood and
Galaxy. Galaxy and Atwood have traditionally been operated as separate
entities and currently have only 13 mutual clients among the 75 clients
which Galaxy and Atwood collectively serve within the "Tradeshow 200."
Management intends to capitalize on the loyal customer base of both
Atwood and Galaxy by marketing both unit's products on a packaged basis
to position Atwood and Galaxy as a comprehensive provider of multiple
media, information and exhibitor services to their customers.
. Expanding Atwood's Custom Publishing Customer Base. Atwood historically
has focused its custom publishing activities on the exposition and trade
association markets. Management has identified additional markets, such
as corporate publishing and corporate gatherings, where Atwood can
capitalize on its custom publishing capabilities.
. Augmenting Galaxy's Exhibitor Products and Services. Management intends
to expand the scope and level of information gathered with respect to
attendees to create additional value-added information products for
exhibitors and trade show managers. For example, Galaxy provided Sony
Electronics, Inc. ("Sony") with a series of sophisticated electronic
"lead" management tools at the 1997 National Association of Broadcasters
("NAB") trade show, which, according to TradeShow & Exhibit Manager
magazine, enabled Sony to increase the number of booth visitors it
"qualified" to 12,000 from 5,000 during the 1996 NAB show, representing
an increase of 140%.
. Expanding Galaxy's Services to the European Marketplace. According to
1996 M&A Exhibition Directory, the exposition and trade show marketplace
in Europe is approximately five times as large as that in the U.S.
(based on total square footage of exhibition space). Galaxy has
historically provided registration and "lead" management services to the
European exposition marketplace through a licensee, Galaxy Expocard
Europe. The Company acquired 73% of Galaxy Expocard Europe in 1997 and
management intends to enhance Galaxy's international capabilities by
more aggressively marketing products to European exposition managers
through Galaxy Expocard Europe.
. Pursuing Selective Acquisitions of Exposition Services
Companies. Management believes that the exposition services industry is
highly fragmented and plans to pursue opportunistic acquisitions to
enhance Galaxy's existing service offerings so that Galaxy, in concert
with Atwood, can become a comprehensive provider of exposition media
services.
. Leveraging Key GEM Franchises. GEM's leading position in the legalized
gaming market is a direct result of its strong brand names. IGWB and the
World Gaming Congress are widely recognized
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domestically and internationally as the leading sources of business
information regarding the legalized gaming market. Management intends to
utilize this position to increase revenues through (i) launching or
acquiring additional gaming related trade publications targeting
specific high-growth gaming markets (e.g., slot machines and bingo),
(ii) exploring the acquisition or launch of trade shows complementary to
the World Gaming Congress and (iii) working closer with the American
Gaming Association to develop ancillary revenue sources.
. Rationalizing GEM's Overhead Costs. IGWB, GEM's flagship publication,
was formerly part of a group of five trade magazines, four of which were
sold in 1994 and 1995. Following this sale, IGWB continued to occupy the
same office space, although the organization's publishing revenue had
been reduced by approximately 71%. Management has identified
opportunities for cost savings through integration with other
publications.
. Expanding GEM to New Gaming Markets. Management believes portions of the
world's gaming markets are relatively immature and underserved. As a
result, management plans to capitalize on trade show and publishing
opportunities in Europe, Latin America, Asia and Sub-Saharan Africa. As
a first step, the Company recently purchased a 49% ownership stake in
Gaming for Africa, the leading trade show and magazine targeting the
legalized gaming industry in South Africa, one of the world's growing
gaming markets. Management intends to seek other acquisitions and joint
venture opportunities for worldwide expansion.
COMPETITION
Each of the Company's businesses is in competition with other suppliers and
vendors of services or products similar to those provided by the Company and
many of such competitors are significantly larger and have greater resources
than the Company. The following is a brief description of the competitive
environment in which each of the Company's businesses operates.
TISI
TISI has a leading market position in the trucking industry. In the
insurance industry, there are two TISI competitors which are significantly
larger and sell significantly more MVRs than TISI, as well as many regional
providers. Management believes that TISI's ability to maintain and grow its
MVR business in the insurance industry is dependent upon its ability to
continue to resell Choice Point's CLUE(R) data, as described above. Choice
Point is the largest competitor selling MVRs to the insurance industry.
CORSEARCH
The trademark search business is dominated by Thomson & Thomson, which
CORSEARCH estimates controls 80% of the domestic market and an even higher
percentage of international searches done by domestic customers. Thomson &
Thomson is owned by a large international media/information conglomerate.
There is also one smaller competitor which, while doing fewer searches than
CORSEARCH, is owned by a large publishing/information company which
specializes in selling to law firms.
Galaxy
Galaxy has two significant competitors, both of which provide services to
fewer shows in any given year than Galaxy and management believes that they do
not possess the resources of the Company. There are also smaller and regional
competitors as well as some large companies which provide other exposition
services which will compete in certain aspects of Galaxy's business.
Atwood
As a custom publisher, Atwood competes primarily on price, quality and
service and has been successful by targeting the publishing needs of the trade
show, convention and trade association market. Outside of that
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market there are many custom publishers, some with significantly greater
resources than the Company. In the trade show, convention and trade
association market, there are competitors which, while concentrating on
another set of services they perform for their customers, will also provide
publishing services as part of their package of services. While several of
these competitors are significantly larger than Atwood, management believes
that stronger competitors are trade shows or associations with "in house"
publishing capabilities and trade magazine publishers with specialized
knowledge in the industry that is the subject of the trade show or convention.
GEM
In the gaming trade show business, there is one other significant U.S. show
(which is smaller than World Gaming Congress), a large show held in London
each year, and a variety of smaller niche or regional shows and conferences
throughout the world. A few of these are owned or managed by competitors which
are significantly larger than GEM.
From a publishing standpoint, there is one other significant competitive
magazine serving the U.S. casino industry and several successful magazines and
newsletters serving vertical niches of the gaming industry in the U.S. and
worldwide industry, such as lotteries and pari-mutuals. Internationally, there
are several magazines, particularly in Europe, which successfully serve the
casino industry and compete with the Company. To management's knowledge, none
of such competitors are significantly larger than GEM. In addition, GEM must
compete with other media for advertising dollars, such as direct mail and
direct selling. The latter is particularly important for potential U.S. casino
advertisers as so much of the industry is concentrated in a few locations.
EMPLOYEES
As of October 31, 1997, the Company employed 599 persons on a full-time
basis including 252 in Information Services, 341 in Business to Business
Communications and 6 at the Company's corporate offices. None of the Company's
employees are subject to collective bargaining agreements. The Company
considers relations with its employees to be satisfactory. Most employees are
salaried, with sales personnel receiving commissions on sales. In connection
with the Recapitalization and the reorganization of the Company's management,
the corporate offices have been relocated to New York and the number of
employees in the corporate offices will be reduced to approximately five.
PROPERTIES
The Company conducts its principal operations at the facilities set forth
below:
<TABLE>
<CAPTION>
LOCATION SQUARE FOOTAGE LEASED/OWNED
-------- -------------- ------------
<S> <C> <C>
Information Services:
Tulsa, Oklahoma (TISI) (1) 38,800 Leased (Expires June 1999)
New York, New York (CORSEARCH) 22,000 Leased (Expires February 2009)
Business to Business Communications:
Frederick, Maryland (Galaxy) 51,000 Leased (Expires January 2003)
Overland Park, Kansas (Atwood) 22,715 Leased (Expires May 2000)
New York, New York (GEM) (2) 10,400 Leased (Expires August 2000)
Corporate:
Tulsa, Oklahoma (3) 5,400 Owned
New York, New York 1,565 Sub-leased (Expires December
1998)
</TABLE>
- --------
(1) TISI also leases office space in Chicago, Illinois.
(2) GEM also leases small offices in Chicago, Illinois and Las Vegas, Nevada.
(3) The Company is in the process of closing the sale of its office space in
Tulsa, Oklahoma.
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Management believes that its facilities are suitable and adequate for its
immediate needs and that additional or substitute space is available if needed
to accommodate expansion.
As a result of the merger of Tribune/Swab-Fox with and into the Issuer, the
Company acquired a 49.99% membership interest in 1995 Land Company, L.L.C., an
Oklahoma limited liability company which owns undeveloped real estate in
Tulsa, Oklahoma. The majority member of this entity has sole management
responsibility for this property and the entity's business. The entity
purchased three significant parcels of raw land from the Company on December
30, 1994 for approximately $1.4 million in cash and notes.
GOVERNMENT REGULATION
As a "consumer reporting agency," TISI is subject to the provisions of the
FCRA and similar acts existing in the states and is regulated by the FTC under
the Federal Trade Commission Act. Under the FCRA, a consumer reporting agency
may furnish a "consumer report" to a customer only for a permissible purpose
allowed by the FCRA. Permissible purposes include extension or review of
credit, collecting an account, employment purposes, underwriting of insurance,
determining eligibility for a license or permit granted by a governmental
entity, or in connection with a business transaction involving the consumer.
All reports of TISI are treated by TISI as consumer reports for purposes of
the FCRA. In addition, TISI's Total Applicant Screening reports are treated by
TISI as "investigative consumer reports" within the meaning of that term under
the FCRA because they involve contacting third parties. Certain additional
restrictions apply to these reports.
The FCRA requires a consumer reporting agency to maintain reasonable
procedures designed to ensure that the restrictions on the use of certain
information are not violated. In addition, a consumer reporting agency must
follow reasonable procedures to assure maximum possible accuracy of the
information concerning the consumer about whom the report relates. The FCRA
also requires a consumer reporting agency, upon request from a consumer, to
disclose all information about that consumer in its file, together with the
source and the recipients of the information. In some cases, this information
must be delivered to the consumer at no cost, and in others the agency may
charge a reasonable fee. TISI does not charge a fee to a driver or other
individual or entity about whom or which data is provided to a customer if
that individual or entity has been turned down for a job or denied insurance
within the last 30 days. Otherwise, TISI may charge a $10.00 fee.
The ADA contains pre-employment inquiry and confidentiality restrictions
designed to prevent discrimination against individuals in the hiring process.
Although TISI's business is not directly regulated by the ADA, the use by its
customers of certain information sold to them, such as workers' compensation
histories or drug and alcohol test results, is regulated, both with respect to
the type of information and the timing of its use. Similar state laws also
affect TISI's business. Some states have human rights laws that provide more
protection than the ADA. A large number of states also regulate the type of
information which can be made available to the public or to a third party or
impose conditions to the release of the information.
While the FCRA provides for civil liability sanctions against a consumer
reporting agency by a consumer for willful or negligent noncompliance with the
FCRA, and, as a result of the 1997 amendments, criminal penalties for willful
violations, by complying in good faith with the FCRA, TISI is protected from
liability by the FCRA even if there are inadvertent errors in the information
provided. TISI has developed and implemented internal policies designed to
help ensure that background information retrieved by it concerning a consumer
is accurate and that it otherwise complies with the provisions of the FCRA and
applicable state laws. In addition, each customer of TISI is required to sign
a user agreement, in which the customer agrees to accept responsibility for
using information provided by TISI in accordance with the provisions of the
FCRA, the ADA and local laws. TISI also has internal checks in place regarding
access and release of such information. The Company currently maintains
liability insurance to cover claims by customers or the subjects of reports
for alleged inaccurate information or misuse of information.
The FCRA was amended in 1997, effective October 1, 1997. Such amendments
require DAC's customers to increase their compliance activities and may limit,
under certain circumstances, their ability to access certain information sold
by DAC, in particular certain criminal records over seven years old. While the
effect of such
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amendments is not expected by DAC to impact materially its business or
prospects, primarily because further amendments to the FCRA are anticipated
(and draft legislation of such amendments has been submitted to the U.S.
Congress), the need for customers to revamp procedures and for the industry to
adjust to the new regulations thus far has had a negative impact on the use of
DAC's services and such negative impact may, if the foregoing further
amendments are not adopted, are adopted materially later than anticipated by
management, or are adopted in materially different form than previously
proposed, have a material and adverse effect on the use of DAC's services and
on its results of operations. It is not possible at this time to predict
accurately the extent of such effect.
In the 14 years it has been in business, TISI has not been found liable for
any violations of the FCRA, the ADA or similar state laws. The Company did
settle one case out of court for a nominal amount to avoid litigation
expenses. There can be no assurance, however, that the Company will not be
found liable for any such violations and that, if found so liable, the Company
will not be subject to adverse judgments in substantial amounts. In addition,
there can be no assurance that the FCRA, the ADA or similar state laws will
not be amended or subjected to different judicial or administrative
interpretation in the future. It is not possible at this time to predict the
impact that any such change might have on the Company's results of operations,
financial condition or liquidity.
The DOT is in the process of proposing and promulgating revised regulations
which, among other things, concern the requirements for pre-employment
screening of truck drivers. It is not possible at this time to predict the
impact that such regulations, if adopted, might have on the Company's results
of operations, financial condition or liquidity. If adopted in their current
form, such regulations would likely provide a greater demand for access to
employment history, MVRs and drug and alcohol test results of truck drivers,
such as the information provided by the Company.
LITIGATION AND GOVERNMENT PROCEEDINGS
The Company's 1992-1994 New York State income tax returns are in process of
a review. No assessments have been made to date. Management believes that the
tax positions taken by the Company were correct and that adjustments, if any,
for income taxes will not have a material effect on the Company's consolidated
financial statements. The income tax refund from the State of Oklahoma
included in "Refundable Income Taxes" in the Company's balance sheets as of
December 31, 1996 has been received by the Company.
In the ordinary course of its business, the Company and its subsidiaries
have been named as defendants in lawsuits and a party in various governmental
proceedings from time to time. While in the past, such matters have not had a
material adverse effect on the financial position, results of operation or
liquidity of the Company, and management does not anticipate that such matters
will have such an effect in the future, the outcome of suits and proceedings
cannot be predicted with certainty and, due to such inherent uncertainty of
litigation, there can be no assurance that the Company will not be subject to
adverse judgments in substantial amounts.
FOREIGN SALES
The Company's pro forma net revenues for 1996 and the nine months ended
September 30, 1997 to customers outside the U.S. and Canada were $2.4 million
and $1.1 million, respectively, representing 3.2% and 2.0% of net revenues,
respectively. All of such 1996 net revenues and 1997 revenues are attributable
to Business to Business Communications.
TRADEMARKS, LICENSES AND PATENTS
The Company has registered numerous trademarks, including DAC Services(R),
CORSEARCH(R), CORSTATE(R), CORBASE(R), EXPO(R), World Gaming Congress(R), IGWB
(pending) and MessageXpress(R), in the United States and, in certain cases, in
foreign countries in which the Company does business. The Company believes
that it owns or licenses all intellectual property rights necessary to conduct
its business.
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MANAGEMENT
The following table sets forth information with respect to the current
Directors and executive officers of the Issuer and certain other key employees
of the Issuer and its subsidiaries. All Directors of the Issuer hold office
until the next Annual Meeting of Stockholders and until the election and
qualification of their successors. Each individual listed below is a citizen
of the United States, except for Ian L.M. Thomas who is a citizen of the
United Kingdom.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
John S. Suhler.......... 54 Chairman of the Board and Director
Ian L. M. Thomas........ 60 President, Chief Executive Officer and Director
John J. Veronis......... 69 Director
Jeffrey T. Stevenson.... 37 Director
S. Gerard Benford....... 59 Director
Jeffrey Tannenbaum...... 35 Director
John Rolfe.............. 29 Director
Stefan M. Selig......... 34 Director
Steven J. Hunt.......... 53 Chief Financial Officer and Treasurer
Brian A. Meyer.......... 37 General Counsel and Secretary
Richard A. Wimbish...... 54 President and Chief Operating Officer of TISI
Robert Frank............ 46 President and Chief Operating Officer of
CORSEARCH
W. Michael Goodwin...... 47 President and Chief Executive Officer of Atwood,
Galaxy and Galaxy Registration, LLC
</TABLE>
John S. Suhler co-founded VS&A in 1981 and VS&A Fund I in 1987 with Mr.
Veronis. Mr. Suhler currently is President and Co-Chief Executive of VS&A and
is a Founding General Partner of VS&A Fund I. Prior to forming VS&A, Mr.
Suhler was a Corporate Vice President of CBS and President of CBS Publishing
Group.
Ian L. M. Thomas was previously employed as a Managing Director at VS&A.
Currently, Mr. Thomas' services are provided to the Company by VS&A, with whom
Mr. Thomas has an employment arrangement, and the Company reimburses VS&A for
such services at cost. Following such time as his U.S. Visa is transferred
from VS&A to the Issuer, Mr. Thomas will enter into an employment agreement
which will provide for his employment as President, Chief Executive Officer
and a Director through October 2002. Prior to his employment at VS&A, Mr.
Thomas completed a 24-year career at Reed Elsevier plc, where he served as
Chairman and Chief Executive Officer of Reed Telepublishing Ltd. and as a
member of the Board of Directors of both Reed Elsevier plc and Reed
International plc. In late September 1997, Reed Elsevier announced that
"irregularities" had been uncovered in its circulation statements for certain
of the publications of one of the divisions in Reed Telepublishing Ltd. and
that it had launched a full investigation. The announcement stated that the
irregularities had been traced back to 1991 and that a charge to 1997 earnings
would be taken as a result of the company's commitment to recompense
advertisers in the affected publications and the board's intent to make a
substantial writedown of the division's intangible asset values. Mr. Thomas
has informed the Company that he has no knowledge of the circumstances
referred to in the Reed announcement and related press reports.
John J. Veronis co-founded VS&A in 1981 and VS&A Fund I in 1987 with Mr.
Suhler. Mr. Veronis currently is Chairman and Co-Chief Executive of VS&A and
is a Founding General Partner of VS&A Fund I. Prior to forming VS&A, Mr.
Veronis co-founded Psychology Today and its parent company, CRM; served as
President of Curtis Magazines and Publisher of its Ladies Home Journal and was
a general corporate executive at Interpublic Group of Companies.
Jeffrey T. Stevenson has served as President and General Partner of VS&A
Fund II since November 1994 and as President of VS&A Fund I since 1989. Mr.
Stevenson joined VS&A in 1982 and prior to joining VS&A Fund I was Executive
Vice President of VS&A in charge of corporate finance.
S. Gerard Benford has served as Executive Vice President and General Partner
of VS&A Fund II since November 1994 and as Executive Vice President of VS&A
Fund I since 1990. Prior to 1990, Mr. Benford was a Corporate Vice President
of Warner Communications Corporation and a principal at Arthur Young &
Company.
Jeffrey Tannenbaum founded Fir Tree Partners, a private investment firm, in
January 1994. From 1988 through 1993, Mr. Tannenbaum was an investment
professional at Kohlberg & Co., a corporate acquisition firm.
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<PAGE>
John Rolfe joined Fir Tree in February 1997. Prior to joining Fir Tree, Mr.
Rolfe was an investment banker with Donaldson, Lufkin & Jenrette specializing
in media and communications.
Stefan M. Selig has been a Managing Director in the Merger & Acquisition
Department of UBS Securities since August 1994. Prior to joining UBS, Mr.
Selig was an investment banker in the Mergers and Acquisitions Group at The
First Boston Corporation.
Steven J. Hunt was appointed Chief Financial Officer in November 1997. Prior
to joining the Company, he was the founder of Value Growth Partners,
International, a strategic and financial consulting firm, from 1995 to October
1997. Mr. Hunt previously served as Executive Vice President Business
Development and Planning and Chief Financial Officer of Patrick Media Group,
Inc., a subsidiary of GE Capital Corp. from 1991 to 1995.
Brian A. Meyer was appointed General Counsel in November 1997. Prior to
joining the Company, Mr. Meyer served as Senior Counsel at Revlon, Inc. from
May 1993 to October 1997. From January 1990 to April 1993, he was an attorney
at the law firm of Latham & Watkins.
Richard A. Wimbish joined TISI, a wholly-owned subsidiary of the Issuer, as
Controller in 1987 and became Executive Vice President in 1990. Mr. Wimbish
was made President and Chief Operating Officer of TISI in 1991. Prior to
joining TISI, Mr. Wimbish was Controller and Chief Financial Officer of
Carlson Reserve Corporation from 1981 through 1986.
Robert Frank founded CORSEARCH in 1983 and has been the President and Chief
Operating Officer of such company on a full time basis since such time
(CORSEARCH was acquired by the Issuer in August 1996).
W. Michael Goodwin joined the Company in December 1996, as President and
Chief Executive Officer of both Atwood and Galaxy. Prior to joining the
Company, Mr. Goodwin was founder and President of Falcon Sports Group, Inc., a
company which focused on developing and introducing new sports media
properties. Prior to this, Mr. Goodwin was Executive Vice President and Chief
Operating Officer of Professional Sports Publications, a publisher of sporting
event game day magazines (1992-1995).
EXECUTIVE COMPENSATION
COMPENSATION
Set forth below is certain information with respect to the compensation of
each of the five most highly compensated executive officers of the Issuer and
its subsidiaries, based on salary and bonus earned during 1996, for services
in all capacities to the Issuer and its subsidiaries during each of the
Issuer's last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------
ANNUAL
COMPENSATION(1) AWARDS PAYOUTS
----------------- ----------- ------------------
NUMBER OF
RESTRICTED SHARES
NAME AND PRINCIPAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS(2) AWARD(S)(3) OPTIONS(4) PAYOUTS COMPENSATION(5)
- ------------------ ---- -------- -------- ----------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Howard G. Barnett, 1996 $270,000 $189,000 $ -- 30,000 -- $7,600
Jr.(6) 1995 210,904 175,000 -- -- -- 5,575
Chairman, President and 1994 207,704 77,889 77,889 75,000 -- 5,544
Chief Executive Officer
J. Gary Mourton 1996 166,400 116,480 -- 21,000 -- 6,541
Senior Vice President & 1995 157,410 63,000 -- -- -- 5,047
Chief Financial Officer 1994 151,410 34,067 34,067 37,500 -- 4,620
Robert E. Craine, Jr. 1996 159,000 111,300 -- 21,000 -- 6,418
Executive Vice President 1995 150,000 55,000 -- -- -- 5,154
1994 133,900 30,127 30,127 37,500 -- 4,107
Richard A. Wimbish 1996 155,000 41,491 -- 10,000 -- 5,429
President, TISI 1995 140,000 36,083 -- -- -- 4,959
1994 125,000 36,192 -- 22,500 -- 3,960
Stuart P. Honeybone 1996 154,000 107,800 -- 21,000 -- 7,585
Vice President 1995 132,000 52,000 -- 15,000 -- 5,369
1994 120,150 27,500 -- 10,000 -- 4,064
</TABLE>
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<PAGE>
- --------
(1) No cash compensation other than the annual amounts described was paid to
any of the named executives attributable to the periods shown. Certain
executives are also entitled to car allowances or are provided cars, and
club dues are paid for certain executives. The value of such perquisites
is not required to be disclosed because the aggregate amount of such
compensation does not exceed the lesser of $50,000 or 10 percent of the
total amount of annual salary and bonus for any named executive.
(2) Includes bonuses earned for the year, even if paid in another year.
(3) Under the T/SF Communications Corporation 1994 Incentive Stock Plan,
approved by the stockholders of the Company at the 1994 Annual Meeting of
Stockholders, one-half of the 1994 bonus paid to Howard G. Barnett, Jr.,
J. Gary Mourton and Robert E. Craine, Jr., was paid in the form of
restricted stock grants. The amount shown here represents the dollar
amount of such stock grants, which were granted at a rate of $6.25 per
share, being the closing price on the AMEX for Common Stock on December
30, 1994 (the last trading day of 1994). As of December 31, 1996, Mr.
Barnett, Mr. Mourton and Mr. Craine held the following number of shares
awarded as restricted stock grants: Mr. Barnett held 12,462 shares, valued
at $345,820 in the aggregate; Mr. Mourton held 5,451 shares, valued at
$151,265 in the aggregate; and Mr. Craine held 4,820 shares, valued at
$133,755 in the aggregate. Values as of December 31, 1996 are based on the
closing price on the AMEX for Common Stock on December 31, 1996 (the last
trading day of 1996).
(4) Consists solely of options to acquire shares of Common Stock.
(5) These amounts represent the total value of the Issuer's contributions made
or accrued to the Issuer's 401(k) plan. All such persons are 100 percent
vested in their accounts under the Issuer's plan.
(6) The cash compensation shown for Howard G. Barnett, Jr. in the table does
not include amounts paid to him as a director of Tribune/Swab-Fox in 1994
and 1995. Employees who are Directors of the Issuer do not receive fees
from the Issuer for their service as Directors.
OPTIONS
The following table sets forth certain information with respect to options
exercised by the named executive officers of the Company and its subsidiaries
during 1996, and the number and value of unexercised options held by such
persons at the end of 1996. The Company has never granted any stock
appreciation rights ("SAR").
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT
FISCAL YEAR- FISCAL YEAR-END
END ($)(1)(2)
------------- -------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE
---- --------------- --------------- ------------- -------------------
<S> <C> <C> <C> <C>
Howard G. Barnett,
Jr. ................... -- -- 30,000/75,000 $382,500/$1,762,500
J. Gary Mourton......... -- -- 21,000/37,500 267,750/881,250
Robert E. Craine, Jr. .. -- -- 21,000/37,500 267,750/881,250
Richard A. Wimbish...... -- -- --/32,500 --/667,500
Stuart P. Honeybone..... -- -- 21,000/25,000 267,750/561,250
</TABLE>
- --------
(1) Market value of the underlying securities at exercise date or fiscal year-
end, as the case may be, minus the option exercise price.
(2) Based on the closing price for the Common Stock on the American Stock
Exchange on December 31, 1996, the last trading day of fiscal 1996, which
was $27.75.
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<PAGE>
The following table sets forth certain information with respect to options
granted to the named executive officers of the Company and its subsidiaries
during 1996. The Company has never granted any stock appreciation rights.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
-------------------------------------------------- PRICE
NUMBER OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------
NAME GRANTED (#)(3) FISCAL YEAR (PER SHARE) DATE 5% 10%
---- -------------- ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Howard G. Barnett,
Jr. ................... 30,000(3) 19.61 $15.00 3/18/03 $135,700 $361,200
J. Gary Mourton......... 21,000(3) 13.73 15.00 3/18/03 95,000 252,800
Robert E. Craine, Jr. .. 21,000(3) 13.73 15.00 3/18/03 95,000 252,800
Richard A. Wimbish...... 10,000(4) 6.54 13.875 3/18/06 87,700 221,100
Stuart P. Honeybone..... 21,000(3) 13.73 15.00 3/18/03 95,000 252,800
</TABLE>
- --------
(1) Consists solely of options to acquire shares of Common Stock. The option
exercise price may be paid in cash, by delivery of already-owned shares
and, in some instances, by offset of the underlying shares, or by a
combination of such methods. Tax withholding obligations, if any, related
to exercise may be paid by offset of the underlying shares, subject to
certain conditions.
(2) Potential realizable value illustrates the value that might be realized
upon exercise of the options immediately prior to the expiration of their
term (ten years from the date of grant as to the options granted Mr.
Wimbish and seven years from the date of grant as to all other options in
the table), assuming that the Common Stock appreciates in value from the
date of grant to the end of the option term at rates of 5% and 10%,
respectively, compounded annually.
(3) These options were granted for a term of seven years, subject to earlier
termination in certain events related to the termination of employment.
The exercise price of $15.00 was higher than the $13.88 per share market
price of the Common Stock on the date of grant. These options vested in
three tranches as the price of the Common Stock reached $18.00, $21.00 and
$24.00, all of which were achieved in 1996.
(4) The options were granted for a term of ten years, subject to earlier
termination in certain events related to the termination of employment.
The exercise price of the options is equal to the fair market value of the
Common Stock on the date of grant.
See "Description of the Transactions--The Option Repurchase" for information
on the effect of the Recapitalization on these options.
COMPENSATION OF DIRECTORS. Directors receive no additional compensation for
service on the Board of Directors or any committee thereof. Directors are
reimbursed by the Issuer for out-of-pocket expenses incurred by them in
connection with their service on the Board of Directors and any committee
thereof.
EMPLOYMENT AGREEMENTS. The Company is subject to employment agreements with
certain Directors, officers or key employees, as follows:
Ian L.M. Thomas is President and Chief Executive Officer and a Director of
the Issuer; currently his services are provided to the Company by VS&A, with
whom Mr. Thomas has an employment arrangement, and the Company reimburses VS&A
for such services at cost. Following such time as his U.S. Visa is transferred
from VS&A to the Issuer, Mr. Thomas will enter into an employment agreement
with the Issuer that will provide for his employment through October 2002 at a
base salary of $175,000 per year, with annual increases based upon the
Consumer Price Index, plus a bonus (of up to 100% of his base salary) based
upon certain performance targets. Mr. Thomas also will participate in the
Issuer's Chief Executive Officer Equity Appreciation Plan and Supplemental
Chief Executive Officer Equity Appreciation Plan. See "--Phantom Stock Plans."
Steven J. Hunt, hired by the Company in November 1997, is the Chief
Financial Officer of the Issuer. Mr. Hunt is party to an employment agreement
with the Issuer that provides for a five-year term at a base salary of
68
<PAGE>
$175,000 per year, with annual increases based upon the Consumer Price Index,
plus a bonus (of up to 50% of his base salary) based upon certain performance
targets. Mr. Hunt also will participate in the Issuer's Chief Financial
Officer/General Counsel Equity Appreciation Plan. See "--Phantom Stock Plans."
Brian A. Meyer, hired by the Company in November 1997, is the General
Counsel of the Issuer. Mr. Meyer is party to an employment agreement with the
Issuer that provides for a five-year term at a base salary of $160,000 per
year, with annual increases based upon the Consumer Price Index, plus a bonus
(of up to 50% of his base salary) based upon certain performance targets. Mr.
Meyer also will participate in the Issuer's Chief Financial Officer/General
Counsel Equity Appreciation Plan. See "--Phantom Stock Plans."
W. Michael Goodwin was hired by the Company in December 1996, to serve as
President and Chief Executive Officer of both Atwood and Galaxy. Mr. Goodwin
previously was employed pursuant to an employment agreement which extended to
December 31, 1997 at a base salary of $165,000 annually. The employment
agreement provided for various incentives and bonus possibilities, with
$20,000 of such bonus guaranteed. To induce Mr. Goodwin to relocate his family
to Frederick, Maryland (Galaxy's location), Mr. Goodwin's employment agreement
was amended, in August 1997, to provide for a severance arrangement which
would pay him, if his employment is terminated other than "for cause," his
base salary until the later of (i) 12 months after such termination or (ii)
August 31, 1999. Pursuant to such Employment Agreement, Mr. Goodwin was
granted on January 16, 1997 options for 20,000 shares of Common Stock at an
exercise price of $28.00 per share, the closing price of the Common Stock on
the American Stock Exchange on such date of grant. Upon consummation of the
Tender Offer, Mr. Goodwin exercised the options and was paid $245,000. Mr.
Goodwin entered into a new employment agreement as of January 1, 1998 which
provides for his employment through December 31, 2000 as President and Chief
Executive Officer of Galaxy Registration, LLC and an executive officer of
Atwood Publishing, LLC at a base salary of $165,000 annually, with annual
increases based upon the Consumer Price Index, and various incentives and
bonus opportunities, including participation in the Issuer's Key Executive
Equity Appreciation Plan.
Richard A. Wimbish entered into an employment agreement with TISI, effective
January 1, 1997, which, among other things, provided for a salary in 1997 of
$165,000 and bonuses consistent with prior practices of TISI (reference is
made to the above compensation table for information concerning Mr. Wimbish's
historical bonus earnings). Upon consummation of the Tender Offer, Mr. Wimbish
received a bonus of $535,000 and was paid $567,000 upon the exercise of
certain options. Mr. Wimbish continues to hold options granted under the
Issuer's 1994 Incentive Stock Plan. 16,750 shares of Common Stock are issuable
upon exercise of such options, 10,000 of which have an exercise price of
$13.874 per share and 6,750 of which have an exercise price of $4.25 per
share. The Issuer's 1994 Incentive Stock Plan, under which such options were
granted, therefore will survive (solely with respect to such options). If Mr.
Wimbish is terminated at any time after the consummation of the Transactions,
he will receive a severance package equal to two years of his then base
salary. Mr. Wimbish entered into a new employment agreement with TISI as of
January 1, 1998 which provides for his employment through December 31, 2000 as
President and Chief Operating Officer of TISI at a base salary of $175,000
annually, with annual increases based upon the Consumer Price Index, and
various incentives and bonus opportunities, including participation in the
Issuer's Key Executive Equity Appreciation Plan.
In connection with the acquisition of CORSEARCH in August 1996, CORSEARCH
entered into an employment agreement with Mr. Frank employing him as its
President through December 31, 1999. Mr. Frank was employed at a salary of
$236,250 in 1997. Under his employment agreement, Mr. Frank was to receive
bonuses based on the net income of CORSEARCH exceeding certain thresholds each
year. Under the agreement by which CORSEARCH was acquired, in the years 2000
and 2001, Mr. Frank was to receive additional payments for his interest in
CORSEARCH sold to the Company based on the earnings of CORSEARCH in 1997, 1998
and 1999. Mr. Frank and the Company recently have agreed to terms by which Mr.
Frank will continue to serve in his current positions through May 1998, and
thereafter serve as a consultant to CORSEARCH through 1999. The terms of such
agreement provide that Mr. Frank will not receive any bonuses based on the net
income of CORSEARCH or any additional payments for his interest in CORSEARCH
sold to the Company based on the earnings of CORSEARCH.
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<PAGE>
In connection with his employment, Mr. Frank was granted options for 15,000
shares of Common Stock at an exercise price of $20.00 per share and 15,000
options at an exercise price of $24.00 per share, both of which were greater
than the closing price of the Common Stock on the AMEX on the date of such
grant. Upon consummation of the Tender Offer, Mr. Frank exercised the options
and was paid $547,500.
In addition, in connection with the Recapitalization, the Company entered
into consulting agreements on October 9, 1997 with Howard G. Barnett, Jr., J.
Gary Mourton and Robert E. Craine, Jr. Mr. Barnett's agreement has a term of
one year, extendable at the option of the Company for a second year; Mr.
Mourton's agreement has a term of one year; and Mr. Craine's agreement has a
term of 90 days. Each agreement pays the consultant compensation at a rate
equal to his base salary from the Company at the time of the Stock Purchase,
except that Mr. Mourton's compensation for the second six months of the year
is at a rate equal to 50% of his current base salary.
Messrs. Mourton, Craine and Stuart P. Honeybone also were parties to a
special bonus plan pursuant to which, upon consummation of the Tender Offer,
they shared, pro rata with their respective salaries, a bonus pool equal to
$1,637,500. Messrs. Barnett, Mourton, Craine and Honeybone are each entitled
to participate in a severance plan whereby each person will be paid one year's
salary for every 10 years of service with the Company, plus an amount equal to
all bonus and overtime wages paid for 1996.
PHANTOM STOCK PLANS
The Company has established a Key Executive Equity Appreciation Plan (the
"Key Executive Phantom Stock Plan") for executives of the Company. Pursuant to
the Key Executive Phantom Stock Plan, executives can be awarded Equity
Appreciation Units ("Units") which constitute a "phantom" equity interest in
any appreciation in the value of the equity of the Company above the $59.6
million originally invested by VS&A-T/SF and Fir Tree in the Company and
Holdings LLC (the "Equity Appreciation"). The Units vest 20% per year over
five years, provided that the executive remains an employee of the Company and
the annual EBITDA budget for the Company is achieved (or, if not achieved,
that 110% of the annual EBITDA budget for the next year is achieved). Messrs.
Wimbish and Goodwin each will be awarded Units equal to .3% and .2%,
respectively, of the Equity Appreciation under the Key Executive Phantom Stock
Plan.
Ian L.M. Thomas, President and Chief Executive Officer of the Issuer, will
be awarded Units equal to 2.5% of the Equity Appreciation under the Chief
Executive Officer Equity Appreciation Plan, which Units vest 20% per year over
five years, provided that Mr. Thomas remains an employee of the Company. Mr.
Thomas also will be awarded Units equal to an additional 2.5% of the Equity
Appreciation under the Supplemental Chief Executive Officer Equity
Appreciation Plan, which Units vest 100% upon a Change of Control (as defined
in the Supplemental Chief Executive Officer Equity Appreciation Plan), in the
event that VS&A-T/SF has received an internal rate of return on its investment
in the Common Stock of greater than 20% per annum.
Mr. Hunt, Chief Financial Officer of the Issuer, and Mr. Meyer, General
Counsel of the Issuer, will be awarded Units equal to 1.5% and 1%,
respectively, of the Equity Appreciation under the Chief Financial
Officer/General Counsel Equity Appreciation Plan (together with the Key
Executive Phantom Stock Plan, the Chief Executive Officer Equity Appreciation
Plan and the Supplemental Chief Executive Officer Equity Appreciation Plan,
the "Phantom Stock Plans"), which Units vest 20% per year over five years,
provided, in each case, that such individual remains an employee of the
Company.
Upon termination of an executive's employment by the Company for any reason
(other than Cause (as defined in the Key Executive Phantom Stock Plan) or
voluntary termination by the executive), the executive is entitled to receive
an amount equal to the value of his or her vested Units, payment of which can
be deferred until a Change in Control (as defined in the Key Executive Phantom
Stock Plan) of the Company. All Units awarded under the Chief Executive
Officer Equity Appreciation Plan and the Chief Financial Officer/General
Counsel Equity Appreciation Plan vest on a Change in Control (as defined in
each plan), and the executive is entitled to receive an amount equal to the
value of his or her Units (unless his or her employment terminated prior to
the Change in Control).
The maximum number of Units issuable under the Phantom Stock Plans would
constitute approximately 10% of the common equity interests of the Company.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCKHOLDERS AGREEMENT
VS&A-T/SF, Fir Tree (each, a "Stockholder") and the Issuer are parties to a
Stockholders Agreement (the "Stockholders Agreement"), dated as of October 9,
1997, with respect to the management of the Company and their ownership of
shares of the Common Stock.
The Stockholders Agreement provides each Stockholder the right to "tag"
along on any sale of shares by the other Stockholder, provides to VS&A-T/SF
the right to "drag" along Fir Tree on any sale of all of the Common Stock and
provides preemptive rights to each Stockholder.
The Stockholders Agreement provides that VS&A-T/SF and Fir Tree will vote
for a board consisting of a majority of members designated by VS&A-T/SF and a
number of Fir Tree designees in proportion to Fir Tree's ownership of Common
Stock. Accordingly, the board of directors of the Issuer consists of eight
members, five designated by VS&A-T/SF and three designated by Fir Tree. See
"Management."
The Stockholders Agreement provides that certain actions require approval by
a majority of the Fir Tree designees on the board, including an amendment of
the Certificate of Incorporation or By-Laws, a transaction with VS&A-T/SF or
an affiliate, certain borrowings or management equity plans pursuant to which
management receives more than 10% of the common equity interests of the
Company.
At any time after October 9, 2002, Fir Tree has the right to force a sale of
the Issuer or its assets and the Stockholders are required to sell their
shares or vote in favor of a sale. If a definitive agreement for the sale of
the Issuer is not executed within 18 months after the notice from Fir Tree,
the Stockholders will vote their shares to elect a board consisting of a
majority of members designated by Fir Tree.
The Stockholders Agreement terminates in 10 years or upon an earlier
underwritten initial public offering of Common Stock.
VS&A-T/SF, Fir Tree and the Issuer have also entered into a letter
agreement, dated as of February 6, 1998, with respect to the effectuation of
the Second Step Transaction. The Equity Investors have agreed to amend the
operating agreements of the LLCs to provide the members with similar "tag
along" and "drag along" rights with respect to their respective membership
interests in the LLCs as are found in the Stockholders Agreement.
Upon consummation of the Recapitalization, VS&A will be paid an investment
banking fee of $1.5 million by the Issuer, which will be shared with Fir Tree
pro rata (based on the ratio in which VS&A-T/SF and Fir Tree own shares of the
Common Stock).
CERTAIN FEES
VS&A will be paid an annual monitoring fee of $90,000 per year by the
Company and may be paid advisory fees (not to exceed 1% of the transaction
value) in connection with future acquisitions or dispositions by the Company;
Fir Tree will be entitled to receive from VS&A 50% of Fir Tree's pro rata
share of any such fee (based on the ratio in which VS&A-T/SF and Fir Tree own
shares of the Common Stock).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Upon consummation of the Recapitalization, VS&A-T/SF will hold 881,988
shares (or 64%) and Fir Tree will hold 487,506 shares (or 36%) of the Common
Stock, constituting all of the outstanding Common Stock. Upon consummation of
the Tender Offer, Stock Purchase and Option Repurchase, pending the Second
Step Transaction, public shareholders held 101,969 shares of the Common Stock
(or 7%), and VS&A-T/SF's shares constituted approximately 60% and Fir Tree's
shares constituted approximately 33% of the outstanding shares of the Common
Stock. No directors or executive officers of the Company own any shares of the
Common Stock. An affiliate of Ian L. M. Thomas, President and Chief Executive
Officer of the Issuer, has invested $750,000 to purchase 1.95% of VS&A-T/SF.
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<PAGE>
DESCRIPTION OF THE SENIOR CREDIT FACILITY
In connection with the Recapitalization, FUNB provided $25.0 million of
borrowing availability to the Issuer pursuant to the Senior Credit Facility.
Repayment. The Senior Credit Facility is a revolving credit facility which
is due and payable at maturity in September, 2004.
Security; Guaranty. The Senior Credit Facility is secured by a first
priority lien on substantially all of the properties and assets of the Issuer
and its subsidiaries (which for all purposes includes the LLCs), owned now or
acquired later. The Senior Credit Facility is guaranteed by the Guarantors.
Interest. At the Issuer's option, the interest rate per annum applicable to
the Senior Credit Facility will be a fluctuating rate of interest measured by
reference either to: (i) LIBOR plus the applicable borrowing margin or (ii)
FUNB's base rate, which is the greater of the published prime rate of FUNB or
the overnight federal funds rate plus 0.5% (the "FUNB Rate") plus the
applicable borrowing margin. The applicable borrowing margin for the Senior
Credit Facility will range from 1.75% to 2.75% for LIBOR based borrowings and
0.5% to 1.5% for FUNB Rate based borrowings.
Fees. The Issuer has agreed to pay certain fees with respect to the Senior
Credit Facility including (i) upfront facility fees, (ii) agent and
arrangement fees and (iii) commitment fees of 0.5% per annum on the unused
portion of the Senior Credit Facility.
Use of Proceeds. The entire amount of the Senior Credit Facility was made
available to the Issuer concurrently with the closing of the Tender Offer.
Prepayments; Reduction of Commitments. The commitments under the Senior
Credit Facility are required to be permanently reduced with: (i) 100% of the
net cash proceeds of all non-ordinary-course asset sales or other dispositions
of the property by the Issuer and its subsidiaries, including insurance and
condemnation proceeds, subject to limited exceptions and (ii) 100% of the net
proceeds of issuances of equity or debt obligations of the Issuer and its
subsidiaries, subject to limited exceptions (including the Offering). The
Issuer may voluntarily reduce the commitment in amounts of $1.0 million or
more at any time without premium or penalty.
Covenants. The Senior Credit Facility contains covenants, among others,
restricting the ability of the Issuer and the Guarantors to: (i) declare
dividends or redeem or repurchase capital stock; (ii) prepay, redeem or
purchase debt; (iii) incur liens and engage in sale-leaseback transactions;
(iv) make loans and investments; (v) issue more debt; (vi) amend or otherwise
alter debt and other material agreements; (vii) make capital expenditures;
(viii) engage in mergers, acquisitions and asset sales; (ix) transact with
affiliates and (x) alter its lines of business. The Issuer must also make
certain customary indemnifications of the lenders and their agents and will
also be required to comply with financial covenants (based on adjusted pro
forma EBITDA) with respect to: (i) a maximum leverage ratio; (ii) a maximum
senior leverage ratio; (iii) a minimum interest coverage ratio and (iv) a
minimum fixed charge coverage ratio. The Senior Credit Facility also contains
certain customary affirmative covenants.
Events of Default. Events of default under the Senior Credit Facility
include: (i) the Issuer's failure to pay principal or interest when due; (ii)
the Issuer's material breach of any covenant, representation or warranty
contained in the loan documents; (iii) customary cross-default provisions;
(iv) events of bankruptcy, insolvency or dissolution of the Issuer or the
Guarantors; (v) the levy of certain judgments against the Issuer, any
Guarantor, or its assets; (vi) certain adverse events under ERISA plans of the
Issuer or the Guarantors; (vii) the actual or asserted invalidity of security
documents or guarantees of the Issuer or the Guarantors and (viii) a change of
control of the Issuer.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The New Notes will be issued under an indenture (the "Indenture"), dated as
of October 29, 1997, by and among the Company, the Guarantors and IBJ Schroder
Bank & Trust Company, as Trustee (the "Trustee"). As used in this "Description
of the New Notes" section, references to the Notes mean the New Notes.
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended (the "TIA"), and to
all of the provisions of the Indenture, including the definitions of certain
terms therein and those terms made a part of the Indenture by reference to the
TIA as in effect on the date of the Indenture. A copy of the Indenture may be
obtained from the Company. The definitions of certain capitalized terms used
in the following summary are set forth below under "--Certain Definitions."
For purposes of this section, references to the "Company" include only the
Company and not its Subsidiaries.
The New Notes will be unsecured obligations of the Company, ranking
subordinate in right of payment to all Senior Debt of the Company.
All of the Company's Subsidiaries and the LLCs will be Restricted
Subsidiaries and each of the active Wholly Owned Restricted Subsidiaries
(including the LLCs) will be Guarantors.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $100.0 million and
will mature on November 1, 2007. Interest on the Notes will accrue at the rate
of 10 3/8% per annum and will be payable semiannually in cash on each May 1
and November 1, commencing on May 1, 1998, to the persons who are registered
Holders at the close of business on the April 15 and October 15 immediately
preceding the applicable 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 and including the date of issuance.
The Notes will not be entitled to the benefit of any mandatory sinking fund.
REDEMPTION
Optional Redemption. The Notes will be redeemable, at the Company's option,
in whole at any time or in part from time to time, on and after November 1,
2002, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof)
if redeemed during the twelve-month period commencing on November 1 of the
year set forth below, plus, in each case, accrued and unpaid interest thereon,
if any, to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002............................................................ 105.188%
2003............................................................ 103.458%
2004............................................................ 101.729%
2005 and thereafter............................................. 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. At any time, or from time
to time, on or prior to November 1, 2000, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings (as defined) to
redeem the Notes at a redemption price equal to 110.375% of the principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date
of redemption; provided that at least 65% of the principal amount of Notes
originally issued remains outstanding immediately after any such redemption.
In order to effect the foregoing redemption with the proceeds of any Public
Equity Offering, the Company shall make such redemption not more than 90 days
after the consummation of any such Public Equity Offering.
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SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any time,
selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed or, if such Notes are not
then listed on a national securities exchange, on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Notes of a principal amount of $1,000 or less shall be
redeemed in part; provided, further, that if a partial redemption is made with
the proceeds of a Public Equity Offering, selection of the Notes or portions
thereof for redemption shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rata basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days
before the redemption date to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company has deposited with the Paying Agent funds in
satisfaction of the applicable redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash of all Obligations on Senior
Debt. Upon any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors or marshaling of assets of the Company or in a
bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Debt shall
first be paid in full in cash, or such payment duly provided for to the
satisfaction of the holders of Senior Debt, before any payment or distribution
of any kind or character is made on account of any Obligations on the Notes,
or for the acquisition of any of the Notes for cash or property or otherwise.
If any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise, of any principal
of, interest on, unpaid drawings for letters of credit issued in respect of,
or regularly accruing fees with respect to, any Senior Debt, no payment of any
kind or character shall be made by or on behalf of the Company or any other
Person on its or their behalf with respect to any Obligations on the Notes or
to acquire any of the Notes for cash or property or otherwise.
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Debt, as such event of default is defined in
the instrument creating or evidencing such Designated Senior Debt, permitting
the holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default
have been cured or waived or have ceased to exist or the Trustee receives
notice from the Representative for the respective issue of Designated Senior
Debt terminating the Blockage Period (as defined below), during the 180 days
after the delivery of such Default Notice (the "Blockage Period"), neither the
Company nor any other Person on its behalf shall (x) make any payment of any
kind or character with respect to any Obligations on the Notes or (y) acquire
any of the Notes for cash or property or otherwise. Notwithstanding anything
herein to the contrary, in no event will a Blockage Period extend beyond 180
days from the date the payment on the Notes was due and only one such Blockage
Period may be commenced within any 360 consecutive days. No event of default
which existed or was continuing on the date of the commencement of any
Blockage Period with respect to the Designated Senior Debt shall be, or be
made, the basis for commencement of a second Blockage Period by the
Representative of such Designated Senior Debt whether or not within a period
of 360 consecutive days, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of
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commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default
for this purpose).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Debt,
including the Holders of the Notes, may recover less, ratably, than holders of
Senior Debt.
After giving effect to the Offering of the Old Notes and the application of
the proceeds therefrom, the Recapitalization and the transactions contemplated
thereby, on a pro forma basis, at September 30, 1997, the aggregate amount of
Senior Debt would have been approximately $3.7 million. In addition, the
Company would have had $25.0 million of additional borrowing availability
under the Credit Agreement.
GUARANTEES
Each Guarantor unconditionally guarantees, on a senior subordinated basis,
jointly and severally, to each Holder and the Trustee, the full and prompt
performance of the Company's obligations under the Indenture and the Notes,
including the payment of principal of and interest on the Notes. The
Guarantees will be subordinated to Guarantor Senior Debt on the same basis as
the Notes are subordinated to Senior Debt. The obligations of each Guarantor
are limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under its Guarantee or
pursuant to its contribution obligations under the Indenture, will result in
the obligations of such Guarantor under the Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law. Each
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to a contribution from each other Guarantor in an amount pro rata,
based on the net assets of each Guarantor, determined in accordance with GAAP.
Each Guarantor may consolidate with or merge into or sell its assets to the
Company or another Guarantor that is a Restricted Subsidiary of the Company
without limitation, or with other Persons upon the terms and conditions set
forth in the Indenture. See "--Certain Covenants--Merger, Consolidation and
Sale of Assets." In the event all of the Capital Stock of a Guarantor is sold
by the Company and the sale complies with the provisions set forth in "--
Certain Covenants--Limitation on Asset Sales," the Guarantor's Guarantee will
be released.
Separate financial statements of the Guarantors are not included herein
because such Guarantors are jointly and severally liable with respect to the
Company's obligations pursuant to the Notes, and the aggregate net assets,
earnings and equity of the Guarantors and the Company are substantially
equivalent to the net assets, earnings and equity of the Company on a
consolidated basis.
HOLDING COMPANY STRUCTURE
The Company is a holding company for its Subsidiaries, with no material
operations of its own and only limited assets. Accordingly, the Company is
dependent upon the distribution of the earnings of its Restricted Subsidiaries
(and distributions with respect to its preferred ownership interest in
Holdings LLC), whether in the form of dividends, advances or payments on
account of intercompany obligations, to service its debt obligations. In
addition, the claims of the Holders of Notes are subject to the prior payment
of all liabilities (whether or not for borrowed money) and to any preferred
stock interest of such Restricted Subsidiaries. There can be no assurance
that, after providing for all prior claims, there would be sufficient assets
available from the Company and its Restricted Subsidiaries to satisfy the
claims of the Holders of Notes. See "Risk Factors--Dependence Upon
Distributions from Subsidiaries and LLCs."
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CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control, each
Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued interest to the date of purchase.
The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, the
Company covenants to (i) repay in full and terminate all commitments under
Indebtedness under the Credit Agreement and all other Senior Debt the terms of
which require repayment upon a Change of Control or offer to repay in full and
terminate all commitments under all Indebtedness under the Credit Agreement
and all other such Senior Debt and to repay the Indebtedness owed to each
lender which has accepted such offer or (ii) obtain the requisite consents
under the Credit Agreement and all other Senior Debt to permit the repurchase
of the Notes as provided below. The Company shall first comply with the
covenant in the immediately preceding sentence before it shall be required to
repurchase Notes pursuant to the provisions described below. The Company's
failure to comply with the covenant described in the immediately preceding
sentence shall constitute an Event of Default described in clause (iii) and
not in clause (ii) under "Events of Default" below.
Within 30 days following the date upon which the Change of Control occurred,
the Company must send, by first class mail, a notice to each Holder, with a
copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 45 days from the date
such notice is mailed, other than as may be required by law (the "Change of
Control Payment Date"). Holders electing to have a Note purchased pursuant to
a Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third business day prior to the Change of Control
Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third party financing to the extent it does not
have available funds to meet its purchase obligations. However, there can be
no assurance that the Company would be able to obtain such financing.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control.
Restrictions in the Indenture described herein on the ability of the Company
and its Restricted Subsidiaries to incur additional Indebtedness, to grant
liens on its property, to make Restricted Payments and to make Asset Sales may
also make more difficult or discourage a takeover of the Company, whether
favored or opposed by the management of the Company. Consummation of any such
transaction in certain circumstances may require redemption or repurchase of
the Notes, and there can be no assurance that the Company or the acquiring
party will have sufficient financial resources to effect such redemption or
repurchase. Such restrictions and the restrictions on transactions with
Affiliates may, in certain circumstances, make more difficult or discourage
any leveraged buyout of the Company or any of its Subsidiaries by the
management of the Company. While such restrictions cover a wide variety of
arrangements which have traditionally been used to effect highly leveraged
transactions, the Indenture may not afford the Holders of Notes protection in
all circumstances from the adverse aspects of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company
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shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under the "Change of Control"
provisions of the Indenture by virtue thereof.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible
for payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Company or any of its Restricted
Subsidiaries may incur Indebtedness (including, without limitation, Acquired
Indebtedness) and Subsidiaries of the Company may incur Acquired Indebtedness,
in each case if on the date of the incurrence of such Indebtedness, after
giving effect to the incurrence thereof, the ratio of the total Indebtedness
of the Company and its Restricted Subsidiaries (excluding any Indebtedness
owed to a Restricted Subsidiary by any other Restricted Subsidiary or the
Company and any Indebtedness owed to the Company by any Restricted Subsidiary)
to the Company's Consolidated EBITDA (determined on a pro forma basis for the
last four fiscal quarters of the Company for which financial statements are
available at the date of determination) is less than 6.0 to 1; provided,
however, that if the Indebtedness which is the subject of a determination
under this provision is Acquired Indebtedness, or Indebtedness incurred in
connection with the simultaneous acquisition of any Person, business, property
or assets, then such ratio shall be determined by giving effect to (on a pro
forma basis, as if the transaction had occurred at the beginning of the four-
quarter period) both the incurrence or assumption of such Acquired
Indebtedness or such other Indebtedness by the Issuers and the inclusion in
the Company's Consolidated EBITDA of the Consolidated EBITDA of the acquired
Person, business, property or assets and any pro forma expense and cost
reductions calculated on a basis consistent with Regulation S-X under the
Securities Act as in effect and as applied as of the date hereof.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any distribution on any Capital Stock of
the Company or Holdings LLC (other than, in the case of the Company, dividends
or distributions payable solely in Qualified Capital Stock of the Company or
in the case of Restricted Subsidiaries, dividends or distributions payable to
the Company or any Wholly Owned Restricted Subsidiary of the Company), (b)
purchase, redeem or otherwise acquire or retire for value any Capital Stock of
the Company or any warrants, rights or options to purchase or acquire shares
of any class of such Capital Stock, (c) make any principal payment on,
purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for
value, prior to any scheduled final maturity, scheduled repayment or scheduled
sinking fund payment, any Indebtedness of the Company that is subordinate or
junior in right of payment to the Notes or (d) make any Investment (other than
Permitted Investments) (each of the foregoing actions set forth in clauses
(a), (b), (c) and (d) being referred to as a "Restricted Payment"), if at the
time of such Restricted Payment or immediately after giving effect thereto,
(i) a Default or an Event of Default shall have occurred and be continuing or
(ii) the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant or (iii) the
aggregate amount of Restricted Payments including such proposed Restricted
Payment made subsequent to the Issue Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property
as determined reasonably and in good faith by the Board of Directors of the
Company) shall exceed the sum of: (x) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a loss, minus 100%
of such loss) of the Company earned subsequent to the Issue Date and on or
prior to the date the Restricted Payment occurs (the "Reference Date")
(treating such period as a single accounting period) minus the aggregate
amount of Permitted Tax Distributions paid subsequent to the Issue Date; plus
(y) 100% of the aggregate net cash proceeds received by the Company from any
Person (other than a Subsidiary of the Company) from the issuance and sale
subsequent to the Issue Date and on or prior to the Reference Date of
Qualified Capital Stock of the Company; plus (z) without duplication of any
amounts included in clause (iii) (y) above, 100% of the aggregate net cash
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proceeds of any equity contribution received by the Company from a holder of
the Company's Capital Stock (excluding, in the case of clauses (iii )(y) and
(z), any net cash proceeds from a Public Equity Offering to the extent used to
redeem the Notes pursuant to the redemption provisions herein).
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend within 60
days after the date of declaration of such dividend if the dividend would have
been permitted on the date of declaration; (2) if no Default or Event of
Default shall have occurred and be continuing, the acquisition of any shares
of Capital Stock of the Company, either (i) solely in exchange for shares of
Qualified Capital Stock of the Company or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock of the
Company; (3) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any Indebtedness of the Company that is
subordinate or junior in right of payment to the Notes either (i) solely in
exchange for shares of Qualified Capital Stock of the Company, or (ii) through
the application of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of (A) shares of Qualified Capital
Stock of the Company or (B) Refinancing Indebtedness; (4) so long as no
Default or Event of Default shall have occurred and be continuing, repurchases
by the Company of Common Stock of the Company or payments by the Company to
enable VS&A-T/SF to repurchase common Equity Interests of VS&A-T/SF, in either
case, without duplication, from employees of the Company or any of its
Subsidiaries or their authorized representatives upon the death, disability or
termination of employment of such employees, in an aggregate amount not to
exceed in any calendar year the sum of (A) $750,000 and (B) any amounts
permitted to have been paid in any preceding calendar years under subclause
(A) above to the extent such amounts were not so paid in any such prior
calendar years; provided that such payments shall not exceed $3.0 million in
the aggregate; (5) if no Default or Event of Default shall have occurred and
be continuing, or would result from any such distribution, Permitted Tax
Distributions and (6) payments in connection with the Recapitalization. In
determining the aggregate amount of Restricted Payments made subsequent to the
Issue Date in accordance with clause (iii) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1), (2), (4) and (5) shall be
included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an officers' certificate stating that such Restricted
Payment complies with the Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations
may be based upon the Company's latest available internal quarterly financial
statements.
Limitation on Asset Sales. The Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors); (ii) at least 75% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale shall be in the form of cash or Cash Equivalents and is
received at the time of such disposition; and (iii) upon the consummation of
an Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to
apply, the Net Cash Proceeds relating to such Asset Sale within 270 days of
receipt thereof either (A) to prepay any Senior Debt and, in the case of any
Senior Debt under any revolving credit facility, effect a permanent reduction
in the availability under such revolving credit facility, (B) to make an
investment in properties and assets that replace the properties and assets
that were the subject of such Asset Sale or in properties and assets that will
be used in the business of the Company and its Subsidiaries as existing on the
Issue Date or in businesses reasonably related thereto ("Replacement Assets"),
or (C) a combination of prepayment and investment permitted by the foregoing
clauses (iii)(A) and (iii)(B) or (iv) the Company makes the offer described in
the following sentence. On the 271st day after an Asset Sale or such earlier
date, if any, as the Board of Directors of the Company or of such Restricted
Subsidiary determines not to apply the Net Cash Proceeds relating to such
Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the
preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate
amount of Net Cash Proceeds which have not been applied on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and
(iii)(C) of the preceding sentence (each a "Net Proceeds Offer Amount") shall
be applied by the Company or such Restricted Subsidiary to make an offer to
purchase
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(the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date")
not less than 30 nor more than 45 days following the applicable Net Proceeds
Offer Trigger Date, from all Holders on a pro rata basis, that amount of Notes
equal to the Net Proceeds Offer Amount at a price equal to 100% of the
principal amount of the Notes to be purchased, plus accrued and unpaid
interest thereon, if any, to the date of purchase; provided, however, that if
at any time any non-cash consideration received by the Company or any
Restricted Subsidiary of the Company, as the case may be, in connection with
any Asset Sale is converted into or sold or otherwise disposed of for cash
(other than interest received with respect to any such non-cash
consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this covenant. The Company may defer the Net
Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $5.0 million resulting from one or more Asset
Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not
just the amount in excess of $5.0 million, shall be applied as required
pursuant to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "--Merger, Consolidation
and Sale of Assets," the successor corporation shall be deemed to have sold
the properties and assets of the Company and its Restricted Subsidiaries not
so transferred for purposes of this covenant, and shall comply with the
provisions of this covenant with respect to such deemed sale as if it were an
Asset Sale. In addition, the fair market value of such properties and assets
of the Company or its Restricted Subsidiaries deemed to be sold shall be
deemed to be Net Cash Proceeds for purposes of this covenant.
Notwithstanding the two immediately preceding paragraphs, the Company and
its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (i) at least 80% of the
consideration for such Asset Sale constitutes Replacement Assets and (ii) such
Asset Sale is for fair market value; provided that any consideration not
constituting Replacement Assets received by the Company or any of its
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the two preceding paragraphs.
Each Net Proceeds Offer will be mailed to the record Holders as shown on the
register of Holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set
forth in the Indenture. Upon receiving notice of the Net Proceeds Offer,
Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent Holders properly
tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of
tendering Holders will be purchased on a pro rata basis (based on amounts
tendered). A Net Proceeds Offer shall remain open for a period of 20 business
days or such longer period as may be required by law.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset
Sale" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Asset Sale" provisions of the Indenture by
virtue thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or
make any other distributions on or in respect of its Capital Stock (other than
dividends or distributions in respect to the common Equity Interest in
Holdings LLC and Operating LLC); (b) make loans or advances or to pay any
Indebtedness or other obligation owed to the Company or any other Restricted
Subsidiary of the Company; or (c) transfer any of its property or assets to
the Company or any other Restricted Subsidiary of the Company, except for such
encumbrances or restrictions existing under or by reason of: (1) applicable
law; (2) the Indenture; (3) customary non-assignment provisions of any
contract or any lease
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governing a leasehold interest of any Restricted Subsidiary of the Company;
(4) any instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired; (5) agreements existing on the Issue Date to the extent and in the
manner such agreements are in effect on the Issue Date; or (6) an agreement
governing Indebtedness incurred to Refinance the Indebtedness issued, assumed
or incurred pursuant to an agreement referred to in clause (2), (4) or (5)
above; provided, however, that the provisions relating to such encumbrance or
restriction contained in any such Indebtedness are no less favorable to the
Company in any material respect as determined by the Board of Directors of the
Company in their reasonable and good faith judgment than the provisions
relating to such encumbrance or restriction contained in agreements referred
to in such clause (2), (4) or (5).
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
not permit any of its Restricted Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Wholly Owned Restricted Subsidiary of the
Company) or permit any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company) to own any Preferred Stock of any
Restricted Subsidiary of the Company.
Limitation on Liens. The Company will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit or suffer to exist any Liens of any kind against or upon any
property or assets of the Company or any of its Restricted Subsidiaries
whether owned on the Issue Date or acquired after the Issue Date, or any
proceeds therefrom, or assign or otherwise convey any right to receive income
or profits therefrom unless (i) in the case of Liens securing Indebtedness
that is expressly subordinate or junior in right of payment to the Notes, the
Notes are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Liens and (ii) in all other cases, the Notes are
equally and ratably secured, except for (A) Liens existing as of the Issue
Date to the extent and in the manner such Liens are in effect on the Issue
Date; (B) Liens securing Senior Debt and Liens securing Guarantor Senior Debt;
(C) Liens securing the Notes and the Guarantees; (D) Liens of the Company or a
Wholly Owned Restricted Subsidiary of the Company on assets of any Subsidiary
of the Company; (E) Liens securing Refinancing Indebtedness which is incurred
to Refinance any Indebtedness which has been secured by a Lien permitted under
the Indenture and which has been incurred in accordance with the provisions of
the Indenture; provided, however, that such Liens (A) are no less favorable to
the Holders and are not more favorable to the lienholders with respect to such
Liens than the Liens in respect of the Indebtedness being Refinanced and (B)
do not extend to or cover any property or assets of the Company or any of its
Restricted Subsidiaries not securing the Indebtedness so Refinanced; and (F)
Permitted Liens.
Prohibition on Incurrence of Senior Subordinated Debt. Neither the Company
nor any Guarantor will incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is expressly by its terms subordinate
or junior in right of payment to any Indebtedness of such person and senior in
any respect of payment to the Notes or the Guarantee of such Guarantor, as the
case may be.
Merger, Consolidation and Sale of Assets. The Company will not, in a single
transaction or series of related transactions, consolidate or merge with or
into any Person, or sell, assign, transfer, lease, convey or otherwise dispose
of (or cause or permit any Restricted Subsidiary of the Company to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Company's assets (determined on a consolidated basis for the
Company and the Company's Restricted Subsidiaries) whether as an entirety or
substantially as an entirety to any Person unless: (i) either (1) the Company
shall be the surviving or continuing corporation or (2) the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition the properties and assets of the Company and
of the Company's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity") (x) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and (y) shall expressly assume, by supplemental indenture (in form
and substance satisfactory to the Trustee), executed and delivered to the
Trustee, the due and punctual payment of the principal of, and premium, if
any, and interest on all of the Notes and the performance of every covenant of
the Notes, the Indenture and the Registration Rights Agreement on the part of
the Company to be
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performed or observed; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred in connection with or in respect of
such transaction), the Company or such Surviving Entity, as the case may be,
(1) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction
and (2) shall be able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to the "--Limitation on
Incurrence of Additional Indebtedness" covenant; (iii) immediately before and
immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(2)(y) above (including, without limitation, giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated
to be incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing; and (iv) the Company or the Surviving Entity shall have delivered
to the Trustee an officers' certificate and an opinion of counsel, each
stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply with
the applicable provisions of the Indenture and that all conditions precedent
in the Indenture relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
The Indenture provides that upon any consolidation, combination or merger or
any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, in which the Company is not the continuing
corporation, the successor Person formed by such consolidation or into which
the Company is merged or to which such conveyance, lease or transfer is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture and the Notes with the same effect
as if such surviving entity had been named as such.
Each Guarantor (other than any Guarantor whose Guarantee is to be released
in accordance with the terms of the Guarantee and the Indenture in connection
with any transaction complying with the provisions of "--Limitation on Asset
Sales") will not, and the Company will not cause or permit any Guarantor to,
consolidate with or merge with or into any Person other than the Company or
any other Guarantor unless: (i) the entity formed by or surviving any such
consolidation or merger (if other than the Guarantor) or to which such sale,
lease, conveyance or other disposition shall have been made is a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia; (ii) such entity assumes by supplemental
indenture all of the obligations of the Guarantor on the Guarantee; (iii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and (iv) immediately after
giving effect to such transaction and the use of any net proceeds therefrom on
a pro forma basis, the Company could satisfy the provisions of clause (ii) of
the first paragraph of this covenant. Any merger or consolidation of a
Guarantor with and into the Company (with the Company being the surviving
entity) or another Guarantor that is a Wholly Owned Restricted Subsidiary of
the Company need only comply with clause (iv) of the first paragraph of this
covenant.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of the Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), other
than (x) Affiliate Transactions permitted under paragraph (b) below and (y)
Affiliate Transactions on terms that are no less favorable than those that
might reasonably have been obtained in a comparable transaction at such time
on an arm's-length basis from a Person that is not an Affiliate of the Company
or such Restricted Subsidiary. All Affiliate Transactions (and each series of
related Affiliate Transactions which are similar or part of a common
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plan) involving aggregate payments or other property with a fair market value
in excess of $250,000 shall be approved by the Board of Directors of the
Company or such Restricted Subsidiary, as the case may be, such approval to be
evidenced by a Board Resolution stating that such Board of Directors has
determined that such transaction complies with the foregoing provisions. If
the Company or any Restricted Subsidiary enters into an Affiliate Transaction
(or a series of related Affiliate Transactions related to a common plan) that
involves an aggregate payment or other property with a fair market value of
more than $3.0 million, the Company or such Restricted Subsidiary, as the case
may be, shall, prior to the consummation thereof, obtain a favorable opinion
as to the fairness of such transaction or series of related transactions to
the Company or the relevant Restricted Subsidiary, as the case may be, from a
financial point of view, from an Independent Financial Advisor and file the
same with the Trustee.
(b) The restrictions set forth in paragraph (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary of the Company as determined in good faith by the Company's Board
of Directors or senior management; (ii) transactions exclusively between or
among the Company and any of its Restricted Subsidiaries or exclusively
between or among such Restricted Subsidiaries, provided such transactions are
not otherwise prohibited by the Indenture; (iii) any agreement as in effect as
of the Issue Date or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto) in any replacement
agreement thereto so long as any such amendment or replacement agreement is
not more disadvantageous to the Holders in any material respect than the
original agreement as in effect on the Issue Date; (iv) Restricted Payments
permitted by the Indenture; and (v) payments as contemplated by the
Stockholders Agreement.
Additional Subsidiary Guarantees. If the Company or any of its Restricted
Subsidiaries transfers or causes to be transferred, in one transaction or a
series of related transactions, any property to any Restricted Subsidiary that
is not a Guarantor, or if the Company or any of its Restricted Subsidiaries
shall organize, acquire or otherwise invest additional monies in (x) another
Restricted Subsidiary having total assets with a book value in excess of
$500,000 or (y) a Foreign Subsidiary designated as a Restricted Subsidiary
having total assets with a book value in excess of $3.0 million, then such
transferee or acquired or other Restricted Subsidiary shall (i) execute and
deliver to the Trustee a supplemental indenture in form reasonably
satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Notes and
the Indenture on the terms set forth in the Indenture and (ii) deliver to the
Trustee an opinion of counsel that such supplemental indenture has been duly
authorized, executed and delivered by such Restricted Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary. Thereafter, such Restricted Subsidiary shall be a
Guarantor for all purposes of the Indenture.
Modification of Holdings LLC Equity Interest. The Company will not and will
not permit any of the Guarantors to amend or modify in any material respect or
in any manner adverse to the Company or the Holders or permit such an
amendment or modification of any provisions of the Holdings LLC Preferred
Equity Interest, including but not limited to, the provisions granting voting
control of Holdings LLC to the Company or its Wholly Owned Restricted
Subsidiaries or its termination prior to the satisfaction and discharge of the
Indenture.
Conduct of Business. The Company and its Restricted Subsidiaries will not
engage in any businesses which are not the same, similar or related to the
businesses in which the Company and its Restricted Subsidiaries are engaged on
the Issue Date.
Reports to Holders. The Indenture provides that the Company will deliver to
the Trustee within 15 days after the filing of the same with the Commission,
copies of the quarterly and annual reports and of the information, documents
and other reports, if any, which the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture
further provides that, notwithstanding that the Company may not be subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company will file with the Commission, to the extent permitted, and provide
the Trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of TIA (S) 314(a).
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Notwithstanding the foregoing covenants, nothing in the Indenture shall
prohibit the Company from the consummation of the Recapitalization and the
transactions contemplated thereby including the contribution of certain assets
and liabilities of Atwood Convention Publishing, Inc., Galaxy Registration
Inc. and G.E.M. Communications, Inc. to Holdings LLC in exchange for a $45.0
million Holdings LLC Preferred Equity Interest.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on any Notes when the same becomes due
and payable and the default continues for a period of 30 days (whether or
not such payment shall be prohibited by the subordination provisions of the
Indenture);
(ii) the failure to pay the principal on any Notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or
not such payment shall be prohibited by the subordination provisions of the
Indenture);
(iii) a default in the observance or performance of any other covenant or
agreement contained in the Indenture which default continues for a period
of 30 days after the Company receives written notice specifying the default
(and demanding that such default be remedied) from the Trustee or the
Holders of at least 25% of the outstanding principal amount of the Notes
(except in the case of a default with respect to the "Merger, Consolidation
and Sale of Assets" covenant, which will constitute an Event of Default
with such notice requirement but without such passage of time requirement);
(iv) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $5.0 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $2.0
million shall have been rendered against the Company or any of its
Restricted Subsidiaries and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable;
(vi) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries; or
(vii) any of the Guarantees ceases to be in full force and effect or any
of the Guarantees is declared to be null and void and unenforceable or any
of the Guarantees is found to be invalid or any of the Guarantors denies
its liability under its Guarantee (other than by reason of release of a
Guarantor in accordance with the terms of the Indenture).
If an Event of Default (other than an Event of Default specified in clause
(vi) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in principal amount of outstanding
Notes may declare the principal of and accrued interest on all the Notes to be
due and payable by notice in writing to the Company and the Trustee specifying
the respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), and the same (i) shall become immediately due and
payable or (ii) if there are any amounts outstanding under the Credit
Agreement, shall become immediately due and payable upon the first to occur of
an acceleration under the Credit Agreement or 5 business days after receipt by
the Company and the Representative under the Credit Agreement of such
Acceleration Notice. If an Event of Default specified in clause (vi) above
with respect to the Company occurs and is continuing, then all unpaid
principal of, and premium, if any, and accrued and unpaid interest on all of
the outstanding Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
The Indenture provides that, at any time after a declaration of acceleration
with respect to the Notes as described in the preceding paragraph, the Holders
of a majority in principal amount of the Notes may rescind
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and cancel such declaration and its consequences (i) if the rescission would
not conflict with any judgment or decree, (ii) if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration, (iii) to the extent
the payment of such interest is lawful, interest on overdue installments of
interest and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid, (iv) if the Company has paid the
Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances and (v) in the event of the cure or
waiver of an Event of Default of the type described in clause (vi) of the
description above of Events of Default, the Trustee shall have received an
officers' certificate and an opinion of counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
The Holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the principal of or interest
on any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the then outstanding Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
Under the Indenture, the Company is required to provide an officers'
certificate to the Trustee promptly upon any such officer obtaining knowledge
of any Default or Event of Default (provided that such officers shall provide
such certification at least annually whether or not they know of any Default
or Event of Default) that has occurred and, if applicable, describe such
Default or Event of Default and the status thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors discharged with respect to
the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, except for (i) the rights
of Holders to receive payments in respect of the principal of, premium, if
any, and interest on the Notes when such payments are due, (ii) the Company's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (iii) the rights, powers,
trust, duties and immunities of the Trustee and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the
Indenture. In addition, the Company may, at its option and at any time, elect
to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, reorganization and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in U.S. dollars, non-callable U.S. government obligations,
or a combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public accountants, to
pay the principal of, premium, if any, and interest on the Notes on the stated
date for payment thereof or on the applicable redemption date, as the case may
be; (ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of the Indenture, there has been a
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change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the
Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation
of, or constitute a default under the Indenture or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound; (vi) the
Company shall have delivered to the Trustee an officers' certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders over any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company or others; (vii) the Company shall have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with; (viii) the Company shall have
delivered to the Trustee an opinion of counsel to the effect that (A) the
trust funds will not be subject to any rights of holders of Senior Debt,
including, without limitation, those arising under the Indenture and (B) after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; and (ix) certain other customary
conditions precedent are satisfied.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together
with irrevocable instructions from the Company directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case may
be; (ii) the Company has paid all other sums payable under the Indenture by
the Company; and (iii) the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel stating that all conditions precedent
under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, the Guarantors and the Trustee, without the
consent of the Holders, may amend the Indenture for certain specified
purposes, including curing ambiguities, defects or inconsistencies, so long as
such change does not, in the opinion of the Trustee, adversely affect the
rights of any of the Holders in any material respect. In formulating its
opinion on such matters, the Trustee will be entitled to rely on such evidence
as it deems appropriate, including, without limitation, solely on an opinion
of counsel. Other modifications and amendments of the Indenture may be made
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes issued under the Indenture, except that, without the consent
of each Holder affected thereby, no amendment may: (i) reduce the amount of
Notes whose Holders must consent to an amendment; (ii) reduce the rate of or
change or have the effect of changing the time for payment of interest,
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including defaulted interest, on any Notes; (iii) reduce the principal of or
change or have the effect of changing the fixed maturity of any Notes, or
change the date on which any Notes may be subject to redemption or repurchase,
or reduce the redemption or repurchase price therefor; (iv) make any Notes
payable in money other than that stated in the Notes; (v) make any change in
provisions of the Indenture protecting the right of each Holder to receive
payment of principal of and interest on such Note on or after the due date
thereof or to bring suit to enforce such payment, or permitting Holders of a
majority in principal amount of Notes to waive Defaults or Events of Default;
(vi) amend, change or modify in any material respect the obligation of the
Company to make and consummate a Change of Control Offer in the event of a
Change of Control or make and consummate a Net Proceeds Offer with respect to
any Asset Sale that has been consummated or modify in any respect materially
adverse to Holders any of the provisions or definitions with respect thereto;
or (vii) modify or change any provision of the Indenture or the related
definitions affecting the subordination or ranking of the Notes or any
Guarantee in a manner which adversely affects the Holders; or (viii) release
any Guarantor from any of its obligations under its Guarantee or the Indenture
otherwise than in accordance with the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it, the Notes and the Guarantees will be
governed by, and construed in accordance with, the laws of the State of New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the law of another jurisdiction would be
required thereby.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it by the Indenture,
and use the same degree of care and skill in its exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to
obtain payments of claims in certain cases or to realize on certain property
received in respect of any such claim as security or otherwise. Subject to the
TIA, the Trustee will be permitted to engage in other transactions; provided
that if the Trustee acquires any conflicting interest as described in the TIA,
it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
of the Company or at the time it merges or consolidates with the Company or
any of its Subsidiaries or assumed in connection with the acquisition of
assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming
a Restricted Subsidiary of the Company or such acquisition, merger or
consolidation.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"Asset Acquisition" means (a) an Investment by the Company or any Restricted
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of the Company or any
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Restricted Subsidiary of the Company, or shall be merged with or into the
Company or any Restricted Subsidiary of the Company, or (b) the acquisition by
the Company or any Restricted Subsidiary of the Company of the assets of any
Person (other than a Restricted Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprises any
division or line of business of such Person or any other properties or assets
of such Person other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by the Company or
any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company of (a) any Capital Stock of any Restricted
Subsidiary of the Company; or (b) any other property or assets of the Company
or any Restricted Subsidiary of the Company other than in the ordinary course
of business; provided, however, that Asset Sales shall not include (i) a
transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration of less than $500,000
and (ii) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company as permitted under "--Certain
Covenants--Merger, Consolidation and Sale of Assets."
"Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have
been duly adopted by the Board of Directors of such Person and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof;
(ii) 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 Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than $250.0
million; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (iv) above;
and (vi) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (i) through (v)
above.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company or Holdings LLC to any Person or group of related Persons for
purposes of Section 13(d)
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of the Exchange Act (a "Group"), together with any Affiliates thereof (whether
or not otherwise in compliance with the provisions of the Indenture); (ii) the
approval by the holders of Capital Stock of the Company or common Equity
Interests of Holdings LLC of any plan or proposal for the liquidation or
dissolution of the Company or Holdings LLC, as the case may be (whether or not
otherwise in compliance with the provisions of the Indenture); (iii) any
Person or Group (other than the Permitted Holders) shall become the owner,
directly or indirectly, beneficially or of record, of shares representing more
than 25% of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of the Company or common Equity Interests of
Holdings LLC, as the case may be, and the Permitted Holders shall own less
than 50% of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of the Company or common Equity Interests of
Holdings LLC, as the case may be; and (iv) the replacement of a majority of
the Board of Directors of the Company over a two-year period from the
directors who constituted the Board of Directors of the Company, at the
beginning of such period, and such replacement shall not have been approved by
a vote of at least a majority of the Board of Directors of the Company then
still in office who either were members of such Board of Directors at the
beginning of such period or whose election as a member of such Board of
Directors was previously so approved.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on
the Issue Date or issued after the Issue Date, and includes, without
limitation, all series and classes of such common stock.
"Company" means T/SF Communications Corporation, a Delaware corporation.
"Consolidated EBITDA" means, with respect to any Person, for any period, the
sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes
of such Person and its Restricted Subsidiaries (including the LLCs) paid or
accrued in accordance with GAAP for such period (other than income taxes
attributable to extraordinary, unusual or nonrecurring gains or losses or
taxes attributable to sales or dispositions outside the ordinary course of
business), (B) Consolidated Interest Expense and (C) Consolidated Non-cash
Charges less any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (i) the aggregate of all cash and
non-cash interest expense (minus amortization or write-off of deferred
financing costs included in cash or non-cash interest expense) of such Person
and its Restricted Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP, including without limitation, (a) any
amortization of debt discount, (b) the net costs under Interest Swap
Obligations, (c) all capitalized interest and (d) the interest portion of any
deferred payment obligation; and (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such
Person and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any period,
the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
and losses from Asset Sales or abandonments or reserves relating thereto, (b)
items classified as extraordinary, nonrecurring or unusual gains, losses or
charges, and the related tax effects, each determined in accordance with GAAP,
(c) the net income of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Restricted Subsidiary of
the referent Person or is merged or consolidated with the referent Person or
any Restricted Subsidiary of the referent Person, (d) the net income (but not
loss) of any Restricted Subsidiary (other than Holdings LLC) of the referent
Person to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is restricted by a
contract, operation of law or otherwise, (e) the net income of any Person,
other than a Restricted Subsidiary of the referent Person, except to the
extent of cash dividends or distributions paid to the referent Person or to a
Wholly Owned Restricted Subsidiary of the referent Person by such Person, (f)
any restoration to income of any contingency reserve, except to the extent
that
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provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets,
any earnings of the successor corporation prior to such consolidation, merger
or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Restricted Subsidiaries reducing Consolidated Net
Income of such Person and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP (excluding any such
charges constituting an extraordinary item or loss or any such charge which
requires an accrual of or a reserve for cash charges for any future period).
"Credit Agreement" means the Credit Agreement dated as of October 9, 1997,
between the Company, the lenders party thereto in their capacities as lenders
thereunder and First Union National Bank, as agent, together with the related
documents thereto (including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified
from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including increasing the
amount of available borrowings thereunder (provided that such increase in
borrowings is permitted by the "Limitation on Incurrence of Additional
Indebtedness" covenant above) or adding Restricted Subsidiaries of the Company
as additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agent, lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of
Default.
"Designated Senior Debt" means (i) Indebtedness under or in respect of the
Credit Agreement and (ii) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $25.0 million and is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event (other than
an event which would constitute a Change of Control), matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof (except upon the
occurrence of a Change of Control) on or prior to the final maturity date of
the Notes.
"Equity Interest" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited,
of such Person, including any Preferred Equity Interests.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of
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whom is under undue pressure or compulsion to complete the transaction. Fair
market value shall be determined by the Board of Directors of the Company
acting reasonably and in good faith and shall be evidenced by a Board
Resolution of the Board of Directors of the Company delivered to the Trustee.
"Fir Tree" means Fir Tree Value Fund L.P., Fir Tree Institutional Value Fund
L.P. and Fir Tree Partners L.D.C. and its Affiliates.
"Foreign Subsidiary" means any Subsidiary of the Company organized under the
laws of a country or jurisdiction other than the United States or any state or
territory thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Guarantor" means: (i) Atwood Convention Publishing, Inc., a Missouri
corporation, Casino Publishing Company, a Minnesota corporation, CORSEARCH,
Inc., a Delaware corporation, Crimesearch, Inc., an Oklahoma corporation, Expo
Magazine, Inc., a Kansas corporation, Galaxy Design & Printing, Inc., a
Maryland corporation, Galaxy Registration, Inc., a Maryland corporation,
G.E.M. Communications, Inc., an Oklahoma corporation, Transportation
Communications Services, Inc., an Oklahoma corporation, T/SF Europe, Inc., an
Oklahoma corporation, T/SF Investment Co., a Delaware corporation, T/SF of
Nevada, Inc., a Nevada corporation and Transportation Information Services,
Inc., an Oklahoma corporation; (ii) Holdings LLC, Operating LLC and each of
the Operating LLCs and (iii) each of the Company's Restricted Subsidiaries
that in the future executes a supplemental indenture in which such Restricted
Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor;
provided that any Person constituting a Guarantor as described above shall
cease to constitute a Guarantor when its respective Guarantee is released in
accordance with the terms of the Indenture.
"Guarantor Senior Debt" means with respect to any Guarantor, (i) the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of a Guarantor,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Guarantee of such Guarantor. Without limiting the generality of
the foregoing, "Guarantor Senior Debt" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not/to the extent such interest
is an allowed claim under applicable law) on, and all other amounts owing in
respect of, (x) all monetary obligations of every nature of the Company under
the Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit,
fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) all
obligations under Currency Agreements, in each case whether outstanding on the
Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor
Senior Debt" shall not include (i) any Indebtedness of such Guarantor to a
Restricted Subsidiary of such Guarantor or any Affiliate of such Guarantor or
any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on
behalf of, any shareholder, director, officer or employee of such Guarantor or
any Restricted Subsidiary of such Guarantor (including, without limitation,
amounts owed for compensation), (iii) Indebtedness to trade creditors and
other amounts incurred in connection with obtaining goods, materials or
services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any
liability for federal, state, local or other taxes owed or owing by such
Guarantor, (vi) Indebtedness incurred in violation of the Indenture provisions
set forth under the covenant "Limitation on Incurrence of Additional
Indebtedness," (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of such
Guarantor.
"Holdings LLC" means T/SF Holdings, LLC, a Delaware limited liability
company, whose Common Equity Interests shall be owned by VS&A-T/SF and Fir
Tree in the same proportion as their ownership interest
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in the Common Stock of the Company pursuant to the Recapitalization and whose
preferred Equity Interests shall be owned, directly or indirectly, by the
Company. For purposes of the Indenture, Holdings LLC shall be treated as a
Wholly Owned Restricted Subsidiary.
"Holdings LLC Preferred Equity Interests" as applied to the Equity Interests
of Holdings LLC, means Equity Interests of any class or classes (however
designated) which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of Holdings LLC over Equity Interests
of any other class of such Person.
"Indebtedness" means with respect to any Person, without duplication, (i)
all Obligations of such Person for borrowed money, (ii) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all Capitalized Lease Obligations of such Person, (iv) all
Obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all Obligations under any title
retention agreement (but excluding trade accounts payable and other accrued
liabilities arising in the ordinary course of business that are not overdue by
90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted), (v) all Obligations
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (vi) guarantees and other contingent
obligations in respect of Indebtedness referred to in clauses (i) through (v)
above and clause (viii) below, (vii) all Obligations of any other Person of
the type referred to in clauses (i) through (vi) which are secured by any lien
on any property or asset of such Person, the amount of such Obligation being
deemed to be the lesser of the fair market value of such property or asset or
the amount of the Obligation so secured, (viii) all Obligations under currency
agreements and interest swap agreements of such Person and (ix) all
Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, and if such price is
based upon, or measured by, the fair market value of such Disqualified Capital
Stock, such fair market value shall be determined reasonably and in good faith
by the Board of Directors of the issuer of such Disqualified Capital Stock.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified
to perform the task for which it is to be engaged.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated
by applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) 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 by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit
by the Company and its Restricted Subsidiaries on commercially reasonable
terms in accordance with normal trade practices of the Company or such
Restricted Subsidiary, as the case may be. For the purposes of the "Limitation
on Restricted Payments" covenant, (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
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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) the amount of any Investment shall be the
original cost of such Investment plus the cost of all additional Investments
by the Company or any of its Restricted Subsidiaries, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment, reduced by the payment of dividends or
distributions in connection with such Investment or any other amounts received
in respect of such Investment; provided that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Company or
any Restricted Subsidiary of the Company sells or otherwise disposes of any
Common Stock of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, the Company no
longer owns, directly or indirectly, greater than 50% of the outstanding
Common Stock of such Restricted Subsidiary, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Common Stock of such Restricted Subsidiary not
sold or disposed of.
"Issue Date" means the date of original issuance of the Notes.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement
to give any security interest).
"LLCs" means Holdings LLC, Operating LLC and the Operating LLCs. For
purposes of the Indenture, the LLCs shall be treated as Wholly Owned
Restricted Subsidiaries.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents
(other than the portion of any such deferred payment constituting interest)
received by the Company or any of its Restricted Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (b) taxes paid or payable after taking
into account any reduction in consolidated tax liability due to available tax
credits or deductions and any tax sharing arrangements, (c) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Operating LLC" means T/SF Operating, LLC, a Delaware limited liability
company whose preferred Equity Interest is owned by Holdings LLC and whose
common Equity Interest is owned by VS&A-T/SF and Fir Tree in proportion to
their respective ownership of the Common Stock following the Recapitalization.
"Operating LLCs" means each of (i) Galaxy Registration LLC, a Delaware
limited liability company, (ii) Atwood Publishing LLC, a Delaware limited
liability company, (iii) GEM Gaming, LLC, a Delaware limited liability
company, (iv) GEM Nevada, LLC, a Nevada limited liability company, and (v)
Casino Executive, LLC, a Nevada limited liability company, each of whose
Equity Interests is owned 99% by Holdings LLC and 1% by Operating LLC, and
(vi) EXPO Magazine, LLC, a Delaware limited liability company whose Equity
Interests are owned 100% by Atwood Publishing, LLC. For purposes of the
Indenture, the Operating LLCs shall be treated as Wholly Owned Restricted
Subsidiaries.
"Permitted Holders" means Fir Tree and VS&A Fund II.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes, the Indenture and the Guarantees;
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(ii) Indebtedness incurred pursuant to the Credit Agreement in an
aggregate principal amount at any time outstanding not to exceed $25.0
million in the aggregate, reduced by any required permanent repayments
pursuant to the provisions under "Certain Covenants--Limitation on Assets
Sales" (which are accompanied by a corresponding permanent commitment
reduction) thereunder;
(iii) other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the Issue Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering Indebtedness of
the Company or any of its Restricted Subsidiaries and Interest Swap
Obligations of any Restricted Subsidiary of the Company covering
Indebtedness of such Restricted Subsidiary; provided, however, that such
Interest Swap Obligations are entered into to protect the Company and its
Restricted Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with the Indenture to the extent the notional
principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates;
(v) Indebtedness under Currency Agreements; provided that in the case of
Currency Agreements which relate to Indebtedness, such Currency Agreements
do not increase the Indebtedness of the Company and its Restricted
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(vi) Indebtedness of a Restricted Subsidiary of the Company to the
Company or to a Guarantor of the Company for so long as such Indebtedness
is held by the Company or a Guarantor of the Company, in each case subject
to no Lien held by a Person other than the Company or a Guarantor of the
Company; provided that if as of any date any Person other than the Company
or a Guarantor of the Company owns or holds any such Indebtedness or holds
a Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Restricted Subsidiary
of the Company for so long as such Indebtedness is held by a Wholly Owned
Restricted Subsidiary of the Company, in each case subject to no Lien;
provided that (a) any Indebtedness of the Company to any Wholly Owned
Restricted Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under the
Indenture and the Notes and (b) if as of any date any Person other than a
Wholly Owned Restricted Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the Company;
(viii) 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) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or such
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with self-
insurance or similar requirements in the ordinary course of business;
(x) Refinancing Indebtedness; and
(xi) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $5.0 million at
any one time outstanding.
"Permitted Investments" means each of the following:
(i) Investments by the Company or any Restricted Subsidiary of the
Company in any Person that is or will become immediately after such
Investment a Restricted Subsidiary of the Company or that will merge or
consolidate into the Company or a Restricted Subsidiary of the Company;
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(ii) Investments in the Company by any Restricted Subsidiary of the
Company; provided that any Indebtedness evidencing such Investment is
unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under the Notes and the Indenture;
(iii) Investments in cash and Cash Equivalents;
(iv) loans and advances to employees and officers of the Company and its
Restricted Subsidiaries in the ordinary course of business for bona fide
business purposes not in excess of $500,000 at any one time outstanding;
(v) Currency Agreements and Interest Swap Obligations entered into in the
ordinary course of the Company's or its Restricted Subsidiaries' businesses
and otherwise in compliance with the Indenture;
(vi) Investments in Unrestricted Subsidiaries or other entities not to
exceed $4.0 million at any one time outstanding;
(vii) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; and
(viii) Investments made by the Company or its Restricted Subsidiaries as
a result of consideration received in connection with an Asset Sale made in
compliance with the "Limitation on Asset Sales" covenant.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims either
(a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(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, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(vii) purchase money Liens to finance property or assets of the Company
or any Restricted Subsidiary of the Company acquired in the ordinary course
of business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured
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by any property or assets of the Company or any Restricted Subsidiary of
the Company other than the property and assets so acquired and (B) the Lien
securing such Indebtedness shall be created within 90 days of such
acquisition;
(viii) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and set-
off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xii) Liens securing Indebtedness under Currency Agreements; and
(xiii) Liens securing Acquired Indebtedness incurred in accordance with
the "Limitation on Incurrence of Additional Indebtedness" covenant;
provided that (A) such Liens secured such Acquired Indebtedness at the time
of and prior to the incurrence of such Acquired Indebtedness by the Company
or a Restricted Subsidiary of the Company and were not granted in
connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary of the Company and
(B) such Liens do not extend to or cover any property or assets of the
Company or of any of its Restricted Subsidiaries other than the property or
assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Company or a Restricted
Subsidiary of the Company and are no more favorable to the lienholders than
those securing the Acquired Indebtedness prior to the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary of the
Company.
"Permitted Tax Distributions" means, subject to the "Limitation of
Restricted Payments" covenant, distributions by Holdings LLC and Operating LLC
to Fir Tree and VS&A-T/SF to the extent necessary to permit the direct or
indirect beneficial owners of the common Equity Interests of Holdings LLC and
Operating LLC to pay federal and state income tax liabilities arising from
income of Holdings LLC and Operating LLC irrespective of any other income or
loss such holders may have and attributable to them solely as a result of
Holdings LLC and Operating LLC (and any intermediate entity through which such
holder owns such Equity Interests) being a partnership or similar pass-through
entity for federal income tax purposes.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Public Equity Offering" means an underwritten public offering of Qualified
Capital Stock of the Company pursuant to a registration statement filed with
the Commission in accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Recapitalization" means the recapitalization of the Company as contemplated
by the Stock Purchase Agreement.
"Refinance" means, in respect of any security or Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a
security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance
with the "Limitation on Incurrence of Additional
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Indebtedness" covenant (other than pursuant to clause (ii), (iv), (v), (vi),
(vii), (viii), (ix) or (xi) of the definition of Permitted Indebtedness), in
each case that does not (1) result in an increase in the aggregate principal
amount of Indebtedness of such Person as of the date of such proposed
Refinancing (plus the amount of any premium required to be paid under the
terms of the instrument governing such Indebtedness and plus the amount of
reasonable expenses incurred by the Company in connection with such
Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y)
if such Indebtedness being Refinanced is subordinate or junior to the Notes,
then such Refinancing Indebtedness shall be subordinate to the Notes at least
to the same extent and in the same manner as the Indebtedness being
Refinanced; provided, further that Indebtedness incurred currently with an
irrevocable offer to purchase on a date not more than 60 days from the date of
incurrence of such Indebtedness an amount of Notes equal to such Indebtedness
shall be deemed Refinancing Indebtedness.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt in respect of any Designated Senior Debt.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether
owned by the Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom
funds have been or are to be advanced by such Person on the security of such
Property.
"Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the
generality of the foregoing, "Senior Debt" shall also include the principal
of, premium, if any, interest (including any interest accruing subsequent to
the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, to the extent such interest is an allowed
claim under applicable law) on, and all other amounts owing in respect of, (x)
all monetary obligations of every nature of the Company under the Credit
Agreement, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses
and indemnities, (y) all Interest Swap Obligations and (z) all obligations
under Currency Agreements, in each case whether outstanding on the Issue Date
or thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not
include (i) any Indebtedness of the Company to a Guarantor of the Company or
any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director,
officer or employee of the Company or any Subsidiary of the Company
(including, without limitation, amounts owed for compensation), (iii)
Indebtedness to trade creditors and other amounts incurred in connection with
obtaining goods, materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal, state, local or
other taxes owed or owing by the Company, (vi) Indebtedness incurred in
violation of the Indenture provisions set forth under "Limitation on
Incurrence of Additional Indebtedness," (vii) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title
11, United States Code, is without recourse to
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the Company and (viii) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of the Company.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w) of
Regulation S-X under the Securities Act.
"Stock Purchase Agreement" means the stock purchase agreement dated as of
August 15, 1997, as amended, by and among VS&A-T/SF, VS&A Fund II and the
Company, relating to the Recapitalization.
"Stockholders Agreement" means the stockholders agreement dated as of
October 9, 1997 among VS&A-T/SF, Fir Tree and the Company.
"Subsidiary", with respect to any Person, means (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person or (ii) any other
Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (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, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; provided that (x) the
Company certifies to the Trustee that such designation complies with the
"Limitation on Restricted Payments" covenant and (y) each Subsidiary to be so
designated and each of its Subsidiaries 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 only if (x) immediately
after giving effect to such designation, the Company is able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant and (y) immediately before and immediately after giving effect to
such designation, no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an officers' certificate
certifying that such designation complied with the foregoing provisions.
"VS&A Fund II" means VS&A Communications Partners II, L.P. a Delaware
limited partnership and its Affiliates.
"VS&A-T/SF" means VS&A-/T/SF Inc., a Delaware corporation and, after the
liquidation of VS&A-T/SF, Inc., if any, VS&A-T/SF, L.L.C.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any Restricted
Subsidiary of such Person of which all the outstanding voting securities
(other than in the case of a foreign Restricted Subsidiary, directors'
qualifying shares or an immaterial amount of shares required to be owned by
other Persons pursuant to applicable law) are owned by such Person or any
Wholly Owned Restricted Subsidiary of such Person.
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary presents the material U.S. federal income tax
consequences of the Exchange Offer and the ownership and disposition of the
New Notes. The summary is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations (including proposed Treasury
regulations) ("Regulations"), Internal Revenue Service ("IRS") rulings and
pronouncements and judicial decisions currently in effect, all of which are
subject to change, possibly on a retroactive basis.
This summary does not discuss all aspects of U.S. federal income taxation
that may be relevant to investors in light of their personal investment
circumstances, including any elections made by the investors under any
applicable tax law. This summary applies to beneficial owners of the Notes who
hold such Notes as capital assets and does not apply to certain types of
holders subject to special treatment under the U.S. federal income tax laws
(for example, dealers in securities, tax-exempt organizations, insurance
companies, persons other than the initial holders of the New Notes, persons
that will hold notes as a position in an integrated transaction (including a
"straddle") consisting of Notes and one or more other positions and persons
that have a "functional currency" other than the U.S. dollar) and does not
discuss the consequences to a holder under state, local or foreign tax laws.
The Issuer has not sought and will not seek any rulings from the IRS with
respect to the positions discussed below. There can be no assurance that the
IRS will not take a different position concerning the tax consequences of the
Exchange Offer and ownership or disposition of the Old Notes or New Notes or
that any such position would not be sustained.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for U.S. federal income tax purposes (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject
to United States federal income taxation regardless of its source or (iv) any
other person or entity whose income or gain in respect of a Note is
effectively connected with the conduct of a United States trade or business.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND OTHER TAX CONSIDERATIONS OF THE
EXCHANGE OFFER AND THE OWNERSHIP AND DISPOSITION OF THE NOTES.
(i) Exchange Offer. The exchange pursuant to the Exchange Offer of Old Notes
for New Notes will not be treated as a taxable exchange for U.S. federal
income tax purposes and the New Notes will be treated as a continuation of the
Old Notes, because the terms of the New Notes are identical in all material
respects to the terms of the Old Notes. Accordingly, a U.S. Holder will not
recognize gain or loss upon such exchange.
(ii) Interest. Interest on a Note generally will be taxable to a U.S. Holder
as ordinary interest income at the time it is paid or accrued in accordance
with the U.S. Holder's method of accounting for tax purposes.
(iii) Sales, Exchange or Retirement of Notes. Upon the sale, exchange
(except pursuant to the Exchange Offer as provided above), retirement or other
disposition of a Note, a U.S. Holder will recognize gain or loss equal to the
difference between the amount realized (except to the extent attributable to
accrued interest) and the U.S. Holder's adjusted tax basis in the Note. A U.S.
Holder's adjusted tax basis in a Note will be equal to the cost of the Note,
increased by accrued market discount, if any, if the U.S. Holder has included
such market discount in income (see "Market Discount" below), and decreased by
any amortized bond premium (defined below) and payments received. Generally,
and subject to the discussion under "Market Discount" below, any
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gain or loss recognized by a U.S. Holder upon a sale, retirement or other
disposition of the Note will be long-term capital gain or loss if the Note has
been held for more than one year, generally subject to maximum tax rate of 28
percent. Pursuant to recently enacted legislation, with respect to any capital
asset held for more than 18 months, capital gains will be subject to tax at a
rate of 20 percent.
(iv) Acquisition at a Premium. If a subsequent U.S. Holder acquires a Note
for an amount (exclusive of accrued and unpaid interest through the
acquisition date) in excess of the Note's stated redemption price at maturity
("Bond Premium"), the U.S. Holder may elect, in accordance with applicable
Code provisions, to amortize the Bond Premium using a constant yield method.
The amount of Bond Premium amortized in any year will be treated as a
reduction of the U.S. Holder's interest income from the Note.
(v) Market Discount. If a U.S. Holder purchases a Note for an amount that is
less than its issue price (or, in the case of a subsequent purchaser, its
"revised issue price," as defined in the Code) as of the purchase date, the
amount of the difference will be treated as "market discount," unless such
difference is less than a specified de minimis amount. Market discount
generally will accrue ratably during the period from the date of acquisition
to the maturity date of the Note, unless the U.S. Holder elects to accrue such
discount on the basis of the constant interest method, in accordance with
applicable Code provisions.
A U.S. Holder of a Note with market discount generally will be required to
treat as ordinary income any gain recognized on the sale, exchange, retirement
or other disposition of the Note to the extent of accrued market discount
unless the U.S. Holder elects in accordance with the applicable Code
provisions to include market discount in income as it accrues. A U.S. Holder
of a Note acquired at market discount who does not make a current inclusion
election will be required to defer the deduction of all or a portion of the
interest on any indebtedness incurred or maintained to purchase or carry the
Note until the maturity of the Note or its earlier disposition in a taxable
transaction.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The "backup" withholding and information reporting requirements may apply to
certain payments of principal, redemption or repurchase premium, if any, and
interest on a Note and to certain payments of proceeds of the sale or
retirement of a Note. The Issuer, its agent, a broker, or any paying agent, as
the case may be, will be required to withhold tax from any payment that is not
subject to backup withholding at a rate of 31 percent of such payment if the
U.S. Holder of the Note fails to furnish his taxpayer identification number
(social security number or employer identification number), to certify that
such U.S. Holder is not subject to backup withholding or to otherwise comply
with the applicable requirements of the backup withholding rules. Certain U.S.
Holders (including, among others, all corporations) are not subject to the
backup withholding and reporting requirements.
Any amount withheld under the backup withholding rules from a payment to a
U.S. Holder may be claimed as a credit against such U.S. Holder's United
States federal income tax liability.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE EXCHANGE OFFER AND THE OWNERSHIP AND
DISPOSITION OF THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Issuer has agreed that for a period of 10 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
The Issuer will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market rates prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant
to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
The legality of the New Notes offered hereby will be passed upon for the
Issuer by Proskauer Rose LLP, 1585 Broadway, New York, New York 10036.
Proskauer Rose LLP also represents VS&A, VS&A Fund I, VS&A Fund II and VS&A-
T/SF, including, without limitation, representation of such entities in
connection with the Tender Offer, Stock Purchase and Second Step Transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Issuer and its subsidiaries as
of December 31, 1996 and 1995 and for each of the three years in the period
ended December 31, 1996, incorporated by reference in this Prospectus and
included elsewhere in the registration statement, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
with respect thereto, and are included herein in reliance upon the authority
of said firm as experts in giving said reports.
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INDEX TO FINANCIAL STATEMENTS
T/SF COMMUNICATIONS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of independent public accountants.................................. F-2
Consolidated balance sheets as of September 30, 1997 (unaudited) and
December 31, 1996 and 1995............................................... F-3
Consolidated statements of operations for the nine months ended September
30, 1997 and 1996 (unaudited) and the years ended December 31, 1996, 1995
and 1994................................................................. F-4
Consolidated statements of changes in stockholders' equity for the nine
months ended September 30, 1997 and 1996 (unaudited) and the years ended
December 31, 1996, 1995 and 1994......................................... F-5
Consolidated statements of cash flows for the nine months ended September
30, 1997 and 1996 (unaudited) and the years ended December 31, 1996, 1995
and 1994................................................................. F-6
Notes to consolidated financial statements................................ F-7
</TABLE>
F-1
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of T/SF Communications Corporation:
We have audited the accompanying consolidated balance sheets of T/SF
Communications Corporation (a Delaware corporation) and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of T/SF Communications
Corporation and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Tulsa, Oklahoma
February 21, 1997
F-2
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ---------------
1997 1996 1995
------------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents...................... $ 6,894 $ 2,257 $13,383
Short-term investments......................... -- -- 1,000
Accounts receivable, less reserve for doubtful
accounts of $593 in 1997, $412 in 1996 and
$516 in 1995.................................. 11,275 10,194 8,209
Inventories (Note 1)........................... 224 193 181
Deferred tax assets (Notes 1 and 6)............ 674 896 494
Current contract receivable and other current
assets........................................ 2,872 2,604 3,050
Refundable income taxes........................ -- 2,102 3,239
------- ------- -------
Total current assets......................... 21,939 18,246 29,556
------- ------- -------
CONTRACT AND NOTES RECEIVABLE AND INVESTMENTS.... 1,116 1,203 2,721
------- ------- -------
PROPERTY, PLANT AND EQUIPMENT, at cost (Notes 1
and 4):
Exposition equipment........................... 3,761 3,107 2,987
Data processing and office furniture and
equipment..................................... 12,739 8,635 6,653
------- ------- -------
16,500 11,742 9,640
Less--accumulated depreciation................. 9,086 7,182 4,739
------- ------- -------
7,414 4,560 4,901
------- ------- -------
DEFERRED TAX ASSETS (Note 6)..................... 326 578 1,456
------- ------- -------
INTANGIBLES AND OTHER ASSETS, net (Notes 1 and
2).............................................. 32,033 31,395 14,810
------- ------- -------
$62,828 $55,982 $53,444
======= ======= =======
CURRENT LIABILITIES:
Notes payable (Note 5)......................... $ 20 $ 500 $ --
Accounts payable............................... 4,903 3,496 4,200
Accrued liabilities (Note 11).................. 3,081 5,028 5,509
Deferred revenue............................... 9,010 2,343 3,255
Current portion of long-term debt (Note 5)..... 1,149 1,133 1,266
------- ------- -------
Total current liabilities.................... 18,163 12,500 14,230
------- ------- -------
LONG-TERM DEBT (Note 5).......................... 3,713 3,493 4,529
------- ------- -------
DEFERRED CONTRACT LIABILITIES AND CREDITS........ 1,324 1,803 2,199
------- ------- -------
COMMITMENTS AND CONTINGENCIES (Note 8)
</TABLE>
<TABLE>
<S> <C> <C> <C>
STOCKHOLDERS' EQUITY, per accompanying statement
(Notes 1, 7 and 9):
Preferred stock, $10 par value, 1,000 shares
authorized......................................... -- -- --
Common stock, $.10 par value, 10,000 shares
authorized......................................... 331 332 332
Additional paid-in capital.......................... 12,773 13,754 13,475
Retained earnings................................... 26,524 24,100 18,679
------- ------- -------
Total stockholders' equity........................ 39,628 38,186 32,486
------- ------- -------
$62,828 $55,982 $53,444
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- -------------------------
1997 1996 1996 1995 1994
----------- ----------- ------- ------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES (Notes 1, 2 and
3):
Operating revenues....... $53,711 $43,377 $66,816 $59,805 $54,054
Interest and other
income.................. 1,165 1,400 1,478 1,039 2,163
(Loss) gain on sale of
assets, net............. (210) 328 348 11,234 702
------- ------- ------- ------- -------
54,666 45,105 68,642 72,078 56,919
------- ------- ------- ------- -------
COSTS AND EXPENSES (Notes
1, 2, 3 and 4):
Operating costs.......... 33,474 27,549 40,314 39,665 35,069
General and
administrative.......... 13,000 10,289 15,207 11,841 11,862
Interest................. 401 413 581 859 736
Depreciation and
amortization............ 3,564 2,843 4,018 3,601 3,118
------- ------- ------- ------- -------
50,439 41,094 60,120 55,966 50,785
------- ------- ------- ------- -------
INCOME BEFORE INCOME
TAXES..................... 4,227 4,011 8,522 16,112 6,134
INCOME TAX PROVISION (Notes
1 and 6).................. (1,803) (1,578) (3,101) (58) (2,589)
MINORITY INTEREST IN
CONSOLIDATED SUBSIDIARIES
(Note 1).................. -- -- -- (266) (981)
------- ------- ------- ------- -------
INCOME FROM CONTINUING
OPERATIONS................ 2,424 2,433 5,421 15,788 2,564
DISCONTINUED OPERATIONS,
net (Note 4).............. -- -- -- 37 (2,816)
------- ------- ------- ------- -------
NET INCOME (LOSS).......... 2,424 2,433 5,421 15,825 (252)
DIVIDENDS ON PREFERRED
SHARES.................... -- -- -- -- (139)
------- ------- ------- ------- -------
INCOME (LOSS) APPLICABLE TO
COMMON SHARES............. $ 2,424 $ 2,433 $ 5,421 $15,825 $ (391)
======= ======= ======= ======= =======
EARNINGS (LOSS) PER COMMON
AND COMMON EQUIVALENT
SHARE (Note 1):
Continuing operations.... $ 0.68 $ 0.69 $ 1.53 $ 4.19 $ 0.65
Discontinued operations.. -- -- -- 0.01 (0.75)
------- ------- ------- ------- -------
$ 0.68 $ 0.69 $ 1.53 $ 4.20 $ (0.10)
======= ======= ======= ======= =======
CASH DIVIDENDS PER COMMON
SHARE..................... $ -- $ -- $ -- $ 0.27 $ --
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- -------------------------
1997 1996 1996 1995 1994
----------- ----------- ------- ------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
PREFERRED STOCK:
Beginning balance.......... $ -- $ -- $ -- $ -- $ 459
Conversion and redemption
of preferred stock........ -- -- -- -- (459)
------- ------- ------- ------- -------
Balance at end of period... -- -- -- -- --
------- ------- ------- ------- -------
COMMON STOCK:
Beginning balance.......... 332 332 332 342 336
Conversion of preferred
stock..................... -- -- -- -- 17
Conversion of Class B
common stock.............. -- -- -- 46 --
Issuance of common stock... 4 1 1 -- --
Retirement of common
stock..................... (5) -- (1) (165) (2)
Retirement of stock held by
subsidiary................ -- -- -- (9) --
Acquisition of outside
minority interest through
merger.................... -- -- -- 109 --
Reclassification of common
stock subject to put...... -- -- -- 9 (9)
------- ------- ------- ------- -------
Balance at end of period... 331 333 332 332 342
------- ------- ------- ------- -------
COMMON STOCK, CLASS B:
Balance at end of period... -- -- -- -- 46
------- ------- ------- ------- -------
ADDITIONAL PAID-IN CAPITAL:
Beginning balance.......... 13,754 13,475 13,475 20,128 21,879
Conversion and redemption
of preferred stock........ -- -- -- -- (1,077)
Issuance of common stock... 55 84 111 43 --
Retirement of common
stock..................... (1,372) -- (196) (13,342) (158)
Retirement of stock held by
subsidiary................ -- -- -- (556) --
Acquisition of outside
minority interest through
merger.................... -- -- -- 6,686 --
Compensation recognized on
stock option grants....... -- -- 364 -- --
Income tax benefit for
stock options exercised... 336 -- -- -- --
Reclassification of common
stock subject to put...... -- -- -- 516 (516)
------- ------- ------- ------- -------
Balance at end of period... 12,773 13,559 13,754 13,475 20,128
------- ------- ------- ------- -------
RETAINED EARNINGS:
Beginning balance.......... 24,100 18,679 18,679 3,904 4,295
Net income (loss).......... 2,424 2,433 5,421 15,825 (252)
Dividends paid............. -- -- -- (1,050) (139)
------- ------- ------- ------- -------
26,524 21,112 24,100 18,679 3,904
Less stock of parent com-
pany held by subsidiary... -- -- -- -- (565)
------- ------- ------- ------- -------
$39,628 $35,004 $38,186 $32,486 $23,855
======= ======= ======= ======= =======
PREFERRED SHARES:
Beginning balance.......... -- -- -- -- 46
Conversion and redemption
of preferred stock........ -- -- -- -- (46)
------- ------- ------- ------- -------
Balance at end of period... -- -- -- -- --
======= ======= ======= ======= =======
COMMON SHARES:
Beginning balance.......... 3,318 3,318 3,318 3,424 3,363
Conversion of preferred
stock..................... -- -- -- -- 174
Conversion of Class B
common stock.............. -- -- -- 464 --
Issuance of common stock... 41 10 1 4 --
Retirement of common
stock..................... (50) -- (1) (1,654) (25)
Retirement of stock held by
subsidiary................ -- -- -- (95) --
Acquisition of outside
minority interest through
merger.................... -- -- -- 1,087 --
Reclassification of common
stock subject to put...... -- -- -- 88 (88)
------- ------- ------- ------- -------
Balance at end of period... 3,309 3,328 3,318 3,318 3,424
======= ======= ======= ======= =======
COMMON SHARES, CLASS B:
Balance at end of period... -- -- -- -- 464
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------
1997 1996 1996 1995 1994
----------- ----------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)....... $ 2,424 $ 2,433 $ 5,421 $ 15,825 $ (252)
------- ------- -------- -------- --------
Adjustments to reconcile
net income (loss) to
net cash provided by
operating activities:
Depreciation and
amortization.......... 3,564 2,843 4,018 3,601 3,163
Accretion of interest
expense............... 150 177 282 133 47
Loss (gain) on sale of
assets................ 210 (328) (348) (11,234) (702)
Reserves provided on
investments........... -- -- 425 8 2,812
Compensation recognized
on stock option
grants................ -- -- 364 -- --
Changes in assets and
liabilities:
Accounts receivable
and refundable income
taxes................ 1,238 (178) (483) (3,686) (1,907)
Inventories........... 71 (11) (12) 187 (213)
Current contract
receivable and other
current assets....... (848) (645) 390 (816) (399)
Intangibles and other
assets............... (166) (150) (160) (282) 77
Accounts payable and
accrued liabilities.. (1,117) 465 (1,389) (1,006) 1,877
Deferred revenue...... 6,667 4,863 (912) 383 266
Deferred income
taxes................ 474 766 309 (641) (343)
Minority interests.... -- -- -- 266 981
------- ------- -------- -------- --------
Total adjustments.... 10,243 7,802 2,484 (13,087) 5,659
------- ------- -------- -------- --------
Net cash provided by
operating activities.... 12,667 10,235 7,905 2,738 5,407
------- ------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net sales (purchases) of
short-term
investments............ -- 1,000 1,000 1,000 (2,000)
Collections on contract
and notes receivables.. 643 1,305 1,372 6,538 5,033
Investments, net of
distributions.......... (132) (27) (212) (315) (165)
Capital expenditures.... (5,460) (1,955) (2,641) (2,589) (3,254)
Proceeds from the sale
of assets.............. 35 770 772 18,816 8,983
Payments for
acquisitions, net of
cash acquired.......... (939) (15,691) (15,691) -- (1,114)
Payments on deferred
contract liabilities... (482) (603) (685) (616) (502)
------- ------- -------- -------- --------
Net cash (used in)
provided by investing
activities.............. (6,335) (15,201) (16,085) 22,834 6,981
------- ------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments of notes
payable, net........... -- -- -- -- (151)
Principal payments of
long-term debt......... (1,410) (3,265) (3,361) (2,477) (6,378)
Issuance of long-term
debt................... 1,267 -- -- -- --
Borrowings under bank
lines-of-credit........ -- -- 3,500 2,900 3,300
Payments under bank
lines-of-credit........ (500) -- (3,000) (2,900) (3,300)
Issuance of common
stock.................. 63 84 111 43 347
Repurchase of common
stock.................. (1,381) -- (196) (13,290) (2,770)
Redemption of preferred
stock.................. -- -- -- -- (1,520)
Dividends paid.......... -- -- -- (1,050) (139)
Compensation of stock
options................ 336 -- -- -- --
------- ------- -------- -------- --------
Net cash used in
financing activities.... (1,625) (3,181) (2,946) (16,774) (10,611)
------- ------- -------- -------- --------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS............. 4,707 (8,147) (11,126) 8,798 1,777
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD.. 2,257 13,383 13,383 4,585 2,808
------- ------- -------- -------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD........ $ 6,964 $ 5,236 $ 2,257 $ 13,383 $ 4,585
======= ======= ======== ======== ========
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW
INFORMATION:
Cash paid for:
Interest............... $ 214 $ 256 $ 294 $ 642 $ 1,039
Income taxes........... 1,211 2,046 3,845 3,168 2,783
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) AND
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(ALL REFERENCES TO ACTIVITY OR AMOUNTS SUBSEQUENT TO FEBRUARY 21, 1997ARE
UNAUDITED EVENTS AND ARE SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Business
T/SF Communications Corporation and subsidiaries (collectively, the
"Company," unless the context indicates otherwise) are engaged in providing
media services to the gaming industry with trade magazines, newsletters,
conferences and a trade show; providing exposition services, primarily
registration, lead management and publication (primarily convention/trade show
newspapers and directories) services; and providing information services in
the form of pre-employment information, primarily for the insurance and
trucking industries, and trademark/trade name research.
On January 25, 1995, the Company entered into an Agreement and Plan of
Merger, as amended with Tribune/Swab-Fox Companies, Inc. ("Tribune/Swab-Fox")
whereby, subject to approval of the Company and Tribune/Swab-Fox stockholders
(the Company as a 78% owned subsidiary of Tribune/Swab-Fox), Tribune/Swab-Fox
would be merged with and into the Company. On May 25, 1995, Tribune/Swab-Fox
was merged (the "Merger") with and into the Company. In the Merger, each share
of Tribune/Swab-Fox stock was converted into 0.1255 of a share of the Company
or, at the election of the holder, $0.88 in cash. While the Merger was
structured for legal purposes as a merger of Tribune/Swab-Fox with and into
the Company, for accounting purposes the Merger has been treated as a
recapitalization of Tribune/Swab-Fox, with Tribune/Swab-Fox as the survivor
(downstream merger). Thus, for financial reporting purposes, Tribune/Swab-Fox
is the acquiring and surviving entity. Accordingly, the historical financial
statements of the Company, as the surviving entity, are those historical
financial statements of Tribune/Swab-Fox. Earnings per share for the periods
prior to the Merger are restated to reflect the number of equivalent shares
giving effect to the recapitalization. The Company acquired 1,110,675
equivalent shares (8,850,000 Tribune/Swab-Fox shares) for cash in the Merger,
the effect of which is taken into account as of the date of the Merger. In
connection with the Merger, the Board of Directors of Tribune/Swab-Fox
declared a one-time dividend of $0.0344 per share ($0.27 per equivalent share)
which was paid on May 24, 1995.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its majority-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. Minority interest
represents the minority stockholders' interest in the Company prior to the
Merger.
Inventories
Inventories are recorded at the lower of cost or market determined on first-
in, first-out and average cost methods.
Depreciation
Depreciation of property, plant and equipment is provided using the
straight-line method based on estimated useful lives ranging from 3 to 25
years.
F-7
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Intangibles and Other Assets
Intangibles and other assets include mainly goodwill related to acquisitions
and credits granted for truck driver employment information files. These
assets are being amortized over periods of 3 1/2 to 30 years and consist of
the following:
<TABLE>
<CAPTION>
DECEMBER 31,
AMORTIZATION SEPTEMBER 30 ----------------
PERIOD 1997 1996 1995
----------------- ------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Goodwill..................... 30 years $31,982 $30,857 $13,663
Employment information costs
and other................... 3 1/2 to 11 years 5,697 5,192 4,046
Covenants-not-to-compete and
consulting agreements....... 5-10 years 895 895 1,273
------- ------- -------
38,574 36,944 18,982
Accumulated amortization..... (6,541) (5,549) (4,172)
------- ------- -------
$32,033 $31,395 $14,810
======= ======= =======
</TABLE>
Goodwill impairment is assessed at each balance sheet date based upon a
review of the acquired entity's operations as to income, growth of income in
relation to the expected growth of income when acquired and, if the entity is
considered for sale, estimated realizable value. Valuation reserves are
provided if the carrying value of acquired goodwill is determined to be
permanently impaired.
Revenue Recognition
Revenues from information services are net of the cost of charges from state
motor vehicle record departments which are incurred by the Company as an agent
for its customers. As provided in the agreements with customers, the Company
charges a fee for its service and is also reimbursed for state charges.
Exposition services revenues are recognized when the services are provided.
Advertising revenues from publishing are recognized when each publication is
published and distributed. Subscription revenue is recognized ratably over the
subscription period. Trademark research revenues are recognized when the
research is completed and reports transmitted to the client.
Income Taxes
The Company accounts for income taxes under SFAS No. 109 which requires an
asset and liability approach to financial accounting and reporting. The
difference between the financial statement and tax bases of assets and
liabilities is determined annually. Deferred income tax assets and liabilities
are computed for those differences that have future tax consequences using
currently enacted tax laws and rates that apply to the periods in which they
are expected to affect taxable income.
Postretirement Benefits
No postretirement medical or insurance benefits are offered to any
employees.
Statements of Cash Flows
For purposes of the statements of cash flows, all highly liquid debt
instruments purchased with a maturity of three months or less are considered
to be cash equivalents.
F-8
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Earnings (Loss) per Common Share
Earnings (loss) per common and common equivalent share are computed by
dividing net income (loss), adjusted for dividends on preferred stock and
before deduction of interest expense (net of tax) on certain previously
outstanding Tribune/Swab-Fox subordinated convertible debentures, by the
weighted average number of common and common equivalent shares, when dilutive,
outstanding during the year. Outstanding incentive stock options, warrants and
common shares that would be issued assuming the previously outstanding
Tribune/Swab-Fox 6 1/2% convertible preferred shares and the 11% subordinated
convertible debentures due in 1997 were converted into common stock are
considered common stock equivalents and, when dilutive, are included in the
calculation of earnings (loss) per common share.
The weighted average number of common and common equivalent shares
outstanding was 3,543 in 1996, 3,766 in 1995, 3,733 in 1994 and 3,564 and
3,537 for the nine months ended September 30, 1997 and 1996, respectively.
Common shares that would be issued assuming conversion of the previously
outstanding Tribune/Swab-Fox new senior preferred shares and the 11%
subordinated convertible debentures due in 1998 were not included in the
calculations of the applicable years since the effect would have been
antidilutive. The above shares for 1995 and 1994 are as if converted into the
Company's shares at 0.1255 of a share for each previous outstanding share of
Tribune/Swab-Fox.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(2) ACQUISITIONS:
CORSEARCH, Inc. ("CORSEARCH")
On August 15, 1996, the Company acquired all of the issued and outstanding
capital stock of CORSEARCH, a leading provider of trademark and tradename
research and information services, using both proprietary and public
databases. The Company paid $14,400 in cash, $900 in notes and assumed
approximately $1,300 in additional nonoperating liabilities. In addition, the
Company agreed to pay additional consideration in 2000 and 2001 to the two
senior managers/stockholders of CORSEARCH predicated upon CORSEARCH achieving
certain pretax income levels in the years 1997, 1998 and 1999. The minimum
additional consideration to be paid in 2000 and 2001 is $1,500 which has been
discounted at a rate of 8 1/2% and recorded in long-term debt. Costs in excess
of assets acquired were approximately $16,750 and are recorded in "Other
Assets."
In connection with the closing of the transaction, the two senior managers
entered into employment agreements with CORSEARCH through December 31, 1999,
which provide for base salaries, bonuses based on achieving escalating income
targets and covenants-not-to-compete.
Unaudited pro forma results of operations, had the CORSEARCH acquisition
occurred on January 1, 1996, with respect to 1996 are revenues of $72,834;
income from continuing operations of $5,529; and earnings (loss) per common
share from continuing operations of $1.56. This unaudited pro forma
information is presented in response to applicable accounting rules and is not
necessarily indicative of the actual results that would have been achieved had
the CORSEARCH acquisition occurred on January 1, 1996.
F-9
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Galaxy Registration, Inc. ("Galaxy")
Effective March 1, 1994, the Company completed the acquisition of Galaxy, a
provider, on a national basis, of registration, information and marketing
services to the convention/trade show industry. The Company acquired Galaxy
with the payment of $1,200 in cash plus a note payable for $900. If certain
earnings targets were achieved, the former principal owner of Galaxy, who was
employed as President and Chief Operating Officer of Galaxy, would receive
additional payments not to exceed $2,900 by 1997. In connection with this
transaction, on March 17, 1994, the former principal owner of Galaxy purchased
75,000 shares of the Company's Common Stock at $4.625 per share for a total
purchase price of $347. A covenant-not-to-compete and an employment agreement
were also entered into with the former principal owner. The earnings target
for 1994 was achieved and the Company accrued $300 of purchase price
adjustments payable to the former owner. In 1995, the agreement with the
former principal owner was amended to provide that substantially all of the
additional purchase price would be paid over the period set forth in the
acquisition agreement. The additional purchase price was discounted and
recorded as additional goodwill in 1995. In addition, the former owner earned
$100 of incentive compensation in both of the periods ended December 31, 1995
and 1994, which was expensed each year.
Unaudited pro forma results of operations, had the Galaxy acquisition
occurred on January 1, 1994, with respect to 1994, are revenues of $58,469;
income from continuing operations of $2,726 and earnings (loss) per common
share from continuing operations of $0.73. This unaudited pro forma
information is presented in response to applicable accounting rules and is not
necessarily indicative of the actual results that would have been achieved had
the Galaxy acquisition occurred on January 1, 1994, with respect to the 1994
information.
(3) DISPOSITION OF ASSETS:
In 1994, the Company's Board of Directors authorized the sale of three of
the Company's trade journals. An Asset Purchase Agreement was signed June 16,
1995, and the sale of these trade journals was closed on August 2, 1995, for
$21,000 cash. The "Gain on sale of assets" in 1995 in the statement of
operations includes the $11,739 pretax gain from this transaction.
On April 30, 1994, the Company sold the assets of Shopper's Guide, Inc. The
Company received $1,750 in cash, a $1,100 cash payment for post-closing
adjustments, and the buyer assumed certain liabilities totaling $930. The
Company also received the right to receive a maximum of $3,450 out of future
cash flow from the business conducted with the assets sold, as defined, over
the next five years and after the buyer receives a certain sum. In addition,
the Company entered into a five-year covenant-not-to-compete in exchange for
$750 in cash. No gain or loss was recorded on the sale or in connection with
the covenant-not-to-compete. In 1996, the Company received $200 from the buyer
as final settlement of the future payments. A loss of approximately $500 was
recognized in 1996 related to this final settlement.
(4) REAL ESTATE:
Effective November 30, 1994, Tribune/Swab-Fox's Board of Directors approved
a plan to dispose of the remaining real estate operations. As a result, the
real estate business was reclassified as discontinued operations and the sale
of these discontinued assets in 1995 resulted in a nominal net gain. Prior to
the Merger, Tribune/Swab-Fox and the Company filed separate income tax
returns. Due to Tribune/Swab-Fox's history of losses, no deferred tax asset
was recognized related to net operating loss carryforwards. Therefore, no
income tax benefit was recognized on the real estate business losses. The
following summarizes the components of the loss from discontinued operations:
F-10
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1994
----------- -------------
<S> <C> <C>
Revenues....................................... $ 100 $ 589
Costs and expenses............................. (63) (3,405)
---------- -------------
Income (loss) from discontinued operations..... $ 37 $ (2,816)
========== =============
</TABLE>
On December 30, 1994, significant parcels of raw land were sold to 1995 Land
Company L.L.C., an Oklahoma limited liability company ("1995 Land Company"),
for $1,387, including cash of $600 and a note receivable of $786 which was
paid in early 1995. 1995 Land Company is owned 49.99% by the Company, but the
funding for the purchase was provided through a loan from the owner of the
remaining 50.01%, who oversees, manages and funds the development and sale of
these properties.
In March 1995, the Company entered into an Acquisition Agreement with
Midwest Energy Companies, Inc. ("MECI"), which is indirectly controlled by a
director of the Company. Under the agreement approximately 900 acres of raw
land, with a book value of $1,650 at December 31, 1994, was exchanged for
7,422,773 shares of MECI common stock.
As a part of the liquidation plan, periodical reviews of the market value
for each property were made and a write-down of the real estate assets of
approximately $2,800 was recognized in 1994. This write-down is reflected in
"costs and expenses" in the table above and included in discontinued
operations.
(5) LONG-TERM DEBT:
Long-term debt outstanding consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ----------------
1997 1996 1995
------------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
Note payable under Galaxy Purchase Agreement,
discounted at 8.5%, annual payments per
agreement with final payment in April 2000,
effective April 1, 1997, the discount period
ended and the note now accrues interest at
7%............................................ $1,219 $ 1,859 $ 1,898
Payable under CORSEARCH Purchase Agreement,
discounted at 8.5%, payable in equal annual
payments in 2000 and 2001..................... 1,206 1,130 --
Promissory Notes, unsecured, payable
semiannually, plus interest through August 15,
1999, interest rate adjusts 1% below the base
rate of Citibank, N.A. (8.5% at September 30,
1997)......................................... 600 900 --
Promissory Note, unsecured, payable quarterly,
plus interest, through December 2000, interest
rate adjusts semiannually to the base rate of
Chase Manhattan Bank (8.5% at September 30,
1997)......................................... 270 332 3,034
7.5% Promissory Notes, unsecured, annual
payments of $155, plus interest, with final
payments in August 1998 and March 1999........ 175 330 484
Capital lease agreement, monthly payments of
$38 including interest, through June 2000..... 1,175 -- --
Other.......................................... 217 75 379
------ ------- -------
Total long-term debt........................... 4,862 4,626 5,795
Less portion due within one year............... (1,149) (1,133) (1,266)
------ ------- -------
$3,713 $ 3,493 $ 4,529
====== ======= =======
</TABLE>
F-11
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Installments due on long-term debt during each of the five years subsequent
to December 31, 1996, are as follows:
<TABLE>
<CAPTION>
YEAR
----
<S> <C>
1997.................................. $1,133
1998.................................. 963
1999.................................. 898
2000.................................. 1,252
2001.................................. 380
------
$4,626
======
</TABLE>
At December 31, 1996, the Company had a revolving credit arrangement with a
bank which allows the Company to borrow up to $16,000 and at the Company's
election can be converted into a four-year term loan. A balance of $500 was
outstanding under this arrangement at December 31, 1996. Common stock of the
Company's operating subsidiaries, except CORSEARCH, is pledged as collateral
under this revolving credit arrangement, which also provides for various
covenants including restricting the payment of dividends in any fiscal year to
a maximum of $2,000. Interest on amounts borrowed is payable monthly at the
Chase Manhattan base rate (8.5% at December 31, 1996). The revolving credit
arrangement expired June 30, 1997. Management elected not to renew the
arrangement. A one-quarter (.25)% annum fee is payable to the bank on the
unused portion of the credit facility.
(6) INCOME TAXES:
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
CURRENT:
Federal.......................................... $ 2,487 $ (679) $ 2,600
State............................................ 305 1,378 332
------- ------- -------
2,792 699 2,932
------- ------- -------
DEFERRED:
Federal.......................................... 266 (521) (339)
State............................................ 43 (120) (4)
------- ------- -------
309 (641) (343)
------- ------- -------
$ 3,101 $ 58 $ 2,589
======= ======= =======
</TABLE>
F-12
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The reconciliation of income tax computed at the federal statutory rate (34%)
to income tax expense is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------- -------- -------
<S> <C> <C> <C>
Income tax provision at statutory rates........ $ 2,897 $ 5,478 $ 1,128
Amortization of acquired assets not deductible
for income tax purposes....................... 262 193 224
Losses without tax benefit..................... -- -- 1,061
Utilization of losses previously subject to
valuation allowance........................... -- (3,570) --
Excess of tax basis of assets sold over book
basis, not previously tax effected............ -- (1,591) (36)
State income taxes............................. 232 (428) 217
Reduction in previously provided taxes related
to settlement of tax examinations............. (300) -- --
Other.......................................... 10 (24) (5)
------- -------- -------
$ 3,101 $ 58 $ 2,589
======= ======== =======
</TABLE>
Significant components of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1996 1995
------ ------
<S> <C> <C>
DEFERRED TAX ASSETS:
Income recognized in different accounting period for income
tax purposes.............................................. $ 236 $1,028
Deferred severance benefits payable........................ 686 805
Reserves on assets......................................... 343 293
Accrued expenses deductible when paid...................... 606 304
Fixed asset basis differences.............................. 100 --
------ ------
Deferred tax assets...................................... 1,971 2,430
------ ------
DEFERRED TAX LIABILITIES:
Fixed asset basis difference............................... -- (144)
Unusual gain recognized in different accounting period for
income tax reporting purposes............................. -- (336)
Other asset basis difference............................... (497) --
------ ------
Deferred tax liabilities................................. (497) (480)
------ ------
NET DEFERRED TAX ASSETS.................................... $1,474 $1,950
====== ======
</TABLE>
Net deferred tax assets are reflected on the accompanying balance sheets as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1996 1995
------ ------
<S> <C> <C>
CURRENT ASSETS--Deferred tax assets........................... $ 896 $ 494
LONG-TERM--Deferred tax assets................................ 578 1456
------ ------
$1,474 $1,950
====== ======
</TABLE>
F-13
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Subsequent to December 31, 1996, the Company was notified by the taxing
authority of a state that the income tax refund receivable from the state
would be contested and was also notified by the taxing authority of a second
state of proposed adjustments to certain prior years' income taxes paid.
Management believes that the tax positions taken by the Company were correct
and that the amounts included in "refundable income taxes" in the consolidated
balance sheet as of December 31, 1996, will ultimately be received and that
adjustments, if any, for income taxes will not be material to the consolidated
financial statements.
(7) CAPITAL STOCK:
The Company has authorized 10,000,000 shares of $0.10 par value Common Stock
and 1,000,000 shares of $10.00 par value preferred stock. No shares of
preferred stock have been issued. (Reference is made to Note 1 for the capital
stock transactions in connection with the Merger.)
In 1996, 1995 and 1994, the Company purchased and retired 7,900 shares
($24.94 per share), 78,819 shares ($10.50 and $5.48 per share), and 25,000
shares ($6.37 per share), respectively, of its Common Stock owned by certain
officers and directors. As part of these transactions, the Company received
payments on loans of $300 in 1995 and $24 in 1994.
Capital stock transactions prior to the Merger included conversion, in
December 1994, of the 6 1/2% Cumulative Convertible Preferred Stock of
Tribune/Swab-Fox into 1,386,675 common shares (174,027 equivalent shares) and
redemption of the remaining outstanding preferred stocks for approximately
$1,520 which were the 1,400 shares of Class A Preferred Stock redeemed at a
price of $110 per share and the 13,657 shares of New Senior Preferred Stock
redeemed at $100 per share.
The Tribune/Swab-Fox incentive stock option plan was terminated as part of
the Merger. No options were outstanding under this plan.
The Company's incentive stock option plan authorizes an aggregate of 150,000
shares of the Company's Common Stock which may be granted to key employees.
Options for 118,000 shares were outstanding at December 31, 1996, at option
prices ranging from $5.50 to $15.00 per share. During 1996, options for
103,000 shares were granted. No options were exercised and options for 5,000
shares were canceled. Options are granted at the discretion of the Board of
Directors' Compensation Committee at a minimum exercise price of 100% of the
market value of the Company's Common Stock at the date of grant.
In January 1994, the Company's Board of Directors approved the 1994
Incentive Stock Plan which permits the grant of stock options and awards of
restricted stock to executives and key employees. Pursuant to various bonus
and incentive plans, the Company awarded 29,186 shares of restricted stock at
$6.25 and $4.94 per share in April 1995 and May 1995, as part of incentives
which were accrued in 1994. These restricted shares vest three years from the
effective date of the grant. Options of 20,000 shares were granted during the
nine months ended September 30, 1997 at an option price of $28.00 per share,
options for 50,000 shares were granted in 1996 at option prices ranging from
$13.88 to $24.00 per share, options for 15,000 shares were granted in 1995 at
an option price of $6.00 per share and options for 202,500 shares were granted
in 1994 at an option price of $4.25 per share. The options were granted at the
market price of the Company's Common Stock at the effective date of the grant,
expire in 2001 through 2007 and vest 100% in 1997 through 2000. Options for
30,000 shares were exercised for a total price of $153 during the nine months
ended September 30, 1997.
An Employee Stock Purchase Plan has been approved and 100,000 shares of
Common Stock have been allocated for this plan. No shares have been issued
under this plan. In 1995, the Company's Board of Directors approved the
matching of 20% of each employee's contributions (limited to 5% maximum
employee contribution) to the qualified 401(k) defined contribution plan with
the Company's Common Stock and 50,000 shares of Common Stock have been
allocated for this plan. During 1997, 1996 and 1995, 2,273 shares, 6,247
F-14
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
shares and 3,852 shares were issued to the 401(k) plan as matching
contributions. As of June 1, 1997, the matching of 20% of each employee's
contribution with Company Common Stock was ceased and additional cash
contributions in the same amounts will be made.
The Company has adopted the disclosure-only provision of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock--Based
Compensation" (SFAS No. 123). SFAS No. 123 established financial accounting
and reporting standards for stock-based compensation plans and to transactions
in which an entity issues its equity instruments to acquire goods and services
from nonemployees. Since the effect of SFAS No. 123 is not material, the
Company has made no disclosure of pro forma net income and earnings per share
as if SFAS No. 123 had been adopted.
(8) COMMITMENTS AND CONTINGENCIES:
Operating lease agreements of the Company are principally for office
facilities and equipment and expire at various dates through 2009. Rent
expense in 1996, 1995 and 1994 under operating leases was approximately
$1,190, $1,080 and $924, respectively.
As of December 31, 1996, future minimum lease payment are as follows:
<TABLE>
<CAPTION>
MINIMUM LEASE
YEAR ENDING DECEMBER 31, PAYMENTS
------------------------ --------------
(IN THOUSANDS)
<S> <C>
1997.......................... $1,344
1998.......................... 1,290
1999.......................... 982
2000.......................... 644
2001.......................... 407
Thereafter.................... 3,018
------
$7,685
======
</TABLE>
The Company has employment agreements with five key employees of the Company
and its subsidiaries which provide for individual compensation ranging from
$43 to $225 annually ($605 annually in the aggregate) and expire at various
dates through 1999.
The Company is a defendant in certain litigation arising out of operations
in the normal course of business. However, it is the opinion of management
that the ultimate liabilities relating thereto, if any, will not have a
material adverse effect on the financial position or results of operations of
the Company.
(9) RELATED PARTY TRANSACTIONS:
Effective December 31, 1994, the Chairman of the Executive Committee of
Tribune/Swab-Fox retired. Deferred compensation expense of approximately $277
was recorded in 1994 related to this retirement. In addition, the Company
acquired 25,100 shares of Common Stock for $160 from the former employee. In
connection with an amendment to the Retirement Agreement in December 1995, the
Company purchased an additional 30,000 shares of Common Stock at $10.50 per
share, a note payable to the Company of approximately $300 was paid and the
puts and calls for shares of Common Stock owned by the former Chairman of the
Executive Committee were canceled.
In March 1995, upon exercise of an option, the Company acquired 48,819
equivalent shares of the Company's Common Stock from the Profit Sharing Plan
and Trust of Tribune/Swab-Fox Companies, Inc., of
F-15
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
which the former Chairman and Chief Executive Officer of the Company is the
trustee, for $292, with a cash payment of $73 and a note for $219 payable in
equal annual installments over four years.
Under the terms of a loan agreement, amended in June 1992, a current officer
and director of the Company borrowed approximately $250 (outstanding balance
of $200 at December 31, 1996) from the Company at an interest rate of 8.5%,
secured by 87,333 shares of Common Stock of the Company and payable in
semiannual payments of $17, plus interest, with all of the remaining balance
due in October 1999.
(10) BUSINESS SEGMENT INFORMATION:
Operations of the Company are conducted primarily through two business
segments entirely within the continental United States. These segments and the
primary operations of each are as follows:
Business to Business Communications
Publisher (Atwood) of various convention/trade show publications and a trade
journal, provider (Galaxy) of registration services, exhibitor marketing and
information services all to the exposition industry and owner (G.E.M.) of the
World Gaming Congress, the world's largest trade show catering to the
legalized gaming industry, and the publisher of several trade magazines and
newsletters.
Information Services
Provider (TISI) of pre-employment screening information including motor
vehicle reports, truck driver employment information, worker's compensation
information, credit reports, criminal record reports and other pre-employment
screening information and services to the trucking and other industries and
motor vehicle reports to the insurance industry. Provider (CORSEARCH) of
trademark research and information services, using both proprietary and public
databases.
F-16
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Summarized financial information by industry segment is as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------------------- -------------------------
1997 1996 1996 1995 1994
--------------- --------------- ------- ------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET REVENUES FROM SALES
TO UNAFFILIATED CUSTOM-
ERS:
Business to Business
Communications....... $ 29,323 $ 26,313 $42,891 $53,089 $39,665
Information Services.. 24,388 17,064 24,273 17,950 15,091
Corporate and other... 955 1,728 1,478 1,039 2,163
--------------- --------------- ------- ------- -------
$ 54,666 $ 45,105 $68,642 $72,078 $56,919
=============== =============== ======= ======= =======
OPERATING PROFIT:
Business to Business
Communications....... $ 755 $ 1,216 $ 6,018 $14,789 $ 4,344
Information Services.. 5,057 4,194 5,612 3,435 2,992
--------------- --------------- ------- ------- -------
Operating profit from
segments............. 5,812 5,410 11,630 18,224 7,336
Corporate expenses,
net.................. (1,184) (986) (2,527) (1,253) (466)
Interest expense...... (401) (413) (581) (859) (736)
--------------- --------------- ------- ------- -------
Income before income
taxes................ $ 4,227 $ 4,011 $ 8,522 $16,112 $ 6,134
=============== =============== ======= ======= =======
IDENTIFIABLE ASSETS:
Business to Business
Communications....... $ 17,298 $ 15,189 $14,629 $15,525 $26,405
Information Services.. 34,215 32,016 32,035 12,640 12,101
Corporate............. 11,315 12,149 9,318 25,279 12,808
Discontinued
operations........... -- -- -- -- 2,267
--------------- --------------- ------- ------- -------
$ 62,828 $ 59,354 $55,982 $53,444 $53,581
=============== =============== ======= ======= =======
DEPRECIATION AND AMORTI-
ZATION:
Business to Business
Communications....... $ 1,618 $ 1,647 $ 2,192 $ 2,365 $ 2,033
Information Services.. 1,872 1,122 1,723 1,175 1,035
Corporate............. 74 74 103 61 50
Discontinued
operations........... -- -- -- -- 45
--------------- --------------- ------- ------- -------
$ 3,564 $ 2,843 $ 4,018 $ 3,601 $ 3,163
=============== =============== ======= ======= =======
CAPITAL EXPENDITURES:
Business to Business
Communications....... $ 2,282 $ 890 $ 1,097 $ 1,296 $ 3,284
Information Services.. 3,173 1,055 1,533 1,285 935
Corporate............. 5 10 11 8 163
--------------- --------------- ------- ------- -------
$ 5,460 $ 1,955 $ 2,641 $ 2,589 $ 4,382
=============== =============== ======= ======= =======
</TABLE>
Corporate revenues consist principally of revenues from interest, covenants-
not-to-compete and miscellaneous nonoperating income. Operating profit is net
revenues less applicable operating expenses and segment general and
administrative expenses. Corporate general and administrative expenses are
generally not allocated to each segment.
Identifiable assets by segment are those assets that are used in the
operations of each segment. Corporate assets consist principally of cash and
cash equivalents, notes receivable, prepaid expenses and corporate furniture,
fixtures and equipment. Capital expenditures include additions to property,
plant and equipment, goodwill and truck driver employment information files.
F-17
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During 1997, 1996, 1995 and 1994, no customer represented 10% or more of the
Company's revenue or operating profit.
(11)ACCRUED LIABILITIES:
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -------------
1997 1996 1995
------------- ------ ------
(UNAUDITED)
<S> <C> <C> <C>
Current portion of deferred contract
liabilities.................................. $ 430 $ 419 $ 482
Accrued interest.............................. 99 52 47
Accrued payroll and employee benefits......... 1,010 1,763 902
Accrued income taxes.......................... 1,031 311 2,073
Accrued other liabilities..................... 511 2,483 2,005
------ ------ ------
$3,081 $5,028 $5,509
====== ====== ======
</TABLE>
F-18
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION
IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE
SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF OR THAT THE INFORMATION SET FORTH HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... i
Incorporation of Certain Documents by Reference.......................... ii
Cautionary Statement Regarding Industry Forecasts........................ iii
Cautionary Statement Regarding Forward-Looking Statement................. iii
Summary.................................................................. 1
Risk Factors............................................................. 19
Description of the Transactions.......................................... 25
Use of Proceeds.......................................................... 27
Capitalization........................................................... 27
Unaudited Pro Forma Consolidated Financial Information................... 28
Selected Historical Consolidated Financial Data.......................... 37
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 39
The Exchange Offer....................................................... 45
Business................................................................. 53
Management............................................................... 65
Certain Relationships and Related
Transactions............................................................ 71
Security Ownership of Certain Beneficial Owners and Management........... 71
Description of the Senior Credit Facility................................ 72
Description of the New Notes............................................. 73
Certain U.S. Federal Income Tax Consequences............................. 98
Plan of Distribution..................................................... 100
Legal Matters............................................................ 100
Independent Public Accountants........................................... 100
Index to Financial Statements............................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
---------------------
PROSPECTUS
---------------------
[LOGO] TSF COMMUNICATIONS
CORPORATION
OFFER TO EXCHANGE ALL OUTSTANDING 10 3/8% SENIOR SUBORDINATED NOTES
DUE 2007 ($100,000,000 PRINCIPAL AMOUNT OUTSTANDING) FOR 10 3/8% SERIES B
SENIOR SUBORDINATED NOTES DUE 2007
February 6, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she 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
or enterprise. Depending on the character of the proceeding, a corporation may
indemnify against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person indemnified 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 by
or in the right of the corporation, no indemnification may be made in respect
to any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the Court
of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability such person is fairly and
reasonably entitled to indemnify for such expenses which the court shall deem
proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the 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.
However, if the director or officer is not successful in the defense of any
action, suit or proceeding as referred to above or in the defense of any
claim, issue or matter therein, he shall only be indemnified by the
corporation as authorized in the specific case upon a determination that
indemnification is proper because he or she met the applicable standard set
forth above as determined by a majority of the disinterested Board of
Directors or by the stockholders.
Article SIXTH of the Registrant's Certificate of Incorporation provides that
the Registrant shall indemnify to the fullest extent permitted by law every
director or officer of the Registrant and such person's heirs, executors,
administrators and personal representatives against all judgments, penalties,
fines, settlements and reasonable expenses actually incurred by the person in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
The Registrant carries a standard form of directors' and officers' liability
insurance policy covering losses up to $3,000,000 (subject to a $150,000
deductible).
The Purchase Agreement provides for reciprocal indemnification between the
Registrant and its controlling persons, on the one hand, and the Initial
Purchaser and its controlling persons, on the other hand, against certain
liabilities in connection with the Offering, including liabilities under the
Securities Act.
The foregoing summaries are necessarily subject to the complete text of the
General Corporation Law of Delaware, the Registrant's Certificate of
Incorporation, the Purchase Agreement and the agreement related to the
directors' and officers' liability insurance referred to above and are
qualified in their entirety by reference thereto.
II-1
<PAGE>
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1** Purchase Agreement, dated October 24, 1997, by and between First
Union Capital Markets Corp. and T/SF Communications Corporation
2.1** Stock Purchase Agreement, dated as of August 15, 1997, among VS&A
Communications Partners II, L.P., VS&A-T/SF Inc. and T/SF
Communications Corporation
3.1** Amended and Restated Certificate of Incorporation of T/SF
Communications Corporation
3.2** Amended and Restated By-laws of T/SF Communications Corporation
3.3** Certificate of Incorporation of Casino Publishing Company
3.4** By-laws of Casino Publishing Company
3.5** Certificate of Incorporate of Expo Magazine, Inc.
3.6** By-laws of Expo Magazine, Inc.
3.7** Certificate of Incorporation of G.E.M. Communications, Inc.
3.8** By-laws of G.E.M. Communications, Inc.
3.9** Certificate of Incorporation of T/SF of Nevada, Inc.
3.10** By-laws of T/SF of Nevada, Inc.
3.11** Certificate of Incorporation of Atwood Convention Publishing, Inc.
3.12** By-laws of Atwood Convention Publishing, Inc.
3.13** Certificate of Incorporation of Galaxy Registration, Inc.
3.14** By-laws of Galaxy Registration, Inc.
3.15** Certificate of Incorporation of Galaxy Design & Printing, Inc.
3.16** By-laws of Galaxy Design & Printing, Inc.
3.17** Certificate of Incorporation of CORSEARCH, Inc
3.18** By-laws of CORSEARCH, Inc
3.19** Certificate of Incorporation of Crimesearch, Inc.
3.20** By-laws of Crimesearch, Inc.
3.21** Certificate of Incorporation of T/SF Europe, Inc.
3.22** By-laws of T/SF Europe, Inc.
3.23** Certificate of Incorporation of Transportation Communications
Services, Inc.
3.24** By-laws of Transportation Communications Services, Inc.
3.25** Certificate of Incorporation of T/SF Investment Co.
3.26** By-laws of T/SF Investment Co.
3.27** Certificate of Incorporation of Transportation Information
Services, Inc.
3.28** By-laws of Transportation Information Services, Inc.
3.29** Certificate of Formation of T/SF Holdings, LLC
3.30** Amended and Restated Operating Agreement of T/SF Holdings, LLC
3.31** Certificate of Formation of T/SF Operating, LLC
3.32** Operating Agreement of T/SF Operating, LLC
3.33** Certificate of Formation of Galaxy Registration, LLC
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.34** Amended and Restated Operating Agreement of Galaxy Registration,
LLC
3.35** Certificate of Formation of Atwood Publishing, LLC
3.35(a)** Certificate of Amendment to Certificate of Formation of Atwood
Publishing, LLC
3.36** Amended and Restated Operating Agreement of Atwood Publishing, LLC
3.37** Certificate of Formation of GEM Gaming, LLC
3.38** Amended and Restated Operating Agreement of GEM Gaming, LLC
3.39** Certificate of Formation of GEM Nevada, LLC
3.40** Operating Agreement of GEM Nevada, LLC
3.41** Certificate of Formation of Casino Executive, LLC
3.42** Operating Agreement of Casino Executive, LLC
3.43** Certificate of Formation of EXPO Magazine, LLC
3.44** Operating Agreement of EXPO Magazine, LLC
4.1* Indenture, dated as of October 29, 1997, by and among T/SF
Communications Corporation, the Guarantors named therein and IBJ
Schroder Bank & Trust Company, as Trustee
4.1(a)** Form of Supplemental Indenture, by and among T/SF Communications
Corporation, the Guarantors named therein and IBJ Schroder Bank &
Trust Company, as Trustee
4.2* Registration Rights Agreement, dated as of October 29, 1997, by
and among T/SF Communications Corporation, the Guarantors (named
therein) and First Union Capital Markets Corp.
4.3 Form of Old Note (included in Indenture filed as Exhibit 4.1)
4.4 Form of New Note (included in Indenture filed as Exhibit 4.1)
4.5** Form of Letter of Transmittal to be used by tendering holders of
Old Notes in the Exchange Offer
5* Opinion of Proskauer Rose LLP
10.1* Senior Subordinated Credit Agreement, dated as of October 9, 1997,
among T/SF Communications Corporation, the Guarantors (named
therein) and First Union Corporation (as Lender and Agent)
10.2* Credit Agreement, dated as of October 9, 1997, among T/SF
Communications Corporation and First Union Corporation (as Lender
and Agent)
10.3** Security Agreement, dated as of October 9, 1997, among T/SF
Communications Corporation, the Guarantors (as defined therein)
and First Union National Bank
10.4** Stock Pledge Agreement, dated as of October 9, 1997, made by VS&A-
T/SF, Inc. and Fir Tree Value Fund, L.P., Fir Tree Institutional
Value Fund, L.P., and Fir Tree Value Partners, LDC, in favor of
First Union National Bank
10.5** Stock Pledge Agreement, dated as of October 9, 1997, made by T/SF
Communications Corporation in favor of First Union National Bank
10.6** Stock Pledge Agreement, dated as of October 9, 1997, made by T/SF
Holdings, LLC, in favor of First Union National Bank
10.7** Stock Pledge Agreement, dated as of October 9, 1997, made by
Atwood Convention Publishing, Inc., Galaxy Registration, Inc.,
G.E.M. Communications, Inc., Transportation Information Services,
Inc., T/SF Investment Co. and T/SF of Nevada, Inc., in favor of
First Union National Bank
10.8** Employment Agreement by and between Richard A. Wimbish and
Transportation Information Services, Inc., dated as of January 1,
1998
10.9** Form of Employment Agreement by and between Ian L.M. Thomas and
T/SF Communications Corporation
10.9(a)** Letter Agreement, dated October 9, 1997, by and between VS&A
Communications Partners, II, L.P., Veronis, Suhler & Associates,
Inc. and Ian L.M. Thomas
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.10** Employment Agreement by and between Steven J. Hunt and T/SF
Communications Corporation, dated as of November 10, 1997
10.11** Employment Agreement by and between Brian A. Meyer and T/SF
Communications Corporation, dated as of November 10, 1997
10.12** Employment Agreement by and between Michael Goodwin and Galaxy
Registration, LLC, dated as of January 1, 1998
10.13 Employment Agreement, dated August 15, 1996, by and between
CORSEARCH, Inc. and Robert Frank (incorporated herein by reference
to Exhibit 99.1 to the Form 8-K)
10.14** T/SF Communications Corporation Chief Executive Officer Equity
Appreciation Plan
10.15** T/SF Communications Corporation Supplemental Chief Executive
Officer Equity Appreciation Plan
10.16** T/SF Communications Corporation Chief Financial Officer/General
Counsel Equity Appreciation Plan
10.17** T/SF Communications Corporation Key Executive Equity Appreciation
Plan
10.18** Stockholders' Agreement, dated as of October 9, 1997, among T/SF
Communications Corporation, VS&A-T/SF, L.L.C. and Fir Tree Value
Fund, L.P., Fir Tree Institutional Value Fund, L.P. and Fir Tree
Value Partners, LDC
10.19* Consulting Agreement by and between Howard G. Barnett, Jr. and T/SF
Communications Corporation, dated October 9, 1997
10.20* Consulting Agreement by and between Robert F. Craine, Jr. and T/SF
Communications Corporation, dated October 9, 1997
10.21* Consulting Agreement by and between J. Gary Mourton and T/SF
Communications Corporation, dated October 9, 1997
10.22 T/SF Communications Corporation 1991 Incentive Stock Plan
(incorporated herein by reference to Exhibit A to the Registrant's
Proxy Statement for Annual Meeting of Stockholders dated May 23,
1994)
10.23 Settlement Agreement, dated and effective as of December 12, 1995,
by and between T/SF Communications Corporation and Robert J. Swab
(incorporated herein by reference to Exhibit 10.18 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995)
10.24 Operating Agreement for 1995 Land Company, L.L.C., dated December
20, 1994, by and between John C. Bumgarner, Jr. and Tribune/Swab-
Fox (incorporated herein by reference to Exhibit 10.20 of
Tribune/Swab-Fox's Annual Report on Form 10-K for the year ended
December 31, 1994)
10.25 Revolving Credit Agreement, dated as of June 30, 1996, by and among
T/SF Communications Corporation, T/SF Investment Co., and BancFirst
(incorporated herein by reference to Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1996 ("Form 10-Q"))
10.26 Pledge Agreement, dated as of June 30, 1996, between T/SF
Communications Corporation and BancFirst (incorporated herein by
reference to Exhibit 10.2 to the Form 10-Q)
10.27 Pledge Agreement, dated as of June 30, 1996, between T/SF
Investment Co. and BancFirst (incorporated herein by reference to
Exhibit 10.3 to the Form 10-Q)
10.28 Stock Purchase Agreement, dated as of August 15, 1996, by and among
T/SF Investment Co. and the shareholders of CORSEARCH, Inc.
(incorporated herein by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K, dated August 30, 1996,
with respect to events occurring on August 15, 1996, amended
October 29, 1996 (the "Form 8-K"))
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.29** T/SF Communications Corporation and T/SF Holdings, LLC Key Employee
Bonus Plan
12* Statement re: computation of ratios
21** Subsidiaries of the Issuer
23.1** Consent of Arthur Andersen, LLP
23.2 Consent of Proskauer Rose LLP (contained in opinion filed as
Exhibit 5)
24* Issuer Power of Attorney
25* Statement of eligibility of trustee (Form T-1)
27* Financial Data Schedule
</TABLE>
- ----------------
* Previously filed.
** Filed herewith.
ITEM 22. UNDERTAKINGS
Each of the undersigned registrant hereby undertakes that:
(1) To file, during any period in which officers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
II-5
<PAGE>
(5) That every prospectus (i) that is filed pursuant to paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to this registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
a registrant pursuant to the provisions described in Item 15, or otherwise,
each registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, each
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(7) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of a registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(8) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11, or 13 of Form S-4, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.
(9) To supply by means of post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when it
became effective.
II-6
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
Date: February 6, 1998
T/SF COMMUNICATIONS CORPORATION
/s/ Ian L. M. Thomas
By___________________________________
IAN L. M. THOMAS,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Chairman of the
/s/ John S. Suhler* Board February 6,
- ------------------------------------- 1998
JOHN S. SUHLER
/s/ Ian L.M. Thomas President, Chief
- ------------------------------------- Executive Officer, February 6,
IAN L.M. THOMAS and Director 1998
/s/ Steven J. Hunt* Chief Financial February 6,
- ------------------------------------- Officer and 1998
STEVEN J. HUNT Treasurer
Director
/s/ John J. Veronis* February 6,
- ------------------------------------- 1998
JOHN J. VERONIS
/s/ Jeffrey T. Stevenson* Director February 6,
- ------------------------------------- 1998
JEFFREY T. STEVENSON
/s/ S. Gerard Benford* Director February 6,
- ------------------------------------- 1998
S. GERARD BENFORD
Director
/s/ Jeffrey Tannenbaum* February 6,
- ------------------------------------- 1998
JEFFREY TANNENBAUM
Director
/s/ John Rolfe* February 6,
- ------------------------------------- 1998
JOHN ROLFE
Director
/s/ Stefan M. Selig February 6,
- ------------------------------------- 1998
STEFAN M. SELIG
/s/ Ian L. M. Thomas
*By ____________________________
IAN L. M. THOMAS ATTORNEY-IN-FACT
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
ATWOOD CONVENTION PUBLISHING, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS,
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
IAN L. M. THOMAS executive officer)
/s/ Steven J. Hunt Treasurer and February 6,
- ------------------------------------- Director (principal 1998
STEVEN J. HUNT accounting officer
and principal
financial officer)
/s/ Brian A. Meyer Director February 6,
- ------------------------------------- 1998
BRIAN A. MEYER
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
CASINO PUBLISHING COMPANY
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
IAN L. M. THOMAS executive officer)
/s/ Steven J. Hunt Treasurer and February 6,
- ------------------------------------- Director (principal 1998
STEVEN J. HUNT accounting officer
and principal
financial officer)
/s/ Brian A. Meyer Director February 6,
- ------------------------------------- 1998
BRIAN A. MEYER
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
CORSEARCH, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS,
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
- ------------------------------------- Director (principal 1998
accounting officer
STEVEN J. HUNT and principal
financial officer)
/s/ Brian A. Meyer Director February 6,
- ------------------------------------- 1998
BRIAN A. MEYER
/s/ John Prunier Director February 6,
- ------------------------------------- 1998
JOHN PRUNIER
/s/ Howard G. Barnett, Jr. Director February 6,
- ------------------------------------- 1998
HOWARD G. BARNETT, JR.
/s/ John Rolfe Director February 6,
- ------------------------------------- 1998
JOHN ROLFE
Director
- -------------------------------------
ROBERT CAPSHAW
Director
- -------------------------------------
ROBERT FRANK
/s/ John S. Suhler Director February 6,
- ------------------------------------- 1998
JOHN S. SUHLER
/s/ Jeffrey T. Stevenson Director February 6,
- ------------------------------------- 1998
JEFFREY T. STEVENSON
/s/ S. Gerard Benford Director February 6,
- ------------------------------------- 1998
S. GERARD BENFORD
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
CRIMESEARCH, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
- ------------------------------------- Director (principal 1998
STEVEN J. HUNT accounting officer
and principal
financial officer)
/s/ Brian A. Meyer Director February 6,
- ------------------------------------- 1998
BRIAN A. MEYER
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
EXPO MAGAZINE, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
GALAXY DESIGN & PRINTING, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
GALAXY REGISTRATION, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
G.E.M. COMMUNICATIONS, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
TRANSPORTATION COMMUNICATIONS
SERVICES, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
T/SF EUROPE, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
T/SF INVESTMENT CO.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
T/SF OF NEVADA, INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
TRANSPORTATION INFORMATION SERVICES,
INC.
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS
/s/ Steven J. Hunt Treasurer and February 6,
Director (principal 1998
accounting officer
and principal
financial officer)
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Director February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
T/SF HOLDINGS, LLC
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS and Manager
/s/ Jeffrey T. Stevenson Manager February 6,
- ------------------------------------- 1998
JEFFREY T. STEVENSON
/s/ Jeffrey Tannenbaum Manager February 6,
- ------------------------------------- 1998
JEFFREY TANNENBAUM
/s/ S. Gerard Benford Manager February 6,
- ------------------------------------- 1998
S. GERARD BENFORD
/s/ Steven J. Hunt Treasurer (principal February 6,
- ------------------------------------- accounting officer 1998
and principal
STEVEN J. HUNT financial officer)
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
GALAXY REGISTRATION, LLC
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS and Manager
/s/ Steven J. Hunt Treasurer (principal February 6,
accounting officer 1998
and principal
financial officer)
and Manager
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Manager February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
ATWOOD PUBLISHING, LLC
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS and Manager
/s/ Steven J. Hunt Treasurer (principal February 6,
accounting officer 1998
and principal
financial officer)
and Manager
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Manager February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
GEM GAMING, LLC
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS and Manager
/s/ Steven J. Hunt Treasurer (principal February 6,
accounting officer 1998
and principal
financial officer)
and Manager
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Manager February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
GEM NEVADA, LLC
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS and Manager
/s/ Steven J. Hunt Treasurer (principal February 6,
accounting officer 1998
and principal
financial officer)
and Manager
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Manager February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
CASINO EXECUTIVE, LLC
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS and Manager
/s/ Steven J. Hunt Treasurer (principal February 6,
accounting officer 1998
and principal
financial officer)
and Manager
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Manager February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
EXPO MAGAZINE, LLC
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS and Manager
/s/ Steven J. Hunt Treasurer (principal February 6,
accounting officer 1998
and principal
financial officer)
and Manager
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Manager February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 6th day of February, 1998.
T/SF OPERATING, LLC
/s/ Ian L. M. Thomas
By______________________________
IAN L. M. THOMAS
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ian L. M. Thomas Chairman of the February 6,
- ------------------------------------- Board (principal 1998
executive officer)
IAN L. M. THOMAS and Manager
/s/ Steven J. Hunt Treasurer (principal February 6,
accounting officer 1998
and principal
financial officer)
and Manager
- -------------------------------------
STEVEN J. HUNT
/s/ Brian A. Meyer Manager February 6,
1998
- -------------------------------------
BRIAN A. MEYER
II-28
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
----------------
IBJ SCHRODER BANK & TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
NEW YORK 13-5375195
(JURISDICTION OF (I.R.S.
INCORPORATION EMPLOYER
OR ORGANIZATION IF NOT A IDENTIFICATION
U.S. NATIONAL BANK) NO.)
ONE STATE STREET, NEW YORK, 10004
NEW YORK (ZIP CODE)
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
LUIS PEREZ, ASSISTANT VICE PRESIDENT
IBJ SCHRODER BANK & TRUST COMPANY
ONE STATE STREET
NEW YORK, NEW YORK 10004
(212) 858-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
T/SF COMMUNICATIONS CORPORATION
(EXACT NAMES OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION 73-1341805
OF (I.R.S.
INCORPORATION OR EMPLOYER
ORGANIZATION) IDENTIFICATION
NO.)
888 SEVENTH AVENUE, 28TH
FLOOR 10106
NEW YORK, NEW YORK (ZIP CODE)
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
$100,000,000 10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
----------------
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1.GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
New York State Banking Department
Two Rector Street
New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York
Second District,
33 Liberty Street
New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes
ITEM 2.AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
ITEM 13.DEFAULTS BY THE OBLIGOR.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.
None
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligors are outstanding, or is trustee for
more than one outstanding series of securities under the indenture,
state whether there has been a default under any such indenture or
series, identify the indenture or series affected, and explain the
nature of any such default.
None
ITEM 16.LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as amended
to date. (See Exhibit 1A to Form T-1, Securities and Exchange
Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the trustee to Commence
Business (Included in Exhibit 1 above).
*3. A copy of the Authorization of the trustee to exercise corporate trust
powers, as amended to date (See Exhibit 4 to Form T-1, Securities and
Exchange Commission File No. 22-19146).
*4. A copy of the existing By-Laws of the trustee, as amended to date (See
Exhibit 4 to Form T-1, Securities and Exchange Commission File No. 22-
19146).
2
<PAGE>
5. Not Applicable
6. The consent of United States institutional trustee required by Section
321(b) of the Act.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
- --------
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a reference
to the copy of the Exhibit heretofore filed with the Securities and Exchange
Commission, to which there have been no amendments or changes.
3
<PAGE>
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor and its directors or
officers, the trustee has relied upon information furnished to it by the
obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee
of all facts on which to base responsive answers to Item 2, the answer to said
Item is based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an
amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items 1, 2
and 16 of this form since to the best knowledge of the trustee as indicated in
Item 13, the obligor is not in default under any indenture under which the
applicant is trustee.
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, IBJ Schroder Bank & Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility & qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, and State
of New York, on the 13th day of November, 1997.
IBJ SCHRODER BANK & TRUST COMPANY
/s/ Luis Perez
By___________________________________
Luis Perez
Assistant Vice President
5
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939, as amended, in connection with the issuance by T/SF Communications
Corporation, of its $100,000,000 10 3/8% Senior Subordinated Notes Due 2007,
we hereby consent that reports of examinations by Federal, State, Territorial,
or District authorities may be furnished by such authorities to the Securities
and Exchange Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
/s/ Luis Perez
By___________________________________
Luis Perez
Assistant Vice President
Dated: November 13, 1997
6
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
OF NEW YORK, NEW YORK
AND FOREIGN AND DOMESTIC SUBSIDIARIES
REPORT AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
<S> <C> <C>
ASSETS
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin........... $ 41,319
Interest-bearing balances.................................... 314,579
Securities: Held-to-maturity securities....................... 180,111
Available-for-sale securities................................. 47,600
Federal Funds sold and Securities purchased under agreements
to resell................................................... 694,859
Loans and lease financing receivables:
Loans and leases, net of unearned income......... $ 1,955,686
LESS: Allowance for loan and lease losses........ 62,876
LESS: Allocated transfer risk reserve............ --
Loans and leases, net of unearned income, allowance, and
reserve..................................................... 1,892,810
Trading assets held in trading accounts....................... 603
Premises and fixed assets (including capitalized leases)...... 3,709
Other real estate owned....................................... 202
Investments in unconsolidated subsidiaries and associated
companies.................................................... --
Customers' liability to this bank on acceptances outstanding.. 81
Intangible assets............................................. --
Other assets.................................................. 67,092
TOTAL ASSETS.................................................. $3,242,965
LIABILITIES
Deposits:
In domestic offices.......................................... $1,694,675
Noninterest-bearing............................. $ 263,641
Interest-bearing................................ 1,431,034
In foreign offices, Edge and Agreement subsidiaries, and
IBFs....................................................... 1,121,075
Noninterest-bearing............................. 17,535
Interest-bearing................................ 1,103,540
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its Edge
and Agreement subsidiaries, and in IBFs:
Federal Funds purchased and Securities sold under agreements
to repurchase............................................... 25,000
Demand notes issued to the U.S. Treasury...................... 60,000
Trading Liabilities........................................... 140
Other borrowed money:
a) With a remaining maturity of one year or less............. 38,369
b) With a remaining maturity of more than one year........... 1,763
c) With a remaining maturity of more than three years........ 2,242
Bank's liability on acceptances executed and outstanding...... 81
Subordinated notes and debentures............................. --
Other liabilities............................................. 69,908
TOTAL LIABILITIES............................................. 3,013,253
Limited-life preferred stock and related surplus.............. $ --
EQUITY CAPITAL
Perpetual preferred stock and related surplus................. $ --
Common stock.................................................. 29,649
Surplus (exclude all surplus related to preferred stock)...... 217,008
Undivided profits and capital reserves........................ (17,000)
Net unrealized gains (losses) on available-for-sale
securities................................................... 55
Cumulative foreign currency translation adjustments........... --
TOTAL EQUITY CAPITAL.......................................... 229,712
TOTAL LIABILITIES AND EQUITY CAPITAL.......................... $3,242,965
</TABLE>
7
<PAGE>
EXHIBITS INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
------- ----------- ----
<C> <S> <C>
1.1** Purchase Agreement, dated October 24, 1997, by and between
First Union Capital Markets Corp. and T/SF Communications
Corporation
2.1** Stock Purchase Agreement, dated as of August 15, 1997, among
VS&A Communications Partners II, L.P., VS&A-T/SF Inc. and
T/SF Communications Corporation
3.1** Amended and Restated Certificate of Incorporation of T/SF
Communications Corporation
3.2** Amended and Restated By-laws of T/SF Communications
Corporation
3.3** Certificate of Incorporation of Casino Publishing Company
3.4** By-laws of Casino Publishing Company
3.5** Certificate of Incorporate of Expo Magazine, Inc.
3.6** By-laws of Expo Magazine, Inc.
3.7** Certificate of Incorporation of G.E.M. Communications, Inc.
3.8** By-laws of G.E.M. Communications, Inc.
3.9** Certificate of Incorporation of T/SF of Nevada, Inc.
3.10** By-laws of T/SF of Nevada, Inc.
3.11** Certificate of Incorporation of Atwood Convention Publishing,
Inc.
3.12** By-laws of Atwood Convention Publishing, Inc.
3.13** Certificate of Incorporation of Galaxy Registration, Inc.
3.14** By-laws of Galaxy Registration, Inc.
3.15** Certificate of Incorporation of Galaxy Design & Printing,
Inc.
3.16** By-laws of Galaxy Design & Printing, Inc.
3.17** Certificate of Incorporation of CORSEARCH, Inc
3.18** By-laws of CORSEARCH, Inc
3.19** Certificate of Incorporation of Crimesearch, Inc.
3.20** By-laws of Crimesearch, Inc.
3.21** Certificate of Incorporation of T/SF Europe, Inc.
3.22** By-laws of T/SF Europe, Inc.
3.23** Certificate of Incorporation of Transportation Communications
Services, Inc.
3.24** By-laws of Transportation Communications Services, Inc.
3.25** Certificate of Incorporation of T/SF Investment Co.
3.26** By-laws of T/SF Investment Co.
3.27** Certificate of Incorporation of Transportation Information
Services, Inc.
3.28** By-laws of Transportation Information Services, Inc.
3.29** Certificate of Formation of T/SF Holdings, LLC
3.30** Operating Agreement of T/SF Holdings, LLC
3.31** Certificate of Formation of T/SF Operating, LLC
3.32** Operating Agreement of T/SF Operating, LLC
3.33** Certificate of Formation of Galaxy Registration, LLC
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
------- ----------- ----
<C> <S> <C>
3.34** Operating Agreement of Galaxy Registration, LLC
3.35** Certificate of Formation of Atwood Publishing, LLC
3.35(a)** Certificate of Amendment to Certificate of Formation of
Atwood Publishing, LLC
3.36** Operating Agreement of Atwood Publishing, LLC
3.37** Certificate of Formation of GEM Gaming, LLC
3.38** Operating Agreement of GEM Gaming, LLC
3.39** Certificate of Formation of GEM Nevada, LLC
3.40** Operating Agreement of GEM Nevada, LLC
3.41** Certificate of Formation of Casino Executive, LLC
3.42** Operating Agreement of Casino Executive, LLC
3.43** Certificate of Formation of EXPO Magazine, LLC
3.44** Operating Agreement of EXPO Magazine, LLC
4.1* Indenture, dated as of October 29, 1997, by and among T/SF
Communications Corporation, the Guarantors named therein
and IBJ Schroder Bank & Trust Company, as Trustee
4.1(a)** Form of Supplemental Indenture, by and among T/SF
Communications Corporation, the Guarantors named therein
and IBJ Schroder Bank & Trust Company, as Trustee
4.2* Registration Rights Agreement, dated as of October 29,
1997, by and among T/SF Communications Corporation, the
Guarantors (named therein) and First Union Capital Markets
Corp.
4.3 Form of Old Note (included in Indenture filed as Exhibit
4.1)
4.4 Form of New Note (included in Indenture filed as Exhibit
4.1)
4.5** Form of Letter of Transmittal to be used by tendering
holders of Old Notes in the Exchange Offer
5* Opinion of Proskauer Rose LLP
10.1* Senior Subordinated Credit Agreement, dated as of October
9, 1997, among T/SF Communications Corporation, the
Guarantors (named therein) and First Union Corporation (as
Lender and Agent)
10.2* Credit Agreement, dated as of October 9, 1997, among T/SF
Communications Corporation and First Union Corporation (as
Lender and Agent)
10.3** Security Agreement, dated as of October 9, 1997, among T/SF
Communications Corporation, the Guarantors (as defined
therein) and First Union National Bank
10.4** Stock Pledge Agreement, dated as of October 9, 1997, made
by VS&A-T/SF, Inc. and Fir Tree Value Fund, L.P., Fir Tree
Institutional Value Fund, L.P., and Fir Tree Value
Partners, LDC, in favor of First Union National Bank
10.5** Stock Pledge Agreement, dated as of October 9, 1997, made
by T/SF Communications Corporation in favor of First Union
National Bank
10.6** Stock Pledge Agreement, dated as of October 9, 1997, made
by T/SF Holdings, LLC, in favor of First Union National
Bank
10.7** Stock Pledge Agreement, dated as of October 9, 1997, made
by Atwood Convention Publishing, Inc., Galaxy Registration,
Inc., G.E.M. Communications, Inc., Transportation
Information Services, Inc., T/SF Investment Co. and T/SF of
Nevada, Inc., in favor of First Union National Bank
10.8** Employment Agreement by and between Richard A. Wimbish and
Transportation Information Services, Inc., dated as of
January 1, 1998
10.9** Form of Employment Agreement by and between Ian L.M. Thomas
and T/SF Communications Corporation
10.9(a)** Letter Agreement, dated October 9, 1997, by and between
VS&A Communications Partners, II, L.P., Veronis, Suhler &
Associates, Inc. and Ian L.M. Thomas
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
------- ----------- ----
<C> <S> <C>
10.10** Employment Agreement by and between Steven J. Hunt and T/SF
Communications Corporation, dated as of November 10, 1997
10.11** Employment Agreement by and between Brian A. Meyer and T/SF
Communications Corporation, dated as of November 10, 1997
10.12** Employment Agreement by and between Michael Goodwin and
Galaxy Registration, LLC, dated as of January 1, 1998
10.13 Employment Agreement, dated August 15, 1996, by and between
CORSEARCH, Inc. and Robert Frank (incorporated herein by
reference to Exhibit 99.1 to the Form 8-K)
10.14** T/SF Communications Corporation Chief Executive Officer
Equity Appreciation Plan
10.15** T/SF Communications Corporation Supplemental Chief Executive
Officer Equity Appreciation Plan
10.16** T/SF Communications Corporation Chief Financial
Officer/General Counsel Equity Appreciation Plan
10.17** T/SF Communications Corporation Key Executive Equity
Appreciation Plan
10.18** Stockholders' Agreement, dated as of October 9, 1997, among
T/SF Communications Corporation, VS&A-T/SF, L.L.C. and Fir
Tree Value Fund, L.P., Fir Tree Institutional Value Fund,
L.P. and Fir Tree Value Partners, LDC
10.19* Consulting Agreement by and between Howard G. Barnett, Jr.
and T/SF Communications Corporation, dated October 9, 1997
10.20* Consulting Agreement by and between Robert F. Craine, Jr. and
T/SF Communications Corporation, dated October 9, 1997
10.21* Consulting Agreement by and between J. Gary Mourton and T/SF
Communications Corporation, dated October 9, 1997
10.22 T/SF Communications Corporation 1991 Incentive Stock Plan
(incorporated herein by reference to Exhibit A to the
Registrant's Proxy Statement for Annual Meeting of
Stockholders dated May 23, 1994)
10.23 Settlement Agreement, dated and effective as of December 12,
1995, by and between T/SF Communications Corporation and
Robert J. Swab (incorporated herein by reference to Exhibit
10.18 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995)
10.24 Operating Agreement for 1995 Land Company, L.L.C., dated
December 20, 1994, by and between John C. Bumgarner, Jr. and
Tribune/Swab-Fox (incorporated herein by reference to Exhibit
10.20 of Tribune/Swab-Fox's Annual Report on Form 10-K for
the year ended December 31, 1994)
10.25 Revolving Credit Agreement, dated as of June 30, 1996, by and
among T/SF Communications Corporation, T/SF Investment Co.,
and BancFirst (incorporated herein by reference to Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for
the Quarter Ended June 30, 1996 ("Form 10-Q"))
10.26 Pledge Agreement, dated as of June 30, 1996, between T/SF
Communications Corporation and BancFirst (incorporated herein
by reference to Exhibit 10.2 to the Form 10-Q)
10.27 Pledge Agreement, dated as of June 30, 1996, between T/SF
Investment Co. and BancFirst (incorporated herein by
reference to Exhibit 10.3 to the Form 10-Q)
10.28 Stock Purchase Agreement, dated as of August 15, 1996, by and
among T/SF Investment Co. and the shareholders of CORSEARCH,
Inc. (incorporated herein by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K, dated August 30,
1996, with respect to events occurring on August 15, 1996,
amended October 29, 1996 (the "Form 8-K"))
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
------- ----------- ----
<C> <S> <C>
10.29** T/SF Communications Corporation and T/SF Holdings, LLC Key
Employee Bonus Plan
12* Statement re: computation of ratios
21** Subsidiaries of the Issuer
23.1** Consent of Arthur Andersen, LLP
23.2 Consent of Proskauer Rose LLP (contained in opinion filed as
Exhibit 5)
24* Issuer Power of Attorney
25* Statement of eligibility of trustee (Form T-1)
27* Financial Data Schedule
</TABLE>
- ----------------
* Previously filed.
** Filed herewith.
<PAGE>
EXHIBIT 1.1
T/SF COMMUNICATIONS CORPORATION
$100,000,000
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
PURCHASE AGREEMENT
------------------
October 24, 1997
FIRST UNION CAPITAL MARKETS CORP.
High Yield Group
301 South College Street, TW-10
Charlotte, NC 28288
Ladies and Gentlemen:
T/SF Communications Corporation, a Delaware corporation (the
"Company"), hereby confirms its agreement with you (the "Initial Purchaser"), as
------- -----------------
set forth below.
1. The Securities. Subject to the terms and conditions herein
--------------
contained, the Company proposes to issue and sell to the Initial Purchaser
$100,000,000 aggregate principal amount of its 10 3/8% Senior Subordinated Notes
Due 2007, Series A (the "Notes"). The Notes will be guaranteed (the
-----
"Guarantees") on a senior subordinated basis by the Guarantors named on the
----------
signature pages hereto (the "Guarantors"). The Notes are to be issued under an
----------
indenture (the "Indenture") to be dated as of October 15, 1997 by and among the
---------
Company, the Guarantors and IBJ Schroder Bank & Trust Company, as Trustee (the
"Trustee").
- --------
Prior to the issuance and sale of the Notes, the Company entered into
a senior secured revolving credit facility (together with all documents executed
in connection therewith, the "Credit Agreement") among the Company, the
----------------
Guarantors and First Union National Bank.
The Notes will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Act"), in
---
reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated October 8, 1997 (the "Preliminary
-----------
Memorandum"), and a final offering memorandum dated October 24, 1997 (the "Final
- ---------- -----
Memorandum"; the Preliminary Memorandum and the Final Memorandum each herein
- ----------
being referred to as a "Memorandum") setting forth or including a de-
----------
<PAGE>
scription of the terms of the Notes, the terms of the offering of the Notes, a
description of the Company and any material developments relating to the Company
occurring after the date of the most recent historical financial statements
included therein.
The Initial Purchaser and its direct and indirect transferees of the
Notes will be entitled to the benefits of the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit A (the "Registration Rights
--------- -------------------
Agreement"), pursuant to which the Company has agreed, among other things, to
- ---------
file a registration statement (the "Registration Statement") with the Securities
----------------------
and Exchange Commission (the "Commission") registering the Notes or the Exchange
----------
Notes (as defined in the Registration Rights Agreement) under the Act.
2. Representations and Warranties. The Company and the Guarantors
------------------------------
represent and warrant to and agree with the Initial Purchaser that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date thereof
and at all times subsequent thereto up to the Closing Date (as defined in
Section 3 below) contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
Section 2(a) do not apply to statements or omissions made in reliance upon and
in conformity with information relating to the Initial Purchaser furnished to
the Company in writing by the Initial Purchaser expressly for use in the
Preliminary Memorandum, the Final Memorandum or any amendment or supplement
thereto.
(b) As of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum; all of
the subsidiaries of the Company are listed in Schedule 2 attached hereto (each,
----------
a "Subsidiary" and collectively, the "Subsidiaries"); except for the security
---------- ------------
interests granted to the lenders pursuant to the Credit Agreement, all of the
outstanding shares of capital stock of the Company and the Subsidiaries have
been, and as of the Closing Date will be, duly authorized and validly issued,
are fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights; all of the outstanding shares of capital stock of
the Company and of each of the Subsidiaries will be free and clear of all liens,
encumbrances, equities and claims or restrictions on transferability (other than
those imposed by the Act and the securities or "Blue Sky" laws of certain
jurisdictions) or voting; except as set forth in the Final
-2-
<PAGE>
Memorandum, there are no (i) options, warrants or other rights to purchase, (ii)
agreements or other obligations to issue or (iii) other rights to convert any
obligation into, or exchange any securities for, shares of capital stock of or
ownership interests in the Company or any of the Subsidiaries outstanding.
Except for the Subsidiaries or as disclosed in the Final Memorandum or as
disclosed on Schedule 2, the Company does not own, directly or
----------
indirectly, any shares of capital stock-or any other equity or long-term debt
securities or have any equity interest in any firm, partnership, joint venture
or other entity.
(c) Each of the Company and the Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and has all requisite corporate power and
authority to own its properties and conduct its business as now conducted and as
described in the Final Memorandum; each of the Company and the Subsidiaries is
duly qualified to do business as a foreign corporation in good standing in all
other jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not, individually or in the aggregate, have a material
adverse effect on the general affairs, management, business, condition
(financial or otherwise), prospects or results of operations of the Company and
the Subsidiaries, taken as a whole (any such event, a "Material Adverse
----------------
Effect").
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Notes, when issued, will be in the form contemplated by
the Indenture. The Notes, the Exchange Notes and the Private Exchange Notes
have each been duly and validly authorized by the Company and, when executed by
the Company and authenticated by the Trustee in accordance with the provisions
of the Indenture and, in the case of the Notes, when delivered to and paid for
by the Initial Purchaser in accordance with the terms of this Agreement, will
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture, and enforceable against the Company in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(e) Each of the Guarantors has all requisite corporate power and
authority to execute, deliver and perform each
-3-
<PAGE>
of its obligations under the Guarantees. When the Notes are duly and validly
authorized, executed and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the terms
hereof, the Guarantees will constitute legally valid and binding obligations of
the Guarantors, entitled to the benefits of the Indenture and enforceable
against the Guarantors in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(f) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Indenture. The Indenture meets the requirements for qualification
under the Trust Indenture Act of 1939, as amended (the "TIA"). The Indenture
---
has been duly and validly authorized by the Company and the Guarantors and, when
executed and delivered by the Company and the Guarantors (assuming the due
authorization, execution and delivery by the Trustee), will constitute a valid
and legally binding agreement of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with its terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(g) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Registration Rights Agreement. The Registration Rights Agreement has
been duly and validly authorized by the Company and the Guarantors and, when
executed and delivered by the Company and the Guarantors, will constitute a
valid and legally binding agreement of the Company and the Guarantors
enforceable against the Company and the Guarantors in accordance with its terms,
except that (A) the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor may
be brought and (B) any rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public policy considerations.
-4-
<PAGE>
(h) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
This Agreement and the consummation by the Company and the Guarantors of the
transactions contemplated hereby have been duly and validly authorized by the
Company and the Guarantors. This Agreement has been duly executed and delivered
by the Company and the Guarantors.
(i) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the issuance and
sale by the Company of the Notes to the Initial Purchaser or the consummation by
the Company of the other transactions contemplated hereby, except such as have
been obtained and such as may be required under state securities or "Blue Sky"
laws in connection with the purchase and resale of the Notes by the Initial
Purchaser. None of the Company or the Subsidiaries is (i) in violation of its
certificate of incorporation or bylaws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to any of them or any of their respective properties or
assets, except for any such breach or violation which would not, individually or
in the aggregate, have a Material Adverse Effect, or (iii) in breach of or
default under (nor has any event occurred which, with notice or passage of time
or both, would constitute a default under) or in violation of any of the terms
or provisions of any indenture, mortgage, deed of trust, loan agreement, note,
lease, license, franchise agreement, permit, certificate, contract or other
agreement or instrument to which any of them is a party or to which any of them
or their respective properties or assets is subject (collectively, "Contracts"),
---------
except for any such breach, default, violation or event which would not,
individually or in the aggregate, have a Material Adverse Effect.
(j) The execution, delivery and performance by the Company and the
Guarantors of this Agreement, the Indenture and the Registration Rights
Agreement and the consummation by the Company and the Guarantors of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance and sale of the Notes to the Initial Purchaser) will not conflict with
or constitute or result in a breach of or a default under (or an event which
with notice or passage of time or both would constitute a default under) or
violation of any of (i) the terms or provisions of any Contract, except for any
such conflict, breach, violation, default or event which would not, individually
or in the aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of the Company or
any of the Subsidiaries, or (iii) (assuming compliance with all applicable
-5-
<PAGE>
state securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 8 hereof) any
statute, judgment, decree, order, rule or regulation applicable to the Company
or any of the Subsidiaries or any of their respective properties or assets,
except for any such conflict, breach or violation which would not, individually
or in the aggregate, have a Material Adverse Effect.
(k) The audited consolidated financial statements of the Company and
the Subsidiaries (including the notes thereto) included in the Final Memorandum
present fairly in all material respects the financial position, results of
operations and cash flows of the Company and the Subsidiaries at the dates and
for the periods to which they relate and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis, except
as otherwise stated therein. The summary and selected financial and statistical
data in the Final Memorandum present fairly in all material respects the
information shown therein and have been prepared and compiled on a basis
consistent with the audited financial statements included therein, except as
otherwise stated therein. Arthur Andersen LLP (the "Independent Accountants")
-----------------------
is an independent public accounting firm within the meaning of the Act and the
rules and regulations promulgated thereunder.
(l) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final Memorandum
(i) comply as to form in all material respects with the applicable requirements
of Regulation S-X promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (ii) have been prepared in accordance with the
------------
Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) have been properly computed on the bases described
therein; the assumptions used in the preparation of the pro forma financial data
and other pro forma financial information included in the Final Memorandum are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein.
(m) There is not pending or, to the knowledge of the Company,
threatened any action, suit, proceeding, inquiry or investigation to which the
Company or any of the Subsidiaries is a party, or to which the property or
assets of the Company or any of the Subsidiaries are subject, before or brought
by any court, arbitrator or governmental agency or body which, if determined
adversely to the Company or any of the Subsidiaries, would, individually or in
the aggregate, have a Material Adverse Effect or which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance or sale
of
-6-
<PAGE>
the Notes to be sold hereunder or the consummation of the other transactions
described in the Final Memorandum.
(n) Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, presently required or necessary to own or lease, as
the case may be, and to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as set forth in the
Final Memorandum ("Permits"), except where the failure to obtain such Permits
-------
would not, individually or in the aggregate, have a Material Adverse Effect;
each of the Company and the Subsidiaries has fulfilled and performed in all
material respects all of its obligations with respect to such Permits and no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the holder of any such Permit; and none of the Company or the
Subsidiaries has received any notice of any proceeding relating to revocation or
modification of any such Permit, except as described in the Final Memorandum or
except where such revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect.
(o) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as described in the Final Memorandum, (i) none
of the Company or the Subsidiaries has incurred any liabilities or obligations,
direct or contingent, or entered into or agreed to enter into any transactions
or contracts (written or oral) not in the ordinary course of business which
liabilities, obligations, transactions or contracts would, individually or in
the aggregate, be material to the general affairs, management, business,
condition (financial or otherwise), prospects or results of operations of the
Companies and its Subsidiaries, taken as a whole, (ii) none of the Company or
the Subsidiaries has purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on its
capital stock (other than with respect to any of such Subsidiaries, the purchase
of, or dividend or distribution on, capital stock owned by the Company) and
(iii) there shall not have been any change in the capital stock or long-term
indebtedness of the Company or the Subsidiaries.
(p) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where the
failure to so file such returns would not, individually or in the aggregate,
have a Mate-
-7-
<PAGE>
rial Adverse Effect, and has paid all taxes shown as due thereon; and other than
tax deficiencies which the Company or any Subsidiary is contesting in good faith
and for which the Company or such Subsidiary has provided adequate reserves,
there is no tax deficiency that has been asserted against the Company or any of
the Subsidiaries that would have, individually or in the aggregate, a Material
Adverse Effect.
(q) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company and the
Subsidiaries believe to be reliable and accurate.
(r) None of the Company, the Subsidiaries or any agent acting on
their behalf has taken or will take any action that might cause this Agreement
or the sale of the Notes to violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect, or as the
same may hereafter be in effect, on the Closing Date.
(s) Each of the Company and the Subsidiaries has good and marketable
title to all real property and good title to all personal property described in
the Final Memorandum as being owned by it and good and marketable title to a
leasehold estate in the real and personal property described in the Final
Memorandum as being leased by it free and clear of all liens, charges,
encumbrances or restrictions, except as described in the Final Memorandum or to
the extent the failure to have such title or the existence of such liens,
charges, encumbrances or restrictions would not, individually or in the
aggregate, have a Material Adverse Effect. All leases, contracts and agreements
to which the Company or any of the Subsidiaries is a party or by which any of
them is bound are valid and enforceable against the Company or such Subsidiary,
and are valid and enforceable against the other party or parties thereto and are
in full force and effect with only such exceptions as would not, individually or
in the aggregate, have a Material Adverse Effect. The Company and the
Subsidiaries own or possess adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by them as
described in the Final Memorandum, and none of the Company or the Subsidiaries
has received any notice of infringement of or conflict with (or knows of any
such infringement of or conflict with) asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights or know-how
which, if such assertion of infringement or conflict were sustained, would have
a Material Adverse Effect.
(t) There are no legal or governmental proceedings involving or
affecting the Company or any Subsidiary or any of
-8-
<PAGE>
their respective properties or assets which would be required to be described in
a prospectus pursuant to the Act that are not described in the Final Memorandum,
nor are there any material contracts or other documents which would be required
to be described in a prospectus pursuant to the Act that are not described in
the Final Memorandum.
(u) Except as would not, individually or in the aggregate, have a
Material Adverse Effect (A) each of the Company and the Subsidiaries is in
compliance with and not subject to liability under applicable Environmental Laws
(as defined below), (B) each of the Company and the Subsidiaries has made all
filings and provided all notices required under any applicable Environmental
Law, and has and is in compliance with all Permits required under any applicable
Environmental Laws and each of them is in full force and effect, (C) there is no
civil, criminal or administrative action, suit, demand, claim, hearing, notice
of violation, investigation, proceeding, notice or demand letter or request for
information pending or, to the knowledge of the Company or any of the
Subsidiaries, threatened against the Company or any of the Subsidiaries under
any Environmental Law, (D) no lien, charge, encumbrance or restriction has been
recorded under any Environmental Law with respect to any assets, facility or
property owned, operated, leased or controlled by the Company or any of the
Subsidiaries, (E) none of the Company or the Subsidiaries has received notice
that it has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") or any comparable state law, (F) no property or facility of
------
the Company or any of the Subsidiaries is (i) listed or proposed for listing on
the National Priorities List under CERCLA or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list maintained by any
state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common
law and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of hazardous materials, and (iii) underground
and above ground storage tanks
-9-
<PAGE>
and related piping, and emissions, discharges, releases or threatened releases
therefrom.
(v) There is no strike, labor dispute, slowdown or work stoppage with
the employees of the Company or any of the Subsidiaries which is pending or, to
the knowledge of the Company or any of the Subsidiaries, threatened.
(w) Each of the Company and the Subsidiaries carries insurance in
such amounts and covering such risks as is customary business practice for the
conduct of its business and the value of its properties.
(x) None of the Company or the Subsidiaries has any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other plan
which is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which the Company or any of the Subsidiaries makes or ever
-----
has made a contribution and in which any employee of the Company or of any
Subsidiary is or has ever been a participant. With respect to such plans, the
Company and each Subsidiary is in compliance in all material respects with all
applicable provisions of ERISA.
(y) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(z) None of the Company or the Subsidiaries will be an "investment
company" or "promoter" or "principal underwriter" for an "investment company,"
as such terms are defined in the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder.
(aa) Upon issuance of the Notes, the Notes, the Indenture and the
Registration Rights Agreement will conform in all material respects to the
descriptions thereof in the Final Memorandum.
(bb) No holder of securities of the Company or any Subsidiary will be
entitled to have such securities registered under the registration statements
required to be filed by the
-10-
<PAGE>
Company pursuant to the Registration Rights Agreement other than as expressly
permitted thereby.
(cc) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of each of the Company and the Subsidiaries (each on a
consolidated basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; none of the Company or the Subsidiaries (each on a
consolidated basis) is, nor will any of the Company or the Subsidiaries (each on
a consolidated basis) be, after giving effect to the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, (a) left with unreasonably small capital with which to
carry on its business as it is proposed to be conducted, (b) unable to pay its
debts (contingent or otherwise) as they mature or (c) otherwise insolvent.
(dd) None of the Company, the Subsidiaries or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Act) has
directly, or through any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any "security" (as defined in the
Act) which is or could be integrated with the sale of the Notes in a manner that
would require the registration under the Act of the Notes or (ii) engaged in any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Notes or in
any manner involving a public offering within the meaning of Section 4(2) of the
Act. Assuming the accuracy of the representations and warranties of the Initial
Purchaser in Section 8 hereof, it is not necessary in connection with the offer,
sale and delivery of the Notes to the Initial Purchaser in the manner
contemplated by this Agreement to register any of the Notes under the Act or to
qualify the Indenture under the TIA.
(ee) No securities of the Company or any Subsidiary are of the same
class (within the meaning of Rule 144A under the Act) as the Notes and listed on
a national securities exchange registered under Section 6 of the Exchange Act,
or quoted in a U.S. automated inter-dealer quotation system.
(ff) None of the Company or the Subsidiaries has taken, nor will any
of them take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of the
price of the Notes.
Any certificate signed by the officer of the Company or any Subsidiary
and delivered to the Initial Purchaser or to
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<PAGE>
counsel for the Initial Purchaser shall be deemed a joint and several
representation and warranty by the Company and each of the Subsidiaries to the
Initial Purchaser as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Notes. On the basis of the
----------------------------------------
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase the Notes from the Company at 97.0% of their principal amount. One or
more certificates in definitive form for the Notes that the Initial Purchaser
has agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Initial Purchaser requests upon notice
to the Company at least 36 hours prior to the Closing Date, shall be delivered
by or on behalf of the Company to the Initial Purchaser, against payment by or
on behalf of the Initial Purchaser of the purchase price therefor by wire
transfer (same day funds) to such account or accounts as the Company shall
specify prior to the Closing Date, or by such means as the parties hereto shall
agree prior to the Closing Date. Such delivery of and payment for the Notes
shall be made at the offices of Cahill Gordon & Reindel, 80 Pine Street, New
York, New York at 10:00 A.M., New York time, on October 29, 1997, or at such
other place, time or date as the Initial Purchaser, on the one hand, and the
Company, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Company
------------
will make such certificate or certificates for the Notes available for checking
and packaging by the Initial Purchaser at the offices of First Union Capital
Markets Corp., or at such other place as First Union Capital Markets Corp. may
designate, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes
---------------------------------
to make an offering of the Notes at the price and upon the terms set forth in
the Final Memorandum, as soon as practicable after this Agreement is entered
into and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company. The Company covenants and agrees with
------------------------
the Initial Purchaser that:
(a) The Company will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchaser shall not
previously have been advised and furnished a copy for a reasonable period of
time prior to the proposed amendment or supplement and as to which the Initial
Purchaser shall not have given its consent, which consent shall not be
unreasonably withheld. The Company will promptly,
-12-
<PAGE>
upon the reasonable request of the Initial Purchaser or counsel for the Initial
Purchaser, make any amendments or supplements to the Preliminary Memorandum or
the Final Memorandum that may be necessary or advisable in connection with the
resale of the Notes by the Initial Purchaser.
(b) The Company will cooperate with the Initial Purchaser in
arranging for the qualification of the Notes for offering and sale under the
securities or "Blue Sky" laws of which jurisdictions as the Initial Purchaser
may designate and will continue such qualifications in effect for as long as may
be necessary to complete the resale of the Notes; provided, however, that in
-------- -------
connection therewith, the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in excess of a nominal dollar amount
in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by
the Initial Purchaser of the Notes or the Private Exchange Notes, any event
occurs or information becomes known as a result of which the Final Memorandum as
then amended or supplemented would include any untrue statement of a material
fact, or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, or
if for any other reason it is necessary at any time to amend or supplement the
Final Memorandum to comply with applicable law, the Company will promptly notify
the Initial Purchaser thereof and will prepare, at the expense of the Company,
an amendment or supplement to the Final Memorandum that corrects such statement
or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel for the Initial Purchaser as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or supplement
thereto as the Initial Purchaser may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Notes as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For so long as any of the Notes remain outstanding, the Company
will furnish to the Initial Purchaser copies of all reports and other
communications (financial or otherwise) furnished by the Company to the Trustee
or to the holders of the Notes and, as soon as available, copies of any reports
or financial statements furnished to or filed by the Company with the Commission
or any national securities exchange on which any class of securities of the
Company may be listed.
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(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchaser, as soon as they have been prepared, a copy of any unaudited
interim financial statements of the Company for any period subsequent to the
period covered by the most recent financial statements appearing in the Final
Memorandum.
(h) None of the Company or any of its Affiliates will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale of
the Notes in a manner which would require the registration under the Act of the
Notes.
(i) The Company will not, and will not permit any of the Subsidiaries
to, engage in any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) in connection with the offering of
the Notes or in any manner involving a public offering within the meaning of
Section 4(2) of the Act.
(j) For so long as any of the Notes remain outstanding, the Company
will make available at its expense, upon request, to any holder of such Notes
and any prospective purchasers thereof the information specified in Rule
144A(d)(4) under the Act, unless the Company is then subject to Section 13 or
15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the Notes to
be designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the Private Offerings, Resales and
Trading through Automated Linkages market (the "Portal Market") and (ii) permit
-------------
the Notes to be eligible for clearance and settlement through The Depository
Trust Company.
6. Expenses. The Company agrees to pay all costs and expenses
--------
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing, word processing or other production of documents
with respect to the transactions contemplated hereby, including any costs of
printing the Preliminary Memorandum and the Final Memorandum and any amendment
or supplement thereto, and any "Blue Sky" memoranda, (ii) all arrangements
relating to the delivery to the Initial Purchaser of copies of the foregoing
documents, (iii) the fees and disbursements of the counsel, the accountants and
any other experts or advisors retained by the Company, (iv) preparation
(including printing), issuance and delivery to the Initial Purchaser of the
Notes,
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(v) the qualification of the Notes under state securities and "Blue Sky"
laws, including filing fees and fees and disbursements of counsel for the
Initial Purchaser relating thereto, (vi) expenses in connection with any
meetings with prospective investors in the Notes, (vii) fees and expenses of the
Trustee including fees and expenses of counsel, (viii) all expenses and listing
fees incurred in connection with the application for quotation of the Notes on
the PORTAL Market and (ix) any fees charged by investment rating agencies for
the rating of the Notes. The Initial Purchaser agrees to reimburse the Company
$750,000 for expenses of the Company. If the sale of the Notes provided for
herein is not consummated because any condition to the obligations of the
Initial Purchaser set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated or because of any failure, refusal or inability on the
part of the Company to perform all obligations and satisfy all conditions on its
part to be performed or satisfied hereunder (other than solely by reason of a
default by the Initial Purchaser of its obligations hereunder after all
conditions hereunder have been satisfied in accordance herewith), the Company
agrees to promptly reimburse the Initial Purchaser upon demand for all
reasonable out-of-pocket expenses (including fees, disbursements and charges of
Cahill Gordon & Reindel, counsel for the Initial Purchaser) that shall have been
incurred by the Initial Purchaser in connection with the proposed purchase and
sale of the Notes.
7. Conditions of the Initial Purchaser's Obligations. The obligation
-------------------------------------------------
of the Initial Purchaser to purchase and pay for the Notes shall, in its sole
discretion, be subject to the satisfaction or waiver of the following conditions
on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of Proskauer Rose LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Initial Purchaser, to the effect that:
(i) Each of the Company and the Guarantors is duly incorporated,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and has all requisite corporate power and
authority to own its properties and to conduct its business as described in
the Final Memorandum. Each of the Company and the Guarantors is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a Material Adverse Effect.
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(ii) The Company has the authorized, issued and outstanding
capitalization set forth in the Final Memorandum; all of the outstanding
shares of capital stock of the Company and the Guarantors have been duly
authorized and validly issued, are fully paid and nonassessable and were
not issued in violation of any preemptive or similar rights; except for the
security interests granted to the lenders pursuant to the Credit Agreement,
all of the outstanding shares of capital stock of the Guarantors are owned,
directly or indirectly, by the Company, free and clear of all perfected
security interests and, to the knowledge of such counsel, free and clear of
all other liens, encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Act and the securities or
"Blue Sky" laws of certain jurisdictions) or voting.
(iii) Except as set forth in the Final Memorandum to the best of
counsel's knowledge (A) no options, warrants or other rights to purchase
from the Company or any Guarantor shares of capital stock or ownership
interests in the Company or any Guarantor are outstanding, (B) no
agreements or other obligations to issue, or other rights to convert, any
obligation into, or exchange any securities for, shares of capital stock or
ownership interests in the Company or any Guarantor are outstanding and (C)
no holder of securities of the Company or any Guarantor is entitled to have
such securities registered under a registration statement filed by the
Company pursuant to the Registration Rights Agreement.
(iv) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Indenture,
the Notes, the Exchange Notes and the Private Exchange Notes; the Indenture
meets the requirements for qualification under the TIA; the Indenture has
been duly and validly authorized by the Company and, when duly executed and
delivered by the Company (assuming the due authorization, execution and
delivery thereof by the Trustee), will constitute the valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(v) The Notes are in the form contemplated by the Indenture. The
Notes have each been duly and validly
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authorized by the Company and, when duly executed and delivered by the
Company and paid for by the Initial Purchaser in accordance with the terms
of this Agreement (assuming the due authorization, execution and delivery
of the Indenture by the Trustee and due authentication and delivery of the
Notes by the Trustee in accordance with the Indenture), will constitute the
valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture, and enforceable against the Company in
accordance with their terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(vi) Each of the Guarantors has all requisite corporate power and
authority to execute, deliver and perform each of its obligations under the
Guarantees. When the Notes are duly and validly authorized, executed and
authenticated in accordance with the terms of the Indenture and delivered
against payment therefor in accordance with the terms hereof, the
Guarantees will constitute legally valid and binding obligations of the
Guarantors, entitled to the benefits of the Indenture and enforceable
against the Guarantors in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally, and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(vii) The Exchange Notes and the Private Exchange Notes have been
duly and validly authorized by the Company, and when the Exchange Notes and
the Private Exchange Notes have been duly executed and delivered by the
Company in accordance with the terms of the Registration Rights Agreement
and the Indenture (assuming the due authorization, execution and delivery
of the Indenture by the Trustee and due authentication and delivery of the
Exchange Notes and the Private Exchange Notes by the Trustee in accordance
with the Indenture), will constitute the valid and legally binding
obligations of the Company, entitled to the benefits of the Indenture, and
enforceable against the Company in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and
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the discretion of the court before which any proceeding therefor may be
brought.
(viii) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Registration Rights Agreement; the Registration
Rights Agreement has been duly and validly authorized by the Company and
the Guarantors and, when duly executed and delivered by the Company and the
Guarantors (assuming due authorization, execution and delivery thereof by
the Initial Purchaser), will constitute the valid and legally binding
agreement of the Company and the Guarantors, enforceable against the
Company and the Guarantors in accordance with its terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought and (B) any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations.
(ix) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby; this Agreement and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized
by the Company. This Agreement has been duly executed and delivered by the
Company.
(x) The Indenture, the Notes and the Registration Rights Agreement
conform in all material respects to the descriptions thereof contained in
the Final Memorandum.
(xi) No legal or governmental proceedings are pending or, to the
best of counsel's knowledge, threatened to which any of the Company or the
Subsidiaries is a party or to which the property or assets of the Company
or any Subsidiary is subject which, if determined adversely to the Company
or the Subsidiaries, would result, individually or in the aggregate, in a
Material Adverse Effect, or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the Notes to
be sold hereunder or the consummation of the other transactions described
in the Final Memorandum under the caption "Use of Proceeds."
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<PAGE>
(xii) The execution, delivery and performance of this Agreement,
the Indenture, the Registration Rights Agreement and the consummation of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Notes to the Initial Purchaser)
will not conflict with or constitute or result in a breach or a default
under (or an event which with notice or passage of time or both would
constitute a default under) or violation of any of (i) the terms or
provisions of any Contract known to such counsel (including in any event
any of the foregoing which have been filed by the Company with the
Commission), except for any such conflict, breach, violation, default or
event which would not, individually or in the aggregate, have a Material
Adverse Effect, (ii) the certificate of incorporation or bylaws (or similar
organizational document) of the Company or any of the Subsidiaries, or
(iii) (assuming compliance with all applicable state securities or "Blue
Sky" laws and assuming the accuracy of the representations and warranties
of the Initial Purchaser in Section 8 hereof) any statute, judgment,
decree, order, rule or regulation known to such counsel to be applicable to
the Company or any of the Subsidiaries or any of their respective
properties or assets, except for any such conflict, breach or violation
which would not, individually or in the aggregate, have a Material Adverse
Effect.
(xiii) No consent, approval, authorization or order of any
governmental authority is required for the issuance and sale by the Company
of the Notes to the Initial Purchaser or the consummation by the Company of
the other transactions contemplated hereby, except such as may be required
under Blue Sky laws, as to which such counsel need express no opinion, and
those which have previously been obtained.
(xiv) To the knowledge of such counsel, there are no legal or
governmental proceedings involving or affecting the Company or the
Subsidiaries or any of their respective properties or assets which would be
required to be described in a prospectus pursuant to the Act that are not
described in the Final Memorandum, nor are there any material contracts or
other documents which would be required to be described in a prospectus
pursuant to the Act that are not described in the Final Memorandum.
(xv) None of the Company or the Subsidiaries is, or immediately
after the sale of the Notes to be sold hereunder and the application of the
proceeds from such sale (as described in the Final Memorandum under the
caption "Use of Proceeds") will be, an "investment company" as such
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<PAGE>
term is defined in the Investment Company Act of 1940, as amended.
(xvi) No registration under the Act of the Notes is required in
connection with the sale of the Notes to the Initial Purchaser as
contemplated by this Agreement and the Final Memorandum or in connection
with the initial resale of the Notes by the Initial Purchaser in accordance
with Section 8 of this Agreement, and prior to the commencement of the
Exchange Offer (as defined in the Registration Rights Agreement) or the
effectiveness of the Shelf Registration Statement (as defined in the
Registration Rights Agreement), the Indenture is not required to be
qualified under the TIA, in each case assuming (i) (A) that the purchasers
who buy such Notes in the initial resale thereof are qualified
institutional buyers as defined in Rule 144A promulgated under the Act
("QIBs") or accredited investors as defined in Rule 501(a) (1), (2), (3) or
------
(7) promulgated under the Act ("Accredited Investors") or (B) that the
--------------------
offer or sale of the Notes is made in an offshore transaction as defined in
Regulation S, (ii) the accuracy of the Initial Purchaser's representations
in Section 8 and those of the Company contained in this Agreement regarding
the absence of a general solicitation in connection with the sale of such
Notes to the Initial Purchaser and the initial resale thereof and (iii) the
due performance by the Initial Purchaser of the agreements set forth in
Section 8 hereof.
(xvii) Neither the consummation of the transactions contemplated
by this Agreement nor the sale, issuance, execution or delivery of the
Notes will violate Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
At the time the foregoing opinion is delivered, Proskauer Rose LLP
shall additionally state that it has participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants for the Company, representatives of the Initial Purchaser and
counsel for the Initial Purchaser, at which conferences the contents of the
Final Memorandum and related matters were discussed, and, although it has not
independently verified and is not passing upon and assumes no responsibility for
the accuracy, completeness or fairness of the statements contained in the Final
Memorandum (except to the extent specified in subsection 7(a)(ix)), no facts
have come to its attention which lead it to believe that the Final Memorandum,
on the date thereof or at the Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements
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<PAGE>
contained therein, in light of the circumstances under which they were made, not
misleading (it being understood that such firm need express no opinion with
respect to the financial statements and related notes thereto and the other
financial, statistical and accounting data included in the Final Memorandum).
The opinion of Proskauer Rose LLP described in this Section shall be rendered to
the Initial Purchaser at the request of the Company and shall so state therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchaser shall have received
the opinion, in form and substance satisfactory to the Initial Purchaser, dated
as of the Closing Date and addressed to the Initial Purchaser, of Cahill Gordon
& Reindel, counsel for the Initial Purchaser, with respect to certain legal
matters relating to this Agreement and such other related matters as the Initial
Purchaser may reasonably require. In rendering such opinion, Cahill Gordon &
Reindel shall have received and may rely upon such certificates and other
documents and information as it may reasonably request to pass upon such
matters.
(c) The Initial Purchaser shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the Closing
Date, in form and substance reasonably satisfactory to counsel for the Initial
Purchaser.
(d) The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date; the statements of the Company's officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be true and
correct in all material respects on and as of the date made and on and as of the
Closing Date; the Company shall have performed in all material respects all
covenants and agreements and satisfied all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing Date; and, except as
described in the Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), subsequent to the date of the most recent
financial statements in such Final Memorandum, there shall have been no event or
development, and no information shall have become known, that, individually or
in the aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
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(e) The sale of the Notes hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto after the
date hereof), none of the Company or any of the Subsidiaries shall have
sustained any loss or interference with respect to its business or properties
from fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any strike, labor dispute, slow down or work stoppage or
from any legal or governmental proceeding, order or decree, which loss or
interference, individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect.
(g) The Initial Purchaser shall have received a certificate of the
Company, dated the Closing Date, signed on behalf of the Company by its Chairman
of the Board, President or any Senior Vice President and an Executive Officer,
to the effect that:
(i) The representations and warranties of the Company contained in
this Agreement are true and correct in all material respects on and as of
the date hereof and on and as of the Closing Date, and the Company has
performed in all material respects all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since the date
of the most recent financial statements in the Final Memorandum (exclusive
of any amendment or supplement thereto after the date hereof), no event or
development has occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably likely to have
a Material Adverse Effect; and
(iii) The sale of the Notes hereunder has not been enjoined
(temporarily or permanently).
(h) On the Closing Date, the Initial Purchaser shall have received
the Registration Rights Agreement executed by the Company and such agreement
shall be in full force and effect at all times from and after the Closing Date.
On or before the Closing Date, the Initial Purchaser and counsel for
the Initial Purchaser shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and the Subsidiaries as
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they shall have heretofore reasonably requested from the Company.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchaser and counsel for the Initial Purchaser. The Company shall
furnish to the Initial Purchaser such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchaser shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. The Initial
-------------------------------------------
Purchaser represents and warrants that it is a QIB. The Initial Purchaser
agrees with the Company that (i) it has not and will not solicit offers for, or
offer or sell, the Notes by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Act; and (ii) it has and will solicit offers for the Notes only from, and will
offer the Notes only to (A) in the case of offers inside the United States, (x)
persons whom the Initial Purchaser reasonably believes to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchaser that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A, and, in
each case, in transactions under Rule 144A and (B) in the case of offers outside
the United States, to persons other than U.S. persons ("foreign purchasers,"
------------------
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
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in purchasing such Notes such persons are deemed to have represented and agreed
as provided under the caption "Transfer Restrictions" contained in the Final
Memorandum (or, if the Final Memorandum is not in existence, in the most recent
Memorandum).
9. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless the Initial Purchaser, and each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which the Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
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(i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement
thereto or any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Notes under the securities or "Blue
Sky" laws thereof or filed with any securities association or securities
exchange (each an "Application"); or
-----------
(ii) the omission or alleged omission to state, in any Memorandum
or any amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements therein
not misleading,
and will reimburse, as incurred, the Initial Purchaser and each such controlling
person for any reasonable legal or other expenses incurred by the Initial
Purchaser or such controlling person in connection with investigating, defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action; provided, however, the Company will not be
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liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any Memorandum or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information concerning the Initial Purchaser furnished
to the Company by the Initial Purchaser specifically for use therein. This
indemnity agreement will be in addition to any liability that the Company may
otherwise have to the indemnified parties. The Company shall not be liable
under this Section 9 for any settlement of any claim or action effected without
its prior written consent, which shall not be unreasonably withheld. The
Initial Purchaser shall not, without the prior written consent of the Company,
effect any settlement or compromise of any pending or threatened proceeding in
respect of which the Company is or could have been a party, or indemnity could
have been sought hereunder by the Company, unless such settlement (A) includes
an unconditional written release of the Company, in form and substance
reasonably satisfactory to the Company, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of the
Company.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company, its directors, its officers and each person, if any, who controls the
Company within the meaning of
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Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company or any such director,
officer or controlling person may become subject under the Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any Memorandum or any
amendment or supplement thereto or any Application, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated in any
Memorandum or any amendment or supplement thereto or any Application, or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning the Initial Purchaser, furnished
to the Company by the Initial Purchaser specifically for use therein; and
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any reasonable legal or other expenses incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof. This indemnity agreement will be in addition to any liability that the
Initial Purchaser may otherwise have to the indemnified parties. The Initial
Purchaser shall not be liable under this Section 9 for any settlement of any
claim or action effected without its consent, which shall not be unreasonably
withheld. The Company shall not, without the prior written consent of the
Initial Purchaser, effect any settlement or compromise of any pending or
threatened proceeding in respect of which the Initial Purchaser is or could have
been a party, or indemnity could have been sought hereunder by the Initial
Purchaser, unless such settlement (A) includes an unconditional written release
of the Initial Purchaser, in form and substance reasonably satisfactory to the
Initial Purchaser, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof
in writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
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extent such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
- -------- -------
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchaser in the case of
paragraph (a) of this Section 9 or the Company in the case of paragraph (b) of
this Section 9, representing the indemnified parties under such paragraph (a) or
paragraph (b), as the case may be, who are parties to such action or actions) or
(ii) the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party.
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<PAGE>
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect such
a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Notes or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, not only such relative benefits but also
the relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Company on the one hand and the Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by the Initial Purchaser. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand, or the Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and the
Initial Purchaser agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), the Initial Purchaser
shall not be obligated to make contributions hereunder that in the aggregate
exceed the total discounts, commissions and other compensation received by
-27-
<PAGE>
the Initial Purchaser under this Agreement, less the aggregate amount of any
damages that the Initial Purchaser has otherwise been required to pay by reason
of the untrue or alleged untrue statements or the omissions or alleged omissions
to state a material fact, and no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchaser, and each director of the Company, each officer of the Company
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
10. Survival Clause. The respective representations, warranties,
---------------
agreements, covenants, indemnities and other statements of the Company, its
officers and the Initial Purchaser set forth in this Agreement or made by or on
behalf of them pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, the Initial Purchaser or any controlling person
referred to in Section 9 hereof and (ii) delivery of and payment for the Notes.
The respective agreements, covenants, indemnities and other statements set forth
in Sections 6, 9 and 15 hereof shall remain in full force and effect, regardless
of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
-----------
discretion of the Initial Purchaser by notice to the Company given prior to the
Closing Date in the event that the Company shall have failed, refused or been
unable to perform in all material respects all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have sustained any
loss or interference with respect to its businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any strike, labor dispute, slow down or work stoppage
or any legal or governmental proceeding, which loss or interference, in the
sole judgment of the Initial Purchaser, has had or has a Material Adverse
Effect, or there shall have been, in the sole judgment of the Initial
Purchaser, any event or development that, individually or in the aggregate,
has or would be reasonably likely to have a Material Adverse Effect
(including with-
-28-
<PAGE>
out limitation a change in control of the Company or the Subsidiaries),
except in each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the NASDAQ National Market shall have
been suspended or minimum or maximum prices shall have been established on
any such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international calamity
or emergency, or (C) any material change in the financial markets of the
United States which, in the case of (A), (B) or (C) above and in the sole
judgment of the Initial Purchaser, makes it impracticable or inadvisable to
proceed with the offering or the delivery of the Notes as contemplated by
the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchaser. The statements
---------------------------------------------
set forth in the last paragraph on the front cover page and in the second and
third sentences of the third paragraph under the heading "Private Placement" in
the Final Memorandum (to the extent such statements relate to the Initial
Purchaser) constitute the only information furnished by the Initial Purchaser to
the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and,
-------
if sent to the Initial Purchaser, shall be mailed or delivered to First Union
Capital Markets Corp., 301 South College Street, TW-10, Charlotte, NC 28288,
Attention: High Yield Group; if sent to the Company, shall be mailed or
delivered to the Company c/o US&A at 350 Park Avenue, New York, NY 10022,
Attention: Jeffrey T. Stevenson.
-29-
<PAGE>
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; and one business
day after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the Initial Purchaser, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 9 of this Agreement shall also be for the
benefit of any person or persons who control the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchaser contained in Section 9 of this Agreement
shall also be for the benefit of the directors of the Company, its officers and
any person or persons who control the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act. No purchaser of Notes from the
Initial Purchaser will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
--------------
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-30-
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Initial Purchaser.
Very truly yours,
T/SF COMMUNICATIONS CORPORATION
By:
---------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
FIRST UNION CAPITAL MARKETS CORP.
By:
--------------------------------
Name:
Title:
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<PAGE>
SCHEDULE 1
----------
Subsidiaries of the Company
---------------------------
Jurisdiction of
Name Incorporation
- ---- -------------
<PAGE>
EXHIBIT 2.1
________________________________
STOCK PURCHASE AGREEMENT
among
VS&A COMMUNICATIONS PARTNERS II, L.P.
VS&A-T/SF, INC.
and
T/SF COMMUNICATIONS CORPORATION
dated as of
August 15, 1997
________________________________
<PAGE>
STOCK PURCHASE AGREEMENT
August 15, 1997
---------------
The parties to this agreement are VS&A Communications Partners II,
L.P., a Delaware limited partnership ("Parent"), VS&A-T/SF, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent (the "Sub"), and T/SF
Communications Corporation, a Delaware corporation (the "Company").
The parties wish to provide for a recapitalization of the Company by
means of a tender offer by the Company (the "Offer") to purchase all of the
Company's shares of Common Stock, par value $.10 per share ("Common Stock), at a
price of $40.25 per share and a purchase by the Sub of not less than 869,565
shares of Common Stock at the Offer Price (the "Stock Purchase"), followed by a
merger (the "Merger") of the Sub into the Company or a reverse stock split of
the Common Stock (the "Stock Split"). Pursuant to agreements dated this date
between the Sub and certain stockholders of the Company (the "Stockholder
Agreements"), those stockholders have agreed to tender their shares in the
Offer. Pursuant to an agreement dated this date (the "Fir Tree Agreement"), Fir
Tree Partners and its affiliates ("Fir Tree"), the owner of 487,500 shares (the
"Fir Tree Shares") of Common Stock, has agreed not to tender the Fir Tree Shares
in the Offer, and Parent and Fir Tree have agreed that Fir Tree will remain a
stockholder of the Company following the Merger or the Stock Split.
It is therefore agreed as follows:
ARTICLE I
THE OFFER
---------
Section 1.1 Terms of The Offer.
------------------
(a) As promptly as practicable (but in no event later than 15 business
days after the public announcement of the execution of this agreement), the
Company shall commence (within the meaning of Rule 13e-4 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) the Offer for all of the
Company's outstanding shares of Common Stock at a price of $40.25 per share, net
to the seller in cash, subject to the conditions referred to below, and shall
consummate the Offer in accordance with its terms. The Offer shall be made by
means of an offer to purchase (the "Offer to Purchase") containing the terms set
forth in this agreement, and the Company shall, on the terms and subject to the
prior satisfaction or waiver of the conditions of the Offer, accept for payment
and pay for shares tendered as soon as it is legally permitted to do so under
applicable law. The price per share referred to in this Section 1.1(a), or such
other price per share as may be paid in the Offer, is referred to in this
agreement as the "Offer Price" and the date on which the Company consummates the
purchase of the shares in the Offer is referred to in this agreement as the
"Offer Closing Date".
<PAGE>
(b) The obligations of the Company to accept for payment and to pay
for any shares tendered prior to the expiration of the Offer shall be subject
only to (i) the condition that there shall be validly tendered and not withdrawn
prior to the expiration of the Offer at least 1,600,000 shares of Common Stock
(the "Minimum Condition"), (ii) there being available to the Company the funds
required to consummate the purchase of the shares in the Offer from the proceeds
of the Stock Purchase and the Bank Financing (each as defined below) and (iii)
the other conditions set forth in Annex A. The Company shall amend, modify or
waive the terms and conditions of the Offer only upon the request of, and in the
manner requested by, Parent or the Sub, provided that the Company shall not be
--------
required to amend or waive the Minimum Condition, decrease the Offer Price or
the number of shares sought, or amend any other condition of the Offer in any
manner adverse to the holders of the shares; provided, however, that if on the
initial scheduled expiration date of the Offer (which shall be 20 business days
after the date the Offer is commenced), all conditions to the Offer shall not
have been satisfied or waived, the Company may and shall, if requested by Parent
or the Sub, extend the expiration date; provided, further, however, any
extension beyond 10 business days shall require the approval of the Company and
the Parent.
(c) As soon as practicable on the date the Offer is commenced, the
Company shall file with the United States Securities and Exchange Commission
(the "SEC") an Issuer Tender Offer Statement on Schedule 13E-4 with respect to
the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 13E-4"). The Schedule 13E-4 shall include,
as exhibits, the Offer to Purchase, a form of letter of transmittal and summary
advertisement, the information required by Section 14(f) of the Exchange Act,
and any disclosure required by Rule 13e-3 under the Exchange Act which is
permitted to be included in the Schedule 13E-4 (collectively, together with any
amendments and supplements thereto, the "Offer Documents"). The Company shall
also file with the SEC, if necessary, a Rule 13e-3 Transaction Statement
(together with the Offer Documents, the "SEC Filings"). The SEC Filings shall
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that the Company shall not have any responsibility to either Parent or the Sub
with respect to information furnished by Parent or the Sub to the Company in
writing, expressly for inclusion in the SEC Filings. The information supplied
by Parent or the Sub to the Company in writing expressly for inclusion in the
SEC Filings shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company shall take all steps necessary to cause the
Offer Documents to be filed with the SEC and to be disseminated to holders of
the issued and outstanding shares of Common Stock (the "Shares"), in each case
as and to the extent required by applicable federal securities laws. Each of
Parent and the Sub, on the one hand, and the Company, on the other hand,
promptly shall correct any information provided by it for use in the SEC Filings
if and to the extent that it shall have become false or misleading in any
material respect and the Company shall take all steps necessary to cause the SEC
Filings as so corrected to be filed with the SEC and the Offer Documents to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Parent, the Sub and their
counsel shall be given the
2
<PAGE>
opportunity to review the SEC Filings before they are filed with the SEC. In
addition, the Company shall provide Parent, the Sub and their counsel in writing
with any comments, whether written or oral, the Company or its counsel may
receive from time to time from the SEC or its staff with respect to the SEC
Filings promptly after the receipt of such comments, as well as the response
thereto by the Company or its counsel.
Section 1.2 Company Actions.
---------------
(a) The Company hereby confirms that it approves of and consents to
the Offer and represents that the Board of Directors, at a meeting duly called
and held, has (i) unanimously determined that each of this agreement, the Offer,
the Stock Purchase and the Merger or the Stock Split are fair to and in the best
interests of the stockholders of the Company, (ii) approved this agreement and
the Stockholder Agreements and the transactions contemplated hereby and thereby,
including the Offer and the Stock Purchase and such approval constitutes
approval of the Offer, this agreement, the Stockholder Agreements, the Stock
Purchase, the Merger or the Stock Split and the transactions contemplated hereby
and thereby for purposes of Section 203 of the DGCL, with the effect that
Section 203 of the DGCL will not apply to the transactions contemplated by this
agreement or the Stockholder Agreements, and (iii) resolved to recommend that
the stockholders of the Company accept the Offer and tender their shares to the
Company pursuant to the Offer provided that such recommendation may be
withdrawn, modified or amended if, in the opinion of the Board of Directors,
only after receipt of written advice from independent legal counsel, failure to
withdraw, modify or amend such recommendation would result in the Board of
Directors violating its fiduciary duties to the Company's stockholders under
applicable law. The Company further confirms that Prudential Securities
Incorporated (the "Financial Advisor") has delivered to the Board its opinion to
the effect that the cash consideration to be received by the holders of Common
Stock in the Offer is fair to such holders from a financial point of view (the
"Fairness Opinion"). The Company represents that the actions set forth in this
Section 1.2(a) and the other actions it has taken in connection therewith are
sufficient to render the relevant provisions of such Section 203 of the DGCL
inapplicable to the Offer, the Stock Purchase and the Stockholder Agreements.
(b) On the Offer Closing Date, Parent or the Sub shall be entitled to
designate for appointment or election each of the members of the Board of
Directors of the Company and the Company shall obtain the resignation of each
member of the Board of Directors immediately prior thereto. In connection
therewith, the Company shall mail to the stockholders of the Company any
information required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder unless such information has previously been provided to such
stockholders in the Schedule 13E-4. Parent or the Sub shall provide to the
Company in writing, and shall be solely responsible for, any information with
respect to its nominees, officers, directors and Affiliates required by Section
14(f) of the Exchange Act and Rule 14f-1 thereunder.
(c) The Company shall not, nor shall it permit any of its Subsidiaries
(as defined in Section 3.1) to, tender into the Offer any Shares beneficially
owned by it.
3
<PAGE>
Section 1.3 Stock Purchase Closing.
----------------------
Upon the terms and subject to the conditions of this agreement, the
Company shall sell to the Sub, and the Sub shall purchase from the Company for
investment, at the Stock Purchase Closing (as defined below) not less than
869,565 shares of Common Stock at a per share purchase price equal to $40.25 (or
an aggregate purchase price of not less than $34,999,991 for such shares). Not
less than three days prior to the Stock Purchase Closing, the Sub shall give
notice to the Company specifying the number of shares of Common Stock to be
purchased by the Sub. The shares of Common Stock to be purchased by the Sub
hereunder are referred to herein as the "Sub Shares." The consummation of the
Stock Purchase (the "Stock Purchase Closing") shall take place simultaneously
with the closing of the Offer on the Offer Closing Date at the offices of
Proskauer Rose LLP, 1585 Broadway, New York, N.Y., or such other location agreed
upon by the Company and the Sub. At the Stock Purchase Closing, the Company
shall deliver to the Sub one or more certificates representing the Sub Shares
being purchased by Sub, registered in the name of Sub, against receipt by the
Company of the aggregate purchase price therefor, payable in its entirety by
wire transfer of immediately available funds to an account specified in writing
by the Company at least one business day prior to the date of the Stock Purchase
Closing.
Section 1.4 Use of Proceeds. The proceeds received by the Company
---------------
from the sale of the Sub Shares and the Bank Financing shall be used by the
Company to satisfy its obligations to pay for all Shares validly tendered
pursuant to the Offer and not withdrawn prior to the expiration date of the
Offer and to make the payments in respect of the Company Options pursuant to
Section 1.5 and, if there remain any proceeds after such obligations are fully
satisfied, for general corporate purposes.
Section 1.5 Company Plans.
-------------
(a) On the Offer Closing Date, each outstanding employee stock option
to purchase shares (a "Company Option") granted under the Company's 1994
Incentive Stock Plan or Incentive Stock Option Plan (collectively, the "Option
Plan") shall be converted into the right to receive an amount equal to (i) the
product of the number of the shares which are issuable upon exercise of such
Company Option, multiplied by the Offer Price, less (ii) the aggregate exercise
price of such Company Option, provided, however, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such payment shall not be
payable until the first date payment can be made without liability to such
person under Section 16(b) of the Exchange Act, but shall be paid as soon as
practicable thereafter. The Company shall take all necessary action prior to
the Offer Closing Date to facilitate the conversion and payment in consideration
for the Company Options described in this Section 1.5. The Company shall
withhold all income or other taxes as required under applicable law prior to
distribution of the cash amount received under this Section 1.5 to the holders
of Company Options.
(b) The Option Plan shall terminate as of the Offer Closing Date and
the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any of its Subsidiaries (except as disclosed on Schedule 3.2 to the
Company Disclosure Schedule with respect to Casino Publishing Company)
4
<PAGE>
shall be deleted as of the Offer Closing Date so that on and after the Offer
Closing Date no holder of a Company Option shall have any option to purchase
shares or any other equity interest in the Company.
(c) Prior to the Offer Closing Date, the Company shall deliver to
Parent or the Sub an agreement from each holder of a Company Option agreeing to
exchange his or her Company Options at the Offer Closing Date for the cash
payment set forth in Section 1.5(a).
ARTICLE II
THE MERGER OR STOCK SPLIT
-------------------------
As soon as practicable after the Offer Closing Date, the Sub shall
cause the Company to effect the Merger or the Stock Split, pursuant to which
each share of Common Stock not tendered in the Offer (other than the Shares held
by Sub and Fir Tree or any shares held by stockholders exercising appraisal
rights pursuant to Section 262 of the DGCL) shall be converted into the right to
receive an amount equal to the Offer Price, payable to the holder, without
interest, upon surrender of the certificate formerly representing that Share.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and the Sub that all of
the statements contained in this Article III are true and correct as of the date
of this agreement (or, if made as of a specified date, as of such date), except
as set forth in the schedule attached to this agreement setting forth exceptions
to the Company's representations and warranties set forth herein (the "Company
Disclosure Schedule").
Section 3.1 Organization. Each of the Company and its Subsidiaries
------------
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as now
being conducted. As used in this agreement, the term "Subsidiary" shall mean
all corporations or other entities in which the Company or the Parent, as the
case may be, owns 50% or more of the issued and outstanding capital stock or
similar interests or otherwise possesses, directly or indirectly, control over
the direction of management or policies of such corporation or other entity. The
Company and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not individually or in the
aggregate have or be reasonably likely to have a Material Adverse Effect. As
used in this agreement,
5
<PAGE>
the term "Material Adverse Effect" shall mean a material adverse effect on the
condition (financial or otherwise), business, results of operations or prospects
of any of the exposition services division of the Company, the information
services division of the Company or the Company and its Subsidiaries taken as a
whole. Except as set forth in Section 3.1 of the Company Disclosure Schedule,
the Company does not own any equity interest in any corporation or other entity
or marketable securities, where the Company's equity interest in any entity
exceeds five percent of the outstanding equity of such entity on the date
hereof.
Section 3.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock and 1,000,000 shares of preferred stock, par
value $10 per share (the "Preferred Stock"). As of the date hereof, (i)
3,331,646 shares of Common Stock are issued and outstanding, (ii) no shares of
Common Stock are issued and held in the treasury of the Company, (iii) no shares
of Preferred Stock are issued and outstanding, and (iv) 360,500 shares of Common
Stock are reserved for issuance upon exercise of Company Options, in each case
under the Option Plan, as set forth on Schedule 3.2 to the Company Disclosure
Schedule. All the outstanding shares of the Company's capital stock are, and
all shares which may be issued pursuant to the exercise of outstanding Company
Options will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and non-assessable. The shares of
Common Stock to be issued to the Sub on the Offer Closing Date pursuant to
Section 1.3 will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and non-assessable. There are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except as set forth above
and except for the transactions contemplated by this agreement, as of the date
hereof, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no existing options, warrants, calls, pre-
emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment and
(iii) except as set forth in Section 3.2 of the Company Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company, or any Subsidiary or affiliate of the Company or
to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity.
(b) All of the outstanding shares of capital stock of each of the
Subsidiaries are beneficially owned by the Company (except as set forth in
Section 3.2 of the Company Disclosure Schedule), directly or indirectly, and all
such shares have been validly issued and are fully paid and nonassessable and
are owned by either the Company or one of its Subsidiaries free and clear of all
liens, charges, claims or encumbrances ("Encumbrances").
6
<PAGE>
(c) There are no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries.
Section 3.3 Authorization; Validity of Agreement; Company Action.
----------------------------------------------------
The Company has full corporate power and authority to execute and deliver this
agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Company of this agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by its Board of Directors and, except for the approval of the Merger
or the Stock Split by the Company's stockholders, no other corporate action on
the part of the Company is necessary to authorize the execution and delivery by
the Company of this agreement and the consummation by it of the transactions
contemplated hereby. This agreement has been duly executed and delivered by the
Company and, assuming due and valid authorization, execution and delivery hereof
by Parent and the Sub, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
Section 3.4 Consents and Approvals; No Violations. Except for the
-------------------------------------
filings, consents and approvals set forth in Section 3.4 of the Company
Disclosure Schedule and the filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Exchange Act, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), state securities or blue sky laws, and the DGCL, none
of the execution, delivery or performance of this agreement by the Company, the
consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation, the by-laws or similar organizational documents of the Company or
of any of its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity"), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
(the "Company Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets. Section 3.4 of the Company Disclosure
Schedule sets forth a list of all third party consents and approvals required to
be obtained in connection with this agreement under the Company Agreements prior
to the consummation of the transactions contemplated by this agreement.
Section 3.5 SEC Reports and Financial Statements. The Company has
------------------------------------
filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it under the Exchange Act or the Securities
Act of 1933, as amended (the "Securities Act") (as such documents have been
amended since the time of their filing, collectively, the "Company SEC
Documents"). As of their respective dates or, if amended, as of the date of the
last such amendment, the Company SEC Documents,
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including, without limitation, any financial statements or schedules included
therein (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. None of
the Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements of the Company included in the
Company SEC Documents (the "Financial Statements") have been prepared from, and
are in accordance with, the books and records of the Company and its
consolidated Subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto and except for the
absence of footnotes with respect to interim Financial Statements) and fairly
present the consolidated financial position and the consolidated results of
operations and cash flows of the Company and its consolidated Subsidiaries as of
the times and for the periods referred to therein.
Section 3.6 Absence of Certain Changes. Except as disclosed in
--------------------------
Section 3.6 of the Company Disclosure Schedule, since December 31, 1996 the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course and there have not occurred any events or changes
having or reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
Section 3.7 No Undisclosed Liabilities. Except (a) as disclosed in
--------------------------
the Financial Statements and (b) for liabilities and obligations (x) incurred in
the ordinary course of business and consistent with past practice, (y) arising
pursuant to the terms of this agreement or (z) set forth in Section 3.7 of the
Company Disclosure Schedule, since December 31, 1996, neither the Company nor
any of its Subsidiaries has incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that, individually or
in the aggregate, have, or would be reasonably likely to have, a Material
Adverse Effect, or would be required by GAAP to be reflected on a consolidated
balance sheet of the Company and its Subsidiaries (including the notes thereto).
Section 3.8 Litigation. Except as set forth in Section 3.8 of the
----------
Company Disclosure Schedule, there are no suits, claims, actions, proceedings,
including, without limitation, arbitration proceedings or alternative dispute
resolution proceedings, or investigations pending or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries before any
Governmental Entity which if adversely determined would have an adverse effect
on the Company or a Subsidiary in excess of $50,000. Except as disclosed in
Section 3.8 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is subject to any outstanding order, writ, injunction or
decree.
Section 3.9 Employee Benefit Plan; ERISA.
----------------------------
(a) Section 3.9(a) of the Company Disclosure Schedule sets forth a
true and complete list (or, in the case of an unwritten plan, a description) of
all employee benefit plans,
8
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arrangements, contracts or agreements (including employment agreements,
severance agreements and managers' insurance plans) of any type, statutory or
otherwise (including but not limited to plans described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), but
specifically excluding commission and incentive pay plans covering employees
other than officers of the Company that have been adopted by the Company in the
ordinary course of business consistent with past practice and that can be
amended or terminated after December 31, 1997), maintained by the Company, any
of its Subsidiaries or any trade or business, whether or not incorporated (an
"ERISA Affiliate"), which together with the Company would be deemed a "single
employer" within the meaning of Section 414(b), 414(c) or 414(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), or the regulations issued under
Section 414(o) of the Code (the "Benefit Plans"). Except as disclosed in Section
3.9(a) of the Company Disclosure Schedule, neither the Company nor any ERISA
Affiliate has any formal plan or commitment, whether legally binding or not, to
create any additional Benefit Plan or modify or change any existing Benefit Plan
that would affect any employee or terminated employee of the Company or any of
its Subsidiaries.
(b) With respect to each Benefit Plan: (i) if intended to qualify
under Section 401(a) of the Code, such plan so qualifies, and its trust is
exempt from taxation under Section 501(a) of the Code, there have been no
amendments to any such Benefit Plan which are not the subject of a favorable
determination letter, and no condition exists that would reasonably be expected
to affect such qualification; (ii) such plan has been administered in all
material respects in accordance with its terms and applicable statutes, orders
or governmental rules or regulations, including but not limited to ERISA and the
Code, no notice has been issued by any Governmental Entity questioning or
challenging such compliance, and no condition exists that would be expected to
affect such compliance; (iii) no breaches of fiduciary duty have occurred which
might reasonably be expected to give rise to material liability on the part of
the Company; (iv) no disputes are pending, or, to the Company's knowledge,
threatened that might reasonably be expected to give rise to material liability
on the part of the Company; (v) no prohibited transaction (within the meaning of
Section 406 of ERISA) has occurred that would give rise to material liability on
the part of the Company or any ERISA Affiliate; and (vi) all contributions and
premiums due as of the date hereof in respect of any Benefit Plan (taking into
account any extensions for such contributions and premiums) have been made in
full or accrued on the Company's balance sheet.
(c) Except as set forth in Section 3.9(c) of the Company Disclosure
Schedule, neither the Company nor any ERISA Affiliate (i) has incurred an
accumulated funding deficiency, as defined in the Code and ERISA, or (ii) has
any material liability under Title IV of ERISA with respect to any employee
benefit plan that is subject to Title IV of ERISA.
(d) With respect to each Benefit Plan that provides employee benefits
other than pension benefits (including but not limited to each Benefit Plan that
is a "welfare plan" (as defined in Section 3(l) of ERISA)), except as disclosed
in Section 3.9(d) of the Company Disclosure Schedule, no such plan provides
medical or death benefits with respect to current or former employees of the
Company or any of its Subsidiaries beyond their termination of employment, other
than as required by law.
9
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(e) Except as set forth in Section 3.9(e) of the Company Disclosure
Schedule, neither the execution of this agreement nor the consummation of the
transactions contemplated hereby will (i) entitle any individual to severance
pay or accelerate the time of payment or vesting, or increase the amount, of
compensation or benefits due to any individual, (ii) constitute or result in a
prohibited transaction under Section 4975 of the Code or Section 406 of ERISA or
(iii) subject the Company, any of its Subsidiaries, any ERISA Affiliate, any of
the Benefit Plans, any related trust, any trustee or administrator of any
thereof, or any party dealing with the Benefit Plans or any such trust to either
a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 of the Code.
(f) There is no Benefit Plan that is a "multiemployer plan", as
such term is defined in Section 3(37) of ERISA.
(g) With respect to each Benefit Plan, the Company has previously
delivered to Parent or its representatives accurate and complete copies of all
plan documents, summary plan descriptions, summaries of material modifications,
trust agreements and other related agreements, including all amendments to the
foregoing; the most recent annual report; the annual and periodic accounting of
plan assets in respect of the two most recent plan years; the most recent
determination letter received from the United States Internal Revenue Service
(the "Service"); and the actuarial valuation, to the extent any of the foregoing
may be applicable to a particular Benefit Plan, in respect of the two most
recent plan years.
Section 3.10 Tax Matters; Government Benefits.
--------------------------------
Except as set forth in Section 3.10 of the Company Disclosure
Schedule:
(a) The Company and its Subsidiaries have filed all Tax Returns (as
hereinafter defined) that are required to be filed and have paid or caused to be
paid all Taxes (as hereinafter defined) that are either shown on such Tax
Returns as due and payable or otherwise due or claimed to be due by any taxing
authority. All such Tax Returns are correct and complete in all material
respects and accurately reflect all liability for Taxes for the periods covered
thereby. All Taxes owed and due by the Company and each of its Subsidiaries for
results of operations through December 31, 1996 (whether or not shown on any Tax
Return) have been paid or have been adequately reflected on the Company's
consolidated balance sheet as of December 31, 1996 included in the Financial
Statements (the "Balance Sheet"). Since December 31, 1996, the Company has not
incurred liability for any Taxes other than in the ordinary course of business.
Neither the Company nor any of its Subsidiaries has received written notice of
any claim made by an authority in a jurisdiction where neither the Company nor
any of its Subsidiaries file Tax Returns that the Company is or may be subject
to taxation by that jurisdiction.
(b) Neither the Company nor any of its Subsidiaries has violated any
applicable law of any jurisdiction relating to the payment and withholding of
Taxes, including, without limitation, (x) withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions under non-U.S. law and
(y) withholding of Taxes in respect of amounts paid or owing to any employee,
creditor, independent contractor or other third party. The Company and each
10
<PAGE>
of its Subsidiaries have, in the manner prescribed by law, withheld and paid
when due all Taxes required to have been withheld and paid under all applicable
laws.
(c) There are no Encumbrances upon the shares of capital stock of any
of the Company's Subsidiaries or any of the assets or properties of the Company
or any of its Subsidiaries or, to the Company's knowledge, on any of the shares
that arose in connection with any failure (or alleged failure) to pay any Tax
when due.
(d) Neither the Company nor any of its Subsidiaries has waived any
statute of limitations in any jurisdiction in respect of Taxes or Tax Returns or
agreed to any extension of time with respect to a Tax assessment or deficiency.
(e) No federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the Company's knowledge,
are pending with regard to any Taxes or Tax Returns of the Company or of any of
its Subsidiaries. No written notification has been received by the Company or
by any of its Subsidiaries that such an audit, examination or other proceeding
is pending or threatened with respect to any Taxes due from or with respect to
or attributable to the Company or any of its Subsidiaries or any Tax Return
filed by or with respect to the Company or any of its Subsidiaries. To the
Company's knowledge, there is no dispute or claim concerning any Tax liability
of the Company or any of its Subsidiaries either claimed or raised by any taxing
authority in writing.
(f) During their most recent five taxable years, respectively, neither
the Company nor any of its Subsidiaries has made a change in tax accounting
methods, received a ruling from any taxing authority or signed an agreement with
any taxing authority which have or would be reasonably likely to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is required to
include in income any adjustment pursuant to Section 481(a) of the Code or any
similar provision of foreign, state or local law, by reason of a voluntary
change in tax accounting method (nor has any taxing authority proposed in
writing any such adjustment or change of accounting method).
(g) Neither the Company nor any of its Subsidiaries is a party to, is
bound by or has any obligation under any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement (other than
contracts or arrangements among the Company and its Subsidiaries). Neither the
Company nor any of its Subsidiaries is aware of any potential liability or
obligation to any person as a result of, or pursuant to, any such agreement,
contract or arrangement. Neither the Company nor any of its Subsidiaries has any
liability for Taxes of another person by contract or otherwise.
(h) No power of attorney with respect to any matter relating to Taxes
or Tax Returns has been granted by or with respect to the Company or any of its
Subsidiaries.
(i) Neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code.
11
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(j) During the most recent five taxable years of the Company and of
each of its Subsidiaries, no closing agreement pursuant to Section 7121 of the
Code (or any predecessor provision, or any similar provision of any state, local
or foreign law) has been entered into by or with respect to the Company or any
of its Subsidiaries.
(k) Neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
(l) The Company has never been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company has never been a member of an Affiliated Group within the meaning of
Section 1504 of the Code. None of the Subsidiaries of the Company is a foreign
personal holding company within the meaning of Section 552 of the Code or a
passive foreign investment company within the meaning of Section 1296 of the
Code.
(m) No taxing authority is asserting or threatening to assert a claim
against the Company or any of its Subsidiaries under or as a result of Section
482 of the Code or any similar provision of state, local or foreign law.
(n) The Company has delivered to Parent complete and accurate copies
of each of: (A) all audit, examination and similar reports and all letter
rulings and technical advice memoranda filed or received by the Company during
the last five years relating to federal, state, local and foreign Taxes due from
or with respect to the Company and its Subsidiaries; (B) all federal, state and
local and foreign Tax Returns, Tax examination reports and similar documents
filed by the Company and its Subsidiaries during the last five years; and (C)
all closing agreements entered into by the Company and its Subsidiaries with any
taxing authority and all statements of Tax deficiencies assessed against or
agreed to by the Company and its Subsidiaries during the last five years. The
Company shall deliver to the Sub all materials with respect to the foregoing for
all matters arising after the date hereof.
(o) As used in this agreement, the following terms shall have the
following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local
or foreign governmental authority, including, but not limited to, income,
gross receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding,
social security, minimum, estimated and other taxes, and shall include
interest, penalties or additions attributable thereto; and
12
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(ii) "Tax Return" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Section 3.11 Title and Condition of Properties. Except as set forth
---------------------------------
in Section 3.11 of the Company Disclosure Schedule, the Company and its
Subsidiaries own good and marketable title, free and clear of all Encumbrances,
to all of the real and personal property and assets shown on the Balance Sheet
or acquired after December 31, 1996, except for (A) assets which have been
disposed of to nonaffiliated third parties since December 31, 1996 in the
ordinary course of business, (B) Encumbrances reflected in the Balance Sheet or
in the notes thereto, (C)Encumbrances or imperfections of title which are not,
individually or in the aggregate, material in character, amount or extent and
which do not materially detract from the value or materially interfere with the
present or presently contemplated use of the assets subject thereto or affected
thereby, and (D) Encumbrances for current Taxes not yet due and payable. All of
the machinery, equipment and other tangible personal property and assets owned
or used by the Company and its Subsidiaries are in good condition and repair,
except for ordinary wear and tear not caused by neglect, and are useable in the
ordinary course of business. The personal property and assets reflected on the
Balance Sheet or acquired after December 31, 1996, the rights under the Company
Agreements and the Intellectual Property (as defined in Section 3.12) owned or
used by the Company under valid License (as defined in Section 3.12)
collectively include all assets necessary to provide, produce, sell and license
the services and products currently provided, produced, sold and licensed by the
Company and its Subsidiaries and to conduct the business of the Company and its
Subsidiaries as presently conducted or as currently contemplated to be
conducted.
Section 3.12 Intellectual Property.
---------------------
(a) Section 3.12(a) of the Company Disclosure Schedule contains an
accurate and complete listing setting forth (x) all registered Trademarks,
Patents and registered Copyrights (as each such term is hereinafter defined)
which are owned by the Company or any of its Subsidiaries and (y) all Licenses
to which the Company or any of its Subsidiaries is a party, such schedule
indicating, as to each such License, whether the Company or any of its
Subsidiaries is the licensee or licensor, whether it is royalty bearing, the
territory, whether it is exclusive or non-exclusive, and the nature of the
licensed property.
(b) Except as set forth in Section 3.12(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is under any
obligation to pay any royalty or other compensation to any third party or to
obtain any approval or consent for the use of any Intellectual Property used in
or necessary for its business as currently conducted or as currently proposed to
be conducted. None of the Intellectual Property owned by the Company or by any
of its Subsidiaries, or to the Company's knowledge, licensed to the Company or
to any of its Subsidiaries, is subject to any outstanding judgment, order,
decree, stipulation, injunction or charge. Except as set forth in Section
3.12(b) of the Company Disclosure Schedule, there is no claim, charge,
complaint, action, suit, proceeding, hearing, investigation or demand pending
or, to the Company's knowledge, threatened, which challenges the legality,
validity, enforceability, or the Company's or any of its Subsidiaries' use or
ownership of any of the Intellectual Property owned by the Company
13
<PAGE>
or any of its Subsidiaries or, to the Company's knowledge, licensed to the
Company or to any of its Subsidiaries.
(c) No material breach or default (or event which with notice or lapse
of time or both would result in a material event of default) by the Company or
any of its Subsidiaries exists or has occurred under any License or other
agreement pursuant to which the Company or any of its Subsidiaries uses any
Intellectual Property owned by a third party or has granted any third party the
right to use its Intellectual Property, and the consummation of the transactions
contemplated by this agreement will not violate or conflict with or constitute a
material default (or an event which, with notice or lapse of time or both, would
constitute a material default), result in a forfeiture under, or constitute a
basis for termination of any such License or other agreement.
(d) The Company and its Subsidiaries own all items of Intellectual
Property set forth in Section 3.12(a) of the Company Disclosure Schedule and own
or have the right to use all items of Intellectual Property necessary to
provide, produce, sell and license the services and products currently provided,
produced, sold and licensed by the Company and its Subsidiaries and to conduct
the business of the Company and its Subsidiaries as presently conducted or as
currently proposed to be conducted, free and clear of all Encumbrances.
(e) To the Company's knowledge, except as set forth in Section 3.12(e)
of the Company Disclosure Schedule, the conduct of the Company's and its
Subsidiaries' business, the Intellectual Property owned or used by the Company
and its Subsidiaries, and the products or services produced, sold or licensed by
the Company and its Subsidiaries do not infringe any Intellectual Property
rights or any other proprietary right of any person. The Company and its
Subsidiaries have received no notice of any allegations or threats that the
Company's and its Subsidiaries' use of any of the Intellectual Property
infringes upon or is in conflict with any Intellectual Property or proprietary
rights of any third party.
(f) All of the Company's and its Subsidiaries' Patents, Trademarks and
Copyrights issued by, registered with or filed with the United States Patent and
Trademark Office or Register of Copyrights or the corresponding offices of other
countries have been so duly registered, filed in or issued, as the case may be,
have been properly maintained and renewed in accordance with all applicable
provisions of law and administrative regulations, and the Company and its
Subsidiaries, as the case may be, are the record owners thereof.
(g) As used in this agreement, "Intellectual Property" means all of
the following: (i) U.S. and foreign registered and unregistered trademarks,
service marks, logos, trade names, corporate names and all registrations and
applications to register the same (the "Trademarks"); (ii) issued U.S. and
foreign patents and pending patent applications, patent disclosures, and any and
all divisions, continuations, continuations-in-part, reissues, reexaminations,
and extension thereof, any counterparts claiming priority therefrom, utility
models, patents of importation/confirmation, certificates of invention and like
statutory rights (the "Patents"); (iii) U.S. and foreign registered and
unregistered copyrights (including, but not limited to, those in computer
software and databases), rights of publicity and all registrations and
applications to register the same (the "Copyrights"); (iv) all categories of
trade secrets as defined in the Uniform Trade Secrets Act
14
<PAGE>
including, but not limited to, business information; and (v) all licenses and
agreements pursuant to which the Company has acquired rights in or to any
Trademarks, Patents or Copyrights, or licenses and agreements pursuant to which
the Company has licensed or transferred the right to use any of the foregoing
("Licenses").
Section 3.13 Employment Matters. Except as set forth in Section
------------------
3.13 of the Company Disclosure Schedule, to the Company's knowledge, (a) no key
employee or group of employees has any plans to terminate their employment with
the Company or any of its Subsidiaries as a result of the transactions
contemplated hereby or otherwise, (b) neither the Company nor any of its
Subsidiaries has experienced any strikes, collective labor grievances, other
collective bargaining disputes or claims of unfair labor practices in the last
five years, (c) there is no organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Company and its Subsidiaries, and (d) the Company and each Subsidiary is in
compliance with all laws relating to the employment or the workplace, including,
without limitation, provisions relating to wages, hours, collective bargaining,
safety and health, work authorization, equal employment opportunity, immigration
and the withholding of income taxes, unemployment compensation, worker's
compensation, employee privacy and right to know and social security
contributions, except where non-compliance would not, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect.
Section 3.14 Compliance with Laws. Except as set forth in Section
--------------------
3.14 to the Company Disclosure Schedule, the Company and its Subsidiaries are in
compliance with, and have not violated, any applicable law, rule or regulation
of any federal, state, local or foreign government or agency thereof, including,
but not limited to, the Fair Credit Reporting Act, except where non-compliance
would not, individually or in the aggregate, have or be reasonably likely to
have a Material Adverse Effect, and no notice, charge, claim, action or
assertion has been received by the Company or any of its Subsidiaries or has
been filed, commenced or, to the Company's knowledge, threatened against the
Company or any of its Subsidiaries alleging any such violation, except where
non-compliance would not, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect. Except as set forth in
Section 3.14 to the Company Disclosure Schedule, the Company and its
Subsidiaries hold all licenses, permits and approvals from all Governmental
Entities necessary for the Company and its Subsidiaries to own, lease and
operate their properties and to conduct their businesses, and all such licenses,
permits and approvals are in full force and effect except where the failure to
be in full force and effect would not, individually or in the aggregate, have or
be reasonably likely to have a Material Adverse Effect.
Section 3.15 Environmental Compliance.
------------------------
(a) Except as set forth on Section 3.15 to the Company Disclosure
Schedule and except for matters which, individually or in the aggregate, would
not have or be reasonably likely to have a Material Adverse Effect, (i) the
Company and each Subsidiary is in compliance with all applicable Environmental
Laws (as defined below); (ii) all permits and other governmental authorizations
currently held by the Company and each Subsidiary pursuant to the Environmental
Laws are in full force and effect, the Company and each Subsidiary is in
compliance with all of the terms of such permits and authorizations, and no
other permits or authorizations are
15
<PAGE>
required by the Company or any Subsidiary for the conduct of their respective
businesses; and (iii) the management, handling, storage, transportation,
treatment, and disposal by the Company and each Subsidiary of any Hazardous
Materials (as defined below) has been in compliance with all applicable
Environmental Laws. Neither the Company nor any Subsidiary has received any
written communication that alleges that the Company or any Subsidiary is not in
compliance in all material respects with all applicable Environmental Laws.
(b) Except as set forth on Section 3.15 to the Company Disclosure
Schedule, there is no material Environmental Claim (as defined below) pending
or, to the Company's knowledge, threatened against or involving the Company or
any of the Subsidiaries or against any person or entity whose liability for any
material Environmental Claim the Company or any of the Subsidiaries has or may
have retained or assumed either contractually or by operation of law.
(c) Except as set forth on Section 3.15 to the Company Disclosure
Schedule and except for matters which, individually or in the aggregate, would
not have or be reasonably likely to have a Material Adverse Effect, to the
Company's knowledge, there are no past or present actions or activities by the
Company or any Subsidiary including the storage, treatment, release, emission,
discharge, disposal or arrangement for disposal of any Hazardous Materials, that
could reasonably form the basis of any Environmental Claim against the Company
or any of the Subsidiaries or against any person or entity whose liability for
any Environmental Claim the Company or any Subsidiary may have retained or
assumed either contractually or by operation of law.
(d) As used in this agreement, these terms shall have the following
meanings:
(i) "Environmental Claim" means any and all administrative,
-------------------
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any person or governmental authority alleging
potential liability arising out of, based on or resulting from the presence, or
release or threatened release into the environment, of any Hazardous Materials
at any location owned or leased by the Company or any Subsidiary or other
circumstances forming the basis of any violation or alleged violation of any
Environmental Law.
(ii) "Environmental Laws" means all applicable foreign,
------------------
federal, state and local laws (including the common law), rules, requirements
and regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or protection of human health as it relates to the environment
including, without limitation, laws and regulations relating to releases of
Hazardous Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials or relating to management of asbestos in buildings.
(iii) "Hazardous Materials" means wastes, substances or
-------------------
materials (whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants or contaminants, including, without limitation, substances defined as
"hazardous substances", "toxic substances",
16
<PAGE>
"radioactive materials", or other similar designations in, or otherwise subject
to regulation under, any Environmental Laws.
Section 3.16 Contracts. Section 3.16 to the Company's Disclosure
---------
Schedule sets forth a complete and correct list, as of the date of this
agreement, of all agreements of the following types to which the Company or a
Subsidiary is a party or may be bound (collectively, the "Material Contracts"):
(i) agreements filed as an exhibit to the Company SEC Documents and each
agreement that would have been required to be filed as an exhibit to the Company
SEC Documents had such agreement been entered into as of the date of filing any
such Company SEC Documents; (ii employment, severance, termination, consulting
and retirement agreements; (ii loan agreements, indentures, letters of credit,
mortgages, notes and other debt instruments evidencing indebtedness in excess of
$150,000; (iv agreements that require aggregate future payments to or by the
Company or any Company Subsidiary of more than $150,000 (other than purchase
orders and other transactions entered into in the ordinary course of business
consistent with past practice with a term not exceeding, or cancellable by the
Company within, one year); (v) agreements containing any "change of control"
provisions which, if triggered, would involve payments by the Company or any
Subsidiary in excess of $150,000 or other material rights or obligations; (vi
material agreements with any key employee, director, officer, or person known to
the Company to be a direct or indirect stockholder of the Company; (vi
agreements prohibiting the Company or any Subsidiary from engaging or competing
in any line of business or limiting such competition; (vi any joint venture,
partnership and similar agreements involving a sharing of profits; (ix
acquisition or divestiture agreements relating to (A) the sale of assets or
stock of the Company or any Subsidiary or (B) the purchase of assets or stock of
any other person, specifying any earn-out or other payments required to be made
after the date hereof; (x) brokerage, finder's or financial advisory agreements;
and (xi guarantees of indebtedness for borrowed money of any person (other than
a wholly-owned Subsidiary). Each Company Agreement is legally valid and binding
and in full force and effect, and there are no defaults by the Company or any of
its Subsidiaries thereunder, except those defaults that, individually or in the
aggregate, would not have or be reasonably likely to have a Material Adverse
Effect. The Company has previously made available for inspection by Parent or
the Sub or their representatives all of the Company Agreements.
Section 3.17 Vote Required. The affirmative vote of the holders of
-------------
a majority of the outstanding shares of Common Stock are the only votes of the
holders of any class or series of the Company's capital stock necessary to
approve the Merger or to amend the Company's certificate of incorporation.
Section 3.18 Brokers. Except for Prudential Securities
-------
Incorporated, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this agreement based upon arrangements made by or
on behalf of the Company.
Section 3.19 Opinion of Financial Advisor. The Company has received
-----------------------------
the opinion of the Financial Advisor, dated the date of this agreement, to the
effect that, as of this date the cash consideration to be received by the
holders of the Common Stock in the Offer is fair from a financial point of view
to such holders. The Company has been authorized by the Financial Advisor to
17
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include the Fairness Opinion in the Offer Documents and such opinion has not
been withdrawn or modified. A signed copy of the Fairness Opinion has been
delivered to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE SUB
---------------------
Parent and the Sub represent and warrant to the Company that the
statements contained in this Article IV are true and correct as of the date of
this agreement.
Section 4.1 Organization. Parent is a limited partnership duly
------------
organized and validly existing under the laws of Delaware and the Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware. Each of Parent and the Sub has all requisite corporate, partnership
or other power and authority and all necessary government approvals to own,
lease and operate its properties and to carry on its business as now being
conducted.
Section 4.2 Authorization; Validity of Agreement; Necessary Action.
------------------------------------------------------
Each of Parent and the Sub has full partnership or corporate power and
authority to execute and deliver this agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Parent and the Sub of this agreement, and the consummation of the Merger and of
the transactions contemplated hereby have been duly authorized by the general
partner of Parent and the Board of Directors of the Sub and by Parent as the
sole stockholder of the Sub and no other partnership or corporate action on the
part of Parent or the Sub is necessary to authorize the execution and delivery
by Parent and the Sub of this agreement and the consummation of the transactions
contemplated hereby. This agreement has been duly executed and delivered by
Parent and the Sub, as the case may be, and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of each of Parent and the Sub, as the case may be,
enforceable against each of them in accordance with its respective terms.
Section 4.3 Consents and Approvals; No Violations. Except as set
-------------------------------------
forth in Section 4.3 of the schedule attached to this agreement setting forth
exceptions to Parent's representations and warranties set forth herein and
except for filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Exchange Act, the HSR
Act, state securities or blue sky laws and the DGCL, none of the execution,
delivery or performance of this agreement by Parent or the Sub, the consummation
by Parent or the Sub of the transactions contemplated hereby or compliance by
Parent or the Sub with any of the provisions hereof will (i) conflict with or
result in any breach of any provision of the partnership agreement of the Parent
or the certificate of incorporation or by-laws of the Sub, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (iii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent or the Sub is a
party or by which either of them or
18
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any of their respective properties or assets may be bound, or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent or the Sub or any of their properties or assets.
Section 4.4 Company Shares. Neither Parent nor any of its
--------------
Subsidiaries owns any Shares or is acting together with any other person (other
than Fir Tree) in connection with the Offer.
Section 4.5 Brokers. Except for Veronis, Suhler and Associates,
-------
Inc., no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this agreement based upon arrangements made by or on behalf of
Parent or the Sub.
Section 4.6 Financing Commitments. Parent has received, and has
---------------------
delivered to the Company true and complete copies of, commitments from lenders
(the "Commitment Letter") to provide not less than $100,000,000 of debt
financing (the "Debt Financing") required to consummate the Offer and the other
transactions contemplated by this agreement, and the limited partners of Parent
are obligated pursuant to the limited partnership agreement of Parent to
contribute to Parent the equity, which together with the Debt Financing, is
required to consummate the Stock Purchase and the other transactions
contemplated by this agreement.
Section 4.7 Fir Tree Agreement. Parent has delivered to the
------------------
Company a true and complete copy of the Fir Tree Agreement.
ARTICLE V
COVENANTS
---------
Section 5.1 Interim Operations of the Company. The Company
---------------------------------
covenants and agrees that, except (i) as expressly contemplated by this
agreement, (ii) as set forth in Section 5.1 of the Company Disclosure Schedule,
or (iii) as agreed in writing by Parent, after the date hereof, and prior to the
consummation of the Offer:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall use reasonable efforts
to preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees, creditors and business partners;
(b) the Company shall not, directly or indirectly, (i) sell, transfer
or pledge or agree to sell, transfer or pledge any treasury stock of the Company
or any capital stock of any of its Subsidiaries beneficially owned by it; (ii)
amend its certificate of incorporation or by-laws or similar organizational
documents; or (iii) split, combine or reclassify the outstanding Shares or any
outstanding capital stock of any of the Subsidiaries of the Company;
(c) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock (except dividends from a
wholly-owned Subsidiary to the Company); (ii) issue, sell,
19
<PAGE>
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or its Subsidiaries, other than shares reserved for issuance on the
date hereof pursuant to the exercise of Company Options outstanding on the date
hereof; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any material assets other than in the ordinary and usual course of
business and consistent with past practice, or incur or modify any material
indebtedness or other liability, other than in the ordinary and usual course of
business and consistent with past practice; or (iv) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i) grant
any increase in the compensation payable or to become payable by the Company or
any of its Subsidiaries to any of its executive officers or key employees; or
(ii)(A) adopt any new, or (B) amend or otherwise increase, or accelerate the
payment or vesting of the amounts payable or to become payable under any
existing, bonus, incentive compensation, deferred compensation, severance,
profit sharing, stock option, stock purchase, insurance, pension, retirement or
other employee benefit plan, agreement or arrangement, including, without
limitation, the Option Plan; or (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director or
employee of the Company or any its Subsidiaries;
(e) neither the Company nor any of its Subsidiaries shall modify,
amend or terminate any of its material contracts or waive, release or assign any
material rights or claims, except in the ordinary course of business and
consistent with past practice;
(f) neither the Company nor any of its Subsidiaries shall permit any
material insurance policy naming it as a beneficiary or a loss payable payee to
be cancelled or terminated without notice to Parent, except in the ordinary
course of business and consistent with past practice;
(g) neither the Company nor any of its Subsidiaries shall: (i) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness, any such short-term indebtedness to
be in amounts consistent with past practice; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business and consistent with past practice; (iii) make any loans,
advances or capital contributions to, or investments in, any other person (other
than (1) to wholly owned Subsidiaries of the Company, (2) pursuant to existing
commitments which are listed in Section 3.16 of the Company Disclosure Schedule,
or (3) in the ordinary course of business consistent with past practice); or
(iv) enter into any commitment or transaction (including, but not limited to,
any capital expenditure or purchase or lease of assets or real estate) involving
more than $150,000 for any one expenditure, commitment or transaction (other
than pursuant to existing commitments listed in Section 3.16 of the Company
Disclosure Schedule).
20
<PAGE>
(h) neither the Company nor any of its Subsidiaries shall change any
of the accounting methods used by it unless required by GAAP;
(i) neither the Company nor any of its Subsidiaries shall pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice, of claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the consolidated financial statements (or the
notes thereto) of the Company and its consolidated Subsidiaries;
(j) neither the Company nor any of its Subsidiaries shall adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);
(k) neither the Company nor any of its Subsidiaries shall take, or
agree to commit to take, any action that would or is reasonably likely to result
in any of the conditions to the Offer set forth in Annex A or any of the
conditions to the Stock Purchase set forth in Article VI not being satisfied, or
would make any representation or warranty of the Company contained herein
inaccurate in any respect at, or as of any time prior to, the Offer Closing
Date, or that would materially impair the ability of the Company to consummate
the Offer or the Stock Purchase in accordance with the terms hereof or
materially delay such consummation; and
(l) neither the Company nor any of its Subsidiaries shall enter into
an agreement, contract, commitment or arrangement to do any of the foregoing, or
to authorize, recommend, propose or announce an intention to do any of the
foregoing.
Section 5.2 Access; Confidentiality. Upon reasonable notice, the
-----------------------
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours (at such times
and in such manner so as not to interfere with the normal business operations of
the Company and its Subsidiaries), during the period prior to the consummation
of the Offer, to all its properties, books, contracts, commitments and records
and, during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to the Parent (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. Unless otherwise required by law, Parent will
hold any such information which is nonpublic in confidence in accordance with
the provisions of a letter agreement dated January 9, 1997, and supplemented by
letter agreement dated April 4/8, 1997, between the Company and Veronis, Suhler
& Associates, Inc. (the "Confidentiality Agreement").
Section 5.3 Consents and Approvals.
----------------------
(a) Each of the Company, Parent and the Sub shall take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on it with
21
<PAGE>
respect to this agreement and the transactions contemplated hereby (which
requirements shall include, without limitation, those identified in Section
5.3(a) of the Company Disclosure Schedule, and which actions shall include,
without limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
shall promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with this agreement and the transactions contemplated
hereby. Each of the Company, Parent and the Sub shall, and shall cause its
Subsidiaries to, take all reasonable actions necessary to obtain (and shall
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, the Sub, the
Company or any of its Subsidiaries in connection with the Offer or the Stock
Purchase, or the taking of any action contemplated thereby or by this agreement.
(b) The Company and Parent shall take all reasonable actions necessary
to file as soon as practicable notifications under the HSR Act and to respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
Section 5.4 No Solicitation.
---------------
(a) Neither the Company nor any of its Subsidiaries shall (and the
Company shall use its best efforts to cause its officers, directors, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent, any of its affiliates or representatives) concerning any
proposal or offer to acquire all or a substantial part of the business and
properties of the Company or any of its Subsidiaries or any capital stock of the
Company or any of its Subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving the Company or any
Subsidiary, or any division or operating or principal business unit of the
Company (an "Acquisition Proposal"), except that nothing contained in this
Section 5.4 or any other provision hereof shall prohibit the Company or the
Company's Board of Directors from (i) taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or
(ii) making such disclosure to the Company's stockholders as, in the good faith
judgment of the Board, after receiving written advice from independent counsel,
is required under applicable law, provided that the Company may not, except as
permitted by Section 5.4(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to the Offer or approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, or enter into any
agreement with respect to any Acquisition Proposal. The Company shall
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
Notwithstanding the foregoing, (a) the Company may furnish information
concerning its business, properties or assets to any corporation, partnership,
person or other entity or group pursuant to appropriate confidentiality
agreements if in the opinion of the Board of
22
<PAGE>
Directors, only after receipt of written advice from independent legal counsel
to the Company, the failure to provide such information would cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law, and (b) the Company may negotiate and participate in discussions
and negotiations with such entity or group concerning an Acquisition Proposal if
(x) such entity or group has on an unsolicited basis submitted a bona fide
written proposal to the Board of Directors of the Company relating to any such
transaction (which proposal may be conditioned on due diligence and financing)
which the Board of Directors determines in good faith, based on advice of its
financial advisors, represents a superior transaction to the Offer and is
reasonably capable of being consummated, and (y) in the opinion of the Board of
Directors of the Company, only after receipt of written advice from independent
legal counsel to the Company, the failure to engage in such discussions or
negotiations would cause the Board of Directors to violate its fiduciary duties
to the Company's stockholders under applicable law (an Acquisition Proposal
which satisfies clauses (x) and (y) being referred to herein as a "Superior
Proposal"). The Company shall immediately notify Parent of the existence of any
proposal or inquiry received by the Company and the identity of the party making
such proposal or inquiry which it may receive in respect of any such
transaction.
(b) Except as set forth herein, neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or the Sub, the approval or
recommendation by the Board of Directors or any such committee of the Offer, the
Stock Purchase or this agreement, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal. Notwithstanding the foregoing, prior
to the time of acceptance for payment of shares in the Offer, the Board of
Directors of the Company may (subject to the terms of this and the following
sentence) withdraw or modify its approval or recommendation of the Offer, the
Stock Purchase or this agreement, approve or recommend a Superior Proposal, or
enter into an agreement with respect to a Superior Proposal, in each case at any
time after the second business day following Parent's receipt of written notice
advising Parent that the Board of Directors has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal; provided that the Company
shall not enter into an agreement with respect to a Superior Proposal unless the
Company shall have furnished Parent with written notice not later than 12:00
noon one day in advance of any date that it intends to enter into such agreement
and shall have caused its financial and legal advisors to negotiate with Parent
to make such adjustments in the terms and conditions of this agreement as would
enable the Company to proceed with the transactions contemplated herein on such
adjusted terms. In addition, if the Company proposes to enter into an agreement
with respect to any Acquisition Proposal, it shall concurrently with entering
into such agreement pay, or cause to be paid, to Parent the Termination Fee (as
defined in Section 8.1(b)).
Section 5.5 Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to achieve the satisfaction of the Minimum Condition and all
conditions set forth in Annex A and Article VI and to consummate and make
effective the Stock Purchase and the other transactions
23
<PAGE>
contemplated by this agreement. Without limitation of the foregoing, Parent, the
Sub and the Company shall take such steps and provide and comply with such
undertakings as may be required by any Governmental Entity whose approval or
consent, or with respect to which a waiting period must expire, to satisfy the
conditions set forth in Annex A; provided that such steps and undertakings shall
not impose upon the Company or Parent and the Sub any terms or conditions which
Parent determines reasonably and in good faith to be unreasonably burdensome to
Parent or the Sub or to the operations of the Company on a going-forward basis.
In case at any time after the Offer Closing Date any further action is necessary
or desirable to carry out the purposes of this agreement, the proper officers
and directors of the Company, Parent and the Sub shall use all reasonable
efforts to take, or cause to be taken, all such necessary actions.
Section 5.6 Publicity. The initial press release with respect to
---------
the execution of this agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Offer, the Stock Purchase, the Merger or the Stock Split, this agreement
or the other transactions contemplated hereby without the prior consultation of
the other party, except as may be required by law or by any listing agreement
with a national securities exchange or trading market.
Section 5.7 Notification of Certain Matters. The Company shall
-------------------------------
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this agreement to be untrue or inaccurate in any material respect at or prior to
the Offer Closing Date and (ii) any material failure of the Company, Parent or
the Sub, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.8 Directors' and Officers' Insurance and Indemnification.
------------------------------------------------------
(a) For five years after the Offer Closing Date, Parent shall, and
shall cause the Surviving Corporation (or any successor to the Surviving
Corporation) to, (i) retain all provisions of the Company's certificate of
incorporation as now in effect respecting the limitation of liabilities of
directors and officers, and (ii) indemnify, defend and hold harmless the present
and former officers and directors of the Company and its Subsidiaries, and
persons who become any of the foregoing prior to the Offer Closing Date (each an
"Indemnified Party") against all losses, claims, damages, liabilities, costs,
fees and expenses (including reasonable fees and disbursements of counsel and
judgments, fines, losses, claims, liabilities and amounts paid in settlement
(provided that any such settlement is effected with the written consent of the
Parent or the Surviving Corporation)) arising out of actions or omissions
occurring at or prior to the Offer Closing Date to the full extent permitted
under Delaware law, subject to the terms of the Company's certificate of
incorporation or by-laws, as in effect at the date hereof; provided that, in the
event any claim or claims are asserted or made within such five year period, all
rights to indemnification in respect of any such claim or claims shall continue
until disposition of any and all such claims; provided, further, that any
24
<PAGE>
determination required to be made with respect to whether an Indemnified Party's
conduct complies with the standards set forth under Delaware law, the
certificate of incorporation or the by-laws, as the case may be, shall be made
by independent counsel mutually acceptable to Parent and the Indemnified Party;
and provided, further, that nothing herein shall impair any rights or
obligations of any present or former directors or officers of the Company. In
the event the Surviving Corporation or any of its successors or assigns
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
transfers or conveys all or substantially all of its properties and assets to
any person or entity, then, and in each such case, proper provision shall be
made so that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 5.8.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance ("D&O Insurance") for a
period of not less than three years after the Offer Closing Date; provided, that
the Parent may substitute therefor policies of substantially equivalent coverage
and amounts containing terms no less favorable to such former directors or
officers; provided, further, if the existing D&O Insurance expires, is
terminated or cancelled during such period, Parent or the Surviving Corporation
shall use all reasonable efforts to obtain substantially similar D&O Insurance;
provided, further, however, that in no event shall the Company be required to
pay aggregate premiums for insurance under this Section in excess of 110% of the
aggregate premiums paid by the Company in 1996 on an annualized basis for such
purpose (the "1996 Premium"); and provided, further, that if the Parent or the
Surviving Corporation is unable to obtain the amount of insurance required by
this Section 5.8(b) for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium of 110% of the 1996 Premium.
Section 5.9 Actions Respecting Commitment Letters. Parent and Sub
-------------------------------------
shall use reasonable efforts to negotiate on behalf of the Company and deliver
definitive documentation in connection with the financing described in the
Commitment Letter, and the Company shall cooperate in all reasonable respects in
connection therewith, including without limitation executing and delivering any
commitment letters, underwriting or placement agreements, pledge and security
documents, other definitive financing documents, or other requested certificates
or documents, including a certificate of the chief financial officer of the
Company with respect to solvency matters, as may be requested by Parent or Sub.
In conjunction with the obtaining of any such financing, the Company shall, at
the request of Parent, call for prepayment or redemption, or prepay, redeem
and/or renegotiate, as the case may be, any then existing indebtedness of the
Company; provided that any such prepayment or redemption shall actually be made
contemporaneously with the Offer Closing. The Company shall perform, and shall
cause the Subsidiaries to perform, all obligations required to be performed by
them in accordance with and pursuant to the Commitment Letter and not to amend
or terminate the Commitment Letter without the consent of Parent.
Section 5.10 Recapitalization. The Company shall cooperate with any
----------------
reasonable requests of Parent or the SEC related to the recording of the
transactions contemplated hereby as a recapitalization for financial reporting
purposes including, without limitation, to assist Parent and its affiliates with
any presentation to the SEC with regard to such recording and to include
appropriate disclosure with regard to such recording in all filings with the SEC
and all mailings to
25
<PAGE>
stockholders made in connection with the Offer. In furtherance of the foregoing,
the Company shall provide to Parent for the prior review of Parent's advisors
any description of the transaction contemplated by this agreement which is meant
to be disseminated.
ARTICLE VI
CONDITIONS
----------
Section 6.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Stock Purchase. The respective obligation of each party to effect the Stock
- --------------
Purchase shall be subject to the satisfaction on or prior to the Offer Closing
Date of each of the following conditions:
(a) Consummation of Offer. The conditions to the Offer set forth in
---------------------
Annex A shall have been satisfied (or expect with respect to paragraphs (a) and
(b) of Annex A waived by Parent or Sub) and the Offer shall be consummated in
accordance with its terms;
(b) Statutes; Consents. No law, statute, rule, order, decree or
------------------
regulation shall have been enacted or promulgated by any Governmental Entity of
competent jurisdiction which declares this agreement invalid or unenforceable in
any material respect or which prohibits consummation of the Offer or the Stock
Purchase and all governmental consents, orders and approvals (including, without
limitation, those identified in Section 5.3(a) of the Company Disclosure
Schedule) required for the consummation of the Offer and the Stock Purchase and
the other transactions contemplated hereby shall have been obtained and shall be
in effect on the Offer Closing Date; and
(c) HSR Approval. The applicable waiting period under the HSR Act
------------
shall have expired or been terminated.
Section 6.2 Conditions to Parent's and the Sub's Obligations to
---------------------------------------------------
Effect the Stock Purchase. The obligations of Parent and the Sub to consummate
- -------------------------
the Stock Purchase are further subject to the fulfillment of the following
conditions, any and all of which may be waived in whole or in part by Parent and
the Sub:
(a) Representations and Warranties. All of the representations and
------------------------------
warranties of the Company set forth in this agreement that are qualified as to
materiality shall be true and correct without such qualification and any such
representations and warranties that are not so qualified shall be true and
correct (in all respects, in each case (i) as of the date referred to in any
representation or warranty which addresses matters as of a particular date, or
(ii as to all other representations and warranties, as of the date of this
agreement and as of the Offer Closing Date), except to the extent that all
failures to be true and correct in the aggregate would not have or be reasonably
likely to have a Material Adverse Effect;
(b) Covenants. The Company shall have performed in all material
---------
respects all material obligations of the Company and complied in all
26
<PAGE>
material respects with all material agreements or covenants of the Company to be
performed or complied with by it under this agreement;
(c) Opinion. Parent shall have received an opinion of Conner &
-------
Winters, A Professional Corporation, counsel to the Company, in form and
substance reasonably satisfactory to the Parent and its counsel;
(d) Options. All actions contemplated by Section 1.5 hereof
-------
shall have been taken;
(e) Material Adverse Change. There shall not have occurred any
-----------------------
changes (or any developments that, insofar as reasonably can be foreseen, are
reasonably likely to result in any changes) in the financial condition,
business, results of operations or prospects of the Company and its Subsidiaries
that, individually or in the aggregate, would have or be reasonably likely to
have a Material Adverse Effect;
(f) Consents. All consents under the Company Agreements listed on
--------
Schedule 6.2(f) shall have been obtained, without any terms or conditions that
Parent determines in good faith to be unreasonably burdensome to Parent or the
Sub or the operations of the Company on a going forward basis, and shall be in
effect at the on the Offer Closing Date; and
(g) Termination of Credit Facility. The Company shall have terminated
------------------------------
the Credit facility maintained pursuant to the terms of a Credit Agreement dated
June 30, 1996 between the Company and BancFirst.
Section 6.3 Conditions to Company's Obligations to Effect the Stock
-------------------------------------------------------
Purchase. The obligations of the Company to consummate the Stock Purchase are
- --------
further subject to the fulfillment of the following conditions, any or all of
which may be waived in whole or in part by the Company:
(a) Representations. All of the representations and warranties of the
---------------
Parent and the Sub set forth in this agreement that are qualified as to
materiality shall be true and correct and any such representations and
warranties that are not so qualified shall be true and correct in all material
respects, in each case (i) as of the date referred to in any representation or
warranty which addresses matters as of a particular date, or (ii) as to all
other representations and warranties, as of the date of this agreement and as of
the Offer Closing Date;
(b) Covenants. Parent and the Sub shall have performed in all
---------
material respects all material obligations and complied in all material
respects with all material agreements or covenants of the Company to be
performed or complied with by it under this agreement; and
(c) Opinion. The Company shall have received an opinion of Proskauer
-------
Rose LLP, counsel to Parent and the Sub, in form and substance reasonably
satisfactory to the Company and its counsel.
27
<PAGE>
Section 6.4 Consulting Agreements. On the Offer Closing Date, the
---------------------
Company shall enter into (1) a Consulting Agreement in the form of Exhibit
6.4(a) with Howard G. Barnett, Jr., Chairman, President and Chief Executive
Officer of the Company, for a period of one year after Offer Closing Date at a
rate equal to his current base salary, (2) a Consulting Agreement in the form of
Exhibit 6.4(b) with Robert E. Craine, Jr., Executive Vice President of the
Company, for a period of 90 days after the Offer Closing Date at a rate equal to
his current base salary, and (3) a Consulting Agreement in the form of Exhibit
6.4(c) with J. Gary Mourton, Senior Vice President-Finance of the Company, for a
period of one year after the Offer Closing Date, the first six months at a rate
equal to his current base salary and the second six months at a rate equal to
one-half of his current base salary.
ARTICLE VII
TERMINATION
-----------
Section 7.1 Termination. This agreement may be terminated and the
-----------
transactions contemplated herein may be abandoned at any time prior to the Offer
Closing Date:
(a) By the mutual written consent of Parent and the Company.
(b) By either the Company or Parent:
(i) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use reasonable efforts to lift),
which permanently restrains, enjoins or otherwise prohibits (x) the
acceptance for payment of, or payment for, shares pursuant to the Offer or
the Merger or the Stock Split or (y) the Stock Purchase, the Merger or the
Stock Split and such order, decree, ruling or other action shall have
become final and non-appealable;
(ii) if the Minimum Condition is not satisfied; or
(iii) if the Offer shall not have been consummated before
October 31, 1997; provided, however, this Section 7(b)(iii) shall not be
available to any party whose failure to fulfill any obligation under this
agreement has been the cause of, or resulted in, the failure to consummate
the Offer before that date.
(c) By the Company:
(i) in connection with entering into a definitive
agreement in accordance with Section 5.4(b), provided it has complied with
all provisions thereof, including the notice provisions therein, and that
it makes simultaneous payment of the Termination Fee;
28
<PAGE>
(ii) if Parent or the Sub shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this agreement, which breach
cannot be or has not been cured within 30 days after the giving of written
notice to Parent or the Sub, as applicable.
(d) By Parent:
(i) if, due to an occurrence, not involving a breach by
Parent or the Sub of their obligations hereunder, which makes it impossible
to satisfy any of the conditions set forth in Annex A, the Company shall
have failed to commence the Offer on or prior to 15 business days following
the date of the initial public announcement of the Offer or shall terminate
the Offer;
(ii) if the Company shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in this agreement, which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
Company; or
(iii) if the Company is entitled to terminate the Offer as a
result of the occurrence of any event set forth in paragraph (e) of Annex
A.
Section 7.2 Effect of Termination. In the event of the termination
---------------------
of this agreement pursuant to its terms, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this agreement shall forthwith become
null and void, and there shall be no liability on the part of the Parent or the
Company except (A) for fraud or for breach of this agreement prior to such
termination and (B) as set forth in Section 8.1.
ARTICLE VII
MISCELLANEOUS
-------------
Section 8.1 Fees and Expenses.
-----------------
(a) Except as contemplated by this agreement, including Section 8.1(b)
hereof, all costs and expenses incurred in connection with this agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such expenses.
(b) If (x) the Company shall terminate this agreement pursuant to
Section 7.1(c)(i), (y) the Parent shall terminate this agreement pursuant to
Section 7.1(d)(iii) hereof, or (z) the Company or Parent shall terminate this
agreement pursuant to Section 7.1(b)(ii) and (1) prior to the termination of
this agreement, an Acquisition Proposal at a price and on terms at least as
favorable to the stockholders of the Company as the Offer shall have been made,
and (2) within one year of such termination the Company consummates such
Acquisition Proposal or within six
29
<PAGE>
months of such termination the Company enters into an agreement for a different
Acquisition Proposal which is consummated within one year of such termination,
in either case at a price and on terms at least as favorable to the stockholders
of the Company as the Offer, then the Company shall pay to Parent (concurrently
with such termination, in the case of clauses (x) or (y) above, and not later
than the consummation of such Acquisition Proposal, in the case of clause (z)
above) an amount equal to $5,000,000 (the "Termination Fee") plus an amount
equal to $1,000,000 to reimburse Parent for its costs and expenses in connection
with the Offer, the Merger and this agreement (the "Expense Reimbursement");
provided that no Termination Fee or Expense Reimbursement shall be payable if
the Sub or Parent was in material breach of its representations, warranties or
obligations under this agreement at the time of its termination.
(c) Payment of the Termination Fee and Expense Reimbursement upon any
termination referred to in Section 8.1(b) shall be the sole and exclusive remedy
for Parent and the Sub as a result of such termination.
Section 8.2 Amendment and Modification. Subject to applicable law,
--------------------------
this agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto.
Section 8.3 Nonsurvival of Representations and Warranties. None of
---------------------------------------------
the representations and warranties in this agreement or in any schedule,
instrument or other document delivered pursuant to this agreement shall survive
the Offer Closing Date.
Section 8.4 Notices. All notices and other communications
-------
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice);
(a) if to Parent or the Sub, to:
VS&A Communications Partners II, L.P.
350 Park Avenue
New York, New York 10022
Att: Jeffrey T. Stevenson
President
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Att: Bertram A. Abrams, Esq.
30
<PAGE>
(b) if to the Company, to:
T/SF Communications Corporation
2407 E. Skelly Drive
Tulsa, Oklahoma 74105
Att: Howard G. Barnett, Jr., President
with a copy to:
Conner & Winters
2400 First Place Tower
15 E. 5th Street
Tulsa, Oklahoma 74103
Att: Robert A. Curry, Esq.
Section 8.5 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.6 Entire Agreement; Third Party Beneficiaries. This
-------------------------------------------
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Article II and Section 5.8 are not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder. The
stockholders of the Company who do not tender shares in the Offer shall be third
party beneficiaries of Article II of this Agreement.
Section 8.7 Severability. Any term or provision of this agreement
------------
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 8.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
31
<PAGE>
Section 8.9 Assignment. Neither this agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Sub may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Parent or to any direct or indirect wholly owned Subsidiary of Parent.
Subject to the preceding sentence, this agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
Section 8.10 Transfer and Similar Taxes. Notwithstanding any other
--------------------------
provision of this agreement to the contrary, each of the Company's stockholders
shall be responsible for the payment of any sales, use, privilege, transfer,
documentary, gains, stamp, duties, recording and similar Taxes and fees
(including any penalties, interest and additions to such fees) incurred in
connection with sucn stockholder's sale of shares to the Sub pursuant to this
agreement and for the accurate filing of all necessary Tax Returns and other
documentation with respect to any transfer Tax.
VS&A COMMUNICATIONS PARTNERS II, L.P.
By: /s/ Jeffrey T. Stevenson
------------------------
VS&A-T/SF, INC.
By:/s/ Jeffrey T. Stevenson
------------------------
T/SF COMMUNICATIONS CORPORATION
By: Howard G. Barnett, Jr.
----------------------
32
<PAGE>
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other provisions
-------------------------------
of the Offer, but subject to the restriction on the Company's right to amend,
modify or waive the terms and conditions of the Offer pursuant to Section 1.1(b)
of this agreement, the Company shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule 14e-
l(c) under the Exchange Act (relating to the Company's obligation to pay for or
return tendered shares promptly after termination or withdrawal of the Offer),
pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered shares, and may
terminate or amend the Offer as to any shares not then paid for, if (i) any
applicable waiting period under the HSR Act has not expired or terminated, (ii)
the Minimum Condition has not been satisfied, or (iii) at any time on or after
the date of this agreement and before the time of acceptance for payment for any
such shares, any of the following events shall occur:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Sub, Parent, the Company or
any Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Sub's ownership or operation (or that of any of
their respective Subsidiaries or affiliates) of all or a material portion of
their or the Company's businesses or assets, or to compel Parent or the Sub or
their respective Subsidiaries and affiliates to dispose of or hold separate any
material portion of the business or assets of the Company or Parent and their
respective Subsidiaries, (ii) challenging the acquisition by the Company of any
shares under the Offer or the acquisition by the Sub of any shares of Common
Stock pursuant to the Stock Purchase or pursuant to the Stockholder Agreements,
seeking to restrain or prohibit the making or consummation of the Offer, the
Stock Purchase or the Merger or the Stock Split or the performance of any of the
other transactions contemplated by this agreement or the Stockholder Agreements
(including the voting provisions thereunder), or seeking to obtain from the
Company, Parent or the Sub any damages that are material in relation to the
Company and its Subsidiaries taken as a whole, (iii) seeking to impose material
limitations on the ability of the Company, or render the Company unable, to
accept for payment, pay for or purchase some or all of the shares pursuant to
the Offer, or (iv) which otherwise would have or be reasonably likely to have a
Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer, the Stock Purchase or the Merger or the Stock Split, or
any other action shall be taken by any Governmental Entity, other than the
application to the Offer, the Stock Purchase or the Merger or the Stock Split of
applicable waiting periods under HSR Act, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
American Stock Exchange or in the NASDAQ National Market System, for a period in
excess of 24 hours (excluding suspensions
33
<PAGE>
or limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (iv) any limitation (whether or not mandatory) by
any United States governmental authority on the extension of credit generally by
banks or other financial institutions, or (v) a change in general financial bank
or capital market conditions which materially and adversely affects the ability
of financial institutions in the United States to extend credit or syndicate
loans or (vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(d) there shall have occurred any changes (or any developments that,
insofar as reasonably can be foreseen, are reasonable likely to result in any
changes) in the financial condition, business, results of operations or
prospects of the Company and its Subsidiaries that individually or in the
aggregate would have or be reasonably likely to have a Material Adverse Effect;
(e) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its approval or recommendation of the Offer,
the Stock Purchase or this agreement, or approved or recommended any Acquisition
Proposal or (ii) the Company shall have entered into any agreement with respect
to any Superior Proposal in accordance with Section 5.4(b) of this agreement;
(f) any of the representations and warranties of the Sub set forth in
this agreement that are qualified as to materiality shall not be true and
correct without such qualification and any such representations and warranties
that are not so qualified shall not be true and correct in any respect (in each
case (i) as of the date referred to in any representation or warranty which
addresses matters as of a particular date, or (ii) as to all other
representations and warranties, as of the date of this agreement and as of the
scheduled expiration of the Offer), except to the extent all failures to be true
and correct in the aggregate would not have or be reasonably likely to have a
Material Adverse Effect;
(g) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under this agreement or the action contemplated by Section 1.5(c) of this
agreement shall not have been taken; or
(h) this agreement shall have been terminated in accordance with its
terms;
which in the reasonable good faith judgment of the Parent or the Sub, in any
such case, and regardless of the circumstances (including any action or inaction
by the Parent or the Sub) giving rise to such condition makes it inadvisable for
the Company to proceed with the Offer and/or with such acceptance for payment of
or payment for Shares.
34
<PAGE>
The foregoing conditions are for the benefit of the Parent and the Sub
and may be waived by the Parent or the Sub, on behalf of the Company, in whole
or in part, at any time and from time to time in the sole discretion of the
Parent and the Sub. The failure by the Parent or the Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
35
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
T/SF COMMUNICATIONS CORPORATION
It is hereby certified that:
1. The name of the Corporation is T/SF Communications Corporation.
2. The Certificate of Incorporation of the Corporation is hereby amended
and restated in its entirety as follows:
FIRST: The name of the corporation is T/SF Communications Corporation.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle, State of
Delaware 19805. The name of the registered agent at that address is Corporation
Service Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The authorized capital stock of the Corporation and the
aggregate number of shares which the Corporation shall have the authority to
issue shall be 10,000,000 shares of Common Stock with a par value of $0.10 per
share ("Common Stock") and 1,000,000 shares of preferred stock with a par value
of $10.00 per share ("Preferred Stock"). The Common Stock and Preferred Stock
shall have the designations, preferences, dividends, voting powers or
restrictions, qualifications, limitations, and relative rights hereinunder
described.
A. Common Stock
------------
Except as otherwise expressly provided by law or in this paragraph
FOURTH, or as determined by the Board of Directors of the Corporation pursuant
to the provisions hereof when fixing the voting rights of any series of the
Preferred Stock to be issued and subject to the provisions of paragraph B
hereof, voting rights upon any and all matters shall be vested in the holders of
the Common Stock, each share of such Common Stock having one vote on all
matters. Each fractional share, if any, of Common Stock shall be entitled to a
corresponding fractional vote. Subject to the provisions hereof governing the
payment of dividends on the Preferred Stock, as determined by the Board of
Directors of the Corporation pursuant to the provisions of Paragraph B hereof,
the Board of Directors of the Corporation may declare and pay dividends, in its
discretion, on the Common Stock of the Corporation out of funds legally
available for the payment of dividends. Upon any voluntary or involuntary
liquidation of the Corporation and after the holders of shares of the Preferred
Stock, as determined by the Board of Directors of the Corporation
<PAGE>
pursuant to the provisions of Paragraph B hereof, shall have been paid the full
preferential amounts to which they shall be entitled, the holders of shares of
the Common Stock shall be entitled to share in all remaining assets of the
Corporation. The Common Stock of the Corporation shall not be redeemable
without the consent of the holders of the shares to be redeemed.
B. Preferred Stock.
---------------
The shares of the Preferred Stock may be divided into and issued in
series. The Board of Directors of the Corporation shall be expressly vested
with full authority and discretion to establish one or more series of Preferred
Stock and to fix and determine by written action or resolution the relative
rights and preferences of the shares of Preferred Stock or any series thereof so
established, to the full extent now or hereafter permitted by the General
Corporation Law of the State of Delaware, including, but not limited to, the
fixing and determining of the following:
1. The rate of dividend of such stock or any series thereof
and whether such dividends are to be cumulative and the priority, if any, of
dividend payments relative to other series in the class;
2. Whether the shares of such stock or any series thereof
may be redeemed and, if so, the redemption price and the terms and conditions of
redemption;
3. The amount payable upon such shares or any series
thereof in the event of voluntary or involuntary liquidation and the priority,
if any, of each series relative to other series in the class with respect to
amounts payable upon liquidation;
4. Sinking fund provisions, if any, for the redemption or
purchase of such shares or any series thereof;
5. The terms and conditions, if any, on which such shares
or any series thereof may be converted into or exchanged for shares of any other
class (common or preferred) or into shares of any series of the same class, and,
if provision is made for conversation or exchange, the times, prices, rates,
adjustments, and other terms and conditions of such conversion or exchange; and
6. Voting rights, if any, of such shares or any series thereof.
C. Pre-Emptive Rights.
------------------
No holder of shares of any class of stock of the Corporation shall be
entitled, as a matter of right, to subscribe for or purchase any part of any new
or additional issue of stock of any class whatsoever, or of obligations or other
securities convertible into, or exchangeable for, any stock of any class
whatsoever, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of dividend, stock split or other distribution."
and said Certificate of Incorporation as herein amended shall continue in full
force and effect until further changed, altered or amended as therein provided
and in the manner prescribed by the provisions of the GCL.
<PAGE>
FIFTH: To the fullest extent that elimination or limitation of the
liability of directors is permitted by law, as the same is now or may hereafter
be in effect, no director of the corporation shall be liable to the corporation
or its stockholders for monetary damages for breach of his or her fiduciary
duty as a director.
SIXTH: The corporation shall, to the fullest extent permitted by law, as
now or hereafter in effect, indemnify each person (including the heirs,
executors, administrators and other personal representatives of such person)
against expenses including attorneys' fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by such person in connection with
any threatened, pending or completed suit, action or proceeding (whether civil,
criminal, administrative or investigative in nature or otherwise) in which such
person may be involved by reason of the fact that he or she is or was a director
or officer of the corporation or is or was serving any other incorporated or
unincorporated enterprise in such capacity at the request of the corporation.
Expenses (including attorneys' fees) incurred by a director or officer in
defending any civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
of the action, suit or proceeding, but, if Delaware law requires, advancement of
expenses shall be made only upon receipt of an undertaking by or on behalf of
the director or officer to repay the amounts advanced if it shall ultimately be
determined that the person is not entitled to be indemnified by the corporation.
The indemnification provided for in this certificate of incorporation shall not
be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of (S)291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of (S)279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on the corporation.
EIGHT: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
NINTH: The board of directors may from time to time adopt, amend or
repeal the by-laws of the corporation, subject to the power of the
stockholders to adopt any by-laws or to amend or repeal any by-laws adopted,
amended or repealed by the board of directors.
3
<PAGE>
3. The amendment of the Certificate of Incorporation herein certified
has been duly adopted and written consent has been given in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
Dated: February 5, 1998
T/SF COMMUNICATIONS CORPORATION
By: /s/ Brian A. Meyer
______________________________
Brian A. Meyer
Secretary and General Counsel
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
T/SF COMMUNICATIONS CORPORATION
1. MEETINGS OF STOCKHOLDERS.
------------------------
1.1 Annual Meeting. The annual meeting of stock-holders shall be
--------------
held on the first Monday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
----------------
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
--------------------------
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
<PAGE>
1.4 Notice of Meetings; Waiver of Notice. Written notice of each
------------------------------------
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except when required
under section 1.5 below or by law. Each notice of a meeting shall be given,
personally or by mail, not fewer than 10 nor more than 60 days before the
meeting and shall state the time and place of the meeting, and, unless it is the
annual meeting, shall state at whose direction or request the meeting is called
and the purposes for which it is called. If mailed, notice shall be considered
given when mailed to a stockholder at his address on the corporation's records.
The attendance of any stockholder at a meeting, without protesting at the
beginning of the meeting that the meeting is not lawfully called or convened,
shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
------
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at
-2-
<PAGE>
the meeting as originally called. No notice of an adjourned meeting need be
given, if the time and place are announced at the meeting at which the
adjournment is taken, except that, if adjournment is for more than 30 days or
if, after the adjournment, a new record date is fixed for the meeting, notice of
the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
---------------
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of stockholders, except as otherwise
provided by law or by section 1.8. Directors shall be elected in the manner
provided in section 2.1. Voting need not be by ballot, unless requested by a
majority of the stockholders entitled to vote at the meeting or ordered by the
chairman of the meeting. Each stockholder entitled to vote at any meeting of
stockholders or to express consent to or dissent from corporate action in
writing without a meeting may authorize another person to act for him by proxy.
No proxy shall be valid after three years from its date, unless it provides
otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
--------------------
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of 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 his name. For a period of not fewer than 10
-3-
<PAGE>
days prior to the meeting, the list shall be available during ordinary business
hours for inspection by any stockholder for any purpose germane to the meeting.
During this period, the list shall be kept either (a) at a place within the city
where the meeting is to be held, if that place shall have been specified in the
notice of the meeting, or (b) if not so specified, at the place where the
meeting is to be held. The list shall also be available for inspection by
stockholders at the time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
-----------------------------------
permitted to be taken at any 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 fewer 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 any such
action shall be given to those stockholders who did not consent in writing.
2. BOARD OF DIRECTORS.
------------------
2.1 Number, Qualification, Election and Term of Directors. The
-----------------------------------------------------
business of the corporation shall be managed by the entire Board, which
initially shall consist of not less than three (3) nor more than fifteen (15)
directors. The number of directors may be changed by resolution of a majority
of the Board or by the stockholders, but no decrease may shorten the term of
-4-
<PAGE>
any incumbent director. Directors shall be elected at each annual meeting of
stockholders by a plurality of the votes cast and shall hold office until the
next annual meeting of stockholders and until the election and qualification of
their respective successors, subject to the provisions of section 2.9. As used
in these by-laws, the term "entire Board" means the total number of directors
the corporation would have, if there were no vacancies on the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
---------------------------
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
-----------------
outside Delaware.
2.4 Annual and Regular Meetings. Annual meetings of the Board, for
---------------------------
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6.
-5-
<PAGE>
Regular meetings of the Board may be held without notice at such times and
places as the Board determines. If the day fixed for a regular meeting is a
legal holiday, the meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
----------------
the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
------------------------------------
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
2.7 Board or Committee Action Without a Meeting. Any action required
-------------------------------------------
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the
-6-
<PAGE>
members of the Board or the committee consent in writing to the adoption of a
resolution authorizing the action. The resolution and the written consents by
the members of the Board or the committee shall be filed with the minutes of the
proceedings of the Board or the committee.
2.8 Participation in Board or Committee Meetings by Conference
----------------------------------------------------------
Telephone. Any or all members of the Board or any committee of the Board may
- ---------
participate in a meeting of the Board 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 the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
------------------------------------
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
---------
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
-7-
<PAGE>
2.11 Compensation. Directors shall receive such compensation as the
------------
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid
for serving the corporation or its affiliates or subsidiaries in other
capacities.
3. COMMITTEES.
----------
3.1 Executive Committee. The Board, by resolution adopted by a
-------------------
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
----------------
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. 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 case of the absence
or
-8-
<PAGE>
disqualification of any member of a committee, the member or members present at
a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be reported to
the Board at its next meeting. Each committee shall adopt rules of procedure and
shall meet as provided by those rules or by resolutions of the Board.
4. OFFICERS.
--------
4.1 Number; Security. The executive officers of the corporation
----------------
shall be the chairman of the board, the president, one or more vice presidents
(including an executive vice president, if the Board so determines), a
secretary, a treasurer, a chief financial officer and a general counsel. Any
two or more offices may be held by the same person. The board may require any
officer, agent or employee to give security for the faithful performance of his
duties.
4.2 Election; Term of Office. The executive officers of the
------------------------
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
--------------------
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall
-9-
<PAGE>
hold office for such period and have such powers and duties as the Board
determines. The Board may delegate to any executive officer or committee the
power to appoint and define the powers and duties of any subordinate officers,
agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
-----------------------------------
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any officer elected or appointed by the Board
or appointed by an executive officer or by a committee may be removed by the
Board either with or without cause, and in the case of an officer appointed by
an executive officer or by a committee, by the officer or committee that
appointed him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
---------
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 Chairman of the Board. The chairman of the board shall preside
---------------------
at all meetings of the Board of Directors of the corporation and may preside at
meetings of the shareholders. He shall be an ex-officio member of all standing
committees and shall see that all orders and resolutions of the Board are
carried into effect. Subject to the control of the Board, he shall, with powers
concurrent with the president, have general
-10-
<PAGE>
supervision over the business of the corporation and shall have such other
powers and duties as chairmen of the board of corporations usually have or as
the Board assigns to him.
4.7 The President. The president shall be the chief executive
-------------
officer of the corporation. Subject to the control of the Board, he shall, with
powers concurrent with the chairman of the board, have general supervision over
the business of the corporation and shall have such other powers and duties as
presidents of corporations usually have or as the Board assigns to him.
4.8 Vice President. Each vice president shall have such powers and
--------------
duties as the Board or the president assigns to him.
4.9 The Treasurer. The treasurer shall be the chief financial
-------------
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.10 The Secretary. The secretary shall be the secretary of, and
-------------
keep the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall have
such powers and duties as the Board or the president
-11-
<PAGE>
assigns to him. In the absence of the secretary from any meeting, the minutes
shall be kept by the person appointed for that purpose by the presiding officer.
4.11 Salaries. The Board may fix the officers' salaries, if any, or
--------
it may authorize the president or the chairman of the board to fix the salary of
any other officer.
5. SHARES.
------
5.1 Certificates. The corporation's shares shall be represented by
------------
certificates in the form approved by the Board. Each certificate shall be signed
by the chairman of the board or the president or a vice president, and by the
secretary or an assistant secretary or the treasurer or an assistant treasurer,
and shall be sealed with the corporation's seal or a facsimile of the seal. Any
or all of the signatures on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
---------
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
---------------------------------------
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or
-12-
<PAGE>
dissent from any proposal without a meeting, or to receive payment of any
dividend or the allotment of any rights, or for the purpose of any other action.
The record date may not be more than 60 or fewer than 10 days before the date of
the meeting or more than 60 days before any other action.
6. INDEMNIFICATION AND INSURANCE.
-----------------------------
6.1 Right to Indemnification. The corporation shall indemnify each
------------------------
person who is or was an officer or director of the corporation to the fullest
extent provided for in the corporation's certificate of incorporation.
7. MISCELLANEOUS.
-------------
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
----
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
-----------
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
--------------------------------------
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The
Board may, however, appoint some other person to vote the shares.
-13-
<PAGE>
7.4 Amendments. These Bylaws may be altered or repealed or new Bylaws
----------
may be adopted either by:
(a) The affirmative vote of the holders of record of a
majority of the outstanding shares of corporation entitled to vote thereon;
or
(b) The affirmative vote of a majority of the members of the
Board of Directors; provided, however, that the Board of Directors shall
not adopt or alter any bylaw fixing their number, qualifications,
classifications or term of office.
-14-
<PAGE>
CERTIFICATE OF INCORPORATION
OF
CASINO PUBLISHING COMPANY
*****
1. Name. The name of the Corporation is Casino Publishing Company.
----
2. Registered Agent and Address. The address of its registered office in
----------------------------
the State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle, Delaware. The name of its registered agent at such address is
The Corporation Trust Company.
3. Purpose. The purpose of the Corporation is to engage in any lawful act
-------
or activity for which corporations may be organized under (the General
Corporation Law of Delaware.
4. Powers and Privileges. In furtherance of the objects and purposes of
---------------------
the Corporation, the Corporation shall have all the powers and privileges
granted by the General Corporation Law of Delaware, by any other law, or by this
Certificate of Incorporation, including without limitation the power to borrow
or raise money and otherwise contract indebtedness for any of the purposes of
the Corporation; to draw, make, accept, endorse, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds, debentures and other
negotiable or non-nogotiable instruments and evidences of indebtedness; to
secure the payment of any of the foregoing and of the interest thereon by
mortgage, pledge, assignment, deed of trust or lien of or upon any or all of the
property of the Corporation (real, personal or mixed), whether at the time owned
or thereafter acquired; and to sell, pledge or otherwise dispose of such bonds
or other obligations, of the Corporation for its corporate purposes.
5. Capitalization. The total number of shares of stock which the
--------------
Corporation shall have authority to issue is ten thousand (10,000) shares of
common stock, having a par value of One Cent ($0.01) per share.
6. Incorporator. The name and mailing address of the Incorporator is as
follows:
NAME MAILING ADDRESS
---- ----------------
Robert A. Curry 2400 First Place Tower
15 East 5th Street
Tulsa, Oklahoma 74103
<PAGE>
7. Board of Directors. The powers of the Incorporator shall terminate
upon the election of a Board of Directors of the Corporation. The number of
members of the Board of Directors of the Corporation shall be as set forth
in the Bylaws.
8. Duration. The Corporation is to have perpetual existence.
9. Limited Liability. The private property of the stockholders shall
not be subject to the payment of corporate debts to any exent whatsoever.
10. Authority of the Board of Directors. In furtherance and not in
limitations of the powers conferred by statute, the Board of Directors of
the Corporation is expressly auhorized:
(a) To make, alter or repeal the Bylaws of the Corporation;
(b) To authorize and cause to be exceuted mortgages and liens
upon the real and personal property of the Corporation; and
(c) To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purposes and
to abolish any such reserve in the manner in which it was created.
11. General. Meetings of the stockholders may be held within or outside the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) within or outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the Bylaws of the Corporation. Elections of
directors need not be by written ballot unless the Bylaws of the Corporation
shall so provide.
12. Amendment. The Corporation reserves the right to amend, alter, change
or repeal any provisions contained in this Certificate of Incorporation, in the,
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
13. Compromise or Arrangement. Whenever a compromise or arrangement is
proposed between the Corporation and its creditors or any class of them and/or
between the Corporation and its stockholders or any class of them, any court of
equitable jurisdication within the State of Delaware, on the application in a
summary way of the Corporation or of any creditor or shareholder thereof, or on
the application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, may order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the court directs. If a majority
in number representing three-fourths (3/4ths) in value of the creditors or class
of
-2-
<PAGE>
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the compromise or arrangement and the reorganization shall, if
sanctioned by the court to which the application has been made, be binding on
all the creditors or class of creditors, and/or on all the stockholders or class
of stockholders of the Corporation, as the case may be, and also on the
Corporation.
14. LIABILITY OF DIRECTORS. To the fullest extent permitted by the General
Corporation Law of Delaware, as the same exists or may hereafter be amended, a
director of the Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director. No amendment to or repeal of this Article 14 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.
THE UNDERSIGNED, being the Incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, does make this Certificate, hereby declaring and certifying that this
is his act and deed and the facts herein stated are true, and accordingly has
hereunto set his hand this 11th day of June, 1996.
/s/ Robert A. Curry
-------------------------
Robert A. Curry
-3-
<PAGE>
BY-LAWS
OF
CASINO PUBLISHING COMPANY
(a Delaware corporation)
<PAGE>
BY-LAW OF
CASINO PUBLISHING COMPANY
(a Delaware corporation}
TABLE OF CONTENTS
Article or
Section Caption Page
- ---------- ------- ----
I Offices and Fiscal Year..................... 1
-----------------------
1.01 Registered Office 1
1.02 Other Offices 1
1.03 Fiscal Year 1
II Meetings of Stockholders.................... 1
--------------------------------------------
2.01 Place of Meeting............................ 1
2.02 Annual Meeting.............................. 1
2.03 Special Meetings............................ 2
2.04 Notice of Meetings.......................... 2
2.05 Quorum, Manner of Acting and Adjournment.... 2
2.06 Organization................................ 3
2.07 Voting; Proxies............................. 3
2.08 Consent of Stockholders in Lieu of Meeting.. 3
2.09 Voting Lists................................ 4
III Board of Directors.......................... 4
--------------------------------------------
3.01 Powers...................................... 4
3.02 Number and Term of Office................... 4
3.03 Resignations................................ 4
3.04 Vacancies and Newly-Created Directorships... 4
3.05 Organization................................ 5
3.06 Place of Meeting............................ 5
3.07 Organization Meeting........................ 5
3.08 Regular Meetings............................ 5
3.09 Special Meetings............................ 5
3.10 Conference Telephone Meetings............... 5
3.11 Quorum, Manner of Acting and Adjournment.... 6
3.12 Committees.................................. 6
3.13 Consent of Directors in Lieu of Meeting..... 7
3.14 Presumption of Assent....................... 7
3.15 Compensation of Directors................... 7
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<PAGE>
Article or
Section Caption Page
- ------- ------- ----
3.16 Removal of Directors...................... 7
IV Notices-Waivers........................... 7
------------------------------------------
4.01 Notice, What Constitutes.................. 7
4.02 Waivers of Notice......................... 8
V Officers.................................. 8
--------
5.01 Number , Qualifications and Designation... 8
5.02 Election and Term of Office............... 8
5.03 Other Officers, Committees and Agents..... 8
5.04 Chairman of the Board and Vice Chairman... 9
5.05 President................................. 9
5.06 Vice Presidents........................... 9
5.07 Secretary and Assistant Secretaries....... 9
5.08 Treasurer and Assistant Treasurers........ 10
5.09 Officers' Bonds........................... 10
5.10 Compensation.............................. 10
5.11 Action with Respect to Securities of
Other Corporations........................ 10
VI Capital Stock............................. 10
-------------
6.01 Issuance.................................. 10
6.02 Regulations Regarding Certificates........ 11
6.03 Stock Certificates........................ 11
6.04 Lost, Stolen, Destroyed or Mutilated
Certificates.............................. 11
6.05 Record Holder of Shares................... 11
6.06 Determination of Stockholders of Record
for Voting at Meetings.................... 12
6.07 Determination of Stockholders of Record
for Dividends and Distributions........... 12
6.08 Determination of Stockholders for
Written Consent........................... 12
VII Indemnification and Insurance............. 13
-----------------------------
7.01 Right to Indemnification 13
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<PAGE>
Article or
Section Caption Page
- ------- ------- ----
7.02 Right of Indemnitee to Bring Suit.......... 14
7.03 Non-Exclusivity of Rights.................. 14
7.04 Insurance.................................. 14
7.05 Indemnification of Employees and
Agents of the Corporation.................. 14
VIII General Provisions......................... 15
------------------
8.01 Dividends.................................. 15
8.02 Annual Statements.......................... 15
8.03 Contracts.................................. 15
8.04 Checks..................................... 15
8.05 Corporate Seal............................. 16
8.06 Amendment of By-laws....................... 16
(Parenthetical Section references are to sections of the General Corporation Law
of Delaware.)
-ii-
<PAGE>
BY-LAWS
OF
CASINO PUBLISHING COMPANY
(a Delaware Corporation)
ARTICLE I
Offices and Fiscal Year
SECTION 1.01. Registered Office. The registered office of the Corporation
-------------------
shall be in the City of Wilmington, County of New Castle, State of Delaware,
until otherwise established by a vote of a majority of the Board of Directors in
office, and a statement of such change is filed in the manner provided by
statute. (Secs. 131, 133)
SECTION 1.02. Other Offices. The Corporation may also have offices at such
---------------
other places within or without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Corporation requires.
(Sec. 141)
SECTION 1.03. Fiscal Year. The fiscal year of the Corporation shall be the
-------------
calendar year unless otherwise fixed by resolution of the Board of Directors.
ARTICLE II
Meetings of Stockholders
SECTION 2.01. Place of Meeting. All meetings of the Stockholders of the
----------------
Corporation shall be held at the registered office of the Corporation or at the
principal office of the Corporation or at such other place within or outside the
State of Delaware as shall be designated by the Board of Directors in the notice
of such meeting. (Sec. 211 (a))
SECTION 2.02. Annual Meeting. An annual meeting of the Stockholders of the
---------------
Corporation, for the election of directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting, shall be held in each year on the first Tuesday in May (commencing in
1997) at 10:00 a.m. If such day is a legal holiday, the annual meeting shall be
held on the following business day. If the annual meeting is not held on such
date, the Board of Directors by majority vote shall cause a meeting to be held
as soon thereafter as convenient. (Sec. 211(b), (c))
<PAGE>
SECTION 2.03. Special Meetings. Special meetings of the Stockholders of the
----------------
Corporation may be called at any time by the President, Chairman of the Board,
if any, a majority of the Board of Directors, or one or more Stockholders
holding not less than 25 percent of all of the issued and outstanding stock
entitled to vote on the business to be transacted at such special meeting, for
any purpose or purposes for which meetings may be lawfully called. At any time,
upon written request of any such person or persons who have duly called a
special meeting, which written request shall state the purpose or purposes of
the meeting, it shall be the duty of the President to fix the date of the
meeting to be held at such date and time as the President may fix, not less than
10 nor more than 60 days after the receipt of the request, and to give due
notice thereof. If the President shall neglect or refuse to fix the time and
date of such meeting and give notice thereof, the person or persons calling the
meeting may do so. (Sec. 211(d))
SECTION 2.04. Notice of Meetings. Written notice of the place, date and
------------------
hour of every meeting of the Stockholders, whether annual or special, shall be
given by the Chairman of the Board, the President, a Vice President, the
Secretary or an Assistant Secretary of the Corporation to each Stockholder
having voting power with respect to the business to be transacted at such
meeting not less than 10 nor more than 60 days before the date of the meeting.
Each notice of a special meeting shall state the purpose or purposes for which
the meeting is being called. Any meeting at which all Stockholders having voting
power with respect to the business to be TRANSACTED THEREAT ARE PRESENT, either
in person or by proxy, shall be a valid meeting for the TRANSACTION of business,
notwithstanding that notice has not been given as hereinabove provided. (Sec.
222)
SECTION 2.05. Quorum Manner of Acting and Adjournment. The holders of a
----------------------------------------
majority of the stock issued and outstanding (not including treasury stock) and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the Stockholders for the transaction of
business except as otherwise provided by statute, by the certificate of
incorporation or by these by-laws. If, however, such quorum shall not be present
or represented at any meeting of the Stockholders, the Stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At any 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 30 days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each Stockholder of record having
voting power with respect to the business to be transacted at such meeting. When
a quorum is present at any meeting, the vote of the holders of the majority of
the stock having voting power with respect to a question present in person or
represented by proxy shall decide any such question brought before such meeting,
unless the question is one upon which, by express provision of the applicable
statute or these by-laws, a different vote is required in which case such
express provision shall govern and control the decision on such question. Except
upon those questions governed by the aforesaid express provisions, the
Stockholders present in person or by proxy at a duly organized meeting can
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continue to do business until adjournment, notwithstanding withdrawal of enough
Stockholders to leave less than a quorum. (Sec. 216, 222)
SECTION 2.06. Organization. At every meeting of the Stockholders, the
--------------
President or, in the absence of the President, one of the following persons
present in the order stated: Chairman of the Board, if any, a chairman
designated by the Board of Directors, or a chairman chosen by the Stockholders,
shall act as chairman, and the Secretary, or, in his absence, an Assistant
Secretary or a person appointed by the chairman of the meeting, shall act as
secretary of the meeting.
SECTION 2.07. Voting Proxies. Except as provided in the certificate of
-----------------
incorporation or in a resolution adopted by the Board of Directors pursuant to
Section 151 of the General Corporation Law of the State of Delaware and subject
to Section 213 of such Law, each Stockholder shall at every meeting of the
Stockholders be entitled to one vote in person or by proxy for each share of
capital stock having voting power held by such Stockholder. No proxy shall be
voted after three years from its date, unless the proxy provides for a longer
period. Each proxy shall be executed in writing by the Stockholder or by his
duly authorized attorney-in-fact and filed with the Secretary of the Corporation
or the secretary of the meeting prior to being voted. A proxy, unless coupled
with an interest, shall be revocable at will, notwithstanding any other
agreement or any provision in the proxy to the contrary, but the revocation of a
proxy shall not be effective until notice thereof has been given to the
Secretary of the Corporation. 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. A
proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of such
death or incapacity is given to the Secretary of the Corporation. (Sec. 212)
SECTION 2.08. Consent of Stockholders in Lieu of Meeting. 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 the Stockholders, 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 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 by delivery to its
registered office in 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. Every written consent shall bear the date of signature of
each Stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within 60 days after
the earliest dated consent delivered in the manner required herein to the
Corporation, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation by delivery to its registered office in
Delaware, its principal place of business, or
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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. 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. (Sec. 228)
SECTION 2.09. Voting Lists. The officer who has charge of the stock ledger
--------------
of the Corporation shall prepare and make, at least 10 days before every meeting
of Stockholders, a complete list of the Stockholders entitled to vote at the
meeting. The list shall be arranged in alphabetical order and show the address
of each Stockholder and the number of shares registered in the name of each
Stockholder. Such list shall be open to the examination of any Stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least 10 days prior to the meeting either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any Stockholder who is
present. (Sec. 219(a))
ARTICLE III
Board of Directors
SECTION 3.01. Powers. The Board of Directors shall have full power to
--------
manage the business and affairs of the Corporation; and all powers of
the Corporation, except those specifically reserved or granted to the
Stockholders by statute, the certificate of incorporation or these by-laws, are
hereby granted to and vested in the Board of Directors. (Sec. 141(a))
SECTION 3.02. Number and Term of Office. The Board of Directors shall
---------------------------
consist of such number of Directors, not less than three nor more than 12, as
may be determined from time to time by resolution of the Board of Directors. The
shall Board of Directors shall consist of five members. Each Director shall
serve until the next annual election and until his successor shall have been
elected and shall qualify, except in the event of his death, resignation or
removal. All Directors of the Corporation shall be natural persons of full age,
but need not be residents of Delaware or Stockholders of the Corporation. (Sec.
141(b))
SECTION 3.03. Resignations. Any Director of the Corporation may resign at
--------------
any time by giving written notice to the President or the Secretary of the
Corporation. Resignations shall become effective upon receipt or at such later
time as shall be specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
(Secs. 141(b), 223)
SECTION 3.04. Vacancies and Newly-Created Directorships. Vacancies and
-------------------------------------------
newly-created Directorships resulting from any increase in the authorized number
of Directors may be filled by a majority vote of the Directors then in office,
though less than a quorum, or
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by a sole remaining Director. Each Director so chosen shall hold office until
the next annual election and until his successor shall have been duly elected
and shall qualify, unless he dies, resigns or is removed prior to such time. If
at any time, by reason of death or resignation or other cause, the Corporation
should have no Directors in office, then an election of Directors may be held by
the Stockholders or in the manner provided by statute. (Sec. 223)
SECTION 3.05. Organization. At every meeting of the Board of Directors, the
--------------
Chairman of the Board, if any, or, in the case of a vacancy in the office or
absence of the Chairman of the Board, the President or, in his absence, a
chairman chosen by a majority of the Directors present, shall preside, and the
Secretary or, in his absence, an Assistant Secretary or any person appointed by
the chairman of the meeting, shall act as secretary of the meeting.
SECTION 3.06. Place of Meeting. The Board of Directors may hold its
------------------
meetings, both regular and special, at such place or places within or without
the State of Delaware as the Board of Directors may from time to time appoint,
or as may be designated in the notice calling the meeting. (Sec. 141(g))
SECTION 3.07. Organization Meeting. The first meeting of each newly-elected
----------------------
Board of Directors shall, unless otherwise specified by the President of the
Corporation, be held immediately after and at the same place as, the annual
meeting of Stockholders. Notice of such meeting to the newly-elected Directors
shall not be necessary in order legally to constitute the meeting, provided a
quorum shall be present. (Sec. 141)
SECTION 3.08. Regular Meetings. Regular meetings of the Board of Directors
----------------
may be held without notice at such time and place as shall be designated from
time to time by resolution of the Board of Directors. If the date fixed for any
such regular meeting be a legal holiday under the laws of the State where such
meeting is to be held, then the same shall be held on the next succeeding
business day, not a Saturday, or at such other time as may be determined by
resolution of the Board of Directors. At such meetings, the Directors shall
transact such business as may properly be brought before the meeting. (Sec. 141)
SECTION 3.09. Special Meetings. Special meetings of the Board of Directors
----------------
shall be held whenever called by the Chairman of the Board, if any, the
President or by two or more of the Directors. Notice of each such meeting shall
be given to each Director by telephone, telegram, facsimile, in writing or in
person at least 24 hours (in the case of notice by telephone or in person) or 48
hours (in the case of notice by telegram or facsimile) or 5 days (in the case of
notice by mail) before the time at which the meeting is to be held. Each such
notice shall state the time and place of the meeting to be so held. Except as
otherwise specifically provided in these by-laws, no notice of the objects or
purposes of any special meeting of the Board of Directors need be given, and,
unless otherwise indicated in the notice thereof, any and all business may be
transacted at any such special meeting. (Sec. 141)
SECTION 3.10. Conference Telephone Meetings. One or more Directors may
-------------------------------
participate in a meeting of the Board, or of a committee of the Board, by means
of conference telephone or similar communications equipment by means of which
all persons participating in
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the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting. (Sec. 141(i))
SECTION 3. 11. Quorum Manner of Acting and Adjournment. At all meetings
---------------------------------------
of the Board a majority of the Directors shall constitute a quorum for the
transaction of business. The vote 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 on additions, amendments, repeal or any changes whatsoever in the by-laws
or the adoption of new by-laws with respect to any of which the affirmative
votes of at least a majority of the members of the Board of Directors shall be
necessary for the adoption of such changes and except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
(Sec. 141 (b))
SECTION 3.12. Committees. The Board of Directors may, by resolution adopted
------------
by a majority of the whole Board, designate one or more other committees, each
committee to consist of two or more 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, and the alternate or alternates, if
any, designated for such member, of any 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 the place of any such absent or disqualified member. A majority of
the members of any committee, as at the time constituted, shall be necessary to
constitute a quorum thereof, and the act of a majority of the members of any
committee who are present at any meeting thereof at which a quorum is present
shall be the act of such committee. Any vacancy in any committee shall be filled
by vote of a majority of the Directors at the time in office. (Sec. 141(c))
Any such committee to the extent provided in the resolution establishing
such committee shall have and may exercise all the power and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, except that no such committee shall have the authority of the Board
of Directors in reference to amending the certificate of incorporation,
approving a plan of merger or consolidation, recommending to the Stockholders
the sale, lease or exchange of all or substantially all of the property and
assets of the Corporation, recommending to the Stockholders a voluntary
dissolution of the Corporation or a revocation thereof, amending, altering or
repealing the by-laws or adopting new by-laws for the Corporation, filling
vacancies in the Board of Directors or any such committee, filling any
directorship to be filled by reason of an increase in the number of Directors,
electing or removing officers or members of any such committee, fixing the
compensation of any member of such committee, or altering or repealing any
resolution of the Board of Directors which provides for any of the foregoing or
which by its terms provides that it shall not be so amendable or repealable; and
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of shares of the Corporation. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board
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<PAGE>
of Directors. Each committee so formed shall fix the time and place of its
meetings and its own rules of procedure and shall keep regular minutes of its
meetings and report the same from time to time to the Board of Directors. (Sec.
141(c))
SECTION 3.13. Consent of Directors in Lieu of Meeting. Unless otherwise
-----------------------------------------
restricted by the certificate of incorporation or these by-laws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board or the Committee consent thereto in writing, and the writing or writings
are filed with the minutes of proceedings of the Board or the Committee. (Sec.
141(f))
SECTION 3.14. Presumption of Assent. A Director who is present at a meeting
-----------------------
of the Board of Directors at which action on any corporate matter is taken shall
be presumed to have assented to the action 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 secretary of the meeting before the
adjournment thereof or unless he 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 3.15. Compensation of Directors. Unless otherwise restricted by the
--------------------------
certificate of incorporation, 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. (Sec. 141(h))
SECTION 3.16. Removal of Directors. Except as otherwise provided in the
----------------------
certificate of incorporation or the General Corporation Law of the State of
Delaware, any Director may be removed from office, with or without cause, at any
time by the holders of a majority of the shares then entitled to vote at any
election of Directors, at any annual or special meeting of the Stockholders.
(Sec. 141(k))
ARTICLE IV
Notices - Waivers
SECTION 4.01. Notice, What Constitutes. Whenever, under the provisions of
--------------------------
the statutes of Delaware or the certificate of incorporation or of these by-
laws, notice is required to be given to any Director or Stockholder, it may be
given in writing, by mail, addressed to such Director or Stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid. Notice given in accordance with this provision shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to Directors
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<PAGE>
of special meetings must be given in accordance with Section 3.09 of Article III
hereof. (Sec. 222(b))
SECTION 4.02. Waivers of Notice. Whenever any written notice is required to
-------------------
be given under the provisions of the certificate of incorporation, these by-
laws, or by statute, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Stockholders, Directors, or members of a committee of Directors need be
specified in any written waiver of notice of such meeting unless so required by
the certificate of incorporation or these by-laws. Attendance by a person,
either in person or by proxy, at any meeting, shall constitute a waiver of
notice of such meeting, except where a person attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not lawfully called or convened. (Sec. 229)
ARTICLE V
Officers
SECTION 5.01. Number, Qualifications and Designation. The officers of the
--------------------------------------
Corporation shall be chosen by the Board of Directors and shall be a President,
Secretary and such other officers as may be elected in accordance with the
provisions of Section 5.03 of this Article. One person may hold more than one
office. Officers may be, but need not be, Directors or Stockholders of the
Corporation. (Sec. 142)
SECTION 5.02. Election and Term of Office. The officers of the Corporation,
---------------------------
except those elected by delegated authority pursuant to Section 5.03 of this
Article, shall be elected annually by the Board of Directors, and each such
officer shall hold his office until his successor shall have been elected and
shall qualify, or until his earlier death, resignation or removal. Any officer
may resign at any time upon written notice to the Corporation or may be removed,
with or without cause, by the Board of Directors. (Sec. 142)
SECTION 5.03. Other Officers, Committees and Agents. The Board of Directors
-------------------------------------
may from time to time elect such other officers, including without limitation a
Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, a
Treasurer and one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers, and appoint such committees, employees and other agents as it deems
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as are provided in these by-laws, or as the Board
of Directors may from time to time determine. The Board of Directors may
delegate to any officer or committee the power to elect subordinate officers and
to retain or appoint employees or other agents, or committees thereof, and to
prescribe the authority and duties of such subordinate officers, committees,
employees or other agents. (Sec. 142)
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<PAGE>
SECTION 5.04. Chairman of the Board and Vice Chairman. The Chairman of the
---------------------------------------
Board of Directors, if any, shall preside at all meetings of the Board of
Directors. He may sign and deliver on behalf of the Corporation any deeds,
mortgages, bonds, contracts, certificates, powers of attorney, and other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these by-laws to some other officer or agent of the
Corporation or shall be required by law to be otherwise signed or executed, and
he shall perform such other duties as may be prescribed by the Board of
Directors from time to time. The Vice Chairman, if any, shall, at the request of
the Chairman or in his absence or disability, perform the duties and exercise
the powers of the Chairman, and shall perform such other duties as the Board of
Directors shall prescribe.
SECTION 5.05. President. The President shall have general charge and
---------
active management of the business, properties and operations of the Corporation,
shall see that all orders and resolutions of the Board of Directors are carried
into effect and shall have such other authority as may be vested in him by the
Board of Directors. He shall preside at all meetings of the Stockholders and, if
there is no Chairman or Vice Chairman of the Board, or in their absence, all
meetings of the Board of Directors. He may sign and deliver on behalf of the
Corporation any deeds, mortgages, bonds, contracts, certificates, powers of
attorney, and other instruments which the Board of Directors has authorized to
be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these by-laws to some other
officer or agent of the Corporation or shall be required by law to be otherwise
signed or executed. He may employ all agents and employees of the Corporation
and may discharge any such agent or employee, and, in general, shall perform all
duties incident to the office of President, and such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 5.06. Vice Presidents. Any Vice President shall, at the request of
-----------------
the President or in his absence or disability, perform the duties and exercise
the powers of the President and such other duties as may from time to time be
assigned by the Board of Directors or by the President. At the discretion of the
Board of Directors, one or more Vice Presidents may be designated as an
Executive Vice President or Senior Vice President.
SECTION 5.07. Secretary and Assistant Secretaries. The Secretary shall
-------------------------------------
attend all meetings of the Stockholders and of the Board of Directors and shall
record the proceedings of the Stockholders and of the Directors and of
committees of the Board in a book or books to be kept for that purpose; see that
notices are given and records and reports properly kept and filed by the
Corporation as required by law; be the custodian of the seal of the Corporation
and see that it is affixed to all documents to be executed on behalf of the
Corporation under its seal; and, in general, perform all duties incident to the
office of Secretary, and such other duties as may from time to time be assigned
to him by the Board of Directors or the President. Any Assistant Secretary
shall, at the request of the Secretary or in his absence or disability, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the Board of Directors or the President shall prescribe.
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<PAGE>
SECTION 5.08. Treasurer and Assistant Treasurers. The Treasurer shall have
------------------------------------
or provide for the custody of the funds or other property of the Corporation;
whenever so required by the Board of Directors, shall render an account showing
his transactions as Treasurer and the financial condition of the Corporation;
and, in general, shall discharge such other duties as may from time to time be
assigned to him by the Board of Directors or the President. Any Assistant
Treasurer shall, at the request of the Treasurer or in his absence or
disability, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties as the Board of Directors or the President shall
prescribe.
SECTION 5.09. Officers' Bonds. No officer of the Corporation need provide a
-----------------
bond to guarantee the faithful discharge of his duties unless the Board of
Directors shall by resolution so require a bond, in which event such officer
shall give the Corporation a bond (which shall be renewed if and as required) in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his office. (Sec.
142(c))
SECTION 5.10. Compensation. The compensation of the officers and agents of
-------------
the Corporation elected by the Board of Directors shall be fixed from time to
time by the Board of Directors. Any employment contract, whether for an officer,
agent or employee, if expressly approved or specifically authorized by the Board
of Directors, may fix a term of employment, and any such contract, but only if
so approved or authorized, shall be valid and binding upon the Corporation in
accordance with the terms thereof; provided, however, this provision shall not
limit or restrict in any way the right of the Corporation at any time in its
discretion (which right is hereby expressly reserved) to remove from office,
discharge or terminate the employment or otherwise dispense with the services of
any such officer, agent or employee, as provided in these by-laws, prior to the
expiration of the term of employment under any such contract, provided only that
the Corporation shall not thereby be relieved of any continuing liability for
salary or other compensation provided for in such contract. (Sec. 141(a))
SECTION 5.11. Action with Respect to Securities of Other Corporations.
--------------------------------------------------------
Unless otherwise directed by the Board of Directors, the Chairman of the
Board of Directors, if any, the President or any Vice President of the
Corporation shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of security holders, or with
respect to any action of security holders, of any other Corporation in which the
Corporation may hold securities and shall have power to exercise any and all
rights and powers which the Corporation may possess by reason of its ownership
of securities in such other Corporation.
ARTICLE VI
Capital Stock
SECTION 6.01. Issuance. The Directors may, at any time and from time to
----------
time, if all of the shares of capital stock which the Corporation is authorized
by its certificate of incorporation to issue have not been issued, subscribed
for, or otherwise committed to be issued, issue or take subscriptions for
additional shares of its capital stock up to the amount authorized
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in its certificate of incorporation. Unless otherwise provided by the
certificate of incorporation or these by-laws, the Board of Directors may
provide by resolution that some or all of any or all classes and series of the
shares of capital stock of the Corporation shall be uncertificated shares,
provided that such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the Corporation. The stock
certificates of the Corporation shall be numbered and registered in the stock
ledger and transfer books of the Corporation as they are issued. The Board of
Directors may also appoint one or more transfer agents and/or registrars for its
stock of any class or classes and for the transfer and registration of
certificates representing the same and may require stock certificates to be
countersigned by one or more of them. They shall be signed by the Chairman or
Vice Chairman of the Board of Directors or the President or a Vice President and
attested by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and shall bear the corporate seal, which may be a
facsimile, engraved or printed. Any or all of the signatures upon such
certificate may be a facsimile, engraved or printed. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any share certificate shall have ceased to be such officer,
transfer agent or registrar, before the certificate is issued, it may be issued
with the same effect as if he were such officer, transfer agent or registrar at
the date of its issue. (Secs. 158, 161)
SECTION 6.02. Regulations Regarding Certificates. Except as otherwise
------------------------------------
provided by law, the Board of Directors shall have the power and authority to
make all such rules and regulations as it may deem expedient concerning the
issuance, transfer and registration or the replacement of certificates for
shares of capital stock of the Corporation. (Sec. 161)
SECTION 6.03. Stock Certificates. Stock certificates of the Corporation
--------------------
shall be in such form as is provided by statute and approved by the Board of
Directors. The stock record books and the blank stock certificate books shall be
kept by the Secretary of the Corporation or by any agency designated by the
Board of Directors for that purpose. (See. 158)
SECTION 6.04. Lost, Stolen. Destroyed or Mutilated 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, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed. (Sec. 167)
SECTION 6.05. Record Holder of Shares. 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
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or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
SECTION 6.06. Determination of Stockholders of Record for Voting at
-----------------------------------------------------
Meetings. 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 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 record date shall not be more than 60 nor
less than 10 days before the date of such meeting, nor more than 60 days prior
to any other action. 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. (Sec. 213(a))
SECTION 6.07. Determination of Stockholders of Record for Dividends and
---------------------------------------------------------
Distributions. 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 60 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. (Sec. 213(c))
SECTION 6.08. Determination of Stockholders of Record for Written Consent.
------------------------------------------------------------
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 10 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 Stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
statute, 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 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 a
Corporation's registered office shall be by hand or by certified
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<PAGE>
or registered mail, return receipt requested. If no record date has been fixed
by the Board of Directors, when prior action by the Board of Directors is
required by statute, 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. (Sec. 213(b))
ARTICLE VII
Indemnification and Insurance
SECTION 7.01. Right to Indemnification. Each person who was or is made a
--------------------------
party to or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a Director or officer of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation or of a partnership, joint venture, trust or other enterprise,
including without limitation service with respect to employee benefit plans
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a Director, officer, employee or agent or in
any other capacity while serving as a Director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including without
limitation attorneys' fees, judgments, fines, excise taxes or penalties under
the Employee Retirement Income Security Act of 1974, as amended, and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue as to an indemnitee
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of such indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in Section 7.02 of this Article VII with
respect to proceedings to enforce rights to indemnification, the Corporation
shall indemnify any such indemnitee in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part thereof)
was authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article VII shall be a contract right and
shall include the right to be paid by the Corporation the expenses (including
without limitation attorneys' fees) incurred in defending any such proceeding in
advance of its final disposition (hereinafter an "advancement of expenses");
provided, however, that, if the General Corporation Law of the State of Delaware
requires, an advancement of expenses incurred by an indemnitee in his or her
capacity as a Director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including without limitation
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined that such indemnitee is
not entitled to be indemnified for such expenses under this Article VII or
otherwise (hereinafter an "undertaking"). (Sec. 145)
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<PAGE>
SECTION 7.02. Right of Indemnitee to Bring Suit. If a claim under Section
-----------------------------------
7.01 of this Article VII is not paid in full by the Corporation within 60 days
after a written claim has been received by the Corporation, except in the case
of a claim for an advancement of expenses, in which case the applicable period
shall be 20 days, the indemnitee may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit or in a suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expenses (including without
limitation attorneys' fees) of prosecuting or defending such suit. In any suit
brought by the indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that the indemnitee has not met the applicable
standard of conduct set forth in the General Corporation Law of the State of
Delaware. In any suit by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Corporation shall be entitled to
recover such expenses upon a final adjudication that the indemnitee has not met
the applicable standard of conduct set forth in the General Corporation Law of
the State of Delaware. Neither the failure of the Corporation (including without
limitation its Board of Directors, independent legal counsel, or its
Stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including without limitation its Board of
Directors, independent legal counsel, or its Stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right hereunder, or by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
burden of proving that the indemnitee is not entitled to be indemnified or to
such advancement of expenses under this Article VII or otherwise shall be on the
Corporation.
SECTION 7.03. Non-Exclusivity of Rights. The rights to indemnification and
---------------------------
to the advancement of expenses conferred in this Article VII shall not be
exclusive of any other right which any person may have or hereafter acquire
under the certificate of incorporation, any statute, by-law, agreement, vote of
Stockholders or disinterested Directors or otherwise. (Sec. 145(f))
SECTION 7.04. Insurance. The Corporation may maintain insurance, at its
-----------
expense, to protect itself and any Director, officer, employee or agent of the
Corporation or another Corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
(Sec. 145(g))
SECTION 7.05. Indemnification of Employees and Agents of the Corporation
----------------------------------------------------------
The Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses,
to any employee or agent of the
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<PAGE>
Corporation to the fullest extent of the provisions of this Article VII with
respect to the indemnification and advancement of expenses of Directors and
officers of the Corporation. (Sec. 145)
ARTICLE VIII
General Provisions
SECTION 8.01. Dividends. Subject to the provisions of the certificate of
-----------
incorporation, if any, dividends upon the capital stock of the Corporation may
be declared by the Board of Directors at any regular or special meeting, in
accordance with law. Dividends may be paid in cash, in property, or in shares of
the capital stock of the Corporation, subject to the provisions of the
certificate of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
thinks proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Directors shall think conducive to the interest of
the Corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created. (Secs. 170, 171, 173)
SECTION 8.02. Annual Statements. The Board of Directors shall present at
-------------------
each annual meeting a full and clear statement of the business and condition of
the Corporation.
SECTION 8.03. Contracts. Except as otherwise provided in these by-laws, the
-----------
Chairman of the Board of Directors, the President or a Vice President of the
Corporation shall sign, in the name and on behalf of the Corporation, all deeds,
bonds, contracts, mortgages and other instruments, the execution of which shall
be authorized by the Board of Directors; provided, however, that the Board of
Directors may authorize any other officer or officers or any agent or agents to
sign, in the name and on behalf of the Corporation, any such deed, bond,
contract, mortgage or other instrument. Such authority may be general or
confined to specific instances. Except as so authorized by the Board of
Directors, and except in the ordinary course of business, no officer, agent or
employee of the Corporation shall have power or authority to bind the
Corporation by any contract or engagement or to pledge, sell or otherwise
dispose of its credit or any of its property or to render it pecuniarily liable
in any amount in excess of $10,000. (Secs. 141, 142)
SECTION 8.04. Checks. All checks, notes, bills of exchange or other orders
--------
in writing shall be signed by such person or persons as the Board of Directors
may from time to time designate. (Secs. 141, 142)
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<PAGE>
SECTION 8.05. Corporate Seal. The corporate seal shall have inscribed
----------------
thereon the name of the Corporation, the year of its organization and the state
of its incorporation. The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or otherwise reproduced. (See. 122)
SECTION 8.06. Amendment of By-laws. These by-laws may be altered, amended
--------------------
or repealed or new by-laws may be adopted by the Stockholders or by the Board of
Directors, when such power is conferred upon the Board of Directors by the
certificate of incorporation, at any regular or special meeting of the
Stockholders or of the Board of Directors, if notice of such alteration,
amendment, repeal or adoption of new by-laws be contained in the notice of such
special meeting. (Sec. 109)
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<PAGE>
EXHIBIT 3.5
ARTICLES OF INCORPORATION
-------------------------
OF
EXPO MAGAZINE, INC.
------------------
The undersigned, incorporator, hereby forms and establishes a corporation
FOR profit under the laws of the State of Kansas.
ARTICLE I
---------
The name of the corporation is EXPO Magazine, Inc. (hereinafter called the
"Corporation").
ARTICLE II
----------
The location of the registered office of the Corporation in Kansas is 515
S. Kansas, Shawnee County, Kansas and the resident agent in charge thereof at
such address is The Corporation Company, Inc.
ARTICLE III
-----------
The Corporation is organized FOR profit and the nature of its business or
purposes to be conducted and promoted is to own, acquire, develop, write,
edit, promote, produce, distribute, market and sell magazines and other
publications, to engage in the business of providing information, rendering
marketing and promotion services and selling advertising, and to engage in
any lawful act or activity for which corporations may be organized under the
Kansas General Corporation Code.
ARTICLE IV
----------
The aggregate number of shares which the Corporation shall have the
authority to issue shall all be of one class and consist of Ten Thousand
(10,000) Shares, par value One Dollar ($1.00) per share, Voting Common stock.
The Board of Directors of the Corporation have full authority, to the
extent permitted by law, to increase, decrease or otherwise adjust the
capital stock of the Corporation, to designate the classes or series thereof
and to determine whether all or any part of such stock shall have voting
powers, full or limited, or no voting powers, and to determine such
designations, and such powers, preferences, relative, participating or
optional, or other special rights and the qualifications, limitations or
restrictions thereof as the Board shall from time to time determine in duly
adopted resolutions.
At any time and from time to time when authorized by resolution of the
Board of Directors and without any action by its stockholders, the
Corporation may issue or sell any shares of its capital stock of any class or
series, whether out of the unissued shares thereof authorized by the
Certificate of Incorporation of the Corporation as originally filed or by an
amendment thereof or out of shares of its capital stock acquired by it after
the issue thereof, and whether or not the shares thereof so issued or sold
shall confer upon the holders thereof the right to exchange or convert such
shares for or into other shares of capital stock of the Corporation of any
class or classes or any series thereof. When similarly authorized, but
without any action by its stockholders, the Corporation may issue or grant
rights, warrants, or options, in bearer or registered or such other form as
the Board of Directors may determine, for the purchase of shares of the
capital stock of any class or series of the Corporation within such period of
time, or without limit as to time, to such aggregate number of shares, and at
such price per share, as the Board Of Directors may determine. Such rights,
warrants or options may be issued or granted separately or in connection with
the issue of any bonds, debentures, notes, obligations or other evidences of
<PAGE>
indebtedness or shares of the capital stock of any class or series of the
Corporation and for such consideration and on such terms and conditions as
the Board of Directors in its sole discretion may determine. In each case,
the consideration to be received by the Corporation for any such shares so
issued or sold shall be such as shall be fixed from time to time by
resolution of the Board of Directors.
ARTICLE V
-------
The name and mailing address of the incorporator is as follows
NAME ADDRESS
---- -------
Charles W. Fairchild 800 West 69th Terrace
Kansas City, MO 64113
ARTICLE VI
----------
The number of directors shall be fixed by the Bylaws, and there shall be no
requirement that the election of directors be by written ballot
ARTICLE VII
-----------
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
(a) To adopt, amend or repeal the Bylaws of the Corporation.
(b) To authorize and cause to be executed or granted mortgages, security
interests and liens upon the real and personal property of the Corporation.
(c) To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
(d) By a majority of the whole Board of Directors, to designate one or more
committees, each committee to consist of one (1) or more of the directors of
the Corporation. The Board may designate one (1) or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution or in the Bylaws of the Corporation,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
provided, however, the Bylaws may provide that in the absence or
disqualification of any member of 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.
(e) When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by law, or
when authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the Corporation, including
its goodwill and its corporate franchises, upon such terms and conditions and
for such consideration, which may consist in-whole or in part of money or
property including shares of stock in, and/or other securities of, any other
corporation or Corporations as its
2
<PAGE>
Board of Directors shall deem expedient and for the best interests of the
Corporation.
ARTICLE VIII
------------
The term for which this Corporation is to exist is perpetual.
ARTICLE IX
----------
No holder of any of the shares of any class of the Corporation shall be
entitled as a matter of right to subscribe for, purchase, or otherwise
acquire any shares of any class of the Corporation which the Corporation
proposes to issue or any rights or options which the Corporation proposes to
grant for the purchase of shares of the same class of the Corporation or for
the purchase of any shares, bonds, securities, or obligations of the
Corporation which are convertible into or exchangeable for, or which carry
any rights, to subscribe for, purchase, or otherwise acquire shares of the
same class of the Corporation; and any and all of such shares, bonds,
securities or obligations of the Corporation, whether now or hereafter
authorized or created, may be issued, or may be reissued or transferred if
the same have been reacquired and have treasury status, and any and all of
such rights and options may be granted by the Board of Directors to such
persons, firms, corporations and associations, and for such lawful
consideration, and on such terms, as the Board of Directors in its discretion
may determine, without first offering the same, or any part thereof, to any
said holder.
ARTICLE X
The private property of the stockholders of this Corporation shall not be
subject to the payment of corporate debts, except to the extent of any unpaid
balance of subscriptions for shares.
ARTICLE XI
----------
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them or between this Corporation and its
stockholders or any class of them, any court of competent jurisdiction within
the State of Kansas, on the application in a summary way of this Corporation
or of any creditor or stockholder thereof or on the application of any
receiver or receivers appointed for this Corporation under the provisions of
K.S.A. 17-6901 and amendments thereto, or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation
under the provisions of K.S.A. 17-6808 and any amendments thereto, may order
a meeting of the creditors or class of creditors, or of the stockholders or
class of stockholders of this Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
or of the stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization
of this Corporation as consequence of such compromise or arrangement and the
reorganization, if sanctioned by the court to which the application has been
made, shall be binding on all the creditors or class of creditors, or on all
the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
ARTICLE XII
-----------
Meetings of stockholders may be held within or without the State of Kansas,
as the Bylaws may provide. The books of the Corporation may be kept (subject
to applicable law) inside or outside the State of Kansas at such place or
places as may be designated from time to time by the Board of Directors or in
the Bylaws of the Corporation. Elections of directors need not be by written
ballot unless the Bylaws of the Corporation so provide.
3
<PAGE>
ARTICLE XIII
------------
To the extent permitted by law, no contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors
or officers or have a financial interest, shall be void or voidable solely
for this reason, or solely because the directors or officers are present at
or participate in the meeting of the Board or committee thereof which
authorizes the contract or transaction, or solely because the directors or
officers or their votes are counted for such purpose.
ARTICLE XIV
-----------
Any person who, by reason of the fact he is or was a Director or officer of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, is or was a party, or is threatened
to be made a party, to any threatened, pending or contemplated action, suit
or proceeding, whether civil, criminal, administrative, or investigative,
shall be indemnified by the Corporation, provided 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. Such
indemnification shall be provided 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; provided,
however, that with respect to an action or suit by or in the right of the
Corporation, such indemnification shall be only against expenses, including
attorneys' fees, and in such cases 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 in
which the action or suit was brought determines, upon application, that
despite the adjudication of liability and in view of all the circumstances of
the case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper. To the extent that a Director,
officer, employee or agent of the Corporation has been successful on the
merits or otherwise in defense of any such action, suit, or proceeding 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 with the action, suit or proceeding. Any other
indemnification hereunder, unless ordered by a court, shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the Director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
herein. The determination shall be made by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to the
action, suit, or proceeding, or if such a quorum is not obtainable, or even
if obtainable if a quorum of disinterested Directors so directs, by
independent legal counsel in a written opinion, or by the stockholders. The
termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that
his conduct was unlawfull.
Expenses, including attorneys' fees, incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of the 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
4
<PAGE>
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized herein.
The indemnification provided hereunder shall not be deemed exclusive of any
other rights to which those seeking indemnification may be entitled under
any applicable statute as amended from time to time, any bylaw, agreement,
vote of stockholders or disinterested Directors or otherwise, both as to
action in their official capacity and as to action in another capacity while
holding such office, 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 persons.
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 him in any such capacity, or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him against such
liability under the provisions herein.
ARTICLE XV
----------
The Bylaws of the Corporation may from time to time be repealed, amended or
altered, or new Bylaws may be adopted by the Board of Directors or the
stockholders.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name this 4th day of
June, 1992.
/s/ Charles W. Fairchild
----------------------------------
Charles W. Fairchild, Incorporator
STATE OF MISSOURI )
) ss:
COUNTY OF JACKSON )
I Pauline D. Howell, a Notary Public, do hereby certify that on the 4th
day of June, 1992, personally appeared before me Charles W. Fairchild, who being
by me first duly sworn, acknowledged and declared that he is the person who
signed the foregoing document as incorporator, and that the statements therein
contained are true.
/s/ Pauline D. Howell
-----------------------------
Notary Public
My commission expires:
1-12-1996
- ----------------------
PAULINE D. HOWELL
NOTARY SEAL
NOTARY PUBLIC-STATE OF MISSOURI
COMMISSIONED IN JACKSON COUNTY
MY COMMISSION EXPIRES JANUARY 12, 1998
5
<PAGE>
EXHIBIT 3.6
BYLAWS
OF
EXPO MAGAZINE, INC.
ARTICLE I
---------
MEETINGS OF SHAREHOLDERS
Section 1. Meetings of shareholders for any purpose may be held at such
time and place, within or without the State of Kansas, as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of shareholders shall be held once each year on
such date and at such time as the Board of Directors may determine. If the Board
of Directors fails to specify a date, the annual meeting of shareholders,
commencing with the year 1993, shall be held on June 1, if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 10:00 a.m. At
the annual meeting the shareholders shall elect by a plurality vote a board of
directors, and transact such other business as may be properly brought before
the meeting.
Section 3. Written notice of the annual meeting, stating the place, date
and hour of such meeting, shall be given to each shareholder entitled to vote
thereat not less than ten (10) days nor more than sixty (60) days before the
date of the meeting unless 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 (10) days before every meeting
of shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the election, either at a place within the city where the meeting is to be held
and which place shall be specified in the notice of the meeting, or, if not
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 subject to the inspection of any shareholder who may be present.
Section 5. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by law or by the Articles of
Incorporation, may be called by the Chairman, Vice Chairman or the President and
shall be called by the Chairman, Vice Chairman, President or Secretary at the
request in writing of a majority of the Board of Directors, or at the request in
writing of shareholders 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 of shareholders, stating the
place, date, hour and the purpose or purposes thereof,
shall be given to each shareholder entitled to vote thereat, not less
<PAGE>
than ten (10) days before the date fixed for the meeting unless otherwise
required by law.
Section 7. Business transacted at any special meeting of the shareholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by law or by the Articles
of Incorporation. If, however, such quorum shall not be present or represented
at any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have 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; provided, however, that
if the date of any adjourned meeting is more than thirty (30) days after the
date for which the meeting was originally noticed, or if a new record date is
fixed for the adjourned meeting, written notice of the place, date and hour of
the adjourned meeting shall be given in conformity herewith. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted at the meeting as originally notified.
Section 9. When a quorum is present at any meeting, the affirmative vote of
the holders of a majority of the shares of stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of law or
of the Articles of Incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Each shareholder shall at every meeting of the shareholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such shareholder, but no proxy shall be voted or
acted upon after three (3) years from its date unless the proxy provides for a
longer period, and, except where the transfer books of the corporation have been
closed or a date has been fixed as a record date for the determination of its
shareholders entitled to vote, no share of stock shall be voted on at any
election for directors which has been transferred on the books of the
corporation within twenty (20) days preceding such election of directors.
Section 11. Any action required to or which may be taken at any annual or
special meeting of the shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action 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 by the
shareholders without a meeting by less than unanimous written consent shall be
given to those shareholders who have not consented in writing.
2
<PAGE>
ARTICLE II
----------
DIRECTORS
Section 1. The number of directors which shall constitute the whole Board
shall be not less than one (1) nor more than seven (7). As of the date of
these Bylaws, the Board shall consist of 5 directors. Thereafter, within the
limits above specified, the number of directors shall be determined by
resolution of the Board of Directors or by the shareholders at the annual or a
special meeting of the shareholders. Except for the election held by the
incorporator(s) and except as provided in Section 2 and in Section 13 of this
Article III, the directors shall be elected at the annual meeting of
shareholders. Each director elected shall hold office until such director's
successor is elected and qualified, or until such director's earlier
resignation or removal. Directors need not be shareholders.
Section 2. Except as provided in Section 13 of this Article III,
vacancies and newly created directorships resulting from any increase in the
authorized numbers of directors by the directors may be filled by a majority
vote of the directors then in office, though less than a quorum, and any
director so chosen shall hold office until the next annual election and until
such director's successor is duly elected and qualified, unless such director
resigns or is removed.
Section 3. The business of the corporation shall be managed by its Board
of Directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by law or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done
by the shareholders.
Section 4. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Kansas.
Section 5. Regular meetings of the Board of Directors may be held at such
time and at such place as shall from time to time be determined by the Board.
Five (5) days' notice of all regular meetings shall be given, and such notice
shall state the place, date, hour and the business to be transacted at and
purpose of such meeting.
Section 6. Special meetings of the Board may be called by the Chairman,
Vice Chairman or President on three (3) days' notice to each director either
personally or by mail or by telegram. Special meetings shall be called by the
Chairman, Vice Chairman or President or Secretary in like manner and on like
notice on the written request of two (2) directors unless the corporation has
at that time less than three (3) directors, in which latter event the request
of only one (1) director shall be required. Notice of any special meeting shall
state the place, date, hour and the business to be transacted at and the
purpose of such meeting.
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
3
<PAGE>
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by law or by the Articles of
Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 8. 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 (1) or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. 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 9. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
Section 10. Members of the Board of Directors, or of any committee thereof,
may participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment that enables all persons
participating in the meeting to hear each other. Such participation shall
constitute presence in person at such meeting.
Section 11. Unless otherwise restricted by the Articles of Incorporation or
these Bylaws, 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 a
written consent to such action 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.
Section 12. The directors may be paid their expenses, if any, of attendance
at such meeting of the Board of Directors and may be paid a fixed sum for
attendance at such 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.
Section 13. Any director may be removed, for cause or without cause, by a
majority vote of the shareholders entitled to vote for the election of such
director at any annual or special meeting of the shareholders. Upon such removal
of a director, the shareholders (and not the remaining directors) may elect a
director to replace such removed director at the same shareholders' meeting at
which such removal took place or at a subsequent shareholders' meeting.
4
<PAGE>
ARTICLE III
-----------
NOTICES
Section 1. Notices to directors and shareholders shall be in writing and
delivered personally or mailed to the directors or shareholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be deposited in the United
States mail, postage prepaid. Notice to directors may also be given by
telegram. Notice by telegram shall be deemed to be given when delivered to the
sending telegraph office.
Section 2. Whenever any notice is required to be given under the provisions
of law or of the Articles of Incorporation or of these Bylaws, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated ,therein, shall be deemed equivalent to notice.
ARTICLE IV
----------
OFFICES
Section 1. In addition to the registered office designated in the Articles
of Incorporation, the corporation may also have offices at such other places
both within and without the State of Kansas as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE V
---------
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board of
Directors and shall at a minimum, consist of a President and a Secretary. The
Board of Directors may also choose additional officers, including a Chairman or
Vice Chairman of the Board of Directors, one or more Vice-Presidents who may be
classified by their specific function, a Secretary, a Treasurer and one or more
Assistant Secretaries and Assistant Treasurers. Two or more offices may be held
by the same person, except the offices of President and Secretary.
Section 2. The Board of Directors at its first meeting and after each
annual meeting of shareholders shall choose a President and a Secretary, and may
choose such other officers and agents as it shall deem necessary.
Section 3. The officers of the corporation shall hold office until their
successors are chosen and qualify, or until their earlier resignation or
removal. Any vacancy occurring in any office of the corporation shall be filled
by the Board of Directors.
5
<PAGE>
Section 4. The Chairman of the Board, or in his absence the Vice Chairman
of the Board, shall preside at all meetings of the Board of Directors of the
corporation and may preside at meetings of the shareholders. The Chairman of
the Board and the Vice Chairman of the Board shall both be ex-officio members
of all standing committees and shall see that all orders and resolutions of the
Board are carried into effect. The Chairman of the Board and the Vice Chairman
of the Board shall each, with powers concurrent with the President, have
authority to execute, with the Secretary or an Assistant Secretary,
certificates of shares of the corporation and sign and execute in the name of
the corporation authorized deeds, mortgages, bonds, contracts or other
instruments, except in cases in which the signing and execution thereof shall
have been expressly delegated to some other officer or agent of the
corporation.
Section 5. Either the Chairman, Vice Chairman or the President shall be
designated by the Board of Directors as Chief Executive Officer of the
Corporation. The Chief Executive Officer shall have direct charge and
supervision of the business of the corporation. If the President is not
designated as the Chief Executive Officer, he shall be designated as the Chief
Operating Officer, in which case he shall have the day-to-day responsibility for
the operation of the corporation and, generally, shall perform all duties
incident to the office of a President of a corporation and such other duties as,
from time to time, may be assigned to him by the Chief Executive Officer or the
Board of Directors. The President may preside at meetings of the shareholders
and at meetings of the Board of Directors at which the Chairman of the Board or
Vice Chairman of the Board is not present. He may sign with the Secretary or an
Assistant Secretary, certificates of shares of the corporation; he may sign and
execute, in the name of the corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, except in cases of which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the corporation.
Section 6. If an Executive Vice President be elected, he shall be the
Senior Vice President of the Company and shall act as President in the absence
or incapacity of the President. The duties and authority of the Executive Vice
President, the Senior Vice President or any other vice presidents shall be as
determined by the Board of Directors.
Section 7. The Secretary shall keep the minutes of the meetings of the
shareholders and of the Board of Directors in books provided for the purpose,
and shall see that all notices are duly given in accordance with the provisions
of these Bylaws, or as required by law; he or she shall be custodian of the
records and of the separate seal or seals of the corporation; he or she shall
see that the corporate seal is affixed to all documents, the execution of which,
on behalf of the corporation, under its seal, is duly authorized, and when so
affixed may attest the same; and in general, he or she shall perform all duties
incident to the office of a Secretary of a corporation and such other duties as,
from time to time, may be assigned to him or her by the Board of Directors. The
Secretary may sign, with the Chairman, President or a Vice President,
certificates of stock of the corporation.
6
<PAGE>
Section 8. The Treasurer shall have charge of and be responsible for all
fund, securities, receipts and disbursements of the corporation and shall
deposit or cause to be deposited, in the name of the corporation all monies or
other valuable effects in such banks, trust companies or other depositories as
shall, from time to time, be selected by the Board of Directors; he shall
render to the Chairman, President and the Board of Directors whenever
requested an account of the financial condition of the corporation; and, in
general, shall perform all the duties incident to the office of a Treasurer of
a corporation, and such other duties as may be assigned to him by the Board of
Directors.
The Treasurer shall give the corporation a bond, if required by the Board
of Directors, in a sum and with one or more sureties satisfactory to the Board
for the faithful performance of the duties of his office, and for the
restoration to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control belonging to
the corporation.
Section 9. The Board of Directors may elect one or more Assistant
Secretaries and one or more Assistant Treasurers. Each Assistant Secretary, if
any, and each Assistant Treasurer, if any, shall hold office for such period
as the Board of Directors may prescribe.
Any Assistant Secretary may, in the absence or the disability of the
Secretary, perform the duties and exercise the powers of the Secretary and any
Assistant Treasurer may, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer. Each of such
officers shall perform such other duties as the Board of Directors shall
prescribe.
Section 10. The Board of Directors may elect such subordinate officers as
it may deem desirable. Each such officer shall hold office for such period,
have such authority and perform such duties as the Board of Directors shall
prescribe. The Board of Directors may, from time to time, authorize any
officer to appoint and remove subordinate officers and prescribe the powers
and duties thereof.
Section 11. The Board of Directors shall have the power to fix the
compensation of all officers of the corporation. It may authorize any officer
upon whom the power of appointing subordinate officers may have been conferred
to fix the compensation of such subordinate officers.
Section 12. Any officer of the corporation may be removed, with or
without cause, by a vote of a majority of the entire Board of Directors at a
meeting called for that purpose, or (except in case of an officer elected by
the Board of Directors) by an officer upon whom such power of removal may have
been conferred.
Section 13. In case of the absence of any officer of the corporation or for
any other reason that the Board may deem sufficient, the Board may delegate, for
the time being, the powers or duties, or any of them, of such officer to another
officer, or to any Director, provided a majority of the entire Board concurs
therein.
7
<PAGE>
ARTICLE VI
----------
CERTIFICATES OF STOCK, TRANSFERS OF STOCK
CLOSING OF TRANSFER BOOKS AND
REGISTERED SHAREHOLDERS
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 the shareholder in the corporation.
Section 2. Any or all the signatures on the certificate may be by
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 the
person who signed the certificate was such officer, transfer agent or registrar
at the date of issue.
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 or 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 advertise the same in such manner as the
corporation shall require and/or to give the corporation a bond in such sum as
the corporation may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Subject to transfer restrictions permitted by law and to stop
transfer orders directed in good faith by the corporation to any transfer agent
to prevent possible violations of federal or state securities laws, rules or
regulations, 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 5. The Board of Directors may fix a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of any meeting
of shareholders, nor more than sixty (60) days prior to the time for the other
action hereinafter described, as of which there shall be determined the
shareholders who are entitled: to notice of or to vote at any meeting of
shareholders or any adjournment thereof; to express consent to corporate action
in writ
8
<PAGE>
ing without a meeting; to receive payment of any dividend or other distribution
or allotment of any rights; or to exercise any rights with respect to any
change, conversion or exchange of stock or with respect to any other lawful
action.
Section 6. The corporation shall be entitled to treat the person in whose
name any share of stock is registered on the books of the corporation as the
owner thereof for all purposes and shall not be bound to recognize any equitable
or other claim or other interest in such shares in the part of any other person,
whether or not the corporation shall have express or other notice thereof.
ARTICLE VII
-----------
GENERAL PROVISIONS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in shares of the corporation's capital
stock.
Section 2. There may be set apart out of any of the funds of the
corporation available for dividends such amounts as the Board of Directors deems
proper as a reserve or reserves for working capital, depreciation, losses in
value, or for any other proper corporate purpose, and the Board of Directors may
increase, decrease or abolish any such reserve in the manner in which it was
created.
Section 3. The Board of Directors shall present at each annual meeting and
at any special meeting of the shareholders when called for by vote of the
shareholders, a full and clear statement of the business and condition of the
corporation.
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
Section 5. The fiscal year of the corporation shall be as fixed by the
Board of Directors.
Section 6. The Board of Directors may provide a suitable seal, containing
the name of the corporation, which seal shall be in charge of the Secretary. If
and when so directed by the Board of Directors or a committee thereof,
duplicates of the seal may be kept and used by the Treasurer or by the Assistant
Secretary or Assistant Treasurer. The seal may be used by causing it, or a
facsimile thereof, to be impressed or affixed or in any other manner reproduced.
Section 7. The books of account and other records of the corporation may be
kept (subject to any provisions of Kansas law) at the principal place of
business or executive offices of the corporation.
9
<PAGE>
ARTICLE VIII
------------
INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS
To the extent and in the manner permitted by the laws of the State of
Kansas, 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 such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement.
ARTICLE IX
----------
AMENDMENTS
The Bylaws may be amended or repealed, or new bylaws may be adopted, by the
shareholders or by the Board of Directors at any regular meeting of the
shareholders or of the Board of Directors, or at any special meeting of the
shareholders or of the Board of Directors if notice of such amendment, repeal,
or adoption of new bylaws be contained in the notice of such special meeting.
APPROVED AND RATIFIED as of this 10th day of June, 1992, by the
undersigned, constituting all of the directors of the corporation.
/s/ G. Douglas Fox
----------------------------
G. Douglas Fox
/s/ Howard G. Barnett, Jr.
----------------------------
Howard G. Barnett, Jr.
/s/ Robert E. Craine, Jr.
----------------------------
Robert E. Craine, Jr.
/s/ Wayne Atwood
----------------------------
Wayne Atwood
/s/ Donna P. Sanford
-----------------------------
Donna P. Sanford
10
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA,
[LOGO]
AMENDED
CERTIFICATE OF INCORPORATION
WHEREAS, The Amended Certificate of Incorporation of
G.E.M COMMUNICATIONS, INC.
has been filed in the office of the Secretary of State as provided by the laws
of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma by virtue of the powers vested in me by law, do hereby issue this
certificate evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
Filed in the City of Oklahoma City this 1ST
-----
day of SEPTEMBER, 1995.
SEAL ---------
/s/ ?
----------------------------------------
Secretary of State
By:/s/ ?
---------------------------------------
<PAGE>
FEE $50.00
(Minimum)
AMENDED
FILE IN DUPLICATE CERTIFICATE OF INCORPORATION
PRINT CLEARLY (After Receipt of Payment of Stock)
SOS CORP. KEY: FOR OFFICE USE
- ---------------
PLEASE NOTE: This form MUST be filed with a letter from the Oklahoma Tax
Commission stating the franchise tax has been paid for the current fiscal year.
If the authorized capital is increased in excess of fifty thousand dollars
($50,000.00), the filing fee shall be an amount equal to one-tenth of one
percent (1/10 of 1%) of such increase.
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA, 101 State Capitol Bldg.,
Oklahoma City, OK 73105:
The undersigned Oklahoma corporation, for the purpose of amending its
certificate of incorporation as provided by Section 1077 of the Oklahoma General
Corporation Act, hereby certifies:
1. A. The name of the corporation is BMT COMMUNICATIONS INC.
-------------------------------------------
- --------------------------------------------------------------------------------
B. As amended. The name of the corporation has been changed to:
G.E.M. COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
2. A. No change, as filed X .
_________
B. As amended. The address of the registered office in the State of Oklahoma
and the name of the registered agent at such address is:
- --------------------------------------------------------------------------------
NAME STREET ADDRESS CITY COUNTY ZIP CODE
(P.O. BOXES ARE NOT ACCEPTABLE)
---
3. A. No Change, as filed X .
----
B. As amended. The duration of the corporation is:
-----------------------
4. A. No change, as filed X .
----
B. As amended. The purpose or purposes for which the corporation is formed
are:
5. A. No change, as filed X .
---
B. As amended. The aggregate number of the authorized shares, itemized by
class, par value of shares, shares without par value, and series, if any,
within a class is:
NUMBER OF SHARES SERIES PAR VALUE PER SHARE
Common
--------------- --------------------
Preferred
------------- --------------------
TOTAL NO. SHARES: TOTAL AUTHORIZED CAPITAL:
------ --------------
<PAGE>
That at a meeting of the Board of Directors, a resolution was duly
adopted setting forth the foregoing proposed amendment(s) to the Certificate of
Incorporation of said corporation, declaring said amendment(s) to be advisable
and calling a meeting of the shareholders of said corporation for consideration
thereof.
That thereafter, pursuant to said resolution of its Board of Directors,
a meeting of the shareholders of said corporation was duly called and held, at
which meeting the necessary number of shares as required by statute were voted
in favor of the amendment(s).
SUCH AMENDMENT(S) WAS DULY ADOPTED IN ACCORDANCE WITH 18 O.S., 1077.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by its President and attested by its Secretary, this 29th
-------- ------ ----
day of August , 1995.
--------- ----
/s/ Stuart P. Honeybone
---------------------------------
By ____ President
Stuart P. Honeybone
---------------------------------
(PLEASE PRINT NAME)
ATTEST:
/s/ J. Gary Mourton
- ---------------------------------
____ Secretary
J. Gary Mourton
- ---------------------------------
(PLEASE PRINT NAME)
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[LOGO]
AMENDED
CERTIFICATE OF INCORPORATION
WHEREAS, the Certificate of Incorporation, executed and acknowledged by
BMT COMMUNICATIONS INC.
has been filed in the office of the Secretary of State as provided by the laws
of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma, by virtue of the powers vested in me by law, do hereby issue this
Certificate evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
Filed in the City of Oklahoma City this 10TH
----
day of JANUARY, 1994.
SEAL ----------- --
----------------------------------------
Secretary of State
By:
---------------------------------------
<PAGE>
CERTIFICATE OF AMENDMENT TO THE
AMENDED CERTIFICATE OF INCORPORATION
OF BMT PUBLICATIONS, INC.
------------------------
JAN 10, 1994
TO: THE SECRETARY OF STATE OF OKLAHOMA
State Capitol Building
Oklahoma City, Oklahoma 73105
OKLAHOMA SECRETARY
OF STATE
The undersigned Oklahoma corporation, for the purpose of amending its
Amended Certificate of Incorporation as filed on November 6, 1986, as
provided by Section 1077 of the Oklahoma General Corporation Act, hereby
certifies:
1. That the name of the corporation is:
BMT PUBLICATIONS, INC.
2. That the name of the corporation has been changed to:
BMT COMMUNICATIONS INC.
3. That all other provisions of the Amended Certificate of Incorporation
not amended hereby shall remain unchanged and in full force and effect.
4. That the Board of Directors, acting by unanimous written consent
without a meeting pursuant to Section 1027 of the Oklahoma General
Corporation Act, approved and adopted the foregoing amendment to the Amended
Certificate of Incorporation of said corporation (the "Amendment"),
declaring the Amendment to be advisable and calling a meeting of the sole
shareholder of said corporation for consideration thereof.
5. That thereafter, pursuant to said resolution of the Board of
Directors of said corporation, the sole shareholder of said corporation,
acting by written consent without a meeting pursuant to Section 1073 of the
Oklahoma General Corporation Act, approved and adopted the proposed
Amendment.
SUCH AMENDMENT WAS DULY ADOPTED IN ACCORDANCE WITH 18 O.S (S) 1077.
IN WITNESS WHEREOF, said BMT PUBLICATIONS, INC., has caused this
Amendment to be signed by its Chairman and Chief Executive Officer and
attested by its Secretary this 22nd day of December, 1993.
----
RECEIVED
JAN 10, 1994
OKLAHOMA SECRETARY
OF STATE
ATTEST: BMT PUBLICATIONS, INC.
By /s/ J. Gary Mourton By /s/ Howard G. Barnett Jr.
------------------------------- ----------------------------
J. Gary Mourton, Secretary Howard G. Barnett, Jr. Chairman
and Chief Executive Officer
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA,
[LOGO]
AMENDED
CERTIFICATE OF INCORPORATION
To all to Whom these Presents shall Come, Greetings:
WHEREAS, The Certificate of Incorporation, duly signed and cerified, of
BMT PUBLICATIONS INC.
________________________________________________________________________________
has been filed in the office of the Secretary of State as provided by the Laws
of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma by virtue of the powers vested in me by laws, do hereby issue this
Certificate of Incorporation.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
Filed at the City of Oklahoma City this 4th
-----
day of February, A.D., 1987
SEAL --------- ----
/s/
----------------------------------------
Secretary of State
By: /s/
---------------------------------------
SOS Corp. Key: DB 00450248
----------------
<PAGE>
AMENDMENT
TO
CERTIFICATE OF INCORPORATION
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
The undersigned Oklahoma corporation, for the purpose of amending its
Certificate of Incorporation as provided by Section 77 of the Oklahoma
General Corporation Act, hereby certifies as follows:
1. A. As filed: the name of the corporation is: "BMT of Oklahoma, Inc."
B. As amended: the name of the corporation has been changed to: "BMT
Publications, Inc."
2. Except as described above, no other provisions of the Certificate of
Incorporation are affected by this Amendment.
The Board of Directors, by unanimous written action in lieu of a meeting,
approved the foregoing Amendment of the Certificate of Incorporation of the
corporation, declaring said Amendment to be advisable.
The shareholders of the corporation, by unanimous written action in lieu of
a meeting, approved the foregoing Amendment to the Certificate of
Incorporation of the corporation.
The foregoing Amendment was duly adopted in accordance with section 77 of
the Oklahoma General Corporation Act.
In witness whereof, the undersigned has caused this Certificate to be
signed by its President and attested by its Secretary, this 1st day of
December, 1986.
BMT OF OKLAHOMA, INC.
By: /s/ G. Douglas Fox
-------------------------
G. Douglas Fox, President
ATTEST:
/s/ J. Gary Mourton
- --------------------------
J. Gary Mourton, Secretary
7
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA,
[LOGO]
CERTIFICATE OF INCORPORATION
To all to Whom these Presents shall Come, Greetings:
WHEREAS, The Certificate of Incorporation, duly signed and cerified, of
BMT OF OKLAHOMA, INC.
________________________________________________________________________________
has been filed in the office of the Secretary of State as provided by the Laws
of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma by virtue of the powers vested in me by law, do hereby issue this
Certificate of Incorporation.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
Filed at the City of Oklahoma City this 6th
-----
day of November, A.D., 1986
----------- --
/s/
----------------------------------------
Secretary of State
By: /s/
---------------------------------------
SOS Corp. Key: DB 00450248
----------------
<PAGE>
CERTIFICATE OF INCORPORATION
OF
BMT OF OKLAHOMA, INC.
RECEIVED
STATE OF OKLAHOMA ) NOV 6, 1986
)ss. OKLAHOMA SECRETARY
COUNTY OF TULSA ) OF STATE
TO: SECRETARY OF STATE OF THE STATE OF OKLAHOMA
The undersigned incorporator, HOWARD G. BARNETT, JR., 2407 East Skelly
Drive, Tulsa, OK 74105, being legally competent to enter into contracts, for the
purpose of forming a corporation under "The Oklahoma General Corporation Act",
hereby adopts the following Certificate of Incorporation.
ARTICLE I
The name of this corporation is BMT OF OKLAHOMA, INC.
ARTICLE II
The address of its registered office in the State of Oklahoma is 2407
East Skelly Drive, Tulsa, Oklahoma 74105, and the name and address of its
registered agent is G. DOUGLAS FOX, 2407 East Skelly Drive, Tulsa, Oklahoma
74105.
ARTICLE III
The duration of the corporation is perpetual.
ARTICLE IV
The purposes for which this corporation is formed are:
To print, bind, publish, circulate, distribute, buy, sell and deal in
books, pamphlets, circulars, posters, newspapers, magazines, literature, music,
pictures, tickets, cards, advertisements, letter and bill heads, envelopes, and
legal, commercial, and financial forms and blanks of every kind. To acquire, by
purchase or otherwise, turn to account, license the use of, assign, and deal
with copyrights and intellectual properties of every kind. To carry on a general
printing, engraving, lithographing, electrotyping, and publishing business in
all the branches thereof.
To acquire, hold and deal in any and all kinds of real or personal
property.
<PAGE>
To acquire, hold and deal in business interests of all types and kinds
and corporate securities of every nature, including its own stock.
To engage in any other lawful business or enterprises permitted under
the laws of the State of Oklahoma.
To do and perform any of the above functions or purposes, either as a
principal, broker, agent, partner, joint venturer, or independent contractor,
either alone or in conjunction with any other legal entity.
ARTICLE V
The aggregate number of shares which the corporation shall have
authority to allot is 25,000.
The designation of each class, the number of shares of each class, and
the par value of the shares of each class are as
follows:
NUMBER OF
CLASS SHARES PAR VALUE TOTAL
- ----- ---------- --------- ----------
Common 25,000 $1.00 $25,000.00
ARTICLE VI
Any director individually, or any firm of which any director is a
partner, or any corporation of which any director may be an officer, director,
employee or holder of any amount of its capital stock, may be a party to or may
be interested in any contract or transaction of the corporation and, in the
absence of actual fraud, no such contract or other transaction shall be hereby
affected, impeached or invalidated.
No director shall be liable to account to the corporation for any
profit realized by him from or through any such transaction or contract of the
corporation by reason of his interest in such transaction or contract, provided
that such contract or transaction shall be approved or ratified by the
affirmative vote of directors who are not so interested constituting a majority
of a quorum of directors present at a meeting of the Board of Directors of the
corporation having authority in the premises.
Directors interested in any contracts or transactions of the type
described in the foregoing paragraph may be counted when present at meetings of
the Board of Directors or any committee for the purpose of determining the
existence of a quorum to consider and vote upon any such contract or
transaction. Any director whose interest in any such contract or transaction
arises solely by reason of the fact that he is a stockholder, officer, director
2
<PAGE>
or creditor of such other company shall not be deemed interested in such
contract or other transaction under any of the provisions of this Article VI,
nor shall any such contract or transaction be voided, or voidable, nor shall any
such director be liable to account because of such interest.
No contract or other transaction between the corporation and any other
corporation or firm which provides for the purchase and sale of securities or
other property or for any other action upon terms not less favorable to the
corporation than those offered to others, shall in any case be void or voidable
because of the fact that the directors of the corporation, or any of them, are
directors of such other corporation or partners in such firm, nor shall any
director be deemed interested in such contract or other transactions under any
of the provisions of this Article VI, nor shall any such directors be liable to
account because of such interest.
ARTICLE VII
The corporation shall indemnify every director or officer, his heirs,
executors and administrators, against expenses reasonably incurred by him in
connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been a director or officer of the corporation,
or, at its request, of any other corporation of which it is a stockholder or
creditor and from which he is not entitled to be indemnified, except in relation
to matters as to which he shall be fully adjudged in such action, suit or
proceeding to be liable for negligence or misconduct; in the event of a
settlement, indemnification shall be provided only in connection with such
matters covered by the settlement as to which the corporation is advised by
counsel that the person to be indemnified did not commit such a breach of duty.
The foregoing right of indemnification shall not be exclusive of other rights
to which he may be entitled.
ARTICLE VIII
The directors of this corporation shall have authority to adopt, alter
or repeal Bylaws for the corporation to the extent permitted by law, unless the
shareholders, by appropriate action, specifically limit this authority.
Dated this 5th day of November 1986.
/s/ Howard G. Barnett, Jr.
-------------------------
HOWARD G. BARNETT, JR.
3
<PAGE>
STATE OF OKLAHOMA )
)ss.
COUNTY OF TULSA )
Before me, a Notary Public in and for said county and state, on this
5th day of November 1986, personally appeared HOWARD G. BARNETT, JR., to me
known to be the identical person who executed the foregoing Certificate of
Incorporation, and acknowledged to me that he executed the same as his free and
voluntary act and deed, for the uses and purposes therein set forth.
Linda F. Toon
-------------------
Notary Public
My commission expires:
June 23, 1998
- ----------------------
4
<PAGE>
EXHIBIT 3.8
BYLAWS
OF
BMT OF OKLAHOMA, INC.
ARTICLE I
---------
OFFICES
Section 1. The registered office shall be in the City of Tulsa, County of
Tulsa, State of Oklahoma.
Section 2. The corporation may also have offices at such other places both
within and without the State of Oklahoma as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
----------
MEETINGS OF SHAREHOLDERS
Section 1. Meetings of shareholders for any purpose may be held at such
time and place, within or without the State of Oklahoma, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of shareholders, commencing with the year 1987,
shall be held each year at a time and place to be determined by the Board of
Directors, at which meeting they shall elect by a plurality vote by written
ballot a board of directors, and transact such other business as may be properly
brought before the meeting.
Section 3. Written notice of the annual meeting, stating the place, date
and hour of such meeting, shall be given to each shareholder entitled to vote
thereat not less than ten (10) days nor more than sixty (60) days before the
date of the meeting unless 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 (10) days before every meeting
of shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the election, either at a place within the city where the meeting is to be held
and which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held, and the list shall be
produced and kept at the
<PAGE>
time and place of the meeting during the whole time thereof, and subject to the
inspection of any shareholder who may be present.
Section 5. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by law or by the Articles of
Incorporation, may be called by the Chairman, Vice Chairman or the President and
shall be called by the Chairman, Vice Chairman, President or Secretary at the
request in writing of a majority of the Board of Directors, or at the request in
writing of shareholders 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 of shareholders, stating the
place, date, hour and the purpose or purposes thereof,
shall be given to each shareholder entitled to vote thereat, not less
than ten (10) days before the date fixed for the meeting unless otherwise
required by law.
Section 7. Business transacted at any special meeting of the shareholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by law or by the Articles
of Incorporation. If, however, such quorum shall not be present or represented
at any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have 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; provided, however, that
if the date of any adjourned meeting is more than thirty (30) days after the
date for which the meeting was originally noticed, or if a new record date is
fixed for the adjourned meeting, written notice of the place, date and hour of
the adjourned meeting shall be given in conformity herewith. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted at the meeting as originally notified.
Section 9. When a quorum is present at any meeting, the affirmative vote of
the holders of a majority of the shares of stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of law or
of the Articles of Incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
2
<PAGE>
Section 10. Each shareholder shall at every meeting of the shareholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such shareholder, but no proxy shall be voted or
acted upon after three (3) years from its date unless the proxy provides for a
longer period, and, except where the transfer books of the corporation have been
closed or a date has been fixed as a record date for the determination of its
shareholders entitled to vote, no share of stock shall be voted on at any
election for directors which has been transferred on the books of the
corporation within twenty (20) days preceding such election of directors.
Section 11. Any action required to or which may be taken at any annual or
special meeting of the shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action 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 by the
shareholders without a meeting by less than unanimous written consent shall be
given to those shareholders who have not consented in writing.
ARTICLE III
-----------
DIRECTORS
Section 1. The number of directors which shall constitute the whole Board
shall be not less than one (1) nor more than seven (7). As of November 7, 1986,
the Board shall consist of 3 directors. Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
Board of Directors or by the shareholders at the annual or a special meeting of
the shareholders. Except for the election held by the incorporator(s) and except
as provided in Section 2 and in Section 14 of this Article II, the directors
shall be elected at the annual meeting of shareholders. Each director elected
shall hold office until such director's successor is elected and qualified, or
until such director's earlier resignation or removal. Directors need not be
shareholders.
Section 2. Except as provided in Section 14 of this Article II, vacancies
and newly created directorships resulting from any increase in the authorized
numbers of directors by the directors may be filled by a majority vote of the
directors then in office, though less than a quorum, and any director so chosen
shall hold office until the next annual election and until such director's
successor is duly elected and qualified, unless such director resigns or is
removed.
3
<PAGE>
Section 3. The business of the corporation shall be managed by its Board
of Directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by law or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done
by the shareholders.
Section 4. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Oklahoma.
Section 5. Regular meetings of the Board of Directors may be held at such
time and at such place as shall from time to time be determined by the Board.
Five (5) days' notice of all regular meetings shall be given, and such notice
shall state the place, date, hour and the business to be transacted at and
purpose of such meeting.
Section 6. Special meetings of the Board may be called by the
President on three (3) days' notice to each director either personally or by
mail or by telegram. Special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of two (2)
directors unless the corporation has at that time less than three (3) directors,
in which latter event the request of only one (1) director shall be required.
Notice of any special meeting shall state the place, date, hour and the business
to be transacted at and the purpose of such meeting.
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 law or by the Articles of Incorporation. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 8. 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 (1) or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. 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.
4
<PAGE>
Section 9. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
Section 10. Members of the Board of Directors, or of any committee thereof,
may participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment that enables all persons
participating in the meeting to hear each other. Such participation shall
constitute presence in person at such meeting.
Section 11. Unless otherwise restricted by the Articles of Incorporation or
these Bylaws, 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 a
written consent to such action 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.
Section 12. The directors may be paid their expenses, if any, of attendance
at such meeting of the Board of Directors and may be paid a fixed sum for
attendance at such meeting of the Board of Directors and/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.
Section 13. The Board of Directors at any time may, by affirmative vote of
a majority of the members of the Board then in office, remove any officer
elected or appointed by the Board of Directors for cause or without cause.
Section 14. Any director may be removed, for cause or without cause, by a
majority vote of the shareholders entitled to vote for the election of such
director at any annual or special meeting of the shareholders. Upon such removal
of a director, the shareholders (and not the remaining directors) shall elect a
director to replace such removed director at the same shareholders' meeting at
which such removal took place or at a subsequent shareholders' meeting.
ARTICLE IV
----------
NOTICES
Section 1. Notices to directors and shareholders shall be in writing and
delivered personally or mailed to the directors or shareholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be deposited in the United
States
5
<PAGE>
mail, postage prepaid. Notice to directors may also be given by telegram. Notice
by telegram shall be deemed to be given when delivered to the sending telegraph
office.
Section 2. Whenever any notice is required to be given under the provisions
of law or of the Articles of Incorporation or of these Bylaws, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
ARTICLE V
---------
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board of
Directors and shall at a minimum, consist of a President and a Secretary. The
Board of Directors may also choose additional officers, including a Chairman or
Vice Chairman of the Board of Directors, one or more Vice-Presidents who may be
classified by their specific function, a Secretary, a Treasurer and one or more
Assistant Secretaries and Assistant Treasurers. Two or more offices may be held
by the same person, except the offices of President and Secretary.
Section 2. The Board of Directors at its first meeting and after each
annual meeting of shareholders shall choose a President and a Secretary, and may
choose such other officers and agents as it shall deem necessary.
Section 3. The salaries of all officers and agents of the corporation shall
be fixed by the Board of Directors.
Section 4. The officers of the corporation shall hold office until their
successors are chosen and qualify, or until their earlier resignation or
removal. Any vacancy occurring in any office of the corporation shall be filled
by the Board of Directors.
Section 5. The Chairman, or, in the absence of the Chairman, a Vice
Chairman of the Board, if chosen, shall preside at all meetings of the Board of
Directors of the corporation and may preside at meetings of the shareholders,
and shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
Section 6. Unless the Chairman or Vice Chairman has been so designated
by the Board of Directors, the President shall be the Chief Executive Officer
of the Corporation, shall preside at all meetings of the shareholders
and, unless a Chairman or Vice Chairman of the Board has been chosen, at all
meetings of the Board of Directors, and shall have general and active management
of the business of the corporation and shall see that
6
<PAGE>
all orders and resolutions of the Board of Directors, are carried into effect.
The Board of Directors may allocate the duties of President among the Chairman,
Vice Chairman and the President, to the extent any such other officers are
elected.
Section 7. The President (and the Chairman or Vice Chairman, if elected)
shall be empowered to execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
Section 8. The Vice President, or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors, shall, in the
absence of disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 9. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and the Board of Directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the shareholders and regular 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 the Secretary shall be.
Additionally, the Secretary shall have custody of the corporate seal of the
corporation, and the Secretary or an Assistant Secretary, shall have authority
to affix the same to any instrument requiring it, and when so affixed, it may be
attested by the Secretary's signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by
signature.
Section 10. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the Board of Directors, shall,
in the absence or disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other duties and have such
other powers as the Board of Directors from time to time prescribe.
Section 11. The Treasurer, if one is chosen or, if not, the Secretary,
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
7
<PAGE>
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, if one is chosen or, if not, the Secretary,
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 transactions performed by the
Treasurer (or Secretary, as the case may be) and of the financial condition of
the corporation.
Section 13. The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board of Directors,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
ARTICLE VI
----------
CERTIFICATES OF STOCK, TRANSFERS OF STOCK
CLOSING OF TRANSFER BOOKS AND
REGISTERED SHAREHOLDERS
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 the shareholder in the corporation.
Section 2. Any or all the signatures on the certificate may be by
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 the
person who signed the certificate was such officer, transfer agent or registrar
at the date of issue.
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 or 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
8
<PAGE>
representative, to advertise the same in such manner as the
corporation shall require and/or to give the corporation a bond in such sum as
the corporation may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Subject to transfer restrictions permitted by law and to stop
transfer orders directed in good faith by the corporation to any transfer agent
to prevent possible violations of federal or state securities laws, rules or
regulations, 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 5. The Board of Directors may fix a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of any meeting
of shareholders, nor more than sixty (60) days prior to the time for the other
action hereinafter described, as of which there shall be determined the
shareholders who are entitled: to notice of or to vote at any meeting of
shareholders 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 with respect
to any change, conversion or exchange of stock or with respect to any other
lawful action.
Section 6. The corporation shall be entitled to treat the person in whose
name any share of stock is registered on the books of the corporation as the
owner thereof for all purposes and shall not be bound to recognize any equitable
or other claim or other interest in such shares in the part of any other person,
whether or not the corporation shall have express or other notice thereof.
ARTICLE VII
-----------
GENERAL PROVISIONS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in shares of the corporation's capital
stock.
9
<PAGE>
Section 2. There may be set apart out of any of the funds of the
corporation available for dividends such amounts as the Board of Directors deems
proper as a reserve or reserves for working capital, depreciation, losses in
value, or for any other proper corporate purpose, and the Board of Directors may
increase, decrease or abolish any such reserve in the manner in which it was
created.
Section 3. The Board of Directors shall present at each annual meeting and
at any special meeting of the shareholders when called for by vote of the
shareholders, a full and clear statement of the business and condition of the
corporation.
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
Section 5. The fiscal year of the corporation shall be as fixed by the
Board of Directors.
Section 6. The Board of Directors may provide a suitable seal, containing
the name of the corporation, which seal shall be in charge of the Secretary. If
and when so directed by the Board of Directors or a committee thereof,
duplicates of the seal may be kept and used by the Treasurer or by the Assistant
Secretary or Assistant Treasurer. The seal may be used by causing it, or a
facsimile thereof, to be impressed or affixed or in any other manner reproduced.
Section 7. The books of account and other records of the corporation may be
kept (subject to any provisions of Oklahoma law) at the principal place of
business or executive offices of the corporation.
ARTICLE VIII
------------
INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS
To the extent and in the manner permitted by the laws of the State of
Oklahoma, 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 such person is or was a director, officer, employee or agent of the
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<PAGE>
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement.
ARTICLE IX
----------
AMENDMENTS
The Bylaws may be amended or repealed, or new bylaws may be adopted, by the
shareholders or by the Board of Directors at any regular meeting of the
shareholders or of the Board of Directors, or at any special meeting of the
shareholders or of the Board of Directors if notice of such amendment, repeal,
or adoption of new bylaws be contained in the notice of such special meeting.
APPROVED AND RATIFIED as of this 8th day of November, 1986 by the
undersigned, constituting all of the directors (whether one or more) of the
corporation.
/s/ G. Douglas Fox
----------------------------
G. Douglas Fox
/s/ Howard G. Barnett, Jr.
----------------------------
Howard G. Barnett, Jr.
/s/ J. Gary Mourton
----------------------------
J. Gary Mourton
DIRECTORS
11
<PAGE>
Articles of Incorporation
(PURSUANT TO NRS 78)
STATE OF NEVADA
[SEAL]
STATE OF NEVADA
(For filing office use) Secretary of State (For filing office use)
________________________________________________________________________________
IMPORTANT: Read instructions on reverse side before completing this form.
TYPE OR PRINT (BLACK INK ONLY)
1. NAME OF CORPORATION: T/SF of Nevada, Inc.
---------------------------------------------------------
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada
--------------
where process may be served)
Name of Resident Agent: The Corporation Trust Company of Nevada
________________________________________________________
Street Address: One East 1st Street Reno 89501
_______________________________________________________________
Street No. Street Name City Zip
3. SHARES: (number of shares the corporation is authorized to issue)
Number of shares with par value: 2,500,000 Par value: $.01 Number of
--------- ----
shares without par value: 0
---
4. GOVERNING BOARD: shall be styled as (check out): X Directors Trustees
--- ---
The FIRST BOARD OF DIRECTORS shall consist of 3 members and the names and
---
addresses are as follows:
Howard G. Barnett, Jr. 2407 E. Skelly Drive Tulsa, OK 74105
-------------------------- ----------------------------------------
Name Address City/State/Zip
Robert E. Craine, Jr. 2407 E. Skelly Drive Tulsa, OK 74105
-------------------------- ----------------------------------------
Name Address City/State/Zip
J. Gary Mourton 2407 E. Skelly Drive Tulsa, OK 74105
-------------------------- ----------------------------------------
Name Address City/State/Zip
5. PURPOSE (optional--see reverse side): The purpose of the corporation shall
----------------------------------------------------------------------------
be:
---
6. NRS 78.037: States that the articles of incorporation may also contain a
provision eliminating or limiting the personal liability of a director or
officer of the corporation or its stockholders for damages for breach of
fiduciary duty as a director of officer except acts or omissions which
include misconduct or fraud. Do you want this provision to be part of your
articles? Please check one of the following: YES X NO .
--- ----
7. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information noted on
separate pages. But, if any of the additional information is contradictory
to this form it cannot be filed and will be returned to you for correction.
Number of pages attached 1. See Exhibit A attached.
---
8. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (signatures must be notorized).
<TABLE>
<S> <C>
Robert A. Curry
----------------------------------------- -------------------------------------------------
Name (print) Name (print)
Conner & Winters
2400 First Place Tower Tulsa OK 74103
------------------------------------------ -------------------------------------------------
Address City/State/Zip Address City/State/Zip
------------------------------------------ -------------------------------------------------
Signature Signature
------------------------------------------ Subscribed and sworn to before me this 11th day of
Name (print) ----
------------------------------------------ July , 1995.
Address City/State/Zip ------------- ----
------------------------------------------ Melissa Fox
Signature --------------------------------------------------
Notary Public
(affix notary stamp or seal)
</TABLE>
9. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
I, ________________________ hereby accept appointment as Resident Agent for the
above named corporation.
- -------------------------------------- -------------------------------------
Signature of Resident Agent Date
<PAGE>
EXHIBIT A
ADDITIONAL INFORMATION
ARTICLES OF INCORPORATION
OF
T/SF OF NEVADA, INC.
To the fullest extent permitted by Chapter 78 of the Nevada Revised
Statutes as the same exists or may hereafter be amended, T/SF of Nevada, Inc
("the Corporation") shall: (i) indemnify its officers, directors, employees and
agents and (ii) advance expenses incurred by such officers, directors, employees
and agents in relation to any action, suit or proceeding. Any repeal or
modification of this paragraph by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the personal
liability or right to indemnification or advancement of expenses hereunder
existing at the time of such repeal or modification.
<PAGE>
Article of Incorporation
(PURSUANT TO NRS 78)
STATE OF NEVADA
SEAL
STATE OF NEVADA
(For filing officce use) Seretary of State (For filing office use)
________________________________________________________________________________
IMPORTANT: Read instructions on reverse side before completing this form
TYPE OR PRINT (BLACK INK ONLY)
1. NAME OF CORPORATION: T/SF of Nevada, Inc.
---------------------------------------------------------
2. RESIDENT AGENT: (designated resident agent and his
The Corporation Trust Company of Nevada
<PAGE>
EXHIBIT 3.10
BYLAWS
OF
T/SF OF NEVADA, INC.
(a Nevada corporation)
<PAGE>
TABLE OF CONTENTS
BYLAWS OF
T/SF OF NEVADA, INC.
(a Nevada corporation)
Article or
Section Caption Page
- ---------- ------- ----
I Offices and Fiscal Year..................... 1
-----------------------
1.01 Registered Office........................... 1
1.02 Other Offices............................... 1
1.03 Fiscal Year................................. 1
II Meetings of Stockholders.................... 1
------------------------
2.01 Place of Meeting............................ 1
2.02 Annual Meeting.............................. 1
2.03 Special Meetings............................ 1
2.04 Notice of Meetings.......................... 2
2.05 Quorum, Manner of Acting and Adjournment.... 2
2.06 Organization................................ 2
2.07 Voting; Proxies............................. 3
2.08 Consent of Stockholders in Lieu of Meeting.. 3
2.09 Voting Lists................................ 4
III Board of Directors.......................... 4
------------------
3.01 Powers...................................... 4
3.02 Number and Term of Office................... 4
3.03 Resignations................................ 4
3.04 Vacancies and Newly-Created Directorships... 4
3.05 Organization................................ 5
3.06 Place of Meeting............................ 5
3.07 Organization Meeting........................ 5
3.08 Regular Meetings............................ 5
3.09 Special Meetings............................ 5
3.10 Conference Telephone Meetings............... 5
3.11 Quorum, Manner of Acting and Adjournment.... 6
3.12 Committees.................................. 6
3.13 Consent of Directors in Lieu of Meeting..... 7
3.14 Presumption of Assent....................... 7
3.15 Compensation of Directors................... 7
3.16 Removal of Directors........................ 7
<PAGE>
Article or
Section Caption Page
- ---------- ------- ----
IV Notices-Waivers.............................. 7
---------------
4.01 Notice, What Constitutes..................... 7
4.02 Waivers of Notice............................ 8
V Officers..................................... 8
--------
5.01 Number, Qualifications and Designation....... 8
5.02 Election and Term of Office.................. 8
5.03 Other Officers, Committees and Agents........ 8
5.04 Chairman of the Board and Vice Chairman...... 9
5.05 President.................................... 9
5.06 Vice Presidents.............................. 9
5.07 Secretary and Assistant Secretaries.......... 9
5.08 Treasurer and Assistant Treasurers........... 10
5.09 Officers' Bonds.............................. 10
5.10 Compensation................................. 10
5.11 Action with Respect to Securities of
Other Corporations.......................... 10
VI Capital Stock................................ 10
-------------
6.01 Issuance..................................... 10
6.02 Regulations Regarding Certificates........... 11
6.03 Stock Certificates........................... 11
6.04 Lost, Stolen, Destroyed or Mutilated
Certificates................................ 11
6.05 Record Holder of Shares...................... 11
6.06 Determination of Stockholders of Record
for Voting at Meetings...................... 12
6.07 Determination of Stockholders of Record
for Dividends and Distributions............. 12
6.08 Determination of Stockholders for
Written Consent............................. 12
VII Indemnification of Directors, Officers and
------------------------------------------
Other Authorized Representatives............ 13
--------------------------------
7.01 Indemnification of Authorized Representatives
in Third Party Proceedings.................. 13
7.02 Indemnification of Authorized Representatives
in Corporate Proceedings.................... 14
7.03 Mandatory Indemnification of Authorized
Representatives............................. 14
7.04 Determination of Entitlement to
Indemnification............................. 14
7.05 Burden of Proof.............................. 14
7.06 Advancing Expenses........................... 15
7.07 Employee Benefit Plans....................... 15
-ii-
<PAGE>
Article or
Section Caption Page
- ------- ------- ----
7.08 Employees and Agents Other Than Authorized
Representatives........................... 15
7.09 Scope of Article........................... 15
7.10 Reliance on Provisions..................... 15
7.11 Insurance.................................. 15
7.12 Rights Continue............................ 16
VIII General Provisions......................... 16
------------------
8.01 Dividends.................................. 16
8.02 Annual Statements.......................... 16
8.03 Contracts.................................. 16
8.04 Checks..................................... 17
8.05 Corporate Seal............................. 17
8.06 Amendment of Bylaws........................ 17
-iii-
<PAGE>
BYLAWS
OF
T/SF OF NEVADA, INC.
(a Nevada Corporation)
ARTICLE I
Offices and Fiscal Year
SECTION 1.01. Registered Office. The registered office of the corporation
-----------------
shall be One East 1st Street, in the City of Reno, County of Washoe, State of
Nevada 89501, until otherwise established by a vote of a majority of the Board
of Directors in office, and a statement of such change is filed in the manner
provided by statute. (Secs. 78.090, 78.095, 78.110)
SECTION 1.02. Other Offices. The corporation may also have offices at such
-------------
other places within or without the State of Nevada as the Board of Directors
may from time to time determine or the business of the corporation requires.
(Sec. 78.070)
SECTION 1.03. Fiscal Year. The fiscal year of the corporation shall be the
-----------
calendar year unless otherwise fixed by resolution of the Board of Directors.
ARTICLE II
Meetings of Stockholders
SECTION 2.01. Place of Meeting. All meetings of the Stockholders of the
----------------
Corporation shall be held at the registered office of the Corporation or at the
principal office of the Corporation or at such other place within or outside the
State of Nevada as shall be designated by the Board of Directors in the notice
of such meeting. (Sec. 78.310)
SECTION 2.02. Annual Meeting. An annual meeting of the Stockholders of the
--------------
Corporation, for the election of directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting, shall be held in each year on the first Tuesday in May (commencing in
1996) at 11:00 a.m. If such day is a legal holiday, the annual meeting shall be
held on the following business day. If the annual meeting is not held on such
date, the Board of Directors by majority vote shall cause a meeting to be held
as soon thereafter as convenient. (Sec. 78.320)
SECTION 2.03. Special Meetings. Special meetings of the Stockholders of the
----------------
corporation may be called at any time by the President, Chairman of the Board,
if any, or a majority of the Board of Directors, for any purpose or purposes for
which meetings may be
<PAGE>
lawfully called. At any time, upon written request of any such person or persons
who have duly called a special meeting, which written request shall state the
purpose or purposes of the meeting, it shall be the duty of the President to fix
the date of the meeting to be held at such date and time as the President may
fix, not less than 10 nor more than 60 days after the receipt of the request,
and to give due notice thereof. If the President shall neglect or refuse to fix
the time and date of such meeting and give notice thereof, the person or persons
calling the meeting may do so. (Secs. 78.325, 78.370)
SECTION 2.04. Notice of Meetings. Written notice of the place, date and
------------------
hour of every meeting of the Stockholders, whether annual or special, shall be
given by the Chairman of the Board, the President, a Vice President, the
Secretary or an Assistant Secretary of the Corporation to each Stockholder
having voting power with respect to the business to be transacted at such
meeting not less than (10) nor more than (60) days before the date of the
meeting. Each notice of a special meeting shall state the purpose or purposes
for which the meeting is being called. Any meeting at which all Stockholders
having voting power with respect to the business to be transacted thereat are
present, either in person or by proxy, shall be a valid meeting for the
transaction of business, notwithstanding that notice has not been given as
hereinabove provided. (Sec. 78.330)
SECTION 2.05. Quorum, Manner of Acting and Adjournment. The holders of a
-----------------------------------------
majority of the stock issued and outstanding (not including treasury shares) and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the Stockholders for the transaction of
business except as otherwise provided by statute, by the certificate of
incorporation or by these bylaws. If, however, such quorum shall not be present
or represented at any meeting of the Stockholders, the Stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At any 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 (30) days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each Stockholder of record having
voting power with respect to the business to be transacted at such meeting. When
a quorum is present at any meeting, the vote of the holders of the majority of
the stock having voting power with respect to a question present in person or
represented by proxy shall decide any such question brought before such meeting,
unless the question is one upon which, by express provision of the applicable
statute or these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision on such question. Except
upon those questions governed by the aforesaid express provisions, the
Stockholders present in person or by proxy at a duly organized meeting can
continue to do business until adjournment, notwithstanding withdrawal of enough
Stockholders to leave less than a quorum. (Secs. 78.320, 78.325)
SECTION 2.06. Organization. At every meeting of the Stockholders, the
--------------
President or, in the absence of the President, one of the following persons
present in the order stated:
-2-
<PAGE>
Chairman of the Board, if any, a chairman designated by the Board of Directors,
or a chairman chosen by the Stockholders, shall act as chairman, and the
Secretary, or, in his absence, an Assistant Secretary or a person appointed by
the chairman of the meeting, shall act as secretary of the meeting.
SECTION 2.07. Voting: Proxies. Except as provided in the certificate of
-----------------
incorporation or in a resolution adopted by the Board of Directors pursuant to
Section 78.195 of the Nevada Business Corporation Act and subject to Section
78.350 of such Act, each Stockholder shall at every meeting of the Stockholders
be entitled to one vote in person or by proxy for each share of capital stock
having voting power held by such Stockholder. No proxy shall be voted after
six months from its date of creation, unless it is coupled with an interest, or
unless the stockholder specifies in it the length of time for which it is to
continue in force, which may exceed seven years from its date of creation.
Each proxy shall be executed in writing by the Stockholder or by his duly
authorized attorney-in-fact and filed with the Secretary of the Corporation or
the Secretary of the meeting prior to being voted. A proxy, unless coupled with
an interest, shall be revocable at will, notwithstanding any other agreement or
any provision in the proxy to the contrary, but the revocation of a proxy shall
not be effective until notice thereof has been given to the Secretary of the
corporation. 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. A
proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of such
death or incapacity is given to the Secretary of the corporation. (Secs. 78.350,
78.355)
SECTION 2.08. Consent of Stockholders in Lieu of Meeting. 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 the Stockholders, 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 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 by delivery to its
registered office in Nevada, 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. Every written consent shall bear the date of signature of
each Stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within (60) days after
the earliest dated consent delivered in the manner required herein to the
corporation, written consents signed by a sufficient number of holders to take
action are delivered to the corporation by delivery to its registered office in
Nevada 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.
Prompt notice of the taking of the
-3-
<PAGE>
corporate action without a meeting by less than unanimous written consent shall
be given to those Stockholders who have not consented in writing. (Secs. 78.320,
78.325)
SECTION 2.09. Voting Lists. The officer who has charge of the stock ledger
--------------
of the corporation shall prepare and make, at least ten (10) days before every
meeting of Stockholders, a complete list of the Stockholders entitled to vote at
the meeting. The list shall be arranged in alphabetical order and show 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 (10) days prior to the meeting either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
Stockholder who is present. (Sec. 78.257)
ARTICLE III
Board of Directors
SECTION 3.01. Powers. The Board of Directors shall have full power to
--------
manage the business and affairs of the corporation; and all powers of
the corporation, except those specifically reserved or granted to the
Stockholders by statute, the certificate of incorporation or these bylaws, are
hereby granted to and vested in the Board of Directors. (Sec. 78.120)
SECTION 3.02. Number and Term of Office. The Board of Directors shall
---------------------------
consist of such number of Directors, not less than one (1) nor more than three
(3), as may be determined from time to time by resolution of the Board of
Directors. The initial Board of Directors shall consist of three (3) members.
Each Director shall serve until the next annual election and until his successor
shall have been elected and shall qualify, except in the event of his death,
resignation or removal. All Directors of the corporation shall be natural
persons of full age, but need not be residents of Oklahoma or Stockholders of
the corporation. (Secs. 78.115, 78.330)
SECTION 3.03. Resignations. Any director of the corporation may resign at
--------------
any time by giving written notice to the President or the Secretary of the
corporation. Resignations shall become effective upon receipt or at such later
time as shall be specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
(Sec. 78.335)
SECTION 3.04. Vacancies and Newly-Created Directorships. Vacancies and
-------------------------------------------
newly-created Directorships resulting from any increase in the authorized number
of Directors may be filled by a majority vote of the Directors then in office,
though less than a quorum, or by a sole remaining Director. Each Director so
chosen shall hold office until the next annual election and until his successor
shall have been duly elected and shall qualify, unless he dies,
-4-
<PAGE>
resigns or is removed prior to such time. If at any time, by reason of death or
resignation or other cause, the corporation should have no Directors in office,
then an election of Directors may be held by the Stockholders or in the manner
provided by statute. (Sec. 78.335)
SECTION 3.05. Organization. At every meeting of the Board of Directors, the
------------
Chairman of the Board, if any, or, in the case of a vacancy in the office or
absence of the Chairman of the Board, the President or, in his absence, a
chairman chosen by a majority of the Directors present, shall preside, and the
Secretary or, in his absence, an Assistant Secretary or any person appointed by
the chairman of the meeting, shall act as secretary of the meeting.
SECTION 3.06. Place of Meeting. The Board of Directors may hold its
----------------
meetings, both regular and special, at such place or places within or without
the State of Nevada as the Board of Directors may from time to time appoint,
or as may be designated in the notice calling the meeting. (Sec. 78.310)
SECTION 3.07. Organization Meeting. The first meeting of each newly-elected
--------------------
Board of Directors shall, unless otherwise specified by the President of the
corporation, be held immediately after and at the same place as, the annual
meeting of Stockholders. Notice of such meeting to the newly-elected Directors
shall not be necessary in order legally to constitute the meeting, provided a
quorum shall be present.
SECTION 3.08. Regular Meetings. Regular meetings of the Board of Directors
----------------
may be held without notice at such time and place as shall be designated from
time to time by resolution of the Board of Directors. If the date fixed for any
such regular meeting be a legal holiday under the laws of the State where such
meeting is to be held, then the same shall be held on the next succeeding
business day, not a Saturday, or at such other time as may be determined by
resolution of the Board of Directors. At such meetings, the Directors shall
transact such business as may properly be brought before the meeting. (Sec.
78.315)
SECTION 3.09. Special Meetings. Special meetings of the Board of Directors
----------------
shall be held whenever called by the Chairman of the Board, if any, the
President or by two or more of the Directors. Notice of each such meeting shall
be given to each Director by telephone, telegram, facsimile, in writing or in
person at least 24 hours (in the case of notice by telephone or in person) or 48
hours (in the case of notice by telegram or facsimile) or five days (in the case
of notice by mail) before the time at which the meeting is to be held. Each such
notice shall state the time, place and purpose of the meeting to be so held.
Except as otherwise specifically provided in these bylaws, no notice of the
objects or purposes of any special meeting of the Board of Directors need be
given, and, unless otherwise indicated in the notice thereof, any and all
business may be transacted at any such special meeting. (Sec. 78.315, 78.325)
SECTION 3.10. Conference Telephone Meetings. One or more Directors may
-----------------------------
participate in a meeting of the Board, or of a committee of the Board, by means
of conference telephone or similar communications equipment by means of which
all persons participating in
-5-
<PAGE>
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting. (Sec. 78.315)
SECTION 3.11. Quorum, Manner of Acting and Adjournment. At all meetings
---------------------------------------
of the Board a majority of the Directors shall constitute a quorum for the
transaction of business. The vote 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 on additions, amendments, repeal or any changes whatsoever in the bylaws
with respect to any of which the affirmative votes of at least a majority of the
members of the Board of Directors shall be necessary for the adoption of such
changes and except as may be otherwise specifically provided by statute or by
the certificate of incorporation. If a quorum shall not be present at any
meeting of the Board of Directors, the Directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present. (Sec. 78.315)
SECTION 3.12. Committees. The Board of Directors may, by resolution adopted
------------
by a majority of the whole Board, designate an executive committee and one or
more other committees, each committee to consist of one or more 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, and
the alternate or alternates, if any, designated for such member, of any
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 the place of any
such absent or disqualified member. A majority of the members of any committee,
as at the time constituted, shall be necessary to constitute a quorum thereof,
and the act of a majority of the members of any committee who are present at any
meeting thereof at which a quorum is present shall be the act of such committee.
Any vacancy in any committee shall be filled by vote of a majority of the
Directors at the time in office. (Sec. 78.125)
Any such committee to the extent provided in the resolution establishing
such committee shall have and may exercise all the power and authority of the
Board of Directors in the management of the business and affairs of the
corporation, except that no such committee shall have the authority of the Board
of Directors in reference to amending the certificate of incorporation,
approving a plan of merger or consolidation, recommending to the Stockholders
the sale, lease or exchange of all or substantially all of the property and
assets of the corporation, recommending to the Stockholders a voluntary
dissolution of the corporation or a revocation thereof, amending, altering or
repealing the bylaws or adopting new bylaws for the corporation, filling
vacancies in the Board of Directors or any such committee, filling any
Directorship to be filled by reason of an increase in the number of Directors,
electing or removing officers or members of any such committee, fixing the
compensation of any member of such committee, or altering or repealing any
resolution of the Board of Directors which provides for any of the foregoing or
which by its terms provides that it shall not be so amendable or repealable; and
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of shares of the corporation. Such committee or
committees shall have such name or
-6-
<PAGE>
names as may be determined from time to time by resolution adopted by the Board
of Directors. Each committee so formed shall fix the time and place of its
meetings and its own rules of procedure and shall keep regular minutes of its
meetings and report the same from time to time to the Board of Directors. (Sec.
78.125)
SECTION 3.13. Consent of Directors in Lieu of Meeting. Unless otherwise
-----------------------------------------
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board or the Committee consent thereto in writing, and the writing or writings
are filed with the minutes of proceedings of the Board or the Committee. (Sec.
78.315)
SECTION 3.14. Presumption of Assent. A Director who is present at a meeting
-----------------------
of the Board of Directors at which action on any corporate matter is taken shall
be presumed to have assented to the action 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 secretary of the meeting before the
adjournment thereof or unless he 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 3.15. Compensation of Directors. Unless otherwise restricted by the
--------------------------
certificate of incorporation, 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. (Sec. 78.140)
SECTION 3.16. Removal of Directors. Except as otherwise provided in the
----------------------
certificate of incorporation or the Nevada Business General Corporation Act, any
Director may be removed from office, with or without cause, at any time by the
holders of a majority of the shares then entitled to vote at any election of
Directors, at any annual or special meeting of the Stockholders. (Sec. 78.335)
ARTICLE IV
Notices - Waivers
SECTION 4.01. Notice. What Constitutes. Whenever, under the provisions of
--------------------------
the statutes of Nevada or the certificate of incorporation or of these by-
laws, notice is required to be given to any Director or Stockholder, it may be
given in writing, by mail, addressed to such Director or Stockholder, at his
address as it appears on the records of the corporation, with
-7-
<PAGE>
postage thereon prepaid. Notice given in accordance with this provision shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to Directors of special meetings must be given in accordance
with Section 3.09 of Article III hereof. (Sec. 78.370)
SECTION 4.02. Waivers of Notice. Whenever any notice is required to
-----------------
be given under the provisions of the certificate of incorporation, these by-
laws, or by statute, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Stockholders, Directors, or members of a committee of Directors need be
specified in any written waiver of notice of such meeting unless so required by
the certificate of incorporation or these by-laws. Attendance by a person,
either in person or by proxy, at any meeting, shall constitute a waiver of
notice of such meeting, except where a person attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not lawfully called or convened. (Sec. 78.375)
ARTICLE V
Officers
SECTION 5.01. Number, Qualifications and Designation. The officers of the
--------------------------------------
corporation shall be chosen by the Board of Directors and shall be a President,
Secretary and such other officers as may be elected in accordance with the
provisions of Section 5.03 of this Article. One person may hold more than one
office. Officers may be, but need not be, Directors or Stockholders of the
corporation. (Sec. 78.130)
SECTION 5.02. Election and Term of Office. The officers of the corporation,
---------------------------
except those elected by delegated authority pursuant to Section 5.03 of this
Article, shall be elected annually by the Board of Directors, and each such
officer shall hold his office until his successor shall have been elected and
shall qualify, or until his earlier death, resignation or removal. Any officer
may resign at any time upon written notice to the corporation or may be removed,
with or without cause, by the Board of Directors. (Sec. 78.130)
SECTION 5.03. Other Officers, Committees and Agents. The Board of Directors
-------------------------------------
may from time to time elect such other officers, including without limitation a
Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, a
Treasurer and one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers, and appoint such committees, employees and other agents as it deems
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as are provided in these bylaws, or as the Board
of Directors may from time to time determine. The Board of Directors may
delegate to any officer or committee the power to elect subordinate officers and
to retain or appoint
-8-
<PAGE>
employees or other agents, or committees thereof, and to prescribe the authority
and duties of such subordinate officers, committees, employees or other agents.
(Sec. 78.130)
SECTION 5.04. Chairman of the Board and Vice Chairman. The Chairman of the
---------------------------------------
Board of Directors, if any, shall preside at all meetings 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, and deliver on
behalf of the corporation any deeds, mortgages, bonds, contracts,
powers of attorney, and other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
bylaws to some other officer or agent of the corporation or shall be required
by law to be otherwise signed or executed, and he shall perform such other
duties as may be prescribed by the Board of Directors from time to time. The
Vice Chairman, if any, shall, at the request of the Chairman or in his absence
or disability, perform the duties and exercise the powers of the Chairman, and
shall perform such other duties as the Board of Directors shall prescribe.
SECTION 5.05. President. The President shall be the chief executive and
---------
chief operating officer of the corporation and shall have general charge and
active management of the business, properties and operations of the corporation,
shall see that all orders and resolutions of the Board of Directors are carried
into effect. He shall preside at all meetings of the Stockholders and, if there
is no Chairman or Vice Chairman of the Board, or in their absence, all meetings
of the Board of Directors. He shall possess the power to execute and
acknowledge, in the name and under the seal of the corporation, deeds,
mortgages, bonds, contracts, certificates and other instruments authorized by
the Board of Directors, except as may be otherwise provided or required by law,
and except as may be expressly delegated by the Board of Directors, or by these
bylaws. He may employ all agents and employees of the corporation and may
discharge any such agent or employee, and, in general, shall perform all duties
incident to the office of President, and such other duties as from time to time
may be assigned to him by the Board of Directors.
SECTION 5.06. Vice Presidents. Any Vice President shall, at the request of
---------------
the President or in his absence or disability, perform the duties and exercise
the powers of the President and such other duties as may from time to time be
assigned by the Board of Directors or by the President. At the discretion of the
Board of Directors, one or more Vice Presidents may be designated as an
Executive Vice President or Senior Vice President.
SECTION 5.07. Secretary and Assistant Secretaries. The Secretary shall
-----------------------------------
attend all meetings of the Stockholders and of the Board of Directors and shall
record the proceedings of the Stockholders and of the Directors and of
committees of the Board in a book or books to be kept for that purpose; see that
notices are given and records and reports properly kept and filed by the
corporation as required by law; be the custodian of the seal of the corporation
and see that it is affixed to all documents to be executed on behalf of the
corporation under its seal; and, in general, perform all duties incident to the
office of Secretary, and such other duties as may from time to time be assigned
to him by the Board of Directors or the President. Any Assistant
-9-
<PAGE>
Secretary shall, at the request of the Secretary or in his absence or
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties as the Board of Directors or the President shall
prescribe.
SECTION 5.08. Treasurer and Assistant Treasurers. The Treasurer, if any,
----------------------------------
shall be the chief financial officer of the corporation. The Treasurer shall
have or provide for the custody of the funds or other property of the
corporation; whenever so required by the Board of Directors, shall render an
account showing his transactions as Treasurer and the financial condition of the
corporation; and, in general, shall discharge such other duties as may from time
to time be assigned to him by the Board of Directors or the President. Any
Assistant Treasurer shall, at the request of the Treasurer or in his absence or
disability, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties as the Board of Directors or the President shall
prescribe.
SECTION 5.09. Officers' Bonds. No officer of the corporation need provide a
-----------------
bond to guarantee the faithful discharge of his duties unless the Board of
Directors shall by resolution so require a bond in which event such officer
shall give the corporation a bond (which shall be renewed if and as required) in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his office.
SECTION 5.10. Compensation. The compensation of the officers and agents of
-------------
the Corporation elected by the Board of Directors shall be fixed from time to
time by the Board of Directors. Any employment contract, whether for an officer,
agent or employee, if expressly approved or specifically authorized by the Board
of Directors, may fix a term of employment, and any such contract, but only if
so approved or authorized, shall be valid and binding upon the corporation in
accordance with the terms thereof; provided, however, this provision shall not
limit or restrict in any way the right of the corporation at any time in its
discretion (which right is hereby expressly reserved) to remove from office,
discharge or terminate the employment or otherwise dispense with the services of
any such officer, agent or employee, as provided in these bylaws, prior to the
expiration of the term of employment under any such contract, provided only that
the Corporation shall not thereby be relieved of any continuing liability for
salary or other compensation provided for in such contract.
SECTION 5.11. Action with Respect to Securities of Other Corporations.
--------------------------------------------------------
Unless otherwise directed by the Board of Directors, the Chairman of the
Board of Directors, if any, the President or any Vice President of the
corporation shall have power to vote and otherwise act on behalf of the
corporation, in person or by proxy, at any meeting of security holders, or with
respect to any action of security holders, of any other corporation in which the
corporation may hold securities and shall have power to exercise any and all
rights and powers which the corporation may possess by reason of its ownership
of securities in such other corporation.
-10-
<PAGE>
ARTICLE VI
Capital Stock
SECTION 6.01. Issuance. The Directors may, at any time and from time to
----------
time, if all of the shares of capital stock which the corporation is authorized
by its certificate of incorporation to issue have not been issued, subscribed
for, or otherwise committed to be issued, issue or take subscriptions for
additional shares of its capital stock up to the amount authorized in its
certificate of incorporation. Unless otherwise provided by the certificate of
incorporation or these bylaws, the Board of Directors may provide by resolution
that some or all of any or all classes and series of the shares of capital stock
of the corporation shall be uncertificated shares, provided that such resolution
shall not apply to shares represented by a certificate until such certificate is
surrendered to the corporation. The stock certificates of the corporation shall
be numbered and registered in the stock ledger and transfer books of the
Corporation as they are issued. The Board of Directors may also appoint one or
more transfer agents and/or registrars for its stock of any class or classes and
for the transfer and registration of certificates representing the same and may
require stock certificates to be countersigned by one or more of them. They
shall be signed by the Chairman or Vice Chairman of the Board of Directors,
the President or a Vice President and attested by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and shall bear the
corporate seal, which may be a facsimile, engraved or printed. Any or all of the
signatures upon such certificate may be a facsimile, engraved or printed. In
case any officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon, any share certificate shall have ceased to be
such officer, transfer agent or registrar, before the certificate is issued, it
may be issued with the same effect as if he were such officer, transfer agent or
registrar at the date of its issue. (Secs. 78.215, 78.235)
SECTION 6.02. Regulations Regarding Certificates. Except as otherwise
------------------------------------
provided by law, the Board of Directors shall have the power and authority to
make all such rules and regulations as it may deem expedient concerning the
issuance, transfer and registration or the replacement of certificates for
shares of capital stock of the corporation. (Secs. 78.215, 78.235)
SECTION 6.03. Stock Certificates. Stock certificates of the corporation
--------------------
shall be in such form as is provided by statute and approved by the Board of
Directors. The stock record books and the blank stock certificate books shall be
kept by the Secretary of the Corporation or by any agency designated by the
Board of Directors for that purpose. (Sec. 78.215, 78.235)
SECTION 6.04. Lost, Stolen, Destroyed or Mutilated 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, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal
-11-
<PAGE>
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
SECTION 6.05. Record Holder of Shares. The Corporation shall be entitled to
-----------------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Nevada.
SECTION 6.06. Determination of Stockholders of Record for Voting at
-----------------------------------------------------
Meetings. 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 (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. If no record
date is fixed 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. (Sec. 78.350(2))
SECTION 6.07. Determination of Stockholders of Record for Dividends and
---------------------------------------------------------
Distributions. 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 (60) 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. (Sec. 78.350(2))
SECTION 6.08. Determination of Stockholders of Record for Written Consent.
-----------------------------------------------------------
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 (10) days after the date upon which the
-12-
<PAGE>
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 Stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
statute, 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 Nevada, 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 a
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, when prior action by the Board of Directors is required by statute,
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.
(Sec.78.350(2))
ARTICLE VII
Indemnification of Directors, Officers and
Other Authorized Representatives
SECTION 7.01. Indemnification of Authorized Representatives in Third
-------------------------------------------------------
Party Proceedings. The corporation shall indemnify any person who was or is an
- ------------------
"authorized representative" of the corporation (which shall mean for purposes
of this Article VII a Director or Officer of the corporation, or a person
serving at the request of the corporation as a Director, Officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise) and who was or is a "party" (which shall include for purposes of
this Article VII the giving of testimony or similar involvement) or is
threatened to be made a party to any "third party proceeding" (which shall mean
for purposes of this Article VII 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 such person was or is an authorized representative of the corporation,
against expenses (which shall include for purposes of this Article VII
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such third party
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal third party proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of any
third party proceeding by judgment, order, settlement, indictment, conviction or
upon a plea of nolo contendere or its equivalent, shall not of itself create a
presumption that the authorized representative did not act in good faith and in
a manner which such person reasonably believed to be in or not opposed to, the
best interests of the corporation, or, with respect to any criminal third party
proceeding, did not have reasonable cause to believe that such conduct was
unlawful. (Sec. 78.751)
-13-
<PAGE>
SECTION 7.02. Indemnification of Authorized Representative in Corporate
---------------------------------------------------------
Proceedings. The corporation shall indemnify any person who was or is an
- -----------
authorized representative of the corporation and who was or is a party or is
threatened to be made a party to any "corporate proceeding" (which shall mean
for purposes of this Article VII 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 proceeding by the corporation) by reason of the fact that such
person was or is an authorized representative of the corporation, against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such corporate proceeding
if such person acted in good faith and in a manner reasonably believed to be in,
or not opposed to, the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that a district court or the court in which such
corporate proceeding was pending shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such authorized representative is fairly and reasonably entitled to indemnity
for such expenses which the district court or such other court shall deem
proper. (Sec. 78.751)
SECTION 7.03. 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 referred to in Sections 7.01 or 7.02 above or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses, including attorneys' fees, actually and reasonably incurred by such
person in connection therewith. (Sec. 78.751)
SECTION 7.04. Determination of Entitlement to Indemnification. Any
-----------------------------------------------
indemnification under Section 7.01, 7.02 or 7.03 of this Article VII (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 such person has met the
applicable standard of conduct set forth in Section 7.01, 7.02, or 7.03 of this
Article VII. Such determination shall be made:
(1) By the Board of Directors by a majority 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
quorum of disinterested directors so directs, by independent
legal counsel in a written opinion; or
(3) By the Stockholders. (Sec. 78.751(4))
SECTION 7.05. Burden of Proof. In the event a claim for indemnification
---------------
by an authorized representative is denied by the corporation (except for a claim
by a person described in Section 7.08 hereof), the corporation shall, in any
subsequent legal proceedings relating to such denial, have the burden of proving
that indemnification was not required under Section
-14-
<PAGE>
7.01, 7.02 or 7.03 of these bylaws without regard to Section 7.04 hereof or
under any other agreement or undertaking between the corporation and the
authorized representative or was not permitted under applicable law.
SECTION 7.06. Advancing Expenses. Expenses incurred by an Officer or
------------------
Director in defending a third party or corporate proceeding shall be paid by the
corporation in advance of the final disposition of such third party or corporate
proceeding upon receipt of an undertaking by or on behalf of the authorized
representative to repay such amount if it shall ultimately be determined that
such person is not entitled to be indemnified by the corporation as authorized
in this Article VII. Such expenses incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the Board of Directors deems
appropriate. (Sec. 78.751)
SECTION 7.07. Employee Benefit Plans. For purposes of this Article VII,
----------------------
the corporation shall be deemed to have requested an authorized representative
to serve an employee benefit plan where the performance by such person of duties
to the corporation also imposes duties on, or otherwise involves services by,
such person to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an authorized representative with respect to an employee
benefit plan pursuant to applicable law shall be included within the meaning of
"fines"; and action taken or omitted by such person with respect to an employee
benefit plan in the performance of duties for a purpose reasonably believed to
be in the interest of the participants and beneficiaries of the plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
corporation.
SECTION 7.08. Employees and Agents other than Authorized
------------------------------------------
Representatives. The corporation may, but is not required to, indemnify any
- ---------------
employee or agent who is not also an authorized representative if the
determining group as specified in Section 7.04(1), (2) or (3) determines that
such indemnification is proper in the specific case. (Sec. 78.751)
SECTION 7.09. Scope of Article. The indemnification of and advancement
----------------
of expenses to authorized representatives, as authorized by this Article VII,
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of Stockholders or disinterested Directors or otherwise, both as
to action in an official capacity and as to action in another capacity while
holding such office. (Sec. 78.751)
SECTION 7.10. Reliance on Provisions. Each person who shall act as an
----------------------
authorized representative of the corporation shall be deemed to be doing so in
reliance upon rights of indemnification provided by this Article VII, and the
provisions of this Article VII shall be deemed a contract between the
corporation and the authorized representative.
SECTION 7.11. Insurance. The corporation shall have the power to, but
---------
shall not be obligated to, purchase and maintain insurance on behalf of any
person who is or was an authorized representative of the corporation, or is or
was serving at the request of the corporation as an authorized representative or
agent of another corporation, partnership, joint
-15-
<PAGE>
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
Article VII. (Sec. 78.752)
SECTION 7.12. Rights Continue. The indemnification and advancement of
---------------
expenses provided by or granted pursuant to this Article VII, unless otherwise
provided when authorized or ratified, shall continue as to a person who has
ceased to be an authorized representative and shall inure to the benefit of the
heirs, executors and administrators of such person. (Sec. 78.751)
ARTICLE VIII
General Provisions
SECTION 8.01. Dividends. Subject to the provisions of the certificate of
---------
incorporation, if any, dividends upon the capital stock of the corporation may
be declared by the Board of Directors at any regular or special meeting, in
accordance with law. Dividends may be paid in cash, in property, or in shares
of the capital stock of the corporation, subject to the provisions of the
certificate of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
thinks proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the Board of Directors shall think conducive to the
interest of the corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created. (Sec. 78.288)
SECTION 8.02. Annual Statements. The Board of Directors shall present at
-----------------
each annual meeting, and at any special meeting of the Stockholders when called
for by vote of the Stockholders, a full and clear statement of the business and
condition of the corporation.
SECTION 8.03. Contracts. The Chairman of the Board of Directors, the
---------
President or a Vice President of the corporation shall sign, in the name and on
behalf of the corporation, all deeds, bonds, contracts, mortgages and other
instruments, the execution of which shall be authorized by the Board of
Directors; provided, however, that the Board of Directors may authorize any
other officer of officers or any agent or agents to sign in the name and on
behalf of the corporation, any such deed, bond, contract, mortgage or other
instrument. Such authority may be general or confined to specific instances.
Except as so authorized by the Board of Directors, and except in the ordinary
course of business, no officer, agent or employee of the corporation shall have
power or authority to bind the corporation by any contract or engagement or to
pledge, sell or otherwise dispose of its credit or any or its property or to
render it pecuniarily liable for any purpose or in any amount in excess of
$10,000. (Secs. 78.210, 78.130)
-16-
<PAGE>
SECTION 8.04. Checks. All checks, notes, bills of exchange or other
------
orders in writing shall be signed by such person or persons as the Board of
Directors may from time to time designate. (Secs. 78.120, 78.130)
SECTION 8.05. Corporate Seal. The corporate seal shall have inscribed
--------------
thereon the name of the corporation, the year of its organization and the state
of its incorporation. The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or otherwise reproduced. (Sec. 78.065)
SECTION 8.06. Amendment of Bylaws. These bylaws may be altered, amended
-------------------
or repealed or new bylaws may be adopted by the Stockholders or by the Board of
Directors, when such power is conferred upon the Board of Directors by the
certificate of incorporation, at any regular or special meeting of the
Stockholders or of the Board of Directors, if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting. (Sec. 78.120)
-17-
<PAGE>
No. 00252056
..........
STATE of MISSOURI
SEAL JAMES C. KIRKPATRICK, Secretary of State
Corporation Division
Certificate of Incorporation
WHEREAS, duplicate originals of Articles of Incorporation
......................
ATWOOD CONVENTIONT PUBLISHING, INC.
................................................................................
have been received and filed in the office of the Secretary of State, which
Articles, in all respects,
comply with the requirements of The General and Business Corporation Law:
NOW, THEREFORE, I, JAMES C. KIRKPATRICK, Secretary of State of the State of
Missouri, by virtue of the authority vested in me by llaw, do hreby certify and
delcare..................
ATWOOD CONVENTION PUBLISHING, INC.
................................................................................
a body corporate, duly organized this day and that it is entitled to all rights
and privilegess granted corporations organized under The General and Business
Corporation Law; that the address of its initial Registered Office in Missouri
is ............................................
3261 Gillham Plaza, Kasas City, MO. 64109
................................................................................
that its period of eistence is ; and
........................................
that the amount of its Authorizd Shares is
.....................................
................................................................................
IN TESTIMONY WHEREOF, I have hereunto
set my hand and affixed the GREAT SEAL
of the State of Missouri, at thee City
of Jefferson, this 11th day of May
..........., 1983.
--
........................................
Secretary of State
SEAL
RECEIVED OF: ATWOOD COVENTION PUBLISHING, INC.
....................................................................
Fifty-three dollars andd no/100 ------------------ $ 53.00
...................................................... Dollars,.................
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. 00252056
.........
<PAGE>
State of Missouri... Office of Secretary of State
[SEAL] JAMES C. KIRKPATRICK, Secretary of State
Articles of Incorporation
(To be submitted in duplicate by an attorney)
HONORABLE JAMES C. KIRKPATRICK
SECRETARY OF STATE
STATE OF MISSOURI
JEFFERSON CITY, MO 65101
The undersigned natural person(s) of the age of eighteen years or more for the
purpose of forming a corporation under The General and Business Corporation Law
of Missouri adopt the following Articles of Incorporation:
ARTICLE ONE
The name of the corporation is: Atwood Convention Publishing, Inc.
--------------------------------------------
ARTICLE TWO
The address, including street and number, if any, of the corporation's initial
registered office in this state is:
----
3261 Gillham Plaza, Kansas City, Missouri 64109
- -----------------------------------------------------------------------------
and the name of its initial agent at such address is: George S. Murray III
--------------------------------
- -----------------------------------------------------------------------------
ARTICLE THREE
The aggregate number, class and par value, if any, of shares which the
corporation shall have authority to issue shall be:
30,000 shares of common stock
$1.00 per share of common stock
The preferences, qualifications, limitations, restrictions, and the special or
relative rights, including convertible rights, if any, in respect of the shares
of each class are as follows:
None
<PAGE>
ARTICLE FOUR
The extent, if any, to which the preemptive right of a shareholder to acquire
additional shares is limited or denied.
None
ARTICLE FIVE
The name and place of residence of each incorporator is as follows:
Name Street City
George S. Murray III 3261 Gillham Plaza Kansas City, Missouri 64109
ARTICLE SIX
(Designate which and complete the applicable paragraph)
X The number of directors to constitute the first board of directors is three.
-----
Thereafter the number of directors shall be fixed by, or in the manner provided
in the bylaws. Any changes in the number will be reported to the Secretary of
State within thirty calendar days of such change.
or
The number of directors to constitute the board of directors is
________. (The number of directors to constitute the board of directors must be
stated herein if there are to be less than three directors. The persons to
constitute the first board of directors may, but need not, be named).
ARTICLE SEVEN
The duration of the corporation is perpetual.
<PAGE>
ARTICLE EIGHT
The corporation is formed for the following purposes:
IN WITNESS WHEREOF, these Articles of Incorporation have been signed
this 4th day of May 1983.
---
George S. Murray III
------------------------
George S. Murray III
------------------------
------------------------
------------------------
<PAGE>
STATE OF MISSOURI
----------------------
COUNTY OF JACKSON ss.
---------------------
I, Charlene Mathis , a notary public,
------------------------------------------------
do hereby certify that on the 4th day of May 1983, personally appeared
--- --- --
before me, George S. Murray III (and N/A ,) who
-------------------- ---------------------------------
being by me first duly sworn, (severally) declared that he is (they are) the
person(s) who signed the foregoing document as incorporator(s), and that the
statements therein contained are true.
Charlene Mathis
----------------------------
Notary Public
My commission expires 11-30 1985
----------------------- --
FILED AND CERTIFICATE OF
INCORPORATION ISSUED
MAY 11, 1993
\s\ James Kirkpatrick
----------------------
James Kirkpatrick
<PAGE>
ARTICLE EIGHT
-------------
(a) To buy, purchase, lease, rent, or otherwise acquire, own, hold, use,
operate and sell, lease, mortgage or otherwise deal in and turn to account
real estate and any and all interests or assets in or appertaining thereto,
also any and all buildings, structures, or improvements constituting part of
or situated on or useful in lawfully permitted to acquire, own, hold,
operate, develop, explore, prospect and to obtain the fructum thereof and
therefrom and to deal in rent, lease, mortgage, divide, partition, or
otherwise improve, use, and dispose of lands, leaseholds, buildings,
structures and improvements (and any and all interests, tangible or
intangible, in lands, real estate and leaseholds); and to erect, construct,
manage, operate, improve, decorate, and otherwise deal with buildings,
structures and improvements situated or to be situated on any such land, real
estate or leasehold; and in general to carry on the business of a real estate
compony in any lawful manner without limitation as to description, location
or amount.
(b) To purchase or otherwise acquire, hold, own, improve, develop, sell,
mortgage, pledge, and otherwise deal in and with real and personal property
of every kind and description in the United States of America, and in any
territory, colony, dependence, or district thereof, and in any foreign
country or countries to the extent that the same may be lawfully permissible.
(c) To buy, sell, import, export, manufacture, produce, design, prepare,
assemble, fabricate, improve, develop, mortgage, pledge, distribute, and
otherwise deal in either at wholesale or retail, or both, either as
principal agent or on commission, goods, wares, merchandise, machinery,
tools, devices, apparatus, equipment, and all other personal property,
whether tangible or intangible, of everY kind and description.
(d) To apply for, obtain, purchase, lease, take licenses in respect of, or
otherwise acquire, and to hold, own, use, operate, enjoy, introduce, sell,
assign, mortgage, pledge, or otherwise dispose of:
1. Any and all inventions, devices, and processes, and any
improvements and modifications thereof.
2. Any and all letters patent of the United States or of any
other country, state, or locality, and all rights connected
therewith or appertaining thereto.
3. Any and all copyrights granted by the United States or of
any other country, state, or locality as aforesaid.
4. Any and all trademarks, trade names, trade symbols, and
other indications of origin and ownership granted by or
recognized under the laws of the United States or of any
country, state, or locality as aforesaid; and to conduct and
carry on its business in any or all of its various branches
under any trade name or trade names.
(e) To enter into any lawful conduct or contracts with persons, firms,
corporations, governments or any agencies or subdivisions thereof, including
guaranteeing the obligations of any person, firm or corporation.
(f) To purchase and acquire, as a going concern or otherwise, and to carry
on, maintain, and operate all or any part of the property or business of any
corporation, firm, association, entity, syndicate, or persons whosoever,
deemed to be of benefit to the corporation, or of use in any manner in
connection with any of its objects or purposes; and to acquire, own, hold,
and use and dispose of upon such terms as may seem advisable to the
corporation any and all property, real, personal or mixed, and any interest
therein deemed necessary, useful or of benefit to the corporation in any
manner in connection with any of its objects or purposes.
(g) To invest and deal with moneys of the corporation in any lawful manner,
and to acquire by purchase, by the exchange of stock or other securities of
the corporation, by subscription, or otherwise, and to invest in, to hold for
investment or for any other
<PAGE>
purpose, and to deal in and use, sell, pledge or otherwise dispose of, and in
general to deal in any interest with respect to or enter into any transaction
with respect to (including "long" and "short" sales of) any stocks, bonds,
notes, debentures, and other securities and obligations of any government,
state, municipality, corporation, association, or other entity, including
individuals and partnerships and, while owner thereof, to exercise all of the
rights, powers and privileges of ownership, including among other things, the
right to vote thereon for any and all purposes and to give consents with respect
thereto.
(h) To borrow or raise money for any purpose of the corporation and to secure
the some and the interest accruing on any loan, indebtedness or obligation of
the corporation, and for that or any other purpose to mortgage, pledge,
hypothecate, or change all or any part of the present or hereafter acquired
property, rights and franchises of the corporation, real, personal, mixed or of
any character whatever, subject only to limitations specifically imposed by law.
(i) To have one or more offices, to conduct its business, carry on its
operations, and promote its objects within and without the State of Missouri,
and in other states, the District of Columbia, and territories, colonies,
dependencies of the United States, and in foreign countries, without restriction
as to place or amount, but subject to the laws of such state, district,
territory, colony, dependency, or country; and to do any or all of the things
herein set forth to the same extent as natural persons might or could do and in
any part of the world, either alone or in company of others.
(j) In general, to carry on, transact, and engage in any and every lawful
business or other lawful thing calculated to be of gain, profit or benefit to
the corporation as fully and freely as a natural person might do, to the extent
and in the manner, anywhere within and without the State of Missouri, as it may
from time to time determine; and to have and exercise each and all of the powers
and privileges, either direct or incidental, which are given and provided by or
are available under the laws of the State of Missouri in respect of business
corporations organized for profit thereunder; provided, however, that the
corporation shall not engage in any activity for which a corporation may not be
formed under the laws of the State of Missouri.
(k) In futherance, and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
1. To adopt, alter or amend the corporation's by-laws, and
2. To set apart out of any of the money or funds of the corporation
available for dividends a reserve or reserves for any proper purpose
or to abolish any such reserve in the manner in which it was created.
(l) To manufacture or otherwise produce, purchase or otherwise acquire, sell,
let, and deal in goods, wares, and merchandise, and personal property of every
description in which a corporation may acquire, hold, rent, lease, dispose of
and deal.
(m) To purchase, acquire, hold, improve, sell, convey, assign, release,
mortgage, encumber, lease, hire, construct and deal in real and personal
property of every nature and name, including stocks and securities of other
corporations, and to loan money and take securities for the payment of all sums
due the corporation, and to sell, assign and release such securities.
(n) The corporation shall further be authorized to act for itself or as agent
or correspondent for others, to deal in mortgages, commercial paper, and other
securities in connection with real estate or any other lawful business, to
manage estates and properties, and to conduct a general real estate and rental
business, including the buying, selling, leasing, improving, construction, and
dealing in land, tenements, residences, apartments, buildings and every other
form of realty lawfully available, including the sale of insurance, furniture
fixtures, and any and all items of personalty which might be conceivably
installed and/or used in the construction and/or operation of a real estate
business.
<PAGE>
(o) The corporation shall further be authorized to construct and build a
retail shopping center; to thereafter operate such shopping center and lease
space to others therein; and do all other things necessary in the operation of a
retail shopping center.
(p) the corporation shall be further authorized to construct, build and
operate an industrial park and/or to lease space therein to others and to do all
things necessary in the construction and operation of an industrial park.
(q) The corporation shall be further authorized to engage in the sale at all
levels of food, liquor, recreational facilities and services, including sales
and operation at retail and/or wholesale levels and also including the
manufacturing and preparation of such articles, and shall be further authorized
to engage in franchise operations, covering any and all facets of any lawful
business in which this corporation shall be entitled to engage.
(r) The corporation shall be further authorized to purchase, manufacture,
and sell points and all sundry items connected therewith, or in any way
pertaining thereto; and all other matters and things necessary for the
prosecution of such business, including the purchase, holding and sale of
machinery, inventory, fixtures and real estate.
(s) The corporation shall be further authorized to engage in the publishing
of newspapers, flyers, advertising and letters for conventions on a national
scale.
FILED AND CERTIFICATE OF
INCORPORATION ISSUED
MAY 11, 1983
/s/
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
ATWOOD CONVENTION PUBLISHING, INC.
(a Missouri corporation)
August 3, 1990
ARTICLE I
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
Section 1. Place of Meetings. All meetings of the shareholders shall be held
----------------------------
at the principal office of the corporation or at such other place within or
without the State of Maryland as may be determined upon and set forth in the
respective notices, or waivers of notice thereof, or proxies to represent
shareholders thereat.
Section 2. Annual Meeting of Shareholders. The Annual Meeting of the
-----------------------------------------
shareholders of the corporation for the election of Directors and the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date and at such time as the Board of
Directors shall each year designate, which date shall be within thirteen (13)
months subsequent to the date of the last annual meeting of the stockholders.
Such Annual Meeting shall be called in the same manner as herein provided in
respect of special meetings of the shareholders, except that the purposes of
such meeting need be enumerated in the notice and proxies of such meeting only
to the extent required by law in the case of Annual Meetings.
Section 3. Special Meetings of Shareholders. Special meetings of the
--------------------------------------------
shareholders may be called by the Board of Directors or as otherwise allowed by
law. Business transacted at all special meetings shall be confined to the object
stated in the call.
Section 4. Notice of Meeting of Shareholders. Written or printed notice
---------------------------------------------
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten (10) nor more than sixty (60) days before the date of
the meeting, by or at the direction of the Chairman, President, the Secretary or
the officer or person calling the meeting, to each shareholder of record
entitled to vote at such meeting. Each notice shall be deemed to be delivered
when deposited in the United States mail addressed to the shareholder at such
shareholder's address as it appears on the stock transfer books of the
corporation, with postage prepaid thereon.
Section 5. Quorum. The holders of a majority of the shares issued and
-------
outstanding, and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
law, by the Articles of Incorporation or by these Bylaws (provided that in no
event shall a quorum consist of the holders of less than one-third (1/3) of the
shares entitled to vote and be thus represented at such meeting). If, however,
such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or by
proxy, shall have power to adjourn the meeting, until the holders of the
requisite amount of voting shares shall be present or represented. At such
adjourned meeting at which the requisite amount of voting shares shall be
present or represented, any business may be
<PAGE>
transacted which might have been transacted at the meeting as originally
noticed. The vote of the holders of a majority of the shares entitled to vote
and there represented at a meeting at which a quorum is present shall be the act
of the shareholders' meeting, unless the vote of a greater number is required by
law, the Articles of Incorporation or by these Bylaws.
Section 6. Voting and Proxies. At each meeting of the shareholders, every
------------------------------
shareholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing subscribed by such shareholder and
bearing a date not more than eleven (11) months prior to said meeting unless
said instrument provides for a longer period. Each shareholder shall have one
vote for each share of stock having voting power registered in his name on the
books of the corporation.
Section 7. List of Shareholders Entitled to Vote. The Secretary shall make,
-------------------------------------------------
at least ten (10) days before each meeting of the shareholders, a complete list
of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each, which list, for a period of ten (10) days prior to such
meeting, shall be kept on file at the principal office of the corporation and
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to inspection of any shareholder
during the whole time of meeting. Provided, however, that failure to comply with
the requirements of this Bylaw shall not affect the validity of any action taken
at such meeting.
Section 8. Closing of Transfer Books. For the purpose of determining
-------------------------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books shall be closed for
a stated period, but not to exceed in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least ten (10) days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case not to be more than sixty (60) days nor less than ten (10) days prior
to the meeting. 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 Article, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of stock transfer books and the
stated period of closing has expired.
Section 9. Registered Shareholders. The corporation shall be entitled to
-----------------------------------
treat the holder of record of any share or shares of stock as the holder in fact
thereof for all purposes and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of Missouri.
-2-
<PAGE>
Section 10. Actions of Shareholders. Any action which might be taken at
------------------------------------
a meeting of the shareholders may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the actions taken shall be signed by all shareholders having not less than the
minimum number of votes necessary to authorize or take such action at a meeting
at which all shares entitled to vote were present, in acordance with the
provisions of Missouri law.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number, Election, Qualification and Vacancies. The property and
---------------------------------------------------------
business of the corporation shall be managed by its Board of Directors. The
number of Directors to constitute the Board shall be not less than three (3) nor
more than fifteen (15), with the exact number to be elected each year to be
detemined by the Board prior to the mailing of the notice of the annual meeting
of shareholders, at any regular or special meeting of the Board. No decrease in
the number of Directors shall have the effect of shortening the term of any
incumbent Director.
A Director shall serve for one (1) year from the date of the Annual Meeting
of shareholders at which he was elected and until his successor shall be elected
and qualified.
Any vacancy occurring or created in the Board of Directors may be filled by
the affirmative vote of a majority of the remaining Directors though less than a
quorum of the Board of Directors. A Director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any directorship to
be filled by reason of an increase in the number of Directors shall be filled by
election at an Annual Meeting or at a special meeting of the shareholders called
for that purpose, unless the vacancy was created by the shareholders, in which
case it may be filled by the Directors as in the case of any other vacancy.
Directors need not be residents of the State of Missouri.
Section 2. Powers of Board of Directors. In addition to the powers and
----------------------------------------
authorities by these Bylaws expressly conferred upon it, the Board may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the Articles of Incorporation or by these Bylaws directed
or required to be exercised or done by the shareholders.
Section 3. Compensation of Directors. Directors, as such, may receive a
-------------------------------------
stated salary for their services, as determined by resolution of the Board; in
addition, a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board or committee
thereof; provided, however, that noting herein contained shall be construed to
preclude any Director from serving the corporation in any other capacity and
receiving compensation therefor.
Section 4. Place of Meetings. The Directors may hold their meetings and
-----------------------------
keep the books of the corporation at the office of the corporation at the office
of the corporation in the city of Overland Park, Kansas, or at such other place
or places either within or without the State of Oklahoma as they may, from time
to time, determine.
Section 5. First Meeting of New Board of Directors. The first meeting of
--------------------------------------------------
each newly elected Board, for the purpose of organization or otherwise, may be
held at such time and place as shall be fixed by the vote of the shareholders
at the Annual Meeting,
-3-
<PAGE>
and no notice of such meeting to the newly elected Directors shall be necessary
in order to legally constitute the meeting, provided a majority of the whole
Board shall be present; or they may meet at such place and time as shall be
fixed by the consent in writing of all of the Directors.
Section 6. Regular Meetings. Regular meetings of the Board may be held
----------------------------
without notice at such time and place as shall from time to time be determined
by the Board.
Section 7. Special Meetings and Notice. Special meetings of the Board may
---------------------------------------
be called by the Chairman or President by notice of the time and place of
meeting served personally upon each Director, or mailed, telegraphed or cabled
to his address upon the books of the corporation, at least forty-eight (48)
hours before the meeting; special meetings shall be called by the Chairman,
President or Secretary in like manner and on like notice on the written request
of a majority of the Directors. Each special meeting of the Board shall be held
at such a place as shall be specified in the notice of such meeting.
Section 8. Attendance and Waiver of Notice. 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 on the ground that 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 9. Quorum. At all meetings of the Board a majority of the Directors
------------------
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 statute or by the Articles of
Incorporation or by these Bylaws; provided, however, that whenever any meeting
of the Board of Directors shall be held outside of the United States of America,
no action taken at such meeting shall be effective unless concurred in by a
majority of the entire Board of Directors.
Section 10. Committees Appointed by Board of Directors. The Board of
-------------------------------------------------------
Directors may, by resolution, provide for such standing or special committee as
it deems desirable, and discontinue the same at pleasure. Each such committee
shall have such powers and perform such duties, not inconsistent with law, as
may be assigned to it by the Board of Directors. If provision be made for any
such committee, the members thereof shall be appointed by the Board of Directors
and shall serve during the pleasure of the Board of Directors. Vacancies in such
committees shall be filled by the Board of Directors.
Section 11. Directors' Statements. When requested to do so by the holders
----------------------------------
of at least one-third (1/3) of the outstanding shares of the corporation, the
Board of Directors shall present written reports of the financial condition and
the general condition of the corporation and may present such reports at such
other times as they deem advisable.
Section 12. Appointment of Executive Committee. The Board of Directors may,
-----------------------------------------------
by resolution adopted by a majority of the entire Board, designate an Executive
Committee composed of not less than three (3) of the Directors. The Executive
Committee shall have and may exercise all of the powers of the Board of
Directors in the management of the busines affairs of the corporation and
may otherwise act in all respects as the Board of Directors between meetings of
the Board, except that, without specific approval or direction from the Board of
Directors, the Executive Committee may not:
-4-
<PAGE>
(a) Approve the dissolution of the corporation, the merger or consolidation
of the corporation with another company or companies, or the sale of
substantially all of the assets of the corporation.
(b) Authorize the issuance, purchase or redemption of any capital stock of
the corporation.
(c) Terminate the employment of any officer of the corporation or change the
title, duties or compensation of any officer.
(d) Approve any changes to any employment contract with any officer of the
corporation or any of its subsidiaries.
(e) Declare any dividends, other than dividends due with respect to
preferred stock of the corporation which has been issued pursuant to approval of
the Board of Directors.
(f) Approve an amendment to the Bylaws or Certificate of Incorporation of
the corporation or any of its subsidiaries.
(g) Make any expenditure or approve any action which will result in the
expenditure, as to any one matter, in excess of $50,000, other than
expenditures approved in or in conformity with any operating or capital
expenditure budget for the corporation approved by the Board of Directors.
(h) Approve any borrowings on behalf of the corporation other than (i)
purchase money mortgages for acquisitions of assets within the limits set in (g)
above, or (ii) as authorized by or in conformity with any operating or capital
expenditure budget approved by the Board of Directors.
(i) Invest in any other business not presently being conducted by the
corporation or its subsidiaries except as specifically budgeted by the Board of
Directors and, in any event, only to the extent that each such investment is
less than $50,000.
Section 13. Actions of Directors. Any action which might be taken at a
---------------------------------
meeting of the Board of Directors may be taken without a meeting if a record or
memorandum thereof be made, in writing, and signed by all of the members of the
Board.
ARTICLE III
OFFICERS
Section 1. Number, Qualification and Vacancies. The Board of Directors shall
-----------------------------------------------
appoint, as executive officers, a Chairman of the Board, a President, one or
more Executive Vice Presidents, Senior Vice Presidents or Vice Presidients, a
Secretary and a Treasurer and in addtion the Board of Directors may appoint such
other officers, including without limitation, a Vice Chairman of the Board, as
the Board of Directors deems appropriate. The Chairman of the Board and
the President shall be chosen from among the Directors. The executive officers
shall be elected annually by the Board of Directors at its first meeting
following the Annual Meetings of shareholders, and each
-5-
<PAGE>
such officer shall hold office until the corresponding meeting in the next year
or until he shall have resigned or shall have been removed in the manner
provided in Section 11 of this Article III. Any vacancy in any of the offices
shall be filled for the unexpired portion of the term by the Board of Directors
at any regular or special meeting. A resignation shall be deemed to take effect
upon its receipt by the Secretary, unless otherwise specified therein.
Section 2. Chairman of the Board. The Chairman of the Board shall preside at
---------------------------------
all meetings of the Board of Directors of the corporation and may preside at
meetings of the shareholders. He shall be an ex-officio member of all standing
committees and shall see that all orders and resolutions of the Board are
carried into effect. He shall, with powers concurrent with the President, have
authority to execute, with the Secretary or an Assistant Secretary, certificates
of shares of the corporation and sign and execute in the name of the corporation
authorized deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the corporation.
Section 3. President. Either the Chairman or the President shall be
---------------------
designated by the Board of Directors as Chief Executive officer of the
corporation. The Chief Executive Officer shall have direct charge and
supervision of the business of the corporation. If the President is not
designated as the Chief Executive Officer, he shall be designated as the Chief
Operating Officer, in which case he shall have the day-to-day responsibility for
the operation of the corporation and, generally, shall perform all duties
incident to the office of a President of a corporation and such other duties as,
from time to time, may be assigned to him by the Chief Executive Officer or the
Board of Directors. The President may preside at meetings of the shareholders
and at meetings of the Board of Directors at which the Chairman of the Board is
not present. He may sign with the Secretary or an Assistant Secretary,
certificates of shares of the corporation; he may sign and execute, in the name
of the corporation, all authorized deeds, mortgages, bonds, contracts or other
instruments, except in cases of which the signing and execution thereof shall
have been expressly delegated to some other officer or agent of the corporation.
Section 4. Vice President. If an Executive Vice President be elected, he
--------------------------
shall be the senior vice president of the Company and shall act as President in
the absence or incapacity of the President. The duties and authority of any
other vice presidents shall be as determined by the Board of Directors.
Section 5. Secretary. The Secretary shall keep the minutes of the meetings
---------------------
of the shareholders and of the Board of Directors in books provided for the
purpose, and shall see that all notices are duly given in accordance with the
provisions of these Bylaws, or as required by law; he or she shall be custodian
of the records and of the separate seal or seals of the corporation; he or she
shall see that the corporate seal is affixed to all documents, the execution of
which, on behalf of the corporation, under its seal, in duly authorized, and
when so affixed may attest the same; and, in general, he or she shall perform
all duties incident to the office of a Secretary of a corporation and such other
duties as, from time to time, may be assigned to him or her by the Board of
Directors. The Secretary may sign, with the Chairman, President or a Vice
President, certificates of stock of the corporation.
Section 6. Treasurer. The Treasurer shall have charge of and be responsible
---------------------
for all funds, securities, receipts and disbursements of the corporation and
shall deposit or cause to be deposited, in the name of the corporation all
monies or other valuable effects in
-6-
<PAGE>
such banks, trust companies or other depositories as shall, from time to time,
be selected by the Board of Directors; he shall render to the Chairman,
President and the Board of Directors whenever requested an account of the
financial condition of the corporation; and, in general, shall perform all the
duties incident to the office of a Treasurer of a corporation, and such other
duties as may be assigned to him by the Board of Directors.
The Treasurer shall give the corporation a bond, if required by the Board of
Directors, in a sum and with one or more sureties satisfactory to the Board for
the faithful performance of the duties of his office, and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 7. Assistant Officers. The Board of Directors may elect one or more
------------------------------
Assistant Secretaries and one or more Assistant Treasurers. Each Assistant
Secretary, if any, and each Assistant Treasurer if any, shall hold office for
such period as the Board of Directors may prescribe.
Any Assistant Secretary may, in the absence or the disability of the
Secretary, perform the duties and exercise the powers of the Secretary and any
Assistant Treasurer may, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer. Each of such officers shall
perform such other duties as the Board of Directors shall prescribe.
Section 8. Subordinate Officers. The Board of Directors may elect such
--------------------------------
subordinate or other officers as it may deem desirable. Each such officer shall
hold office for such period, have such authority and perform such duties as the
Board of Directors shall prescribe. The Board of Directors may, from time to
time, authorize any officer to appoint and remove subordinate officers and
prescribe the powers and duties thereof.
Section 9. Officers Holding Two(2) or More Offices. Any two (2) or more
---------------------------------------------------
offices may be held by the same person except that the President and Secretary
shall not be the same person.
Section 10. Compensation of Officers. The Board of Directors shall have the
-------------------------------------
power to fix the compensation of all officers of the corporation. It may
authorize any officer upon whom the power of appointing subordinate officers may
have been conferred to fix the compensation of such subordinate officers.
Section 11. Removal of Officers. Any officer of the corporation may be
--------------------------------
removed, with or without cause, by a vote of a majority of the entire Board of
Directors at a meeting called for that purpose, or (except in case of an officer
elected by the Board of Directors) by an officer upon whom such power of removal
may have been conferred.
Section 12. Delegation of Duties. In case of the absence of any officer of
---------------------------------
the corporation or for any other reason that the Board may deem sufficient, the
Board may delegate, for the time being, the powers or duties, or any of them, of
such officer to another officer, or to any Director, provided a majority of the
entire Board concurs therein.
-7-
<PAGE>
ARTICLE IV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification of Directors and officers shall be as provided for in the
corporation's Articles of Incorporation.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates of Shares. The certificates of shares of the
----------------------------------
corporation shall be numbered and shall be entered in the books of the
corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chairman, the President or a Vice President
and the Secretary or an Assistant Secretary, and may be sealed with the seal of
the corporation or a facsimile thereof. The designations, preferences and
relative participating options or other special rights of each class of shares
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 certificates which the corporation shall issue to represent such
class or series of shares.
The signatures of the Chairman, President or Vice President and the
Secretary or Assistant Secretary upon a certificate may be facsimiles, if the
certificate is countersigned by a transfer agent, or registered by a registrar
other than the corporation itself or an employee of the corporation. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be an officer before such certificate is
issued, it may be issued by the corporation with the same affect as if he were
such officer at the date of its issuance.
Section 2. Transfers of Certificates of Shares. Transfers of shares shall be
-----------------------------------------------
made on the books of the corporation only by the person named in the
certificate, or by attorney, lawfully constituted in writing and upon surrender
of the certificate therefor. The Board of Directors shall have power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue and registration of certificates of shares and may appoint
transfer agents and/or registrars thereof.
Section 3. 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 of that fact by the
person claiming the certificates of shares to be lost, and the Board of
Directors, when authorizing such issue of a new certificate or certificates, may
at its discretion and as a condition precedent to the issuance thereof, require
the owner of such lot or destroyed certificate or certificates, or his legal
representatives, to advertise the same in such manner as it shall require and/or
give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation.
-8-
<PAGE>
ARTICLE VI
GENERAL PROVISIONS
Section 1. Corporate Seal. The corporate seal shall be circular in form with
--------------------------
the name of the corporation appearing around the margin with the words
"Corporate Seal" in the center.
Said seal may be used by causing it, or a facsimile thereof, to be impressed
or affixed or reproduced or otherwise.
Section 2. Inspection of Books and Records by Shareholders. The Secretary
-----------------------------------------------------------
shall keep at the corporation's registered office or principal place of
business, or at the office of the corporation's transfer agent or registrar (if
there be such a transfer agent or registrar), a record of the corporation's
shareholders, the names and addresses of all shareholders and the number and
class of shares held by each. Any person who is a shareholder of record of the
corporation, upon written demand stating the purpose thereof, shall have the
right to examine in person or by agent or attorney, at any reasonable time or
times, for any proper purpose, its books and records of accounts, minutes, and
record of shareholder actions and shall be entitled to make extracts therefrom.
Section 3. Signature on Checks, Drafts and Notes. All checks, drafts, notes
------------------------------------------------
or other obligations of the corporation shall be signed by the following
officers, to-wit: Chairman, President or Vice President and Treasurer or any
Assistant Treasurer, or by any person or persons thereunto authorized by the
Board of Directors. Such signatures may be manual, or, if so authorized by the
Board of Directors, may be facsimile.
Section 4. Signatures on Endorsements, Assignments, Transfers and
-----------------------------------------------------------------
Securities. All endorsements, assignments, transfers, stock powers or other
- -----------
instruments of transfer of securities standing in the name of the corporation
shall be executed for and in the name of the corporation by the Chairman,
President or a Vice President and the Secretary or an Assistant Secretary, or by
any officers thereunder authorized by the Board of Directors.
Section 5. Signatures and Proxies of Stock owned by Corporation. The
---------------------------------------------------------------
Chairman of the corporation, or in his absence or disability, the President of
the corporation, may authorize from time to time the signature and issuance of
proxies to vote upon shares of stock of other companies standing in the name of
the corporation; all such proxies shall be signed in the name of the corporation
by the President or Chairman and the Secretary or an Assistant Secretary.
Section 6. Fiscal Year. The fiscal year of the corporation shall and on the
------------
thirty-first (31st) day of December in each year, or on such other day as may be
fixed from time to time by the Board of Directors.
Section 7. Dividends. Dividends upon the capital stock of the corporation,
--------------------
subject to the provisions of the Articles of Incorporation and applicable
provisions of law, may be declared by the Board of Directors at any regular or
special meeting. Dividends may be paid in cash, in property or in shares of the
capital stock.
Before payment of any dividend, there may be set aside out of any funds of
the corporation available for dividends such sum or sums as the Directors from
time to time, in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for
-9-
<PAGE>
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Directors shall think conducive to
the interest of the corporation, and the Directors may abolish any such reserve
in the manner in which it was created.
Section 8. Notices. Whenever any notice is required to be given to any
-------------------
shareholder or Director under the provisions of these Bylaws, 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 equivalent to the giving of
such notice.
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. Procedure to Amend. These Bylaws may be altered or repealed or
------------------------------
new Bylaws may be made either by:
(a) The affirmative vote of the holders of record of a majority of the
outstanding shares of the corporation entitled to vote thereon, given at any
annual or special meeting of the shareholders, provided that notice of the
proposed alteration, repeal or the proposed new bylaw or bylaws be included
in the notice of such meeting or waiver thereof; or
(b) The affirmative vote of a majority of the members of the Board of
Directors given at any annual or regular meeting of the Board, or any
special meeting thereof, provided that notice of the proposed alteration,
repeal or the proposed new bylaws or bylaws be included in the notice of
such special meeting or waiver thereof, or all of the Directors at the time
in office be present at such special meeting; provided, however, that the
Board of Directors shall not adopt or alter any bylaw fixing their number,
qualifications, classifications or term of office.
-10-
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
GALAXY REGISTRATION, INC.
Galaxy Registration Inc., a Maryland Corporation, having its principal
office at 1888 North Market Street, Frederick, Frederick County, Maryland 21701
(hereinafter called the "Corporation") intends by these Articles to change,
amend and restate its Articles of Incorporation in their entirety, and in
furtherance thereof, the Corporation, after this Amendment and Restatement was
duly advised and authorized by the unanimous vote of the Board of Directors and
unanimously approved by the stockholders of the Corporation, does hereby certify
to the Department of Assessments and Taxation, that the following Amendments are
to be made to the Corporation's Articles of Incorporation:
AMENDMENTS
----------
FIRST: The Corporation's Articles of Incorporation, and all prior
amendments thereto, are hereby amended by striking and revoking each and every
provision thereof in their entirety and substituting the following Restatement
as and for its Articles of Incorporation:
RESTATED ARTICLES OF INCORPORATION
----------------------------------
THIS IS TO CERTIFY THAT:
FIRST: I, the undersigned, R. Vincent Welty, whose post office address
is 30 West Patrick Street, 6th Floor, Frederick, Frederick County, Maryland
21701, being at least eighteen (18) years of age, do hereby form a
Corporation under the Laws of the State of Maryland by the execution and
filing of these Articles of Incorporation.
SECOND: The name of the Corporation is "Galaxy Registration, Inc."
THIRD: The post office address of the principal office of the
Corporation in the State of Maryland is 1888 North Market Street, Frederick,
Frederick County, Maryland 21701. The name and post office address of the
resident agent of the Corporation in Maryland is The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202. Said resident
agent is a Maryland corporation.
FOURTH: The nature of the business of the Corporation and the purposes
for which it is formed are as follows:
1. To engage in any service, information, communication, financial,
technology, research, development, manufacturing, marketing, promotion,
commercial, mercantile, trading or investment business or venture of any
kind or character whatsoever permitted by law, and to do all things
necessary or incidental to such business, and to invest in, whether through
debt, equity or otherwise, assist, loan money to, render financial and
managerial assistance to any type of business or venture or property
interest or person permitted by law;
I.D. NO# D1352889
ACKN. NO. - 208C3070024
GALAXY REGISTRATION, INC.
NO. OF CERTIFIED COPIES - 1
STATE OF MARYLAND
-----------------
I hereby certify that this is a true and complete copy of the 6
---
page document on file in this office. DATED: May 23, 1994.
------------
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/
---------------------------------------------------
This stamp replaces our previous certification system. Effective 10/84
<PAGE>
2
2. To purchase, take, receive or otherwise acquire, hold, own, pledge,
transfer or otherwise dispose of its own shares, common and preferred. The
purchase of its own shares may be made out of unreserved and unrestricted
earned and capital surpluses;
3. To have one or more offices outside the State of Maryland and to the
same extent as natural persons might or could do to purchase or otherwise
acquire and to hold, own, maintain, sell, lease, exchange, hire, convey,
mortgage or otherwise dispose of, and deal in lands and leaseholds, and any
interest, estate and rights in real property and in personal or mixed
property, necessary, convenient or appropriate for any of the purposes and
objects herein expressed, either within or without the State of Maryland;
4. To do everything necessary, suitable or proper for the
accomplishment of any of the purposes, the attainment of any of the objects,
or the furtherance of any of the powers hereinbefore set forth, either alone
or in connection with other corporations, firms or individuals, and either
as a principal, broker, agent, partner, joint venturer, or independent
contractor, either alone or in conjunction with any other legal entity or
person, and to do every other act or thing incidental to, or growing out of
or connected with the aforesaid objects, purposes or powers or any of them,
including power to borrow money and mortgage the property of the Corporation
as security for the payment of such sums as may be borrowed, either within
or without the State of Maryland; and
5. The foregoing clauses shall be construed as objects, purposes and
powers, and it is hereby expressly provided that the foregoing enumerations
of specific powers shall not be held to limit or restrict in any manner the
powers of this Corporation. The Corporation is hereby authorized to engage
in any other lawful activity for which corporations may be organized under
the Corporations and Associations Article of the Annotated Code of Maryland,
as amended from time to time, and any successor and/or replacement to said
laws.
FIFTH: The authorized capital stock of the Corporation and the aggregate
number of shares which the Corporation shall have authority to issue shall
be 1,000,000 shares all of one class, that is voting common stock with a par
value of $0.10 per share ("Common Stock"). The Common Stock shall have the
preferences, dividends, voting powers, qualifications, limitations and
relative rights described as follows:
Except as otherwise expressly provided by law or in this paragraph
FIFTH, voting rights upon any and all matters shall be vested in the holders
of the Common Stock, each share of such Common Stock having one vote on all
matters. Each fractional share, if any, of Common Stock shall be entitled to
a corresponding fractional vote. The Board of Directors of the Corporation
may declare and pay dividends, in their discretion, on the Common Stock of
the Corporation out of funds legally available for the payment of
<PAGE>
3
dividends. Upon any voluntary or involuntary liquidation of the Corporation,
the holders of shares of the Common Stock shall be entitled to share in all
remaining assets of the Corporation. The Common Stock of the Corporation
shall not be redeemable without the consent of the holders of the shares to
be redeemed.
No holder of shares of any class of stock of the Corporation shall be
entitled, as a matter of right, to subscribe for or purchase any part of any
new or additional issue of stock of any class whatsoever, or of obligations
or other securities convertible into, or exchangeable for, any stock of any
class whatsoever, whether now or hereafter authorized and whether issued for
cash or other consideration or by way of dividend, stock split or other
distribution.
SIXTH: The property and business of the Corporation shall be managed and
controlled by the Board of Directors. The number of directors which shall
constitute the whole Board of Directors shall be fixed at five (5) members,
subject, however, to increase or decrease from time to time in the manner
provided in the Bylaws but in no case shall the number be less than three
(3). Directors shall serve from the date of their election until the next
Annual Meeting of Stockholders and until their successors have been chosen
and qualified or the number of directors reduced. The names of the directors
currently acting as the Board of Directors are: Robert E. Craine, Jr., John
R. Laughlin, Howard G. Barnett, Jr., Edward J. Staley, and Wayne Atwood. In
furtherance of and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized:
(a) To make, alter, amend or repeal the Bylaws of the Corporation.
(b) To issue and sell all or any part of the shares of stock of any
class of the Corporation without further action by stockholders for such
consideration (but not less than the stated value thereof), and to such
persons on such terms and conditions as may, from time to time, be
determined.
(c) To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
(d) To set apart out of any funds of the Corporation available for
dividends a reserve or reserves for any proper purposes and to abolish any
such reserve in the manner in which it was created.
(e) To borrower or raise money for any corporate purpose.
(f) To appoint an executive committee composed of three (3) or more
directors to have and exercise all of the authority of the board as
permitted by law and the Bylaws.
<PAGE>
4
A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason
of an increase in the number of directors shall be filled by the
stockholders at an annual meeting or at a special meeting called for that
purpose, unless the vacancy was created by the stockholders at the previous
annual meeting, in which case such vacancy may be filled by the directors as
in the case of any other vacancy. No decrease in the number of directors
shall have the effect of shortening the term of any incumbent director.
SEVENTH: All stock of the Corporation shall be non-assessable.
EIGHTH: The period of duration of the Corporation shall be perpetual.
NINTH: To the extent permitted by law, 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 has
a financial interest, shall be void or voidable solely for this reason, or
solely because the directors or officers are present at or participate in
the meeting of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because the directors or officers or
their votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative vote of a majority
of the disinterested directors, even though the disinterested directors be
less than a quorum; or
(b) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
TENTH: The Corporation shall, to the fullest extent permitted by Section
2-418 of the Corporations and Associations Article of the Annotated Code of
Maryland or the indemnification provisions of any successor statute,
indemnify every director and officer and such person's heirs, executors,
administrators and personal representatives against all judgments,
penalties, fines, settlements and reasonable expenses actually incurred by
the person in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative. The foregoing right of indemnification shall not be exclusive
of any
<PAGE>
5
other rights of indemnity to which any such person may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
ELEVENTH: No director shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of such director's
fiduciary duty as a director, provided that this provision shall not
eliminate or limit the liability of a director in any manner prohibited by
Section 5-349 of the Courts and Judicial Proceedings Article of the
Annotated Code of Maryland.
SECOND: The provisions set forth in the Restated Articles of Incorporation
of the Corporation constitute all of the provisions of the Corporation's Charter
that are currently in effect.
THIRD: The Restated Articles of Incorporation contained in these Articles of
Amendment and Restatement were duly advised and authorized by the Corporation's
Board of Directors by written informal action, unanimously taken by the Board
pursuant to Section 2-408 of the Code on March 17, 1994; and such Restated
Articles were also duly approved by the Corporation's stockholders by written
informal action unanimously taken by all the Corporation's stockholders pursuant
to Section 2-505 of the Code on March 17, 1994; and there is no stockholder with
a right to dissent who was entitled to notice but not entitled to vote on the
Restated Charter.
IN WITNESS WHEREOF, Galaxy Registration Inc. has caused these presents
to be signed in its name and on its behalf by its President, its corporate seal
to be hereunder affixed and attested by its Secretary, on this 17 day of March,
1994, and its President acknowledges that these ARTICLES OF AMENDMENT AND
RESTATEMENT are the act and deed of Galaxy Registration Inc., and under
the penalties of perjury, that the matters and facts set forth herein with
respect to authorization and approval are true in all material respects to the
best of his knowledge, information and belief.
ATTEST: GALAXY REGISTRATION INC.
James R. Rose BY: /s/ John R. Laughlin
- ---------------------------- ---------------------------
James R. Rose John R. Laughlin
Assistant Secretary President
<PAGE>
EXHIBIT 3.14
CORPl-2.RVW
021694:RVW
AMENDED AND RESTATED
BYLAWS
OF
GALAXY REGISTRATION, INC.
(A MARYLAND CORPORATION)
ARTICLE I
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
Section 1. Place of Meetings. All meetings of the shareholders shall be held
----------------------------
at the principal office of the corporation or at such other place within or
without the State of Maryland as may be determined upon and set forth in the
respective notices, or waivers of notice thereof, or proxies to represent
shareholders thereat.
Section 2. Annual Meeting of Shareholders. The Annual Meeting of the
-----------------------------------------
shareholders of the corporation for the election of Directors and the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date and at such time as the Board of
Directors shall each year designate, which date shall be within thirteen (13)
months subsequent to the date of the last annual meeting of the stockholders.
Such Annual Meeting shall be called in the same manner as herein provided in
respect of special meetings of the shareholders, except that the purposes of
such meeting need be enumerated in the notice and proxies of such meeting only
to the extent required by law in the case of Annual Meetings.
Section 3. Special Meetings of Shareholders. Special meetings of the
-------------------------------------------
shareholders may be called by the Board of Directors or as otherwise allowed by
law. Business transacted at all special meetings shall be confined to the object
stated in the call.
Section 4. Notice of Meeting of Shareholders. Written or printed notice
--------------------------------------------
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten (10) nor more than sixty (60) days before the date of
the meeting, by or at the direction of the Chairman, President, the Secretary or
the officer or person calling the meeting, to each shareholder of record
entitled to vote at such meeting. Each notice shall be deemed to be delivered
when deposited in the United States mail addressed to the shareholder at such
shareholder's address as it appears on the stock transfer books of the
corporation, with postage prepaid thereon.
Section 5. Quorum. The holders of a majority of the shares issued and
-----------------
outstanding, and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
law, by the Articles of Incorporation or by these Bylaws [provided that in no
event shall a quorum consist of the holders of less than one-third (1/3) of the
shares entitled to vote and be thus represented at such meeting]. If, however,
<PAGE>
2
such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or by
proxy, shall have power to adjourn the meeting, until the holders of the
requisite amount of voting shares shall be present or represented. At such
adjourned meeting at which the requisite amount of voting shares shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The vote of the holders of a
majority of the shares entitled to vote and there represented at a meeting at
which a quorum is present shall be the act of the shareholders' meeting, unless
the vote of a greater number is required by law, the Articles of Incorporation
or by these Bylaws.
Section 6. Voting Proxies. At each meeting of the shareholders, every
--------------------------
shareholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing subscribed by such shareholder and
bearing a date not more than eleven (11) months prior to said meeting unless
said instrument provides for a longer period. Each shareholder shall have one
vote for each share of stock having voting power registered in his name on the
books of the corporation.
Section 7. List of Shareholders Entitled to Vote. The Secretary shall make,
-------------------------------------------------
at least ten (10) days before each meeting of the shareholders, a complete list
of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each, which list, for a period of ten (10) days prior to such
meeting, shall be kept on file at the principal office of the corporation and
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to inspection of any shareholder
during the whole time of meeting. Provided, however, that failure to comply with
the requirements of this Bylaw shall not affect the validity of any action taken
at such meeting.
Section 8. Closing of Transfer Books. For the purpose of determining
-------------------------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books shall be closed for
a stated period, but not to exceed in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least ten (10) days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case not to be more than sixty (60) days nor less than ten (10) days prior
to the meeting. 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
<PAGE>
3
has been made as provided in this Article, such determination shall apply to any
adjournment thereof except where the determination has been made through the
closing of stock transfer books and the stated period of closing has expired.
Section 9. Registered Shareholders. The corporation shall be entitled to
-----------------------------------
treat the holder of record of any share or shares of stock as the holder in fact
thereof for all purposes and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of Maryland.
Section 10. Actions of Shareholders. Any action which might be taken at
------------------------------------
a meeting of the shareholders may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the actions taken shall be signed by all shareholders entitled to vote on the
matter and a written waiver of any right to dissent is signed by each
shareholder entitled to notice of a meeting but not entitled to vote thereat,
and such consent(s) and waiver(s) are filed with the records of stockholders'
meetings.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number, Election, Qualification and Vacancies. The property and
---------------------------------------------------------
business of the corporation shall be managed by its Board of Directors. The
number of Directors to constitute the Board shall be not less than three (3) nor
more than fifteen (15), with the exact number to be elected each year to be
detemined by the Board prior to the mailing of the notice of the annual meeting
of shareholders, at any regular or special meeting of the Board. No decrease in
the number of Directors shall have the effect of shortening the term of any
incumbent Director.
A Director shall serve for one (1) year from the date of the Annual Meeting
of shareholders at which he was elected and until his successor shall be elected
and qualified.
Any vacancy occurring or created in the Board of Directors may be filled by
the affirmative vote of a majority of the remaining Directors though less than a
quorum of the Board of Directors. A Director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any directorship to
be filled by reason of an increase in the number of Directors shall be filled by
election at an Annual Meeting or at a special meeting of the shareholders called
for that purpose, unless the vacancy was created by the shareholders, in which
case it may be filled by the Directors as in the case of any other vacancy.
Directors need not be residents of the State of Maryland.
Section 2. Powers of Board of Directors. In addition to the powers and
----------------------------------------
authorities by these Bylaws expressly conferred upon it, the Board may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the Articles of Incorporation or by these Bylaws
<PAGE>
4
directed or required to be exercised or done by the shareholders.
Section 3. Compensation of Directors. Directors, as such, may receive a
-------------------------------------
stated salary for their services, as determined by resolution of the Board; in
addition, a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board or committee
thereof; provided, however, that nothing herein contained shall be construed to
preclude any Director from serving the corporation in any other capacity and
receiving compensation therefor.
Section 4. Place of Meetings. The Directors may hold their meetings and
-----------------------------
keep the books of the corporation at the office of the corporation in
Frederick, Maryland, or at such other place or places either within or without
the State of Maryland as they may, from time to time, determine.
Section 5. First Meeting of New Board of Directors. The first meeting of
--------------------------------------------------
each newly elected Board, for the purpose of organization or otherwise, may be
held at such time and place as shall be fixed by the vote of the shareholders
at the Annual Meeting, and no notice of such meeting to the newly elected
Directors shall be necessary in order to legally constitute the meeting,
provided a majority of the whole Board shall be present; or they may meet at
such place and time as shall be fixed by the consent in writing of all of the
Directors.
Section 6. Regular Meetings. Regular meetings of the Board may be held
----------------------------
without notice at such time and place as shall from time to time be determined
by the Board.
Section 7. Special Meetings and Notice. Special meetings of the Board may
---------------------------------------
be called by the Chairman or President by notice of the time and place of
meeting served personally upon each Director, or mailed, telegraphed or cabled
to his address upon the books of the corporation, at least forty-eight (48)
hours before the meeting; special meetings shall be called by the Chairman,
President or Secretary in like manner and on like notice on the written request
of a majority of the Directors. Each special meeting of the Board shall be held
at such a place as shall be specified in the notice of such meeting.
Section 8. Attendance and Waiver of Notice. 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 on the ground that the meeting in 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 9. Quorum. At all meetings of the Board a majority of the Directors
------------------
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 statute or by the Articles of
Incorporation or by these Bylaws; provided, however, that whenever any meeting
of the Board of Directors shall be held outside of the United States of America,
no action taken at such meeting shall be effective
<PAGE>
5
unless concurred in by a majority of the entire Board of Directors.
Section 10. Committees Appointed by Board of Directors. The Board of
-------------------------------------------------------
Directors may, by resolution, provide for such standing or special committee as
it deems desirable, and discontinue the same at pleasure. Each such committee
shall have such powers and perform such duties, not inconsistent with law, as
may be assigned to it by the Board of Directors. If provision be made for any
such committee, the members thereof shall be appointed by the Board of Directors
and shall serve during the pleasure of the Board of Directors. Vacancies in such
committees shall be filled by the Board of Directors.
Section 11. Directors' Statements. When requested to do so by the holders
----------------------------------
of at least one-third (1/3) of the outstanding shares of the corporation, the
Board of Directors shall present written reports of the financial condition and
the general condition of the corporation and may present such reports at such
other times as they deem advisable.
Section 12. Appointment of Executive Committee. The Board of Directors may,
-----------------------------------------------
by resolution adopted by a majority of the entire Board, designate an Executive
Committee composed of not less than three (3) of the Directors. The Executive
Committee shall have and may exercise all of the powers of the Board of
Directors in the management of the business affairs of the corporation and
may otherwise act in all respects as the Board of Directors between meetings of
the Board, except as prohibited by Section 2-411 of the Corporations and
Associations Article of the Annotated Code of Maryland, and except that, without
specific approval or direction from the Board of Directors, the Executive
Committee may not:
(a) Approve the dissolution of the corporation, the merger or consolidation
of the corporation with another company or companies, or the sale of
substantially all of the assets of the corporation.
(b) Authorize the issuance, purchase or redemption of any capital stock of
the corporation.
(c) Terminate the employment of any officer of the corporation or change the
title, duties or compensation of any officer.
(d) Approve any changes to any employment contract with any officer of the
corporation or any of its subsidiaries.
(e) Declare any dividends, other than dividends due with respect to
preferred stock of the corporation which has been issued pursuant to approval of
the Board of Directors.
(f) Approve an amendment to the Bylaws or Articles of Incorporation of the
corporation or any of its subsidiaries.
(g) Make any expenditure or approve any action which will result in the
expenditure, as to any one matter, in excess of $100,000.00, other than
expenditures approved in or in conformity with any operating or capital
expenditure budget for the corporation approved by the Board of Directors.
<PAGE>
6
(h) Approve any borrowings an behalf of the corporation other than (i)
purchase money mortgages for acquisitions of assets within the limits set in (g)
above, or (ii) as authorized by or in conformity with any operating or capital
expenditure budget approved by the Board of Directors.
(i) Invest in any other business not presently being conducted by the
corporation or its subsidiaries except as specifically budgeted by the Board of
Directors and, in any event, only to the extent that each such investment is
less than $200,000.00.
Section 13. Actions of Directors. Any action which might be taken at a
---------------------------------
meeting of the Board of Directors may be taken without a meeting if a record or
memorandum thereof be made, in writing, and signed by all of the members of the
Board and filed with the minutes of proceedings of the Board.
ARTICLE III
OFFICERS
Section 1. Number, Qualification and Vacancies. The Board of Directors shall
-----------------------------------------------
appoint, as executive officers, a Chairman of the Board, a President, one or
more Vice Presidents, a Secretary and a Treasurer. The Chairman of the Board and
the President shall be chosen from among the Directors. The executive officers
shall be elected annually by the Board of Directors at its first meeting
following the Annual Meetings of shareholders, and each such officer shall hold
office until the corresponding meeting in the next year or until he shall have
resigned or shall have been removed in the manner provided in Section 11 of this
Article III. Any vacancy in any of the offices shall be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting. A resignation shall be deemed to take effect upon its receipt
by the Secretary, unless otherwise specified therein.
Section 2. Chairman of the Board. The Chairman of the Board shall preside at
---------------------------------
all meetings of the Board of Directors of the corporation and may preside at
meetings of the shareholders. He shall be an ex-officio member of all standing
committees and shall see that all orders and resolutions of the Board are
carried into effect. He shall, with powers concurrent with the President, have
authority to execute, with the Secretary or an Assistant Secretary, certificates
of shares of the corporation and sign and execute in the name of the corporation
authorized deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the corporation.
Section 3. President. Either the Chairman or the President shall be
---------------------
designated by the Board of Directors as Chief Executive Officer of the
corporation. The Chief Executive Officer shall have direct charge and
supervision of the business of the corporation. If the President is not
designated as the Chief Executive Officer, he shall be designated as the Chief
Operating Officer, in which case he shall have the day-to-day responsibility for
the operation of the corporation and, generally, shall perform all duties
incident to the office of a President of a corporation and such other duties
<PAGE>
7
as, from time to time, may be assigned to him by the Chief Executive Officer or
the Board of Directors. The President may preside at meetings of the
shareholders and at meetings of the Board of Directors at which the Chairman of
the Board is not present. He may sign with the Secretary or an Assistant
Secretary, certificates of shares of the corporation; he may sign and execute,
in the name of the corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, except in cases of which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the corporation.
Section 4. Vice President. If an Executive Vice President be elected, he
--------------------------
shall be the senior vice president of the Company and shall act as President in
the absence or incapacity of the President. The duties and authority of any
other vice presidents shall be as determined by the Board of Directors.
Section 5. Secretary. The Secretary shall keep the minutes of the meetings
---------------------
of the shareholders and of the Board of Directors in books provided for the
purpose, and shall see that all notices are duly given in accordance with the
provisions of these Bylaws, or as required by law; he or she shall be custodian
of the records and of the separate seal or seals of the corporation; he or she
shall see that the corporate seal is affixed to all documents, the execution of
which, on behalf of the corporation, under its seal, is duly authorized, and
when so affixed may attest the same; and, in general, he or she shall perform
all duties incident to the office of a Secretary of a corporation and such other
duties as, from time to time, may be assigned to him or her by the Board of
Directors. The Secretary may sign, with the Chairman, President or a Vice
President, certificates of stock of the corporation.
Section 6. Treasurer. The Treasurer shall have charge of and be responsible
---------------------
for all funds, securities, receipts and disbursements of the corporation and
shall deposit or cause to be deposited, in the name of the corporation all
monies or other valuable effects in such banks, trust companies or other
depositories as shall, from time to time, be selected by the Board of Directors;
he shall render to the Chairman, President and the Board of Directors whenever
requested an account of the financial condition of the corporation; and, in
general, shall perform all the duties incident to the office of a Treasurer of a
corporation, and such other duties as may be assigned to him by the Board of
Directors.
The Treasurer shall give the corporation a bond, if required by the Board of
Directors, in a sum and with one or more sureties satisfactory to the Board for
the faithful performance of the duties of his office, and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 7. Assistant Officers. The Board of Directors may elect one or more
------------------------------
Assistant Secretaries and one or more Assistant Treasurers. Each Assistant
Secretary, if any, and each Assistant Treasurer if any, shall hold office for
such period as the Board of Directors may prescribe.
Any Assistant Secretary may, in the absence or the disability of the
<PAGE>
8
Secretary, perform the duties and exercise the powers of the Secretary and any
Assistant Treasurer may, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer. Each of such officers shall
perform such other duties as the Board of Directors shall prescribe.
Section 8. Subordinate Officers. The Board of Directors may elect such
--------------------------------
subordinate or other officers as it may deem desirable. Each such officer shall
hold office for such period, have such authority and perform such duties as the
Board of Directors shall prescribe. The Board of Directors may, from time to
time, authorize any officer to appoint and remove subordinate officers and
prescribe the powers and duties thereof.
Section 9. Officers Holding Two(2) or More Offices. Any two (2) or more
---------------------------------------------------
offices may be held by the same person except that the President and Secretary
shall not be the same person.
Section 10. Compensation of Officers. The Board of Directors shall have the
-------------------------------------
power to fix the compensation of all officers of the corporation. It may
authorize any officer upon whom the power of appointing subordinate officers may
have been conferred to fix the compensation of such subordinate officers.
Section 11. Removal of Officers. Any officer of the corporation may be
--------------------------------
removed, with or without cause, by a vote of a majority of the entire Board of
Directors at a meeting called for that purpose, or (except in case of an officer
elected by the Board of Directors) by an officer upon whom such power of removal
may have been conferred.
Section 12. Delegation of Duties. In case of the absence of any officer of
---------------------------------
the corporation or for any other reason that the Board may deem sufficient, the
Board may delegate, for the time being, the powers or duties, or any of them, of
such officer to another officer, or to any Director, provided a majority of the
entire Board concurs therein.
ARTICLE IV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification of Directors and officers shall be as provided for in the
corporation's Articles of Incorporation.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates of Shares. The certificates of shares of the
----------------------------------
corporation shall be numbered and shall be entered in the books of the
corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chairman, the President or a Vice President
and the Secretary or an Assistant Secretary, and may be sealed with the seal of
the corporation or a facsimile thereof. The designations, preferences and
relative participating options or other special rights of each
<PAGE>
9
class of shares 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 certificates which the corporation shall
issue to represent such class or series of shares.
The signatures of the Chairman, President or Vice President and the
Secretary or Assistant Secretary upon a certificate may be facsimiles, if the
certificate is countersigned by a transfer agent, or registered by a registrar
other than the corporation itself or an employee of the corporation. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be an officer before such certificate is
issued, it may be issued by the corporation with the same affect as if he were
such officer at the date of its issuance.
Section 2. Transfers of Certificates of Shares. Transfers of shares shall be
-----------------------------------------------
made on the books of the corporation only by the person named in the
certificate, or by attorney, lawfully constituted in writing and upon surrender
of the certificate therefor. The Board of Directors shall have power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue and registration of certificates of shares and may appoint
transfer agents and/or registrars thereof.
Section 3. 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 of that fact by the
person claiming the certificates of shares to be lost, and the Board of
Directors, when authorizing such issue of a new certificate or certificates, may
at its discretion and as a condition precedent to the issuance thereof, require
the owner of such lot or destroyed certificate or certificates, or his legal
representatives, to advertise the same in such manner as it shall require and/or
give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Corporate Seal. The corporate seal shall be circular in form with
--------------------------
the name of the corporation appearing around the margin with the words
"Corporate Seal" in the center.
Said seal may be used by causing it, or a facsimile thereof, to be impressed
or affixed or reproduced or otherwise.
Section 2. Inspection of Books and Records by Shareholders. The Secretary
-----------------------------------------------------------
shall keep at the corporation's registered office or principal place of
business, or at the office of the corporation's transfer agent or registrar (if
there be such a transfer agent or registrar), a record of the corporation's
shareholders, the names and addresses of all shareholders and the number and
class of shares held by each. Any person who is a shareholder of record of the
corporation, upon written demand stating the purpose thereof, shall have the
<PAGE>
10
right to examine in person or by agent or attorney, at any reasonable time or
times, for any proper purpose, its books and records of accounts, minutes, and
record of shareholder actions and shall be entitled to make extracts therefrom.
Section 3. Signature on Checks, Drafts and Notes. All checks, drafts, notes
--------------------------------------------------
or other obligations of the corporation shall be signed by the following
officers, to-wit: Chairman, President or Vice President and Treasurer or any
Assistant Treasurer, or by any person or persons thereunto authorized by the
Board of Directors. Such signatures may be manual, or, if so authorized by the
Board of Directors, may be facsimile.
Section 4. Signatures and Endorsements, Assignments, Transfers and
------------------------------------------------------------------
Securities. All endorsements, assignments, transfers, stock powers or other
- -----------
instruments or transfer of securities standing in the name of the corporation
shall be executed for and in the name of the corporation by the Chairman,
President or a Vice President and the Secretary or an Assistant Secretary, or by
any officers thereunder authorized by the Board of Directors.
Section 5. Signatures and Proxies of Stock owned by Corporation. The
---------------------------------------------------------------
Chairman of the corporation, or in his absence or disability, the President of
the corporation, may authorize from time to time the signature and issuance of
proxies to vote upon shares of stock of other companies standing in the name of
the corporation; all such proxies shall be signed in the name of the corporation
by the President or Chairman and the Secretary or an Assistant Secretary.
Section 6. Fiscal Year. The fiscal year of the corporation shall and on the
------------
thirty-first (31st) day of December in each year, or on such other day as may be
fixed from time to time by the Board of Directors.
Section 7. Dividends. Dividends upon the capital stock of the corporation,
--------------------
subject to the provisions of the Articles of Incorporation and applicable
provisions of law, may be declared by the Board of Directors at any regular or
special meeting. Dividends may be paid in cash, in property or in shares of the
capital stock.
Before payment of any dividend, there may be set aside out of any funds of
the corporation available for dividends such sum or sums as the Directors from
time to time, in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the Directors
shall think conducive to the interest of the corporation, and the Directors may
abolish any such reserve in the manner in which it was created.
Section 5. Notices. Whenever any notice is required to be given to any
-------------------
shareholder or Director under the provisions of these Bylaws, 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 equivalent to the giving of
such notice.
<PAGE>
11
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. Procedure to Amend. These Bylaws may be altered or repealed or
------------------------------
new bylaws may be made either by:
(a) The affirmative vote of the holders of record of a majority of the
outstanding shares of the corporation entitled to vote thereon, given at any
annual or special meeting of the shareholders, provided that notice of the
proposed alteration, repeal or the proposed new bylaw or bylaws be included in
the notice of such meeting or waiver thereof; or
(b) The affirmative vote of a majority of the members of the Board of
Directors given at any annual or regular meeting of the Board, or any special
meeting thereof, provided that notice of the proposed alteration, repeal or the
proposed new bylaws or bylaws be included in the notice of such special meeting
or waiver thereof, or all of the Directors at the time in office be present at
such special meeting; provided, however, that the Board of Directors shall not
adopt or alter any bylaw fixing their number, qualifications, classifications
or term of office.
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
GALAXY DESIGN & PRINTING, INC.
Galaxy Design & Printing, Inc., a Maryland Corporation, having its
principal office at 1888 North Market Street, Frederick, Frederick County,
Maryland 21701 (hereinafter called the "Corporation") intends by these Articles
to change, amend and restate its Articles of Incorporation in their entirety,
and in furtherance thereof, the Corporation, after this Amendment and
Restatement was duly advised and authorized by the unanimous vote of the Board
of Directors and unanimously approved by the stockholders of the Corporation,
does hereby certify to the Department of Assessments and Taxation, that the
following Amendments are to be made to the Corporation's Articles of
Incorporation:
AMENDMENTS
----------
FIRST: The Corporation's Articles of Incorporation, and all prior
amendments thereto, are hereby amended by striking and revoking each and every
provision thereof in their entirety and substituting the following Restatement
as and for its Articles of Incorporation:
RESTATED ARTICLES OF INCORPORATION
----------------------------------
THIS IS TO CERTIFY THAT:
FIRST: I, the undersigned, R. Vincent Welty, whose post office address
is 30 West Patrick Street, 6th Floor, Frederick, Frederick County, Maryland
21701, being at least eighteen (18) years of age, do hereby form a
Corporation under the Laws of the State of Maryland by the execution and
filing of these Articles of Incorporation.
SECOND: The name of the Corporation is "Galaxy Design & Printing, Inc."
THIRD: The post office address of the principal office of the
Corporation in the State of Maryland is 1888 North Market Street, Frederick,
Frederick County, Maryland 21701. The name and post office address of the
resident agent of the Corporation in Maryland is The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202. Said resident
agent is a Maryland corporation.
FOURTH: The nature of the business of the Corporation and the purposes
for which it is formed are as follows:
1. To engage in any service, information, communication, financial,
technology, research, development, manufacturing, marketing, promotion,
commercial, mercantile, trading or investment business or venture of any
kind or character whatsoever permitted by law, and to do all things
necessary or incidental to such business, and to invest in, whether through
debt, equity or otherwise, assist,
<PAGE>
2
loan money to, render financial and managerial assistance to any type of
business or venture or property interest or person permitted by law;
2. To purchase, take, receive or otherwise acquire, hold, own, pledge,
transfer or otherwise dispose of its own shares, common and preferred. The
purchase of its own shares may be made out of unreserved and unrestricted
earned and capital surpluses;
3. To have one or more offices outside the State of Maryland and to the
same extent as natural persons might or could do to purchase or otherwise
acquire and to hold, own, maintain, sell, lease, exchange, hire, convey,
mortgage or otherwise dispose of, and deal in lands and leaseholds, and any
interest, estate and rights in real property and in personal or mixed
property, necessary, convenient or appropriate for any of the purposes and
objects herein expressed, either within or without the State of Maryland;
4. To do everything necessary, suitable or proper for the accomplishment
of any of the purposes, the attainment of any of the objects, or the
furtherance of any of the powers hereinbefore set forth, either alone or in
connection with other corporations, firms or individuals, and either as a
principal, broker, agent, partner, joint venturer, or independent
contractor, either alone or in conjunction with any other legal entity or
person, and to do every other act or thing incidental to, or growing out of
or connected with the aforesaid objects, purposes or powers or any of them,
including power to borrow money and mortgage the property of the Corporation
as security for the payment of such sums as may be borrowed, either within
or without the State of Maryland; and
5. The foregoing clauses shall be construed as objects, purposes and
powers, and it is hereby expressly provided that the foregoing enumerations
of specific powers shall not be held to limit or restrict in any manner the
powers of this Corporation. The Corporation is hereby authorized to engage
in any other lawful activity for which corporations may be organized under
the Corporations and Associations Article of the Annotated Code of Maryland,
as amended from time to time, and any successor and/or replacement to said
laws.
FIFTH: The authorized capital stock of the Corporation and the aggregate
number of shares which the Corporation shall have authority to issue shall
be 1,000,000 shares all of one class, that is voting common stock with a par
value of $0.10 per share ("Common Stock"). The Common Stock shall have the
preferences, dividends, voting powers, qualifications, limitations and
relative rights described as follows:
Except as otherwise expressly provided by law or in this paragraph
FIFTH, voting rights upon any and all matters shall be vested in the holders
of the Common Stock, each share of such Common Stock having one vote on all
matters. Each fractional share, if any,
<PAGE>
3
of Common Stock shall be entitled to a corresponding fractional vote. The
Board of Directors of the Corporation may declare and pay dividends, in
their discretion, on the Common Stock of the Corporation out of funds
legally available for the payment of dividends. Upon any voluntary or
involuntary liquidation of the Corporation, the holders of shares of the
Common Stock shall be entitled to share in all remaining assets of the
Corporation. The Common Stock of the Corporation shall not be redeemable
without the consent of the holders of the shares to be redeemed.
No holder of shares of any class of stock of the Corporation shall be
entitled, as a matter of right, to subscribe for or purchase any part of any
new or additional issue of stock of any class whatsoever, or of obligations
or other securities convertible into, or exchangeable for, any stock of any
class whatsoever, whether now or hereafter authorized and whether issued for
cash or other consideration or by way of dividend, stock split or other
distribution.
SIXTH: The property and business of the Corporation shall be managed and
controlled by the Board of Directors. The number of directors which shall
constitute the whole Board of Directors shall be fixed at five (5) members,
subject, however, to increase or decrease from time to time in the manner
provided in the Bylaws but in no case shall the number be less than three
(3). Directors shall serve from the date of their election until the next
Annual Meeting of Stockholders and until their successors have been chosen
and qualified or the number of directors reduced. The names of the directors
currently acting as the Board of Directors are: Robert E. Craine, Jr., John
R. Laughlin, Howard G. Barnett, Jr., Edward J. Staley, and Wayne Atwood. In
furtherance of and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized:
(a) To make, alter, amend or repeal the Bylaws of the Corporation.
(b) To issue and sell all or any part of the shares of stock of any
class of the Corporation without further action by stockholders for such
consideration (but not less than the stated value thereof), and to such
persons on such terms and conditions as may, from time to time, be
determined.
(c) To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
(d) To set apart out of any funds of the Corporation available for
dividends a reserve or reserves for any proper purposes and to abolish any
such reserve in the manner in which it was created.
(e) To borrower or raise money for any corporate purpose.
<PAGE>
4
(f) To appoint an executive committee composed of three (3) or more
directors to have and exercise all of the authority of the board as
permitted by law and the Bylaws.
A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason
of an increase in the number of directors shall be filled by the
stockholders at an annual meeting or at a special meeting called for that
purpose, unless the vacancy was created by the stockholders at the previous
annual meeting, in which case such vacancy may be filled by the directors as
in the case of any other vacancy. No decrease in the number of directors
shall have the effect of shortening the term of any incumbent director.
SEVENTH: All stock of the Corporation shall be non-assessable.
EIGHTH: The period of duration of the Corporation shall be perpetual.
NINTH: To the extent permitted by law, 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 has
a financial interest, shall be void or voidable solely for this reason, or
solely because the directors or officers are present at or participate in
the meeting of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because the directors or officers or
their votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative vote of a majority
of the disinterested directors, even though the disinterested directors be
less than a quorum; or
(b) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
TENTH: The Corporation shall, to the fullest extent permitted by Section
2-418 of the Corporations and Associations Article of the Annotated Code of
Maryland or the indemnification provisions of any successor statute,
indemnify every director and officer and such person's heirs, executors,
administrators and personal representatives against all judgments,
penalties, fines, settlements
<PAGE>
5
and reasonable expenses actually incurred by the person in connection with
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnity to
which any such person may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
ELEVENTH: No director shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of such director's
fiduciary duty as a director, provided that this provision shall not
eliminate or limit the liability of a director in any manner prohibited by
Section 5-349 of the Courts and Judicial Proceedings Article of the
Annotated Code of Maryland.
SECOND: The provisions set forth in the Restated Articles of Incorporation
of the Corporation constitute all of the provisions of the Corporation's Charter
that are currently in effect.
THIRD: The Restated Articles of Incorporation contained in these Articles of
Amendment and Restatement were duly advised and authorized by the Corporation's
Board of Directors by written informal action, unanimously taken by the Board
pursuant to Section 2-408 of the Code on March 17, 1994; and such Restated
Articles were also duly approved by the Corporation's stockholders by written
informal action unanimously taken by all the Corporation's stockholders pursuant
to Section 2-505 of the Code on March 17, 1994; and there is no stockholder with
a right to dissent who was entitled to notice but not entitled to vote on the
Restated Charter.
IN WITNESS WHEREOF, Galaxy Design & Printing, Inc. has caused these presents
to be signed in its name and on its behalf by its President, its corporate seal
to be hereunder affixed and attested by its Secretary, on this 17 day of March,
1994, and its President acknowledges that these ARTICLES OF AMENDMENT AND
RESTATEMENT are the act and deed of Galaxy Design & Printing, Inc., and under
the penalties of perjury, that the matters and facts set forth herein with
respect to authorization and approval are true in all material respects to the
best of his knowledge, information and belief.
ATTEST: GALAXY DESIGN & PRINTING, INC.
James R. Rose BY: /s/ Sandra Laughlin
- ------------------------- ---------------------------
James R. Rose Sandra Laughlin
Assistant Secretary President
<PAGE>
CORPl-13.RVW
021694:RVW
AMENDED AND RESTATED
BYLAWS
OF
GALAXY DESIGN & PRINTING, INC.
(A MARYLAND CORPORATION)
ARTICLE I
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
Section 1. Place of Meetings. All meetings of the shareholders shall be held
-----------------------------
at the principal office of the corporation or at such other place within or
without the State of Maryland as may be determined upon and set forth in the
respective notices, or waivers of notice thereof, or proxies to represent
shareholders thereat.
Section 2. Annual Meeting of Shareholders. The Annual Meeting of the
------------------------------------------
shareholders of the corporation for the election of Directors and the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date and at such time as the Board of
Directors shall each year designate, which date shall be within thirteen (13)
months subsequent to the date of the last annual meeting of the stockholders.
Such Annual Meeting shall be called in the same manner an herein provided in
respect of special meetings of the shareholders, except that the purposes of
such meeting need be enumerated in the notice and proxies of such meeting only
to the extent required by law in the case of Annual Meetings.
Section 3. Special Meetings of Shareholders. Special meetings of the
--------------------------------------------
shareholders may be called by the Board of Directors or as otherwise allowed by
law. Business transacted at all special meetings shall be confined to the object
stated in the call.
Section 4. Notice of Meeting of Shareholders. Written or printed notice
---------------------------------------------
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten (10) nor more than sixty (60) days before the date of
the meeting, by or at the direction of the Chairman, President, the Secretary or
the officer or person calling the meeting, to each shareholder of record
entitled to vote at such meeting. Each notice shall be deemed to be delivered
when deposited in the United States mail addressed to the shareholder at such
shareholder's address as it appears on the stock transfer books of the
corporation, with postage prepaid thereon.
Section 5. Quorum. The holders of a majority of the shares issued and
-------
outstanding, and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
law, by the Articles of Incorporation or by these Bylaws (provided that in no
event shall a quorum consist of the holders of less than one-third (1/3) of the
shares entitled to vote and be thus represented at such meeting). If, however,
<PAGE>
2
such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or by
proxy, shall have power to adjourn the meeting, until the holders of the
requisite amount of voting shares shall be present or represented. At such
adjourned meeting at which the requisite amount of voting shares shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The vote of the holders of a
majority of the shares entitled to vote and there represented at a meeting at
which a quorum is present shall be the act of the shareholders' meeting, unless
the vote of a greater number is required by law, the Articles of Incorporation
or by these Bylaws.
Section 6. Voting Proxies. At each meeting of the shareholders, every
--------------------------
shareholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing subscribed by such shareholder and
bearing a date not more than eleven (11) months prior to said meeting unless
said instrument provides for a longer period. Each shareholder shall have one
vote for each share of stock having voting power registered in his name on the
books of the corporation.
Section 7. List of Shareholders Entitled to Vote. The Secretary shall make,
-------------------------------------------------
at least ten (10) days before each meeting of the shareholders, a complete list
of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each, which list, for a period of ten (10) days prior to such
meeting, shall be kept on file at the principal office of the corporation and
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to inspection of any shareholder
during the whole time of meeting. Provided, however, that failure to comply with
the requirements of this Bylaw shall not affect the validity of any action taken
at such meeting.
Section 8. Closing of Transfer Books. For the purpose of determining
-------------------------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books shall be closed for
a stated period, but not to exceed in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least ten (10) days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case not to be more than sixty (60) days nor less than ten (10) days prior
to the meeting. 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
<PAGE>
3
has been made as provided in this Article, such determination shall apply to any
adjournment thereof except where the determination hasbeen made through the
closing of stock transfer books and the stated period of closing has expired.
Section 9. Registered Shareholders. The corporation shall be entitled to
-----------------------------------
treat the holder of record of any share or shares of stock as the holder in fact
thereof for all purposes and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of Maryland.
Section 10. Actions of Shareholders. Any action which might be taken at
------------------------------------
a meeting of the shareholders may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the actions taken shall be signed by all shareholders entitled to vote on the
matter and a written waiver of any right to dissent is signed by each
shareholder entitled to notice of a meeting but not entitled to vote thereat,
and such consent(s) and waiver(s) are filed with the records of stockholders'
meetings.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number, Election, Qualification and Vacancies. The property and
---------------------------------------------------------
business of the corporation shall be managed by its Board of Directors. The
number of Directors to constitute the Board shall be not less than three (3) nor
more than fifteen (15), with the exact number to be elected each year to be
detemined by the Board prior to the mailing of the notice of the annual meeting
of shareholders, at any regular or special meeting of the Board. No decrease in
the number of Directors shall have the effect of shortening the term of any
incumbent Director.
A Director shall serve for one (1) year from the date of the Annual Meeting
of shareholders at which he was elected and until his successor shall be elected
and qualified.
Any vacancy occurring or created in the Board of Directors may be filled by
the affirmative vote of a majority of the remaining Directors though less than a
quorum of the Board of Directors. A Director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any directorship to
be filled by reason of an increase in the number of Directors shall be filled by
election at an Annual Meeting or at a special meeting of the shareholders called
for that purpose, unless the vacancy was created by the shareholders, in which
case it may be filled by the Directors as in the case of any other vacancy.
Directors need not be residents of the State of Maryland.
Section 2. Powers of Board of Directors. In addition to the powers and
----------------------------------------
authorities by these Bylaws expressly conferred upon it, the Board may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the Articles of Incorporation or by these Bylaws
<PAGE>
4
directed or required to be exercised or done by the shareholders.
Section 3. Compensation of Directors. Directors, as such, may receive a
-------------------------------------
stated salary for their services, as determined by resolution of the Board; in
addition, a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board or committee
thereof; provided, however, that noting herein contained shall be construed to
preclude any Director from serving the corporation in any other capacity and
receiving compensation therefor.
Section 4. Place of Meetings. The Directors may hold their meetings and
-----------------------------
keep the books of the corporation at the office of the corporation in
Frederick, Maryland, or at such other place or places either within or without
the State of Maryland as they may, from time to time, determine.
Section 5. First Meeting of New Board of Directors. The first meeting of
--------------------------------------------------
each newly elected Board, for the purpose of organization or otherwise, may be
held at such time and place as shall be fixed by the vote of the shareholders
at the Annual Meeting, and no notice of such meeting to the newly elected
Directors shall be necessary in order to legally constitute the meeting,
provided a majority of the whole Board shall be present; or they may meet at
such place and time as shall be fixed by the consent in writing of all of the
Directors.
Section 6. Regular Meetings. Regular meetings of the Board may be held
----------------------------
without notice at such time and place an shall from time to time be determined
by the Board.
Section 7. Special Meetings and Notice. Special meetings of the Board may
---------------------------------------
be called by the Chairman or President by notice of the time and place of
meeting served personally upon each Director, or mailed, telegraphed or cabled
to his address upon the books of the corporation, at least forty-eight (48)
hours before the meeting; special meetings shall be called by the Chairman,
President or Secretary in like manner and on like notice on the written request
of a majority of the Directors. Each special meeting of the Board shall be held
at such an place as shall be specified in the notice of such meeting.
Section 8. Attendance and Waiver of Notice. 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 on the ground that the meeting in 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 9. Quorum. At all meetings of the Board a majority of the Directors
------------------
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 statute or by the Articles of
Incorporation or by these Bylaws; provided, however, that whenever any meeting
of the Board of Directors shall be held outside of the United States of America,
no action taken at such meeting shall be effective
<PAGE>
5
unless concurred in by a majority of the entire Board of Directors.
Section 10. Committees Appointed by Board of Directors. The Board of
-------------------------------------------------------
Directors may, by resolution, provide for such standing or special committee as
it deems desirable, and discontinue the same at pleasure. Each such committee
shall have such powers and perform such duties, not inconsistent with law, as
may be assigned to it by the Board of Directors. If provision be made for any
such committee, the members thereof shall be appointed by the Board of Directors
and shall serve during the pleasure of the Board of Directors. Vacancies in such
committees shall be filled by the Board of Directors.
Section 11. Directors' Statements. When requested to do so by the holders
----------------------------------
of at least one-third (1/3) of the outstanding shares of the corporation, the
Board of Directors shall present written reports of the financial condition and
the general condition of the corporation and may present such reports at such
other times as they deem advisable.
Section 12. Appointment of Executive Committee. The Board of Directors may,
-----------------------------------------------
by resolution adopted by a majority of the entire Board, designate an Executive
Committee composed of not less than three (3) of the Directors. The Executive
Committee shall have and may exercise all of the powers of the Board of
Directors in the management of the busines affairs of the corporation and
may otherwise act in all respects as the Board of Directors between meetings of
the Board, except as prohibited by Section 2-411 of the Corporations and
Associations Article of the Annotated Code of Maryland, and except that, without
specific approval or direction from the Board of Directors, the Executive
Committee may not:
(a) Approve the dissolution of the corporation, the merger or consolidation
of the corporation with another company or companies, or the sale of
substantially all of the assets of the corporation.
(b) Authorize the issuance, purchase or redemption of any capital stock of
the corporation.
(c) Terminate the employment of any officer of the corporation or change the
title, duties or compensation of any officer.
(d) Approve any changes to any employment contract with any officer of the
corporation or any of its subsidiaries.
(e) Declare any dividends, other than dividends due with respect to
preferred stock of the corporation which has been issued pursuant to approval of
the Board of Directors.
(f) Approve an amendment to the Bylaws or Articles of Incorporation of the
corporation or any of its subsidiaries.
(g) Make any expenditure or approve any action which will result in the
expenditure, as to any one matter, in excess of $100,000.00, other than
expenditures approved in or in conformity with any operating or capital
expenditure budget for the corporation approved by the Board of Directors.
<PAGE>
6
(h) Approve any borrowings an behalf of the corporation other than (i)
purchase money mortgages for acquisitions of assets within the limits set in (g)
above, or (ii) an authorized by or in conformity with any operating or capital
expenditure budget approved by the Board of Directors.
(i) Invest in any other business not presently being conducted by the
corporation or its subsidiaries except as specifically budgeted by the Board of
Directors and, in any event, only to the extent that each such investment is
less than $200,000.00.
Section 13. Actions of Directors. Any action which might be taken at a
---------------------------------
meeting of the Board of Directors may be taken without a meeting if a record or
memorandum thereof be made, in writing, and signed by all of the members of the
Board and filed with the minutes of proceedings of the Board.
ARTICLE III
OFFICERS
Section 1. Number, Qualification and Vacancies. The Board of Directors shall
-----------------------------------------------
appoint, as executive officers, a Chairman of the Board, a President, one or
more Vice Presidents, a Secretary and a Treasurer. The Chairman of the Board and
the President shall be chosen from among the Directors. The executive officers
shall be elected annually by the Board of Directors at its first meeting
following the Annual Meetings of shareholders, and each such officer shall hold
office until the corresponding meeting in the next year or until he shall have
resigned or shall have been removed in the manner provided in Section 11 of this
Article 111. Any vacancy in any of the offices shall be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting. A resignation shall be deemed to take effect upon its receipt
by the Secretary, unless otherwise specified therein.
Section 2. Chairman of the Board. The Chairman of the Board shall preside at
---------------------------------
all meetings of the Board of Directors of the corporation and may preside at
meetings of the shareholders. He shall be an ex-officio member of all standing
committees and shall see that all orders and resolutions of the Board are
carried into effect. He shall, with powers concurrent with the President, have
authority to execute, with the Secretary or an Assistant Secretary, certificates
of shares of the corporation and sign and execute in the name of the corporation
authorized deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the corporation.
Section 3. President. Either the Chairman or the President shall be
---------------------
designated by the Board of Directors as Chief Executive officer of the
corporation. The Chief Executive Officer shall have direct charge and
supervision of the business of the corporation. if the President is not
designated as the Chief Executive officer, he shall be designated as the Chief
Operating Officer, in which case he shall have the day-to-day responsibility for
the operation of the corporation and, generally, shall perform all duties
incident to the office of a President of a corporation and such other duties
<PAGE>
7
as, from time to time, may be assigned to him by the Chief Executive officer or
the Board of Directors. The President may preside at meetings of the
shareholders and at meetings of the Board of Directors at which the Chairman of
the Board in not present. He may sign with the Secretary or an Assistant
Secretary, certificates of shares of the corporation; he may sign and execute,
in the name of the corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, except in cases of which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the corporation.
Section 4. Vice President. If an Executive Vice President be elected, he
--------------------------
shall be the senior vice president of the Company and shall act as President in
the absence or incapacity of the President. The duties and authority of any
other vice presidents shall be as determined by the Board of Directors.
Section 5. Secretary. The Secretary shall keep the minutes of the meetings
---------------------
of the shareholders and of the Board of Directors in books provided for the
purpose, and shall see that all notices are duly given in accordance with the
provisions of these Bylaws, or an required by law; he or she shall be custodian
of the records and of the separate seal or seals of the corporation; he or she
shall see that the corporate seal in affixed to all documents, the execution of
which, on behalf of the corporation, under its seal, in duly authorized, and
when so affixed may attest the same; and, in general, he or she shall perform
all duties incident to the office of a Secretary of a corporation and such other
duties as, from time to time, may be assigned to him or her by the Board of
Directors. The Secretary may sign, with the Chairman, President or a Vice
President, certificates of stock of the corporation.
Section 6. Treasurer. The Treasurer shall have charge of and be responsible
---------------------
for all funds, securities, receipts and disbursements of the corporation and
shall deposit or cause to be deposited, in the name of the corporation all
monies or other valuable effects in such banks, trust companies or other
depositories as shall, from time to time, be selected by the Board of Directors;
he shall render to the Chairman, President and the Board of Directors whenever
requested an account of the financial condition of the corporation; and, in
general, shall perform all the duties incident to the office of a Treasurer of a
corporation, and such other duties as may be assigned to him by the Board of
Directors.
The Treasurer shall give the corporation a bond, if required by the Board of
Directors, in a sum and with one or more sureties satisfactory to the Board for
the faithful performance of the duties of his office, and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 7. Assistant Officers. The Board of Directors may elect one or more
------------------------------
Assistant Secretaries and one or more Assistant Treasurers. Each Assistant
Secretary, if any, and each Assistant Treasurer if any, shall hold office for
such period as the Board of Directors may prescribe.
Any Assistant Secretary may, in the absence or the disability of the
<PAGE>
8
Secretary, perform the duties and exercise the powers of the Secretary and any
Assistant Treasurer may, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer. Each of such officers shall
perform such other duties as the Board of Directors shall prescribe.
Section 8. Subordinate Officers. The Board of Directors may elect such
--------------------------------
subordinate or other officers as it may deem desirable. Each such officer shall
hold office for such period, have such authority and perform such duties as the
Board of Directors shall prescribe. The Board of Directors may, from time to
time, authorize any officer to appoint and remove subordinate officers and
prescribe the powers and duties thereof.
Section 9. Officers Holding Two(2) or More Offices. Any two (2) or more
---------------------------------------------------
offices may be held by the same person except that the President and Secretary
shall not be the same person.
Section 10. Compensation of Officers. The Board of Directors shall have the
-------------------------------------
power to fix the compensation of all officers of the corporation. It may
authorize any officer upon whom the power of appointing subordinate officers may
have been conferred to fix the compensation of such subordinate officers.
Section 11. Removal of Officers. Any officer of the corporation may be
--------------------------------
removed, with or without cause, by a vote of a majority of the entire Board of
Directors at a meeting called for that purpose, or (except in case of an officer
elected by the Board of Directors) by an officer upon whom such power of removal
may have been conferred.
Section 12. Delegation of Duties. In case of the absence of any officer of
---------------------------------
the corporation or for any other reason that the Board may deem sufficient, the
Board may delegate, for the time being, the powers or duties, or any of them, of
such officer to another officer, or to any Director, provided a majority of the
entire Board concurs therein.
ARTICLE IV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification of Directors and officers shall be as provided for in the
corporation's Articles of Incorporation.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates of Shares. The certificates of shares of the
----------------------------------
corporation shall be numbered and shall be entered in the books of the
corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chairman, the President or a Vice President
and the Secretary or an Assistant Secretary, and may be sealed with the seal of
the corporation or a facsimile thereof. The designations, preferences and
relative participating options or other special rights of each
<PAGE>
9
class of shares or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be not forth in full or
summarized on the face or back of the certificates which the corporation shall
issue to represent such class or series of shares.
The signatures of the Chairman, President or Vice President and the
Secretary or Assistant Secretary upon a certificate may be facsimiles, if the
certificate is countersigned by a transfer agent, or registered by a registrar
other than the corporation itself or an employee of the corporation. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be an officer before such certificate is
issued, it may be issued by the corporation with the same affect as if he were
such officer at the date of its issuance.
Section 2. Transfers of Certificates of Shares. Transfers of shares shall be
-----------------------------------------------
made on the books of the corporation only by the person named in the
certificate, or by attorney, lawfully constituted in writing and upon surrender
of the certificate therefor. The Board of Directors shall have power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue and registration of certificates of shares and may appoint
transfer agents and/or registrars thereof.
Section 3. 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 of that fact by the
person claiming the certificates of shares to be lost, and the Board of
Directors, when authorizing such issue of a new certificate or certificates, may
at its discretion and as a condition precedent to the issuance thereof, require
the owner of such lot or destroyed certificate or certificates, or his legal
representatives, to advertise the same in such manner as it shall require and/or
give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Corporate Seal. The corporate seal shall be circular in form with
--------------------------
the name of the corporation appearing around the margin with the words
"Corporate Seal" in the center.
Said seal may be used by causing it, or a facsimile thereof, to be impressed
or affixed or reproduced or otherwise.
Section 2. Inspection of Books and Records by Shareholders. The Secretary
-----------------------------------------------------------
shall keep at the corporation's registered office or principal place of
business, or at the office of the corporation's transfer agent or registrar (if
there be such a transfer agent or registrar), a record of the corporation's
shareholders, the names and addresses of all shareholders and the number and
class of shares held by each. Any person who is a shareholder of record of the
corporation, upon written demand stating the purpose thereof, shall have the
<PAGE>
10
right to examine in person or by agent or attorney, at any reasonable time or
times, for any proper purpose, its books and records of accounts, minutes, and
record of shareholder actions and shall be entitled to make extracts therefrom.
Section 3. Sigtnature on Checks, Drafts and Notes. All checks, drafts, notes
--------------------------------------------------
or other obligations of the corporation shall be signed by the following
officers, to-wit: Chairman, President or Vice President and Treasurer or any
Assistant Treasurer, or by any person or persons thereunto authorized by the
Board of Directors. Such signatures may be manual, or, if so authorized by the
Board of Directors, may be facsimile.
Section 4. Signatures an Endorsements, Assignments, Transfers and
-----------------------------------------------------------------
Securities. All endorsements, assignments, transfers, stock powers or other
- -----------
instruments or transfer of securities standing in the name of the corporation
shall be executed for and in the name of the corporation by the Chairman,
President or a Vice President and the Secretary or an Assistant Secretary, or by
any officers thereunder authorized by:~he Board of Directors.
Section 5. Signatures an Proxies of Stock owned by Corporation. The Chairman
---------------------------------------------------------------
of the corporation, or in his absence or disability, the President of the
corporation, may authorize from time to time the signature and issuance of
proxies to vote upon shares of stock of other companies standing in the name of
the corporation; all such proxies shall be signed in the name of the corporation
by the President or Chairman and the Secretary or an Assistant Secretary.
Section 6. Fiscal Year. The fiscal year of the corporation shall and on the
------------
thirty-first (31st) day of December in each year, or on such other day as may be
fixed from time to time by the Board of Directors.
Section 7. Dividends. Dividends upon the capital stock of the corporation,
--------------------
subject to the provisions of the Articles of Incorporation and applicable
provisions of law, may be declared by the Board of Directors at any regular or
special meeting. Dividends may be paid in cash, in property or in shares of the
capital stock.
Before payment of any dividend, there may be set aside out of any funds of
the corporation available for dividends such sum or sums an the Directors from
time to time, in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the Directors
shall think conducive to the interest of the corporation, and the Directors may
abolish any such reserve in the manner in which it was created.
Section 5. Notices. Whenever any notice is required to be given to any
-------------------
shareholder or Director under the provisions of these Bylaws, 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 equivalent to the giving of
such notice.
<PAGE>
11
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. Procedure to Amend. These Bylaws may be altered or repealed or
------------------------------
new bylaws may be made either by:
(a) The affirmative vote of the holders of record of a majority of the
outstanding shares of the corporation entitled to vote thereon, given at any
annual or special meeting of the shareholders, provided that notice of the
proposed alteration, repeal or the proposed new bylaw or bylaws be included in
the notice of such meeting or waiver thereof; or
(b) The affirmative vote of a majority of the members of the Board of
Directors given at any annual or regular meeting of the Board, or any special
meeting thereof, provided that notice of the proposed alteration, repeal or the
proposed new bylaws or bylaws be included in the notice of such special meeting
or waiver thereof, or all of the Directors at the time in office be present at
such special meeting; provided, however, that the Board of Directors shall not
adopt or alter any bylaw fixing their number, qualifications, classifications
or term of office.
<PAGE>
EXHIBIT 3.17
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
----------------------------
I, GLENN C. KENTON, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF CORSEARCH, INC. FILED IN THIS OFFICE ON THE FIRST DAY OF JUNE,
A.D. 1984, AT 9 0'CLOCK A.M.
/s/ Glenn C. Kenton
---------------------------------------
Glenn C. Kenton, Secretary of State
AUTHENTICATION: :0259000
DATE: 06/01/1984
<PAGE>
CERTIFICATE OF INCORPORATION
OF
CORSEARCH, INC.
***
The undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
I.
The name of the corporation is CORSEARCH, INC.
II.
The registered office of the corporation is 229 South State Street,
Dover, Kent County, Delaware and the name of its initial registered agent at
such address is The Prentice-Hall Corporation System, Inc.
III.
The purposes 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.
IV.
The aggregate number of shares which the corporation shall have
authority to issue is 5,000 shares of Common Stock with the par value of $1.00
each.
<PAGE>
V.
Cumulative voting by the shareholders of the corporation at any election
for directors of the corporation is hereby prohibited. Every shareholder
entitled to vote at each 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.
VI.
The corporation shall indemnify any and all persons who may serve or who
may have served at any time as directors or officers of the corporation or who,
at the request of the Board of Directors of the corporation, may serve or at any
time have served as directors and officers of another corporation in which the
corporation at such time owned or may own shares of stock or of which it was or
may be a creditor, and their respective heirs, administrators, successors and
assigns, against any and all expenses, including amounts paid upon judgments,
counsel fees and amounts paid in settlement (before or after suit is commenced),
actually and necessarily incurred by such persons in connection with the defense
or settlement of any claim, action, suit or proceedings, in which they, or any
of them, are made parties, or a party, or which may be asserted against them or
any of them, by reason of being or having
2
<PAGE>
been directors of officers or a director or officer of the corporation, or of
such other corporation, except in relation to matters as to which any such
director or officer or former director or officer or person shall be adjudged in
any action, suit or proceeding to be guilty of gross negligence or willful
misconduct in the performance of duty. Such indemnification shall be in addition
to any other rights to which these indemnified may be entitled under any law,
By-law, agreement, vote of shareholders or otherwise.
VII.
Whenever a compromise or arrangement is proposed between the corporation
and its creditors or any class of them and/or between the corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
corporation or of any creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for the corporation under the provisions
of Section 291 of Title 8 of the Delaware Code, or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as
3
<PAGE>
the said court directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of the corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders, of
the corporation, as the case may be, and also on the corporation.
VIII.
Except to the extent such power may be modified or divested by action of
shareholders representing a majority of the issued and outstanding shares of the
capital stock of the corporation, the power to alter, amend or repeal the By-
laws of the corporation shall be vested in the Board of Directors.
IX.
The name and address of the Incorporator is as follows:
Gary A. Schonwald 230 Park Avenue
Suite 416
New York, NY 10169
4
<PAGE>
IN WITNESS WHEREOF, the Incorporator has executed these Articles of
Incorporation, this 31st day of May, 1984.
--------------------------
Gary A. Schonwald
<PAGE>
FILED 9 AM
APRIL 9 1987
BOOK M105 PAGE 307
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CORSEARCH, INC.
--------------------------------
Pursuant to Section 242 of the
General Corporation Law of the
State of Delaware
--------------------------------
WE, THE UNDERSIGNED, President and Secretary of CORSEARCH, INC., a
corporation existing under the laws of the State of Delaware (the
"Corporation"), do hereby certify under the seal of the Corporation as follows:
FIRST: That the Certificate of Incorporation of the Corporation has been
amended by striking out the whole of Article FOURTH thereof as it now exists and
inserting in lieu and instead thereof a new Article FOURTH, reading as follows:
I.V.
The aggregate number of shares which the Corporation, shall have
authority to issue is Five Hundred Thousand (500,000) shares of Common
Stock with the par value of $0.01 each.
SECOND: That each share of common stock of the par value of one dollar
($1.00) each of the Corporation issued and outstanding on the date this
Certificate of Amendment is filed with the Secretary of State of the State of
Delaware shall be changed into one hundred shares of common stock of the par
value of one cent ($.01) each of the Corporation upon such filing.
<PAGE>
THIRD: That such amendment has been duly adopted in accordance with the
provisions of the General Corporation Law of the State of Delaware by the
affirmative vote of more than a majority of the outstanding stock entitled to
vote thereon in accordance with the provisions of Sections, 212 and 228 of the
General Corporation Law of the State of Delaware and that the capital of the
Corporation will not be reduced under or by reason of said amendment.
IN WITNESS WHEREOF, we have signed this Certificate and caused the
corporate seal of the Corporation to be hereunto affixed this 27th day of March,
1987.
------------------------------------
President
Attest:
- --------------------------------
Secretary
<PAGE>
EXHIBIT 3.18
BY-LAWS
OF
CORSEARCH, INC.
(A Delaware Corporation)
-------------------------
ARTICLE I
DEFINITIONS
-----------
As used in these By-laws, unless the context otherwise requires,
the term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as
amended from time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Corporation" means Corsearch, Inc.
1.7 "Directors" means directors of the Corporation.
<PAGE>
1.8 "General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended from time to time.
1.9 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.10 "President" means the President of the Corporation.
1.11 "Secretary" means the Secretary of the Corporation.
1.12 "Stockholders" means stockholders of the Corporation.
1.13 "Total number of directors" means the total number of
directors which the Corporation would have if there were no vacancies.
1.14 "Treasurer" means the Treasurer of the Corporation.
1.15 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
------------
2.1 Place of Meetings. Every meeting of the stockholders shall be
-----------------
held at the office of the Corporation or at such other place within or without
the State of Delaware as
2
<PAGE>
shall be specified or fixed in the notice of such meeting or in the waiver of
notice thereof.
2.2 Annual Meeting. A meeting of stockholders shall be held
--------------
annually for the election of directors and the transaction of other business
at such hour and on such business day in March or April as may be determined by
the Board and designated in the notice of meeting.
2.3 Deferred Meeting for Election of Directors, Etc. If the annual
-----------------------------------------------
meeting of stockholders for the election of directors and the transaction of
other business is not held within the months specified in Section 2.2, the Board
shall call a meeting of stockholders for the election of directors and the
transaction of other business as soon thereafter as convenient.
2.4 Other Special Meetings. A special meeting of stockholders
----------------------
(other than a special meeting for the election of directors), unless otherwise
prescribed by statute, may be called at any time by the Board or by the
President or by the Secretary. At any special meeting of Stockholders only such
business may be transacted which is related to the purpose or purposes of such
meeting set forth in the notice thereof given pursuant to Section 2.6 of the By-
laws or in any waiver of notice thereof given pursuant to Section 2.7 of the By-
laws.
2.5 Fixing Record Date. For the purpose of determining the
------------------
stockholders entitled to notice of or to vote at any
3
<PAGE>
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or for the purpose of determining
stockholders entitled to receive payment of any dividend or the allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock, or for the purpose of any other lawful action, the Board
may fix, in advance, a date as the record date for any such determination of
stockholders. Such date 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. If no such record date is fixed:
2.5.1 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;
2.5.2 The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the Board is necessary, shall be the day on which the first
written consent is expressed;
2.5.3 The record date for determining stockholders for any purpose
other than that specified in
4
<PAGE>
Sections 2.5.1 and 2.5.2 shall be at the close of business on the
day on which the Board adopts the resolution relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5 such
determination shall apply to any adjournment thereof, unless the Board fixes a
new record date for the adjourned meeting.
2.6 Notice of Meetings of Stockholders. Except as otherwise
----------------------------------
provided in Sections 2.5 and 2.7 of the By-laws, whenever under the General
Corporation Law or the Certificate of Incorporation or the By-laws, stockholders
are required or permitted to take any action at a meeting, written notice shall
be given stating the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. A copy
of the notice of any meeting shall be given, personally or by mail, not less
than ten nor more than sixty days before the date of the meeting, to each
stockholder entitled to notice of or to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
with postage prepaid, directed to the stockholder at his address as it appears
on the records of the Corporation. An affidavit of the Secretary or an Assistant
Secretary or of the transfer agent of the Corporation that the notice required
by this section has been given
5
<PAGE>
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein. 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, and at the adjourned meeting any
business may be transacted that might have been transacted at the meeting as
originally called. If, however, 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.
2.7 Waivers of Notice. Whenever notice is required to be given to
-----------------
any stockholder under any provision of the General Corporation Law or of the
Certificate of Incorporation or the By-laws, a written waiver thereof, signed by
the stockholder entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a stockholder at a
meeting shall constitute a waiver of notice of such meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. 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.
6
<PAGE>
2.8 List of Stockholders. The Secretary shall prepare and make, or
--------------------
cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder who is
present.
2.9 Quorum of Stockholders; Adjournment. The holders of one-third
-----------------------------------
of the shares of stock entitled to vote at any meeting of stockholders, present
in person or represented by proxy, shall constitute a quorum for the transaction
of any business at such meeting. When a quorum is once present to organize a
meeting of stockholders, it is not broken by the subsequent withdrawal of any
stockholders. The holders of a
7
<PAGE>
majority of the shares of stock present in person or represented by proxy at any
meeting of stockholders, including an adjourned meeting, whether or not a quorum
is present, may adjourn such meeting to another time and place.
2.10 Voting; Proxies. Unless otherwise provided in the Certificate
---------------
of Incorporation every stockholder of record shall be entitled at every meeting
of stockholders to one vote for each share of capital stock standing in his name
on the record of stockholders determined in accordance with Section 2.5 of the
By-laws. If the Certificate of Incorporation provides for more or less than one
vote for any share, on any matter, every reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Sections 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in treating
the persons in whose names shares of capital stock stand on the record of
stockholders as owners thereof for all purposes. At any meeting of stockholders
(at which a quorum was present to organize the meeting), all matters, except as
otherwise provided by law or by the Certificate of Incorporation or by the By-
laws, shall be decided by a majority of the votes
8
<PAGE>
cast at such meeting by the holders of shares present in person or represented
by proxy and entitled to vote thereon, whether or not a quorum is present when
the vote is taken. All elections of directors shall be by written ballot unless
otherwise provided in the Certificate of Incorporation. In voting on any other
question on which a vote by ballot is required by law or is demanded by any
stockholder entitled to vote, the voting shall be by ballot. Each ballot shall
be signed by the stockholder voting or by his proxy, and shall state the number
of shares voted. On all other questions, the voting may be viva voce. Every
---- ----
stockholder entitled to vote at a meeting of stockholders or to express consent
or dissent without a meeting may authorize another person or persons to act for
him by proxy. The validity and enforceability of any proxy shall be determined
in accordance with Section 212 of the General Corporation Law.
2.11 Selection and Duties of Inspectors at Meetings of
-------------------------------------------------
Stockholders. The Board, in advance of any meeting of stockholders, may appoint
- ------------
one or more inspectors to act at the meeting or any adjournment thereof. If
inspectors are not so appointed, the person presiding at such meeting may, and
on the request of any stockholder entitled to vote thereat shall, appoint one or
more inspectors. In case any person
9
<PAGE>
appointed fails to appear or act, the vacancy may be filled by appointment made
by the Board in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, 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
inspector or inspectors shall determine the number of shares outstanding and the
voting power of each, the shares 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 or any stockholder entitled to vote thereat, the inspector or
inspectors 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. Any report or certificate made by the inspector or inspectors shall be
prima facie evidence of the facts stated and of the vote as certified by him or
them.
10
<PAGE>
2.12 Organization. At every meeting of stockholders, the President,
------------
or in the absence of the President a Vice President, and in case more than one
Vice President shall be present, that Vice President designated by the Board (or
in the absence of any such designation, the most senior Vice President, based on
age, present), shall act as chairman of the meeting. The Secretary, or in his
absence one of the Assistant Secretaries, shall act as secretary of the meeting.
In case none of the officers above designated to act as chairman or secretary of
the meeting, respectively, shall be present, a chairman or a secretary of the
meeting, as the case may be, shall be chosen by a majority of the votes cast at
such meeting by the holders of shares of capital stock present in person or
represented by proxy and entitled to vote at the meeting.
2.13 Order of Business. The order of business at all meetings of
-----------------
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 Written Consent of Stockholders Without a Meeting. Unless
-------------------------------------------------
otherwise provided in the Certificate of Incor-
11
<PAGE>
poration, any action required by the General Corporation Law to be taken at any
annual or special meeting of stockholders of the Corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
---------
3.1 General Powers. Except as otherwise provided in the Certificate
--------------
of Incorporation, the business and affairs of the Corporation shall be managed
by or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or the By-
laws or applicable laws, as it may deem proper for the conduct of its meetings
and the management of the Corporation.
12
<PAGE>
In addition to the powers expressly conferred by the By-laws, the Board may
exercise all powers and perform all acts which are not required, by the By-laws
or the Certificate of Incorporation or by law, to be exercised and performed by
the stockholders.
3.2 Number; Qualification; Term of Office. The Board shall consist
-------------------------------------
of four (4) members. The total number of directors shall be fixed initially by
------------------
the incorporator and may thereafter be changed from time to time by action of
- ---------------- --------------------------------------
the stockholders or of the Board. Directors need not be stockholders. Each
director shall hold office until his successor is elected and qualified or until
his earlier death, resignation or removal.
3.3 Election. Directors shall, except as otherwise required by law
--------
or by the Certificate of Incorporation, be elected by a plurality of the votes
cast at a meeting of stockholders by the holders of shares entitled to vote in
the election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise
-----------------------------------------
provided in the Certificate of Incorporation, newly created directorships
resulting from an increase in the number of directors and vacancies occurring in
the Board for any reason, including the removal of directors without cause, may
be filled by vote of a majority of the directors then in
13
<PAGE>
office, although less than a quorum, or by a sole remaining director, at any
meeting of the Board or may be elected by a plurality of the votes cast by the
holders of shares of capital stock entitled to vote in the election at a special
meeting of stockholders called for that purpose. A director elected to fill a
vacancy shall be elected to hold office until his successor is elected and
qualified, or until his earlier death, resignation or removal.
3.5 Resignations. Any director may resign at any time by written
------------
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.
3.6 Removal of Directors. Except as otherwise provided by law, any
--------------------
or all of the directors may be removed (i) for cause, by vote of the
stockholders or by action of the Board, and (ii) without cause, by vote of the
stockholders.
3.7 Compensation. Each director, in consideration of his service as
------------ -------- -------
such, shall be entitled to receive from the Corporation such amount per annum or
----------------
such fees for attendance at directors' meetings or both, as the Board may from
- -------------------------------------------------------
time to time determine, together with reimbursement for the reasonable
- ----------------------------------------------------------------------
expenses incurred by him in connection with the performance of
- --------------------------------------------------------------
14
<PAGE>
his duties. Each director who shall serve as a member of any committee of
- ----------
directors in consideration of his serving as such shall be entitled to such
additional amount per annum or such fees for attendance at committee meetings,
or both, as the Board may from time to time determine, together with
reimbursement for the reasonable expenses incurred by him in the performance of
his duties. Nothing in this section contained shall preclude any director from
--------
serving the Corporation or its subsidiaries in any other capacity and receiving
----------- -----------------------------------
proper compensation therefor.
- ----------------------------
3.8 Place and Time of Meetings of the Board. Meetings of the
---------------------------------------
Board, regular or special, may be held at any place within or without the State
of Delaware. The times and places for holding meetings of the Board may be fixed
from time to time by resolution of the Board or (unless contrary to resolution
of the Board) in the notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the
---------------
annual meeting of stockholders for the election of directors is held, and as
soon as practicable thereafter, the Board may hold its annual meeting, without
notice of such meeting, for the purposes of organization, the election of
officers and the transaction of other business. The annual meeting of the Board
may be held at any other time and place specified in a notice given as provided
in Section 3.11
15
<PAGE>
of the By-laws for special meetings of the Board or in a waiver of notice
thereof.
3.10 Regular Meetings. Regular meetings of the
----------------
Board may be held at such times and places as may be fixed from time to time by
the Board. Unless otherwise required by the Board, regular meetings of the Board
may be held without notice. If any day fixed for a regular meeting of the Board
shall be a Saturday or Sunday or a legal holiday at the place where such meeting
is to be held, then such meeting shall be held at the same hour at the same
place on the first business day thereafter which is not a Saturday, Sunday or
legal holiday.
3.11 Special Meetings. Special meetings of the Board whenever
----------------
called by the President or the Secretary or by any two or more directors. Notice
of each special meeting of the Board shall, if mailed, be addressed to each
director at the address designated by him for that purpose or, if none is
designated, at his last known address at least two days before the date on which
the meeting is to be held; or such notice shall be sent to each director at such
address by telegraph, cable or wireless, or be delivered to him personally, not
later than the day before the date on which such meeting is to be held. Every
such notice shall state the time and place of the meeting but
16
<PAGE>
need not state the purposes of the meeting, except to the extent required by
law. If mailed, each notice shall be deemed given when deposited, with postage
thereon prepaid, in a post office or official depository under the exclusive
care and custody of the United States post office department. Such mailing shall
be by first class mail.
3.12 Adjourned Meetings. A majority of the directors present
------------------
at any meeting of the Board, including an adjourned meeting, whether or not a
quorum is present, may adjourn such meeting to another time and place. Notice of
any adjourned meeting of the Board need not be given to any director whether or
not present at the time of the adjournment. Any business may be transacted at
any adjourned meeting that might have been transacted at the meeting as
originally called.
3.13 Waiver of Notice. Whenever notice is required to be given
----------------
to any director or member of a committee of directors under any provision of the
General Corporation Law or of the Certificate of Incorporation or By-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of
such meeting, except when the person attends a meeting for the express purpose
of objecting, at the beginning of the
17
<PAGE>
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 directors, or members of a committee
of directors, need be specified in any written waiver of notice.
3.14 Organization. At each meeting of the Board, the President of
------------
the Corporation, or in the absence of the President, a chairman chosen by the
majority of the directors present, shall preside. The Secretary shall act as
secretary at each meeting of the Board. In case the Secretary shall be absent
from any meeting of the Board, an Assistant Secretary shall perform the duties
of secretary at such meeting; and in the absence from any such meeting of the
Secretary and Assistant Secretaries, the person presiding at the meeting may
appoint any person to act as secretary of the meeting.
3.15 Quorum of Directors. One-third of the total number of
-------------------
directors shall constitute a quorum for the transaction of business or of any
specified item of business at any meeting of the Board.
3.16 Action by the Board. All corporate action taken by the Board
-------------------
or any committee thereof shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted to
be
18
<PAGE>
PAGE>
taken at any meeting of the Board, 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. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board, or
of 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, and participation in a meeting pursuant to this
Section 3.16 shall constitute presence in person at such meeting. Except as
otherwise provided by the Certificate of Incorporation or by law, the vote of a
majority of the directors present (including those who participate by means of
conference telephone or similar communications equipment) at the time of the
vote, if a quorum is present at such time, shall be the act of the Board.
ARTICLE 4
COMMITTEES OF THE BOARD
-----------------------
The Board may, by resolution passed by a majority Of the whole
Board, designate one or more committees, each
19
<PAGE>
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 a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board 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 all the powers and
authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-laws of the Corporation; and,
unless the resolution designating it expressly so provides, no such committee
shall have
20
<PAGE>
the power or authority to declare a dividend or to authorize the issuance of
stock.
ARTICLE 5
OFFICERS
--------
5.1 Officers. The Board shall elect a President, a Secretary and a
-------- --------- -----------------
Treasurer, and may elect or appoint one or more Vice Presidents and such other
- ---------- -----------------------------------------------------------
officers as it may determine. The Board may designate one or more Vice
- ----------------------------
Presidents as Executive Vice Presidents, and may use descriptive words or
phrases to designate the standing, seniority or area of special competence of
the Vice Presidents elected or appointed by it. Each officer shall hold his
office until his successor is elected and qualified or until his earlier death,
resignation or removal in the manner provided in Section 5.2 of the By-laws. Any
two or more offices may be held by the same person. The Board may require any
officer to give a bond or other security for the faithful performance of his
duties, in such amount and with such sureties as the Board may determine. All
officers as between themselves and the Corporation shall have such authority and
perform such duties in the management of the Corporation as may be provided in
the By-laws or as the Board may from time to time determine.
21
<PAGE>
5.2 Removal of Officers. Any officer elected or appointed
-------------------
by the Board may be removed by the Board 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.
5.3 Resignations. Any officer may resign at any time in writing by
------------
notifying the Board or the President or the Secretary. Such resignation shall
take effect at the date of receipt of such notice or at such later time as is
therein specified, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective. The resignation of an
officer shall be without prejudice to the contract rights of the Corporation, if
any.
5.4 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in the By-laws for
the regular election or appointment to such office.
5.5 Compensation. Salaries or other compensation of the officers
------------ ----------------------------------------------
may be fixed from time to time by the Board. No officer shall be prevented
- --------------------------------------------------------------------------
from receiving a salary or
- --------------------------
22
<PAGE>
other compensation by reason of the fact that he is also a director.
- -------------------------------------------------------------------
5.6 President. The President shall be the chief executive officer
---------
of the Corporation and shall have general supervision over the business of the
Corporation, subject, however, to the control of the Board and of any duly
authorized committee of directors. The President shall, if present, preside at
all meetings of the stockholders and at all meetings of the Board. He may, with
the Secretary or the Treasurer or an Assistant Secretary or an Assistant
Treasurer, sign certificates for shares of capital stock of the Corporation. He
may sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts and other instruments, except in cases where the signing and execution
thereof shall be expressly delegated by the Board or by the By-laws to some
other officer or agent of the Corporation, or shall be required by law otherwise
to be signed or executed; and, in general, he shall perform all duties incident
to the office of President and such other duties as from time to time may be
assigned to him by the Board.
5.7 Vice Presidents. At the request of the President, or, in
---------------
his absence, at the request of the Board,
23
<PAGE>
the Vice Presidents shall (in such order as may be designated by the Board or,
in the absence of any such designation, in order of seniority based on age)
perform all of the duties of the President and so acting shall have all the
powers of and be subject to all restrictions upon the President. Any Vice
President may also, with the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer, sign certificates for shares of capital
stock of the Corporation; may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts or other instruments authorized by the Board,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board or by the By-laws to some other officer or agent of the
Corporation, or shall be required by law otherwise to be signed or executed; and
shall perform such other duties as from time to time may be assigned to him by
the Board or by the President.
5.8 Secretary. The Secretary, if present, shall act as secretary of
---------
all meetings of the stockholders and of the Board, and shall keep the minutes
thereof in the proper book or books to be provided for that purpose; he shall
see that all notices required to be given by the Corporation are duly given and
served; he may, with the President or a Vice
24
<PAGE>
President, sign certificates for shares of capital stock of the Corporation; he
shall be custodian of the seal of the Corporation and may seal with the seal of
the Corporation, or a facsimile thereof, all certificates for shares of capital
stock of the Corporation and all documents the execution of which on behalf of
the Corporation under its corporate seal is authorized in accordance with the
provisions of the By-laws; he shall have charge of the stock ledger and also of
the other books, records and papers of the Corporation relating to its
organization and management as a Corporation, and shall see that the reports,
statements and other documents required by law are properly kept and filed;
and shall, in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board or by the President.
5.9 Treasurer. The Treasurer shall have charge and
---------
custody of, and be responsible for, all funds, securities and notes of the
Corporation; receive and give receipts for moneys due and payable to the
Corporation from any sources whatsoever; deposit all such moneys in the name of
the Corporation in such banks, trust companies or other depositaries as
shall be selected in accordance with these
25
<PAGE>
By-laws; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositaries of the Corporation signed in such manner
as shall be determined in accordance with any provisions of the By-laws, and be
responsible for the accuracy of the amounts of all moneys so disbursed;
regularly enter or cause to be entered in books to be kept by him or under his
direction full and adequate account of all moneys received or paid by him for
the account of the Corporation; have the right to require, from time to time,
reports or statements giving such information as he may desire with respect to
any and all financial transactions of the Corporation from the officers or
agents transacting the same; render to the President or the Board, whenever the
President or the Board, respectively, shall require him so to do, an account of
the financial condition of the Corporation and of all his transactions as
Treasurer; exhibit at all reasonable times his books of account and other
records to any of the directors upon application at the office of the
Corporation where such books and records are kept; and, 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 or by the President; and he may
sign with the
26
<PAGE>
President or a Vice President certificates for shares of capital stock of the
Corporation.
5.10 Assistant Secretaries and Assistant Treasurers. Assistant
----------------------------------------------
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board or by the President. Assistant Secretaries and Assistant Treasurers may,
with the President or a Vice President, sign certificates for shares of capital
stock of the Corporation.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
--------------------------------------------
6.1 Execution of Contracts. The Board may authorize any officer,
----------------------
employee or agent, in the name and on behalf of the Corporation, to enter into
any contract or execute and satisfy any instrument, and any such authority may
be general or confined to specific instances, or otherwise limited.
6.2 Loans. The President or any other officer, employee or agent
-----
authorized by the By-laws or by the Board may effect loans and advances at any
time for the Corporation from any bank, trust company or other institutions or
from any firm, corporation or individual and for such loans
27
<PAGE>
and advances may make, execute and deliver promissory notes, bonds or other
certificates or evidences of lndebtedness of the Corporation, and when
authorized by the Board so to do may pledge and hypothecate or transfer any
securities or other property of the Corporation as security for any such loans
or advances. Such authority conferred by the Board may be general or confined to
specific instances or otherwise limited.
6.3 Checks, Drafts, Etc. All checks, drafts and other orders for
--------------------
the payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.
6.4 Deposits. The funds of the Corporation not otherwise employed
--------
shall be deposited from time to time to the order of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be selected by an officer, employee or agent of the Corporation to whom such
power may from time to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
-------------------
7.1 Certificates Representing Shares. The shares
--------------------------------
28
<PAGE>
of capital stock of the Corporation shall be represented by certificates in such
form (consistent with the provisions of Section 158 of the General Corporation
Law) as shall be approved by the Board. Such certificates shall be signed by the
President or a Vice President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer, and may be sealed with the seal of the
Corporation or a facsimile thereof. The signatures of the officers upon a
certificate may be facsimiles, if the certificate is countersigned by a transfer
agent or registrar other than the Corporation itself or its employee. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon any certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may, unless otherwise ordered by the Board, 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.
7.2 Transfer of Shares. Transfers of shares of capital stock of the
------------------
Corporation shall be made only on the books of the Corporation by the holder
thereof or by his duly authorized attorney appointed by a power of at
29
<PAGE>
torney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation. A person in whose name shares of capital stock shall stand
on the books of the Corporation shall be deemed the owner thereof to receive
dividends, to vote as such owner and for all other purposes as respects the
Corporation. No transfer of shares of capital stock shall be valid as against
the Corporation, its stockholders and creditors for any purpose, except to
render the transferee liable for the debts of the Corporation to the extent
provided by law, until such transfer shall have been entered on the books of the
Corporation by an entry showing from and to whom transferred.
7.3 Transfer and Registry Agents. The Corporation may from time to
----------------------------
time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.
30
<PAGE>
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The
--------------------------------------------------
holder of any shares of capital stock of the Corporation shall immediately
notify the Corporation of any loss, destruction, theft or mutilation of the
certificate representing such shares, and the Corporation may issue a new
certificate to replace the certificate alleged to have been lost, destroyed,
stolen or mutilated. The Board may, in its discretion, as a condition to the
issue of any such new certificate, require the owner of the lost, destroyed,
stolen or mutilated certificate, or his legal representatives, to make proof
satisfactory to the Board of such loss, destruction, theft or mutilation and to
advertise such fact in such manner as the Board may require, and to give the
Corporation and its transfer agents and registrars, or such of them as the Board
may require, a bond in such form, in such sums and with such surety or
sureties as the Board may direct, to indemnify the Corporation and its transfer
agents and registrars against any claim that may be made against any of them on
account of the continued existence of any such certificate so alleged to have
been lost, destroyed, stolen or mutilated and against any expense in connection
with such claim.
31
<PAGE>
7.5 Regulations. The Board may make such rules and regulations as
-----------
it may deem expedient, not inconsistent with the By-laws or with the Certificate
of Incorporation, concerning the issue, transfer and registration of
certificates representing shares of its capital stock.
7.6 Restriction on Transfer of Stock. A written restriction on the
--------------------------------
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted conspicuously
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like responsibility for the person or estate of the
holder. Unless noted conspicuously on the certificate representing such capital
stock, a restriction, even though permitted by Section 202 of the General
Corporation Law shall be ineffective except against a person with actual
knowledge of the restriction. A restriction on the transfer or registration of
transfer of capital stock of the Corporation may be imposed either by the
Certificate of Incorporation or by an agreement among any number of stockholders
or among such stockholders and the Corporation. No restriction so imposed shall
be binding with
32
<PAGE>
respect to capital stock issued prior to the adoption of the restriction unless
the holders of such capital stock are parties to an agreement or voted in favor
of the restriction.
7.7 Dividends, Surplus, Etc. Subject to the provisions of the
------------------------
Certificate of Incorporation and of law, the Board:
7.7.1 May declare and pay dividends or make other distributions on
the outstanding shares of capital stock in such amounts and at such time or
times as, in its discretion, the condition of the affairs of the
Corporation shall render advisable;
7.7.2 May use and apply, in its discretion, any of the surplus of
the Corporation in purchasing or acquiring any shares of capital stock of
the Corporation, or purchase warrants therefor, in accordance with law, or
any of its bonds, debentures, notes, scrip or other securities or evidences
of indebtedness;
7.7.3 May set aside from time to time out of such surplus or net
profits such sum or sums as, in its discretion, it may think proper, as a
reserve fund to meet contingencies, or for equalizing dividends or for the
purpose of maintaining or increasing the
33
<PAGE>
property or business of the Corporation, or for any purpose it may
think conducive to the best interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
---------------
8.1 Indemnification of Officers and Directors. 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, by reason of the fact
that he is or was a director or an officer of the Corporation, 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 to the fullest extent and in the manner set forth in and permitted by
the General Corporation Law, and any other applicable law, as from time to time
in effect. Such right of indemnification shall not be deemed exclusive of any
other rights to which such director or officer may be entitled apart from the
foregoing provisions. The foregoing provisions of this Section 8.1 shall be
deemed to be a contract
34
<PAGE>
between the Corporation and each director and officer who serves in such
capacity at any time while this Article 8 and the relevant provisions of the
General Corporation Law and other applicable law, if any, are in effect, and any
repeal or modification thereof shall not affect any rights or obligations then
existing with respect to any state of facts then or theretofore existing or any
action, suit or proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts.
8.2 Indemnification of Other Persons. The Corporation may
--------------------------------
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he
is or was an employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the extent and
35
<PAGE>
in the manner set forth in and permitted by the General Corporation Law, and any
other applicable law, as from time to time in effect. Such right of
indemnification shall not be deemed exclusive of any other rights to which any
such person may be entitled apart from the foregoing provisions.
8.3 Insurance. The Corporation shall have power to purchase
---------
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation or a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of Sections
8.1 and 8.2 of the By-laws or under Section 145 of the General Corporation Law
or any other provision Of law.
ARTICLE 9
BOOKS AND RECORDS
-----------------
9.1 Books and Records. The Corporation shall keep correct and
-----------------
complete books and records of account and
36
<PAGE>
shall keep minutes of the proceedings of the stockholders, the Board and any
committee of the Board. The Corporation shall keep at the office designated in
the Certificate of Incorporation or at the office of the transfer agent or
registrar of the Corporation in Delaware, a record containing the names and
addresses of all stockholders, the number and class of shares held by each and
the dates when they respectively became the owners of record thereof.
9.2 Form of Records. Any records maintained by the Corporation in
---------------
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
written form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
9.3 Inspection of Books and Records. Except as otherwise provided
-------------------------------
by law, the Board shall determine from time to time whether, and, if allowed,
when and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
inspection of the stockholders.
37
<PAGE>
ARTICLE 10
SEAL
----
The Board may adopt a corporate seal which shall be ln the form of
a circle and shall bear the full name of the Corporation, the year of its
incorporation and the word "Delaware.
ARTICLE 11
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be determined, and may be
changed, by resolution of the Board.
ARTICLE 12
VOTING OF SHARES HELD
---------------------
Unless otherwise provided by resolution of the Board, the President
may, from time to time, appoint one or more attorneys or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as a stockholder or otherwise in
any other corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of stock or other securities of such
other corporation, or to consent in writing to any action by any such other
corpo-
38
<PAGE>
ration and may instruct the person or persons so appointed as to the manner of
casting such votes or giving such consent, and may execute or cause to be
executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or other instruments as he
may deem necessary or proper in the premises; or the President may himself
attend any meeting of the holders of the stock or other securities of any such
other corporation and thereat vote or exercise any or all other powers of the
Corporation as the holder of such stock or other securities of such other
corporation.
ARTICLE 13
AMENDMENTS
----------
The By-laws may be altered, amended, supplemented or repealed, or
new By-laws may be adopted, by vote of the holders of the shares entitled to
vote in the election of directors. The By-laws may be altered, amended,
supplemented, repealed, or new By-laws may be adopted, by the Board, provided
that the vote of a majority of the entire Board shall be required to change the
number of authorized directors. Any By-laws adopted, altered, amended, or
supplemented by the Board may be altered, amended, or supplemented or repealed
by the stockholders entitled to vote thereon.
39
<PAGE>
EXHIBIT 3.19
Fee: $50.00 ---------------------
(Minimum) F I L E D
AMENDED JUN 27 1996
CERTIFICATE OF INCORPORATION OKLAHOMA SECRETARY
FILE IN DUPLICATE (After Receipt of Payment of Stock) OF STATE
PRINT CLEARLY
SOS CORP. KEY: For Office Use Only
---------------------
- ----------------
PLEASE NOTE: This form MUST be filed with a letter from the Oklahoma Tax
----
Commission stating the franchise tax has been paid for the current fiscal year.
If the authorized capital is increased in excess of fifty thousand dollars
($50,000.00), the filing fee shall be an amount equal to one-tenth of one
percent (1/10 of 1%) of such increase.
TO THE SECRETARY OF STATE. OF THE STATE OF OKLAHOMA, 101 State Capitol Bldg.,
Oklahoma City, OK 73105:
The undersigned Oklahoma corporation, for the purpose of amending
its certificate of incorporation as provided by Section 1077 of the Oklahoma
General Corporation Act, hereby certifies:
1. A. The name of the corporation is: DACNET, INC.
-----------
B. As amended: The name of the corporation has been changed to:
CRIMESEARCH, INC.
-----------------
2. A. No change, as filed.______
B. As amended. The address of the registered office in the State of
Oklahoma and the name of the registered agent at such address is:
Howard G. Barnett, Jr.
---------------------
NAME
2407 East Skelly Drive, Tulsa, Tulsa County, Oklahoma 74105
---------------------------------------------------------------
STREET ADDRESS CITY COUNTY STATE ZIP CODE
3. A. No change, as filed X
---
B. As amended: The duration of the corporation is:____________
4. A. No change, as filed X
---
B. As amended: The purpose or purposes for which the corporation is
formed are:
5. A. No change, as filed X
---
B. As amended: The aggregate number of the authorized shares, itemized by
class, par value of shares, shares without par value, and series, if any,
within a class is:
NUMBER OF SHARES SERIES PAR VALUE PER SHARE
Common____________ ___________________
Preferred_________ ___________________
TOTAL NO. SHARES___________ TOTAL AUTHORIZED CAPITAL_______
<PAGE>
That at a meeting of the Board of Directors, a resolution was duly
adopted setting forth the foregoing proposed amendment(s) to the Certificate of
Incorporation of said corporation, declaring said amendment(s) to be advisable
and calling a meeting of the shareholders of said corporation for consideration
thereof.
That thereafter, pursuant to said resolution of its Board of
Directors, a meeting of the shareholders of said corporation was duly called and
held, at which meeting the necessary number of shares as required by statute
were voted in favor of the amendment(s).
SUCH AMENDMENT(S) WAS DULY ADOPTED IN ACCORDANCE WITH 18 O.S.
SS.1077.
IN WITNESS WHEREOF, said corporation has caused this certificate
to be signed by its President and attested by its Secretary, this 21st day of
June, 1996.
/s/ Richard A. Wimbish
---------------------------------
Richard A. Wimbish, President
ATTEST:
/s/ Barbara Reid
- --------------------------
Barbara Reid, Secretary
-2-
<PAGE>
FILED
AUG 10 1989
CERTIFICATE OF INCORPORATION
OF
DACNET, INC. OKLAHOMA SECRETARY
OF STATE
FIRST: The name of the corporation is DACNET, Inc.
SECOND: The address of the corporation's registered office in the
State of Oklahoma is 4110 South 100th E. Avenue, Suite 200, Tulsa, Oklahoma
74146. The name of the corporation's registered agent at such address is Charles
R. Dees.
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 Oklahoma.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is 50,000, each of the shares having a par value
of $1.00 thereby resulting in the corporation having total authorized capital
stock in the amount of $50.000 all of which shall be Common Stock.
At any time and from time to time when authorized by resolution of
the Board of Directors and without any action by its shareholders, the
corporation may issue or sell any shares of its capital stock of any class or
series, whether out of the unissued shares thereof authorized by the Certificate
of Incorporation of the corporation as originally filed or by an amendment
thereof or out of shares of its capital stock acquired by it after the issue
thereof, and whether or not the shares thereof so issued or sold shall confer
upon the holders thereof the right to exchange or convert such shares for or
into other shares of capital stock of the corporation of any class or classes or
any series thereof. When similarly authorized, but without any action by its
shareholders, the corporation may issue or grant rights, warrants or options, in
bearer or registered or such other form as the Board of Directors may determine,
for the purchase of shares of the capital stock of any class or series of the
corporation within such period of time, or without limit as to time, to such
aggregate number of shares, and at such price per share, as the Board of
Directors may determine. Such rights, warrants or options may be issued or
granted separately or in connection with the issue of any bonds, debentures,
notes, obligations or other evidences of indebtedness or shares of the capital
stock of any class or series of the corporation and for such consideration and
on such terms and conditions as the Board of Directors in its sole discretion
may determine. In each case, the consideration to be received by the corporation
for any such shares so issued or sold shall be such as shall be fixed from time
to time by resolution of the Board of Directors.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
---- ---------------
Michael T. Bass 2000 Fourth National Bank Building
Tulsa, Oklahoma 74119
SIXTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized:
(a) To adopt, amend or repeal the Bylaws of the corporation.
<PAGE>
(b) To authorize and cause to be executed or granted mortgages,
security interests and liens upon the real and personal property of the
corporation.
(c) To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
(d) By a majority of the whole Board of Directors, to designate
one or more committees, each committee to consist of one (1) or more of the
directors of the corporation. The board may designate one (1) or more
directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. Any such committee,
to the extent provided in the resolution or in the Bylaws of the corporation,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
provided, however, the Bylaws may provide that in the absence or
disqualification of any member of 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.
(e) When and as authorized by the affirmative vote of the holders
of a majority of the stock issued and outstanding having voting power given
at a shareholders' meeting duly called upon such notice as is required by
law, or when authorized by the written consent of the holders of a majority
of the voting stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the corporation, including
its goodwill and its corporate franchises, upon such terms and conditions and
for such consideration, which may consist in whole or in part of money or
property including shares of stock in, and/or other securities of, any other
corporation or corporations, as its Board of Directors shall deem expedient
and for the best interests of the corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its shareholders or any class of them, any court of equitable
jurisdiction within the State of Oklahoma, on the application in a summary way
of this corporation or of any creditor or shareholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 1106 of Title 18 of the Oklahoma Statutes or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 1100 of Title 18 of the
Oklahoma Statutes, may order a meeting of the creditors or class of creditors,
and/or of the shareholders or class of shareholders of this corporation, as the
case may be, to be summoned in such manner as the court directs. If a majority
in number representing three-fourths (3/4ths) in value of the creditors or class
of creditors, and/or of the shareholders or class of shareholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the compromise or arrangement and the reorganization shall, if
sanctioned by the court to which the application has been made, be binding on
all the creditors or class of creditors and/or on all the shareholders
-2-
<PAGE>
or class of shareholders of this corporation, as the case may be, and also on
this corporation.
EIGHTH: Meetings of shareholders may be held within or without the
State of Oklahoma, as the Bylaws may provide. The books of the corporation may
be kept (subject to applicable law) inside or outside the State of Oklahoma at
such place or places as may be designated from time to time by the Board of
Directors or in the Bylaws of the corporation. Elections of directors need not
be by written ballot unless the Bylaws of the corporation shall so provide.
NINTH: To the extent permitted by law, no contract or transaction
between the corporation and one or more of its directors or officers, or between
the corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the directors or officers are present at or
participate in the meeting of the board or committee thereof which authorizes
the contract or transaction, or solely because the directors or officers or
their votes are counted for such purpose.
TENTH: The Board of Directors is expressly authorized to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative, other than an action by or in the
right of the corporation, by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement to the extent and in the manner permitted by the laws of the State
of Oklahoma.
ELEVENTH: No director shall be personally liable to the corporation
or its shareholders for monetary damages for breach of such director's fiduciary
duty as a director, provided that this provision shall not eliminate or limit
the liability of a director as follows:
(a) For any breach of the director's duty of loyalty to the
corporation or its shareholders; or
(b) For acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; or
(c) Any liability for the unlawful payment of dividends or an
unlawful stock redemption, in accordance with Section 1053 of Title 18 of the
Oklahoma Statutes; or
(d) Any transaction from which the director derived an improper
personal benefit.
TWELFTH: The corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by law, and all rights conferred upon the
shareholders herein are granted subject to this reservation.
-3-
<PAGE>
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the Oklahoma General
Corporation Act, makes this Certificate, hereby declaring and certifying that
this is the act and deed of the undersigned and that the facts herein stated are
true, as of this 8th day of August, 1989.
/s/ Michael T. Bass
------------------------
Michael T. Bass
<PAGE>
BYLAWS
OF
CRIMESEARCH, INC.
(Formerly DACNET, INC. Name changed on June 27, 1996.)
ARTICLE I
---------
OFFICES
Section 1. The registered office shall be in the City of Tulsa,
County of Tulsa, State of Oklahoma.
Section 2. The corporation may also have offices at such other
places both within and without the State of Oklahoma as the Board of
Directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
----------
MEETINGS OF SHAREHOLDERS
Section 1. Meetings of shareholders for any purposes may be held at such
time and place, within or without the State of Oklahoma, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of shareholders, commencing with the year
1997, shall be held each year at a time and place to be determined by the Board
of Directors, at which meeting they shall elect by a plurality vote by written
ballot a board of directors, and transact such other business as may be properly
brought before the meeting.
Section 3. Written notice of the annual meeting, stating the place, date
and hour of such meeting, shall be given to each shareholder entitled to vote
thereat not less than ten (10) days nor more than sixty (60) days before the
date of the meeting unless 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 (10) days before every meeting
of shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the election, either at a place within the city where the meeting is to be held
and which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held and the list shall be
<PAGE>
produced and kept at the time and place of the meeting during the whole time
thereof, and subject to the inspection of any shareholder who may be present.
Section 5. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by law 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 shareholders 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 of shareholders, stating
the place, date, hour and the purpose or purposes thereof, shall be given to
each shareholder entitled to vote thereat, not less than ten (10) days before
the date fixed for the meeting unless otherwise required by law.
Section 7. Business transacted at any special meeting of the
shareholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by law or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders entitled to
vote thereat, present in person or represented by proxy, shall have 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; provided, however,
that if the date of any adjourned meeting is more than thirty (30) days after
the date for which the meeting was originally noticed, or if a new record date
is fixed for the adjourned meeting, written notice of the place, date and hour
of the adjourned meeting shall be given in conformity herewith. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted at the meeting as originally notified.
Section 9. When a quorum is present at any meeting, the affirmative vote
of the holders of a majority of the shares of stock having voting power present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of law 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. Each shareholder shall at every meeting of the shareholders
be entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such shareholders, but no proxy shall be voted
or acted upon after three (3) years from its date unless the proxy provides for
a longer period, and, except where the transfer books of the corporation have
been closed or a date has been fixed as a record date for the determination of
its shareholders entitled to vote, no share of stock shall be voted on at any
election for directors
2
<PAGE>
which has been transferred on the books of the corporation within twenty (20)
days preceding such election of directors.
Section 11. Any action required to or which may be taken at any annual
or special meeting of the shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action 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 by the
shareholders without a meeting by less than unanimous written consent shall be
given to those shareholders who have not consented in writing.
ARTICLE III
----------
DIRECTORS
Section 1. The number of directors which shall constitute the whole
Board shall be not less than one (1) nor more than seven (7). As of June 27,
1996, the Board shall consist of two (2) directors. Thereafter, within the
limits above specified, the number of directors shall be determined by
resolution of the Board of Directors or by the shareholders at the annual or a
special meeting of the shareholders. Except for the election held by the
incorporator and except as provided in Section 2 and in Section 14 of this
Article II, the directors shall be elected at the annual meeting of
shareholders. Each director elected shall hold office until such director's
successor is elected and qualified, or until such director's earlier resignation
or removal. Directors need not be shareholders.
Section 2. Except as provided in Section 14 of this Article II,
vacancies and newly created directorships resulting from any increase in the
authorized numbers of directors by the directors may be filled by a majority of
the directors then in office, though less than a quorum, and any director so
chosen shall hold office until the next annual election and until such
director's successor is duly elected and shall qualify, unless such director
resigns or is removed.
Section 3. The business of the corporation shall be managed by its Board
of Directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these Bylaws directed or required to be exercised or done by
the shareholders.
Section 4. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Oklahoma.
Section 5. Regular meetings of the Board of Directors may be held at
such time and at such place as shall from time to time be determined by the
Board. Five (5) days' notice of all regular meetings shall be given, and such
notice shall state the place, date, hour and the business to be transacted at
and purpose of such meeting.
3
<PAGE>
Section 6. Special meetings of the Board may be called by the President
on three (3) days' notice to each director either personally or by mail or by
telegram. Special meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of two (2) directors unless the
corporation has at that time less than three (3) directors, in which latter
event the request of only one (1) director shall be required. Notice of any
special meeting shall state the place, date, hour and the business to be
transacted at and the purpose of such meeting.
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 law or by the Certificate of Incorporation. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 8. 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 (1) or more of the directors of the corporation, which, to the
extent provided in the resolution, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
corporation and may authorize the seal of the corporation to be affixed to all
papers which may require it. 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 9. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
Section 10. Members of the Board of Directors, or of any committee
thereof, may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment that enables all
persons participating in the meeting to hear each other. Such participation
shall constitute presence in person at such meeting.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if a written consent to such action 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.
Section 12. The directors may be paid their expenses, if any, of
attendance at such meeting of the Board of Directors and may be paid a fixed sum
for attendance at such meeting of the Board of Directors and/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.
4
<PAGE>
Section 13. The Board of Directors at any time may, by affirmative vote of
a majority of the members of the Board then in office, remove any officer
elected or appointed by the Board of Directors for cause or without cause.
Section 14. Any director may be removed, for cause or without cause, by
a majority vote of the shareholders entitled to vote for the election of such
director at any annual or special meeting of the shareholders. Upon such removal
of a director, the shareholders (and not the remaining directors) shall elect a
director to replace such removed director at the same shareholders' meeting at
which such removal took place or at a subsequent shareholders' meeting.
ARTICLE IV
----------
NOTICES
Section 1. Notices to directors and shareholders shall be in writing and
delivered personally or mailed to the directors or shareholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be deposited in the United
States mail, postage prepaid. Notice to directors may also be given by telegram.
Notice by telegram shall be deemed to be given when delivered to the sending
telegraph office.
Section 2. Whenever any notice is required to be given under the
provisions of law or of the Certificate of Incorporation or of these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice.
ARTICLE V
---------
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board
of Directors and shall, at a minimum, consist of a President and a Secretary.
The Board of Directors may also choose additional officers, including a Chairman
or Vice Chairman of the Board of Directors, one or more Vice Presidents who may
be classified by their specific function, a Secretary, a Treasurer and one or
more Assistant Secretaries and Assistant Treasurers. Two or more offices may be
held by the same person, except the offices of President and Secretary.
Section 2. The Board of Directors at its first meeting and after each
annual meeting of shareholders shall choose a President and a Secretary, and may
choose such other officers and agents as it shall deem necessary.
5
<PAGE>
Section 3. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 4. The officers of the corporation shall hold office until their
successors are chosen and qualify, until their earlier resignation or removal.
Any vacancy occurring in any office of the corporation shall be filled by the
Board of Directors.
Section 5. The Chairman, or, in the absence of the Chairman, a Vice
Chairman of the Board of Directors, if chosen, shall preside at all meetings of
the Board of Directors, and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 6. Unless the Chairman or Vice Chairman has been so designated
by the Board of Directors, the President shall be the chief executive officer of
the corporation, shall preside at all meetings of the shareholders and, unless a
Chairman or Vice Chairman of the Board has been chosen, at all meetings of the
Board of Directors, and shall have general and active management of the business
of the corporation and shall see that all orders and resolutions of the Board of
Directors, are carried into effect. The Board of Directors may allocate the
duties of President among the Chairman, Vice Chairman and the President, to the
extent any such other officers are elected.
Section 7. The President (and the Chairman or Vice Chairman, if elected)
shall be empowered to execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
Section 8. The Vice President, or if there shall be more than one, the
Vice Presidents in the order determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 9. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and the Board of Directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the shareholders and regular 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 the Secretary shall be.
Additionally, the Secretary shall have custody of the corporate seal of the
corporation, and the Secretary or an Assistant Secretary, shall have authority
to affix the same to any instrument requiring it, and when so affixed, it may be
attested by the Secretary's signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by
signature.
6
<PAGE>
Section 10. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the Board of Directors, shall,
in the absence or disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other duties and have such
other powers as the Board of Directors from time to time prescribe.
Section 11. The Treasurer, if one is chosen or, if not, the Secretary,
shall have the custody of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors.
Section 12. The Treasurer, if one is chosen or, if not, the Secretary,
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 transactions performed by the
Treasurer (or Secretary, as the case may be) and of the financial condition of
the corporation.
Section 13. The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board of Directors,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
ARTICLE VI
----------
CERTIFICATES OF STOCK, TRANSFERS OF STOCK
CLOSING OF TRANSFER BOOKS AND
REGISTERED SHAREHOLDERS
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 the shareholder in the corporation.
Section 2. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if the
person who signed the certificate was such officer, transfer agent or registrar
at the date of issue.
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
7
<PAGE>
lost or 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, advertise the same in such
manner as the corporation shall require and/or to give the corporation a bond in
such sum as the corporation may direct as indemnity against any claim that may
be made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
Section 4. Subject to transfer restrictions permitted by Section 1055
of Title 18 of the Oklahoma Statutes and to stop transfer orders directed in
good faith by the corporation to any transfer agent to prevent possible
violations of federal or state securities laws, rules or regulations, 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 5. The Board of Directors may fix a record date, which shall not
be more than sixty (60) nor less than ten (10) days before the date of any
meeting of shareholders, nor more than sixty (60) days prior to the time for the
other action hereinafter described, as of which there shall be determined the
shareholders who are entitled: to notice of or to vote at any meeting of
shareholders 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 with respect
to any change, conversion or exchange of stock or with respect to any other
lawful action.
Section 6. The corporation shall be entitled to treat the person in
whose name any share of stock is registered on the books of the corporation as
the owner thereof for all purposes and shall not be bound to recognize any
equitable or other claim or other interest in such shares in the part of any
other person, whether or not the corporation shall have express or other notice
thereof.
ARTICLE VII
-----------
GENERAL PROVISIONS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be declared
by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the corporation's
capital stock.
Section 2. There may be set apart out of any of the funds of the
corporation available for dividends such amounts as the Board of Directors deems
proper as a reserve or reserves for working capital, depreciation, losses in
value, or for any other proper corporate purpose, and the
8
<PAGE>
Board of Directors may increase, decrease or abolish any such reserve in the
manner in which it was created.
Section 3. The Board of Directors shall present at each annual meeting
and at any special meeting of the shareholders when called for by vote of the
shareholders, a full and clear statement of the business and condition of the
corporation.
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. The fiscal year of the corporation shall be as fixed by the
Board of Directors.
Section 6. The Board of Directors may provide a suitable seal,
containing the name of the corporation, which seal shall be in the custody of
the Secretary. If and when so directed by the Board of Directors or a committee
thereof, duplicates of the seal may be kept and used by the Treasurer or by the
Assistant Secretary or Assistant Treasurer. The seal may be used by causing it,
or a facsimile thereof, to be impressed or affixed or in any other manner
reproduced.
Section 7. The books of account and other records of the corporation
may be kept (subject to any provisions of Oklahoma law) at the principal place
of business and chief executive office of the corporation.
ARTICLE VIII
------------
INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS
To the extent and in the manner permitted by the laws of the State of
Oklahoma and specifically as is permitted under Section 1031 of Title 18 of the
Oklahoma Statutes, 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 such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement.
9
<PAGE>
ARTICLE IX
----------
AMENDMENTS
The Bylaws may be amended or repealed, or new bylaws may be adopted, by
the shareholders or by the Board of Directors at any regular meeting of the
shareholders or of the Board of Directors, or at any special meeting of the
shareholders or of the Board of Directors if notice of such amendment, repeal,
or adoption of new bylaws be contained in the notice of such special meeting.
APPROVED AND RATIFIED as of this 27th day of June, 1996, by the
undersigned, constituting all of the directors (whether one or more) of the
corporation.
/S/ HOWARD G. BARNETT, JR.
-------------------------------------
Howard G. Barnett, Jr.
/S/ ROBERT E. CRAINE, JR.
-------------------------------------
Robert E. Craine, Jr.
DIRECTORS
10
<PAGE>
Fee: $50.00 F I L E D
(Minimum) DEC 16 1996
AMENDED
CERTIFICATE OF INCORPORATION OKLAHOMA SECRETARY
FILE IN DUPLICATE (After Receipt OF Payment OF STOCK) OF STATE
PRINT CLEARLY
SOS CORP. KEY: For Office Use Only
- -----------------
PLEASE NOTE: This form MUST be filed with a letter from the Oklahoma Tax
----
Commission stating the franchise tax has been paid for the current fiscal year.
If the authorized capital is increased in excess of fifty thousand dollars
($50,000.00), the filing fee shall be an amount equal to one-tenth of one
percent (1/10 of 1%) of such increase.
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA, 101 State Capitol Bldg.,
Oklahoma City, OK 73105:
The undersigned Oklahoma corporation, for the purpose of amending its
certificate of incorporation as provided by Section 1077 of the Oklahoma General
Corporation Act, hereby certifies:
1. A. The name of the corporation is: TSF PACIFIC. INC.
---------------------------
B. As amended: The name of the corporation has been changed to: T/SF
----
EUROPE, INC.
------------
2. A. No change, as filed.
----
B. As amended. The address of the registered office in the State of
Oklahoma and the name of the registered agent at such address is:
<TABLE>
<S> <C>
Howard G. Barnett, Jr., 2407 East Skelly Drive, Tulsa, Tulsa County, Oklahoma 74105
--------------------------------------------------------------------------------------
NAME STREET ADDRESS CITY COUNTY STATE ZIP CODE
</TABLE>
3. A. No change, as filed X
---
B. As amended: The duration of the corporation is:
----------------
4. A. No change, as filed X
---
B. As amended: The purpose or purposes for which the corporation is
formed are:
5. A. No change, as filed X
---
B. As amended: The aggregate number of the authorized shares, itemized
by class, par value of shares, shares without par value, and series, if
any, within a class is:
NUMBER OF SHARES SERIES PAR VALUE PER SHARE
Common
----------- -------------------
Preferred
-------- -------------------
TOTAL No. SHARES TOTAL AUTHORIZED CAPITAL
------------- ------
RECEIVED
DEC 16 1996
OKLAHOMA SECRETARY
OF STATE
<PAGE>
That at a meeting of the Board of Directors, a resolution was duly adopted
setting forth the foregoing proposed amendment(s) to the Certificate of
Incorporation of said corporation, declaring said amendment(s) to be advisable
and calling a meeting of the shareholders of said corporation for consideration
thereof.
That thereafter, pursuant to said resolution of its Board of Directors, a
meeting of the shareholders of said corporation was duly called and held, at
which meeting the necessary number of shares as required by statute were voted
in favor of the amendment(s).
SUCH AMENDMENT(S) WAS DULY ADOPTED IN ACCORDANCE WITH 18 O.S. (S)1077.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by its President and attested by its Secretary, this 11th day of
December, 1996.
/s/Stuart P. Honeybone, President
------------------------------------
Stuart P. Honeybone, President
ATTEST:
- ---------------------------
J. Gary Mourton, Secretary
tsfe europe1
<PAGE>
ARTICLES OF INCORPORATION
OF
TSF PACIFIC, INC.
STATE OF OKLAHOMA )
) ss.
COUNTY OF TULSA )
TO: SECRETARY OF STATE OF THE STATE OF OKLAHOMA
We, the undersigned incorporators,
HOWARD G. BARNETT, JR. 2407 East Skelly Drive, Tulsa, OK 74105
J. GARY MOURTON 2407 East Skelly Drive, Tulsa, OK 74105
ROBERT E. OLTMAN 2407 East Skelly Drive, Tulsa, OK 74105
being persons legally competent to enter into contracts, for the purpose of
forming a corporation under "The Business Corporation Act" of the State of
Oklahoma, do hereby adopt the following Articles of Incorporation.
ARTICLE I
The name of this corporation is TSF PACIFIC, INC.
ARTICLE II
The address of its registered office in the State of Oklahoma is 2407
East Skelly Drive, Tulsa, Oklahoma 74105, and the name and address of its
registered agent is G. DOUGLAS FOX, 2407 East Skelly Drive, Tulsa, Oklahoma
74105.
ARTICLE III
The duration of the corporation is perpetual.
ARTICLE IV
The purposes for which this corporation is formed are:
To engage in all aspects of foreign trade, including production and
sale of product.
To acquire, hold and deal in any and all kinds of real or personal
property.
<PAGE>
To acquire, hold and deal in business interests of all types and kinds
and corporate securities of every nature, including its own stock.
To engage in any other lawful business or enterprises permitted under
the laws of the State of Oklahoma.
To do and perform any of the above functions or purposes, either as a
principal, broker, agent, partner, joint venturer, or independent contractor,
either alone or in conjunction with any other legal entity.
ARTICLE V
The aggregate number of shares which the corporation shall have
authority to allot is 100,000.
The designation of each class, the number of shares of each class, and
the par value of the shares of each class are as follows:
NUMBER OF
CLASS SHARES PAR VALUE TOTAL
----- --------- --------- -----
Common 100,000 $0.25 $25,000.00
ARTICLE VI
The amount of stated capital with which it will begin business is
$500.00 which has been fully paid in.
ARTICLE VII
The number and class of shares to be allotted by the corporation
before it shall begin business and the consideration to be received by the
corporation therefor are as follows:
CONSIDERATION
NUMBER OF ALLOCATED TO
CLASS SHARES CONSIDERATION STATED CAPITAL
----- --------- ------------- --------------
Common 2,000 $500.00 $500.00
ARTICLE VIII
The number of directors to be elected at the first meeting of the
shareholders is three (3).
2
<PAGE>
ARTICLE IX
No right to dissent, as set out in The Business Corporation Act of the
State of Oklahoma or subsequent amendment and supplements thereto, shall exist
in behalf of any stockholders of this corporation as to any specified corporate
action or as to all corporate action if such action be approved by the vote or
written consent of the holders of at least ninety percent (90%) of all
outstanding shares of the corporation.
ARTICLE X
Any director individually, or any firm of which any director is a
partner, or any corporation of which any director may be an officer, director,
employee or holder of any amount of its capital stock, may be a party to or may
be interested in any contract or transaction of the corporation and, in the
absence of actual fraud, no such contract or other transaction shall be hereby
affected, impeached or invalidated.
No director shall be liable to account to the corporation for any
profit realized by him from or through any such transaction or contract of the
corporation by reason of his interest in such transaction or contract, provided
that such contract or transaction shall be approved or ratified by the
affirmative vote of directors who are not so interested constituting a majority
of a quorum of directors present at a meeting of the Board of Directors of the
corporation having authority in the premises.
Directors interested in any contracts or transactions of the type
described in the foregoing paragraph may be counted when present at meetings of
the Board of Directors or any committee for the purpose of determining the
existence of a quorum to consider and vote upon any such contract or
transaction. Any director whose interest in any such contract or transaction
arises solely by reason of the fact that he is a stockholder, officer, director
or creditor of such other company shall not be deemed interested in such
contract or other transaction under any of the provisions of this Article X, nor
shall any such contract or transaction be voided, or voidable, nor shall any
such director be liable to account because of such interest.
No contract or other transaction between the corporation and any other
corporation or firm which provides for the purchase and sale of securities or
other property or for any other action upon terms not less favorable to the
corporation than those offered to others, shall in any case be void or voidable
because of the fact that the directors of the
3
<PAGE>
corporation, or any of them, are directors of such other corporation or partners
in such firm, nor shall any director be deemed interested in such contract or
other transactions under any of the provisions of this Article X, nor shall any
such directors be liable to account because of such interest.
ARTICLE XI
The corporation shall indemnify every director or officer, his heirs,
executors and administrators, against expenses reasonably incurred by him in
connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been a director or officer of the corporation,
or, at its request, of any other corporation of which it is a stockholder or
creditor and from which he is not entitled to be indemnified, except in relation
to matters as to which he shall be fully adjudged in such action, suit or
proceeding to be liable for negligence or misconduct; in the event of a
settlement, indemnification shall be provided only in connection with such
matters covered by the settlement as to which the corporation is advised by
counsel that the person to be indemnified did not commit such a breach of duty.
The foregoing right of indemnification shall not be exclusive of other rights to
which he may be entitled.
ARTICLE XII
The directors of this corporation shall have authority to adopt, alter
or repeal Bylaws for the corporation to the extent permitted by law, unless the
shareholders, by appropriate action, specifically limit this authority.
Dated this 24th day of July, 1986.
/s/HOWARD G. BARNETT
------------------------------------
HOWARD G. BARNETT, JR.
/s/J. GARY MOURTON
------------------------------------
J. GARY MOURTON
/s/ROBERT E. OLTMAN
------------------------------------
ROBERT E. OLTMAN
4
<PAGE>
STATE OF OKLAHOMA )
) ss.
COUNTY OF TULSA )
Before me, a Notary Public in and for said county and state, on this
24th day of July, 1986, personally appeared HOWARD G. BARNETT, JR., J. GARY
MOURTON and ROBERT E. OLTMAN, to me known to be the identical persons who
executed the foregoing Articles of Incorporation, and acknowledged to me that
they executed the same as their free and voluntary act and deed, for the uses
and purposes therein set forth.
/s/Linda F. Toon
--------------------------------
Notary Public
My commission expires:
/s/June 23, 1988
- ---------------------
5
<PAGE>
AFFIDAVIT AS TO PAID-IN CAPITAL
STATE OF OKLAHOMA )
) ss.
COUNTY OF TULSA )
HOWARD G. BARNETT, JR., J. GARY MOURTON and ROBERT E. OLTMAN of
lawful age, being first duly sworn, each for himself deposes and says that the
above-named affiants constitute all of the incorporators of TSF PACIFIC, INC., a
proposed corporation, and that the amount of stated capital with which said
corporation will begin business, as set out in its attached Articles of
Incorporation, has been fully paid in.
/s/ HOWARD G. BARNETT
------------------------------------
HOWARD G. BARNETT, JR.
/s/ J. GARY MOURTON
------------------------------------
J. GARY MOURTON
/s/ ROBERT E. OLTMAN
------------------------------------
ROBERT E. OLTMAN
Subscribed and sworn to before me this 24th day of July, 1986.
/s/ Linda F. Toon
--------------------------------
Notary Public
My commission expires:
June 23, 1988
- ---------------------
6
<PAGE>
BYLAWS
OF
TSF PACIFIC, INC.
ARTICLE I
This corporation shall be known as TSF PACIFIC, INC.
ARTICLE II
The principal place of business shall be at 2407 East Skelly Drive,
Tulsa, Oklahoma, and branch offices may be maintained at other places which the
Directors may determine from time to time.
ARTICLE III
Section 1. The control of this corporation shall be vested in a Board
of Directors, composed of not less than three (3) nor more than nine (9)
members.
Section 2. The Directors shall be elected by the stockholders and
shall serve one year or until their successors are elected.
Section 3. The Directors shall meet annually immediately after the
annual stockholders' meeting. At that time they shall elect officers for the
ensuing year and transact any other business that may concern the corporation to
be acted upon by them. Special meetings of Directors may be called at any time
by the President or Secretary upon the written request of any Director, and
notice thereof in writing must be mailed to each Director at least five (5) days
in advance of such meeting; provided, that the notices required under this
section may be waived by the written assent of all the Directors. Any Director,
by attendance at the meeting, shall be deemed to have waived notice thereof.
Section 4. Vacancies occurring during the year in any office or in the
Board of Directors may be filled by the Board and the Board can remove any
officer by a majority vote. Compensation of all the officers shall be fixed by
the Board of Directors.
Section 5. Directors, as such, may receive a salary for their
services, as determined by resolution of the Board, and a fixed sum for expenses
may be allowed for attendance at any regular or special meeting; nothing herein
contained shall be construed as precluding any Director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 6. The Directors shall have power to create, make and issue
mortgages, bonds, deeds of trust, trust
<PAGE>
agreements and negotiable or transferable instruments and securities, secured by
mortgage or otherwise, and can do every other act and thing necessary to effect
the same, including the delegation to the officers of the corporation of the
power to execute and issue such instruments.
Section 7. In addition to such express powers as are conferred hereby,
said Board may do all other acts as, in the usual course of events, shall be
deemed to be necessary or desirable for the best interest of the corporation and
not required to be exercised by the stockholders.
Section 8. A majority of the Directors present at any regular or
special meeting shall constitute a quorum.
Section 9. Any action which might be taken at a meeting of the Board
of Directors may be taken without a meeting if a record or memorandum thereof be
made, in writing, and signed by all of the members of the Board.
Section 10. The Board of Directors may, by resolution, provide for
such standing or special committees as it deems desirable, and discontinue the
same at pleasure. Each such committee shall have such powers and perform such
duties, not inconsistent with law, as may be assigned to it by the Board of
Directors. If provision be made for any such committee, the members thereof
shall be appointed by the Board of Directors and shall serve during the pleasure
of the Board of Directors. Vacancies in such committees shall be filled by the
Board of Directors.
Section 11. The Board of Directors may, by resolution adopted by a
majority of the entire Board, designate an Executive Committee composed of not
less than three (3) of the Directors. The Executive Committee shall have and may
exercise all of the powers of the Board of Directors in the management of the
business affairs of the corporation and may otherwise act in all respects as the
Board of Directors between meetings of the Board, except that, without specific
approval or direction from the Board of Directors, the Executive Committee may
not:
A. Approve the dissolution of the corporation, the merger or
consolidation of the corporation with another company or
companies, or the sale of substantially all of the assets of the
corporation.
B. Authorize the issuance, purchase or redemption of any capital
stock of the corporation.
C. Terminate the employment of any officer of the corporation or
change the title, duties or compensation of any officer.
2
<PAGE>
D. Approve any changes to any employment contract with any officer
of the corporation or any of its subsidiaries.
E. Approve an amendment to the Bylaws or Articles of Incorporation
of the corporation or any of its subsidiaries.
F. Make any expenditure or approve any action which will result in
the expenditure, as to any one matter, in excess of $100,000,
other than expenditures approved in or in conformity with any
operating or capital expenditure budget for the corporation (or
the affiliated group of which it is a part) approved by the Board
of Directors.
G. Notwithstanding F above, approve the acquisition of any parcel of
real property in connection with the real estate business of the
corporation or the affiliated group of which it is a part) in
excess of a purchase price to the interest of the corporation (or
the affiliated group of which it is a part) of in excess of
$1,000,000.
H. Approve any borrowings on behalf of the corporation other than
(i) purchase money mortgages for acquisitions of real estate
which are otherwise within the acquisition limits set in G above,
or (ii) as authorized by or in conformity with any operating or
capital expenditure budget approved by the Board of Directors.
I. Invest in any other business not presently being conducted by the
corporation or the affiliated group of which it is a part except
as specifically budgeted by the Board of Directors of the
corporation (or the affiliated group of which it is a part) and,
in any event, only to the extent that each such investment is
less than $200,000.
Section 12. Directors may be removed either for or without cause by a
vote of stockholders holding a majority in interest of the capital stock of this
corporation at a meeting called for such purpose, or by the unanimous consent of
the stockholders in lieu of a meeting. Meetings for this purpose may be called
by the President, or a majority of the Board of Directors, or by stockholders
owning not less than one-half of the outstanding stock of the corporation. Such
calls shall be addressed to the Secretary in writing; the Secretary must then
give notice of such meeting, the time, place, purpose and by whom called. In the
event of removal, such vacancy may be filled by election of the stockholders at
such meeting.
3
<PAGE>
ARTICLE IV
The annual meeting of the stockholders shall be held on a day and time
to be set each year by the Board of Directors. Meetings shall be held at the
principal place of business, except upon request in writing by the holders of a
majority of the outstanding stock, the Secretary may change the meeting place.
Written notice of meetings must be mailed to each stockholder by the Secretary
at least ten (10) days prior to such meeting. Notice of any meeting may be
waived in writing or by attendance at such meeting, but all stockholders must
waive notice to preclude the necessity of notice. All meetings a majority of the
subscribed shares of stock issued and outstanding must be represented in
writing. The stockholders shall determine the number of directors to be elected
and shall elect the Board of Directors at the annual meeting, and a majority of
the subscribed shares of stock shall be necessary to elect. Each holder of
voting stock shall be entitled to one vote for each share of stock standing in
his or her name on the books of the corporation on the record date for such
meeting. If, for any reason, Directors are not elected at the annual meeting,
they shall be elected at a special meeting called for that purpose, which
special meeting may be called at the request of any stockholder or Director.
Any action which might be taken at a meeting of the stockholders may
be taken without a meeting if a record or memorandum thereof be made in writing
and signed by all of the stockholders.
ARTICLE V
Section 1. The officers of the corporation shall be chosen by the
Directors and shall be: Chairman of the Board, President, one or more Vice
Presidents, Secretary and Treasurer, and such other officers (including
Executive Vice President and Assistant Secretaries and Assistant Treasurers) as
the Board may determine from time to time.
Section 2. The officers shall hold office until their successors are
chosen and qualify in their stead. Any officer or employees may be removed at
any time by the affirmative vote of a majority of the entire Board of Directors.
Section 3. The Chairman of the Board shall preside at all meetings of
the Board of Directors of the corporation and may preside at meetings of the
stockholders. He shall be an ex-officio member of all standing committees and
shall see that all orders and resolutions of the Board are carried into effect.
He shall, with powers concurrent with the President, have authority to execute
with the Secretary or an Assistant Secretary, certificates of shares of the
corporation and sign and execute in the name of the corporation authorized
deeds, mortgages, bonds, contracts or other instruments, except in
4
<PAGE>
cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the corporation.
Section 4. The President shall be the chief executive officer of the
corporation and shall have direct charge and supervision of the business of the
corporation. He may preside at meetings of the stockholders and at meetings of
the Board of Directors at which the Chairman of the Board is not present. He may
sign with the Secretary, or an Assistant Secretary, certificates of shares of
the corporation; he may sign and execute, in the name of the corporation, all
authorized deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the corporation; and, in general,
the President shall perform all duties incident to the office of a President of
a corporation and such other duties as, from time to time, may be assigned to
him by the Board of Directors.
Section 5. The Executive Vice President (if one is chosen and, if not,
the Vice President) in the absence or disability of the Chairman of the Board
and the President, shall preside over meetings of the stockholders and carry on
the other duties of the President. If there be more than one vice president, the
duties and authority of each shall be as determined by the Board of Directors.
If there is an Executive Vice President elected, he shall be the senior vice
president.
Section 6. The Secretary shall be present at all meetings of the
stockholders and Directors and shall take and keep full minutes thereof; shall
keep a stock book in which he shall enter all issuances and transfers of stock;
shall have charge of all records of the corporation, together with the seal and
charter, and he shall have authority to affix the seal; he shall give notice of
all meetings of stockholders and Directors as herein provided; and he shall
attest all certificates of stock, deeds, and contracts executed by the
corporation and shall have such other duties as may be determined by the
Directors. In the absence of the Secretary, an Assistant Secretary may perform
his duties.
Section 7. The Treasurer, who may be the Secretary as well, 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, and he shall perform such other duties as the Board
of Directors shall prescribe.
Section 8. At the annual stockholders' meeting, all officers shall
render reports of the business transacted by
5
<PAGE>
them, which reports shall be in writing if so requested by the Board of
Directors or by a majority of the stockholders.
ARTICLE VI
The certificates of stock of the corporation shall be numbered and
shall be entered in the books of the corporation as they are issued. They shall
exhibit the holder's name and number of shares and shall be signed by the
Chairman of the Board, President or Vice President and the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary.
ARTICLE VII
Transfers of stock shall be made on the books of the corporation only
by the persons named in the certificate or by an attorney, lawfully constituted
in writing, and upon surrender of the certificate therefor. The Board of
Directors may close the transfer books at their discretion for a period of not
exceeding sixty (60) days preceding any meeting, annual or special, of the
stockholders or preceding the day appointed for the payment of a dividend.
ARTICLE VIII
Any person claiming a certificate of stock to have been lost or
destroyed shall make an affidavit or affirmation of that fact and advertise the
same in such manner as the Board of Directors may require, and shall, as the
Directors so require, give the corporation a bond of indemnity in form and with
one or more sureties satisfactory to the Board, in at least double the value of
the stock represented by said certificate; whereupon, a new certificate will be
issued of the same tenor and for the same number of shares as the one alleged to
have been lost or destroyed.
ARTICLE IX
The fiscal year of the corporation shall be the calendar year, unless
otherwise determined by the Board of Directors.
ARTICLE X
Dividends upon the capital stock of the corporation, when earned, may
be declared by the Board of Directors at any regular or special meeting. Before
payment of any dividend or making any distribution of profits, there may be set
aside out of the surplus or net profits of the corporation such sums or sums as
the Directors from time to time, in their absolute discretion, think proper as
conducive to the best interests of the corporation.
6
<PAGE>
ARTICLE XI
The corporate seal shall be the usual and customary paper press seal
containing the words "Corporate Seal of TSF PACIFIC, INC., State of Oklahoma",
and said seal shall be in the care of the Secretary.
ARTICLE XII
These Bylaws may be altered, amended or repealed at any regular
meeting of the stockholders or at any special meeting of the stockholders
provided notice of the proposed alteration or repeal be contained in the notice
of such special meeting, by the affirmative vote of a majority of the stock
issued and outstanding or by the affirmative vote of a majority of the Board of
Directors at any annual or regular meeting of the Board or at any special
meeting of the Board if notice of the proposed alteration or repeal be contained
in the notice of such meeting; provided, however, that the Board of Directors
shall not adopt or alter any Bylaw fixing their number, qualifications,
classifications or term of office.
ACCEPTED this 31st day of July, 1986.
TRIBUNE/SWAB-FOX COMPANIES, INC.
By: /s/ Howard G. Barnett, Jr.
---------------------------
Stockholders
/s/ G. Douglas Fox
-------------------------------
G. Douglas Fox
/s/ Robert E. Craine, Jr.
-------------------------------
Robert E. Craine, Jr.
/s/ Howard G. Barnett, Jr.
-------------------------------
Howard G. Barnett, Jr.
7
<PAGE>
EXHIBIT 3.23
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF TSF INFORMATION SERVICES CORP.
TO: THE SECRETARY OF STATE OF OKLAHOMA
State Capitol Building
Oklahoma City, Oklahoma 73105
The undersigned Oklahoma corporation, for the purposes of amending its
Certificate of Incorporation as filed on December 1, 1986, as provided by
Section 1077 of the Oklahoma General Corporation Act, hereby certifies:
1. That the name of the corporation is:
TSF INFORMATION SERVICES CORP.
2. That the name of the corporation has been changed to:
TRANSPORTATION COMMUNICATIONS SERVICES, INC.
3. That all other provisions of Certificate of Incorporation not amended
hereby shall remain unchanged and in full force and effect.
4. That the Board of Directors, acting by unanimous written consent without
a meeting pursuant to Section 1027 of the Oklahoma General Corporation Act,
approved and adopted the foregoing amendment to the Certificate of Incorporation
of said corporation (the "Amendment"), declaring the Amendment to be advisable
and calling a meeting of the sole shareholder of said corporation for
consideration thereof.
5. That thereafter, pursuant to said resolution of the Board of Directors
of said corporation, the sole shareholder of said corporation, acting by written
consent without a meeting pursuant to to Section 1073 of the Oklahoma General
Corporation Act, approved and adopted the proposed Amendment.
SUCH AMENDMENT WAS DULY ADOPTED IN ACCORDANCE WITH 18 O.S. (S)(S)
1077.
IN WITNESS WHEREOF, said TSF Information Services Corp., has caused this
Amendment to be signed by its President and attested by its Secretary this __
day of February, 1994.
TSF INFORMATION SERVICES CORP.
ATTEST:
By: /s/ Barbara Reid By: /s/ Richard A. Wimbish
------------------------ ------------------------------
Barbara Reid, Secretary Richard A. Wimbish, President
<PAGE>
CERTIFICATE OF INCORPORATION
OF
TSF INFORMATION SERVICES CORP.
ARTICLE I
The name of this corporation is TSF Information Services Corp.
ARTICLE II
The address of its registered office in the State of Oklahoma is 2415 East
Skelly Drive, Suite 102, Tulsa, Oklahoma 74105, and the name and address of its
registered agent is ROBERT E. CRAINE, JR., 2415 East Skelly Drive, Suite 102,
Tulsa, Oklahoma 74105.
ARTICLE III
The duration of the corporation is perpetual.
ARTICLE IV
The purposes for which this corporation is formed are:
To collect, analyze, process, distribute and sell information of all kinds
in written, verbal and electronic forms, and to print, bind, publish, circulate,
distribute, buy, sell and deal in books, pamphlets, directories, newsletters,
circulars, posters, newspapers, magazines, literature, music, pictures,
tickets, cards, advertisements, letter and bill heads, envelopes, and legal,
commercial, and financial forms and blanks of every kind; to acquire, by
purchase or otherwise, turn to account, license the use of, assign, and deal
with copyrights and intellectual properties of every kind; and to carry on a
general printing, engraving, lithographing, electrotyping, and publishing
business in all the branches thereof.
To acquire, hold and deal in any and all kinds of real or personal
property.
To acquire, hold and deal in business interests of all types and kinds and
corporate securities of every nature, including its own stock.
To engage in any lawful act, activity, business or enterprise for which
corporations may be organized under the general corporation law of Oklahoma.
<PAGE>
To do and perform any of the above functions or purposes, either as a
principal, broker, agent, partner, joint venturer, or independent contractor,
either alone or in conjunction with any other legal entity.
ARTICLE V
The aggregate number of shares of stock which the corporation shall have
authority to issue is 50,000, all of which shall be Common Stock.
The designation of each class, the number of shares of each class, and the
par value of the shares of each class are as follows:
NUMBER OF
CLASS SHARES PAR VALUE TOTAL
----- -------- --------- ----------
Common 50,000 $1.00 $50,000.00
ARTICLE VI
Any director individually, or any firm of which any director is a partner,
or any corporation of which any director may be an officer, director, employee
or holder of any amount of its capital stock, may be a party to or may be
interested in any contract or transaction of the corporation and, in the absence
of actual fraud, no such contract or other transaction shall be hereby affected,
impeached or invalidated.
No director shall be liable to account to the corporation for any profit
realized by him from or through any such transaction or contract of the
corporation by reason of his interest in such transaction or contract, provided
that such contract or transaction shall be approved or ratified by the
affirmative vote of directors who are not so interested constituting a majority
of a quorum of directors present at a meeting of the Board of Directors of the
corporation having authority in the premises.
Directors interested in any contracts or transactions of the type described
in the foregoing paragraph may be counted when present at meetings of the Board
of Directors or any committee for the purpose of determining the existence of a
quorum to consider and vote upon any such contract or transaction. Any director
whose interest in any such contract or transaction arises solely by reason of
the fact that he is a stockholder, officer, director or creditor of such other
company shall not be deemed interested in such contract or other transaction
under any of the provisions of this Article VI, nor shall any such contract or
transaction be voided, or voidable, nor shall any such director be liable to
account because of such interest.
<PAGE>
No contract or other transaction between the corporation and any other
corporation or firm which provides for the purchase and sale of securities or
other property or for any other action upon terms not less favorable to the
corporation than those offered to others, shall in any case be void or voidable
because of the fact that the directors of the corporation, or any of them, are
directors of such other corporation or partners in such firm, nor shall any
director be deemed interested in such contract or other transactions under any
of the provisions of this Article VI, nor shall any such directors be liable to
account because of such interest.
ARTICLE VII
The corporation shall indemnify every director or officer, his heirs,
executors and administrators, against expenses reasonably incurred by him in
connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been a director or officer of the corporation,
or, at its request, of any other corporation of which it is a stockholder or
creditor and from which he is not entitled to be indemnified, except in relation
to matters as to which he shall be fully adjudged in such action, suit or
proceeding to be liable for negligence or misconduct; in the event of a
settlement, indemnification shall be provided only in connection with such
matters covered by the settlement as to which the corporation is advised by
counsel that the person to be indemnified did not commit such a breach of duty.
The foregoing right of indemnification shall not be exclusive of other rights to
which he may be entitled.
ARTICLE VIII
The directors of this corporation shall have authority to adopt, alter or
repeal Bylaws for the corporation to the extent permitted by law, unless the
shareholders, by appropriate action, specifically limit this authority.
ARTICLE IX
The name and mailing address of the incorporator is as follows:
Robert E. Craine, Jr., 2415 East Skelly Drive, Suite 102
Tulsa, Oklahoma 74105
<PAGE>
The undersigned, being the incorporator hereinbefore named, for the purpose
of forming a corporation pursuant to the Oklahoma General Corporation Act, makes
this Certificate, hereby declaring and certifying that this is the act and deed
of the undersigned and that the facts herein stated are true, as of this 26th
day of November, 1986.
/s/ Robert E. Craine, Jr.
-------------------------
ROBERT E. CRAINE, JR.
STATE OF OKLAHOMA )
) ss.
COUNTY OF TULSA )
Before me, a Notary Public, in and for said county and state, on this 26th
day of November, 1986, personally appeared ROBERT E. CRAINE, JR., to me known to
be the identical person who executed the foregoing Certificate of Incorporation,
and acknowledged to me that he executed the same as his free and voluntary act
and deed, for the uses and purposes therein set forth.
/s/
--------------------------------
Notary Public
My Commission Expires:
4-22-89
- ---------------------
<PAGE>
EXHIBIT 3.24
BYLAWS
OF
TRANSPORTATION COMMUNICATIONS
SERVICES, INC.
(Formerly TSF Information Services Corp. Name changed on February 16, 1994)
ARTICLE I
---------
OFFICES
SECTION 1. The registered office shall be in the City of Tulsa, County of
Tulsa, State of Oklahoma.
SECTION 2. The corporation may also have offices at such other places both
within and without the State of Oklahoma as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
----------
MEETINGS OF SHAREHOLDERS
SECTION 1. Meetings of shareholders for any purposes may be held at such
time and place, within or without the State of Oklahoma, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 2. Annual meetings of shareholders, commencing with the year 1987,
shall be held each year at a time and place to be determined by the Board of
Directors, at which meeting they shall elect by a plurality vote by written
ballot a board of directors, and transact such other business as may be properly
brought before the meeting.
SECTION 3. Written notice of the annual meeting, stating the place, date and
hour of such meeting, shall be given to each shareholder entitled to vote
thereat not less than ten (10) days nor more than sixty (60) days before the
date of the meeting unless 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 (10) days before every meeting of
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the election, either at a place within the city where the meeting is to be held
and which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held, and the list shall be
<PAGE>
produced and kept at the time and place of the meeting during the whole time
thereof, and subject to the inspection of any shareholder who may be present.
SECTION 5. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by law 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 shareholders 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 of shareholders, stating the
place, date, hour and the purpose or purposes thereof, shall be given to each
shareholder entitled to vote thereat, not less than ten (10) days before the
date fixed for the meeting unless otherwise required by law.
SECTION 7. Business transacted at any special meeting of the shareholders
shall be limited to the purposes stated in the notice.
SECTION 8. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by law or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders entitled to
vote thereat, present in person or represented by proxy, shall have 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; provided, however,
that if the date of any adjourned meeting is more than thirty (30) days after
the date for which the meeting was originally noticed, or if a new record date
is fixed for the adjourned meeting, written notice of the place, date and hour
of the adjourned meeting shall be given in conformity herewith. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted at the meeting as originally notified.
SECTION 9. When a quorum is present at any meeting, the affirmative vote of
the holders of a majority of the shares of stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of law 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. Each shareholder shall at every meeting of the shareholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such shareholders, but no proxy shall be voted or
acted upon after three (3) years from its date unless the proxy provides for a
longer period, and, except where the transfer books of the corporation have been
closed or a date has been fixed as a record date for the determination of its
shareholders entitled to vote, no share of stock shall be voted on at any
election for directors
2
<PAGE>
which has been transferred on the books of the corporation within twenty (20)
days preceding such election of directors.
SECTION 11. Any action required to or which may be taken at any annual or
special meeting of the shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action 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 by the
shareholders without a meeting by less than unanimous written consent shall be
given to those shareholders who have not consented in writing.
ARTICLE III
-----------
DIRECTORS
SECTION 1. The number of directors which shall constitute the whole Board
shall be not less than one (1) nor more than seven (7). As of December 1, 1986,
the Board shall consist of three (3) directors. Thereafter, within the limits
above specified, the number of directors shall be determined by resolution of
the Board of Directors or by the shareholders at the annual or a special meeting
of the shareholders. Except for the election held by the incorporator and except
as provided in Section 2 and in Section 14 of this Article II, the directors
shall be elected at the annual meeting of shareholders. Each director elected
shall hold office until such director's successor is elected and qualified, or
until such director's earlier resignation or removal. Directors need not be
shareholders.
SECTION 2. Except as provided in Section 14 of this Article II, vacancies
and newly created directorships resulting from any increase in the authorized
numbers of directors by the directors may be filled by a majority of the
directors then in office, though less than a quorum, and any director so chosen
shall hold office until the next annual election and until such director's
successor is duly elected and shall qualify, unless such director resigns or is
removed.
SECTION 3. The business of the corporation shall be managed by its Board of
Directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by law or by the Certificate of Incorporation
or by these Bylaws directed or required to be exercised or done by the
shareholders.
SECTION 4. The Board of Directors of the corporation may hold meetings, both
regular and special, either within or without the State of Oklahoma.
SECTION 5. Regular meetings of the Board of Directors may be held at such
time and at such place as shall from time to time be determined by the Board.
Five (5) days' notice of all regular meetings shall be given, and such notice
shall state the place, date, hour and the business to be transacted at and
purpose of such meeting.
3
<PAGE>
SECTION 6. Special meetings of the Board may be called by the President on
three (3) days' notice to each director either personally or by mail or by
telegram. Special meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of two (2) directors unless the
corporation has at that time less than three (3) directors, in which latter
event the request of only one (1) director shall be required. Notice of any
special meeting shall state the place, date, hour and the business to be
transacted at and the purpose of such meeting.
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 law or by the Certificate of Incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
SECTION 8. 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 (1) or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. 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 9. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
Section 10. Members of the Board of Directors, or of any committee thereof,
may participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment that enables all persons
participating in the meeting to hear each other. Such participation shall
constitute presence in person at such meeting.
SECTION 11. Unless otherwise restricted by the Certificate of Incorporation
or these Bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if a written consent to such action 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.
SECTION 12. The directors may be paid their expenses, if any, of attendance
at such meeting of the Board of Directors and may be paid a fixed sum for
attendance at such meeting of the Board of Directors and/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.
4
<PAGE>
SECTION 13. The Board of Directors at any time may, by affirmative vote of a
majority of the members of the Board then in office, remove any officer elected
or appointed by the Board of Directors for cause or without cause.
SECTION 14. Any director may be removed, for cause or without cause, by a
majority vote of the shareholders entitled to vote for the election of such
director at any annual or special meeting of the shareholders. Upon such removal
of a director, the shareholders (and not the remaining directors) shall elect a
director to replace such removed director at the same shareholders' meeting at
which such removal took place or at a subsequent shareholders' meeting.
ARTICLE IV
----------
NOTICES
SECTION 1. Notices to directors and shareholders shall be in writing and
delivered personally or mailed to the directors or shareholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be deposited in the United
States mail, postage prepaid. Notice to directors may also be given by telegram.
Notice by telegram shall be deemed to be given when delivered to the sending
telegraph office.
SECTION 2. Whenever any notice is required to be given under the provisions
of law or of the Certificate of Incorporation or of these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice.
ARTICLE V
---------
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the Board of
Directors and shall, at a minimum, consist of a President and a Secretary. The
Board of Directors may also choose additional officers, including a Chairman or
Vice Chairman of the Board of Directors, one or more Vice Presidents who may be
classified by their specific function, a Secretary, a Treasurer and one or more
Assistant Secretaries and Assistant Treasurers. Two or more offices may be held
by the same person, except the offices of President and Secretary.
SECTION 2. The Board of Directors at its first meeting and after each annual
meeting of shareholders shall choose a President and a Secretary, and may choose
such other officers and agents as it shall deem necessary.
5
<PAGE>
SECTION 3. The salaries of all officers and agents of the corporation shall
be fixed by the Board of Directors.
SECTION 4. The officers of the corporation shall hold office until their
successors are chosen and qualify, until their earlier resignation or removal.
Any vacancy occurring in any office of the corporation shall be filled by the
Board of Directors.
SECTION 5. The Chairman, or, in the absence of the Chairman, a Vice Chairman
of the Board of Directors, if chosen, shall preside at all meetings of the Board
of Directors, and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
SECTION 6. Unless the Chairman or Vice Chairman has been so designated by
the Board of Directors, the President shall be the chief executive officer of
the corporation, shall preside at all meetings of the shareholders and, unless a
Chairman or Vice Chairman of the Board has been chosen, at all meetings of the
Board of Directors, and shall have general and active management of the business
of the corporation and shall see that all orders and resolutions of the Board of
Directors, are carried into effect. The Board of Directors may allocate the
duties of President among the Chairman, Vice Chairman and the President, to the
extent any such other officers are elected.
SECTION 7. The President (and the Chairman or Vice Chairman, if elected)
shall be empowered to execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
SECTION 8. The Vice President, or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
SECTION 9. The Secretary shall attend all meetings of the Board of Directors
and all meetings of the shareholders and record all the proceedings of the
meetings of the corporation and the Board of Directors in a book to be kept for
that purpose and shall perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the shareholders and regular 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 the Secretary shall be.
Additionally, the Secretary shall have custody of the corporate seal of the
corporation, and the Secretary or an Assistant Secretary, shall have authority
to affix the same to any instrument requiring it, and when so affixed, it may be
attested by the Secretary's signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by
signature.
6
<PAGE>
Section 10. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the Board of Directors, shall,
in the absence or disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other duties and have such
other powers as the Board of Directors from time to time prescribe.
SECTION 11. The Treasurer, if one is chosen or, if not, the Secretary, shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors
SECTION 12. The Treasurer, if one is chosen or, if not, the Secretary, 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 transactions performed by the
Treasurer (or Secretary, as the case may be) and of the financial condition of
the corporation.
SECTION 13. The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors, shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
ARTICLE VI
----------
CERTIFICATES OF STOCK, TRANSFERS OF STOCK
CLOSING OF TRANSFER BOOKS AND
REGISTERED SHAREHOLDERS
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 the shareholder in the corporation.
SECTION 2. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if the
person who signed the certificate was such officer, transfer agent or registrar
at the date of issue.
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
7
<PAGE>
lost or 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, advertise the same in such
manner as the corporation shall require and/or to give the corporation a bond in
such sum as the corporation may direct as indemnity against any claim that may
be made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
SECTION 4. Subject to transfer restrictions permitted by Section 1055 of
Title 18 of the Oklahoma Statutes and to stop transfer orders directed in good
faith by the corporation to any transfer agent to prevent possible violations of
federal or state securities laws, rules or regulations, 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 5. The Board of Directors may fix a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of any meeting
of shareholders, nor more than sixty (60) days prior to the time for the other
action hereinafter described, as of which there shall be determined the
shareholders who are entitled: to notice of or to vote at any meeting of
shareholders 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 with respect
to any change, conversion or exchange of stock or with respect to any other
lawful action.
SECTION 6. The corporation shall be entitled to treat the person in whose
name any share of stock is registered on the books of the corporation as the
owner thereof for all purposes and shall not be bound to recognize any equitable
or other claim or other interest in such shares in the part of any other person,
whether or not the corporation shall have express or other notice thereof
ARTICLE VII
-----------
GENERAL PROVISIONS
SECTION 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the corporation's
capital stock.
Section 2. There may be set apart out of any of the funds of the corporation
available for dividends such amounts as the Board of Directors deems proper as a
reserve or reserves for working capital, depreciation, losses in value, or for
any other proper corporate purpose, and the
8
<PAGE>
Board of Directors may increase, decrease or abolish any such reserve in the
manner in which it was created.
SECTION 3. The Board of Directors shall present at each annual meeting and
at any special meeting of the shareholders when called for by vote of the
shareholders, a full and clear statement of the business and condition of the
corporation.
SECTION 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
SECTION 5. The fiscal year of the corporation shall be as fixed by the Board
of Directors.
SECTION 6. The Board of Directors may provide a suitable seal, containing
the name of the corporation, which seal shall be in the custody of the
Secretary. If and when so directed by the Board of Directors or a committee
thereof, duplicates of the seal may be kept and used by the Treasurer or by the
Assistant Secretary or Assistant Treasurer. The seal may be used by causing it
or a facsimile thereof, to be impressed or affixed or in any other manner
reproduced.
SECTION 7. The books of account and other records of the corporation may be
kept (subject to any provisions of Oklahoma law) at the principal place of
business and chief executive office of the corporation.
ARTICLE VIII
------------
INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS
To the extent and in the manner permitted by the laws of the State of
Oklahoma and specifically as is permitted under Section 1031 of Title 18 of the
Oklahoma Statutes, 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 such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement.
9
<PAGE>
ARTICLE IX
----------
AMENDMENTS
The Bylaws may be amended or repealed, or new bylaws may be adopted, by the
shareholders or by the Board of Directors at any regular meeting of the
shareholders or of the Board of Directors, or at any special meeting of the
shareholders or of the Board of Directors if notice of such amendment, repeal,
or adoption of new bylaws be contained in the notice of such special meeting.
APPROVED AND RATIFIED as of this 1st day of December, 1986, by the
undersigned, constituting all of the directors (whether one or more) of the
corporation.
/s/ Howard G. Barnett, Jr.
---------------------------
Howard G. Barnett, Jr.
/s/ Robert E. Craine, Jr.
---------------------------
Robert E. Craine, Jr.
/s/ J. Gary Mourton
---------------------------
J. Gary Mourton
DIRECTORS
10
<PAGE>
CERTIFICATE OF INCORPORATION
OF
T/SF INVESTMENT CO.
ARTICLE I
The name of the Corporation is "T/SF INVESTMENT CO."
ARTICLE II
The location of the registered office of the Corporation in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle. The name of the registered agent at such address upon whom
process against this Corporation may be served is The Corporation Trust Company.
ARTICLE III
The nature of the business of the Corporation and the purposes for
which it is formed are as follows:
1. To purchase, own, and hold the stock, notes and securities of other
corporations, and to do every act and thing covered generally by the
denomination "holding corporation," and especially to direct the operations of
other corporations through the ownership of stock therein; to purchase,
subscribe for, acquire, own, hold, sell, exchange, assign, transfer, create
security interests in, pledge, or otherwise dispose of shares or voting trust
certificates for shares of the capital stock, or any bonds, notes, securities,
or evidences of indebtedness created by any other corporation or corporations
organized under the laws of this state or any other state or district or
country, nation, or government and also bonds or evidences of indebtedness of
the United States or of any state, district, territory, dependency or country or
subdivision or municipality thereof; to issue in exchange therefor shares of the
capital stock, bonds, notes, or other obligations of the Corporation and while
the owner thereof to exercise all the rights, powers, and privileges of
ownership including the right to vote on any shares of stock or voting trust
certificates so owned; to promote, lend money to, and guarantee the dividends,
stocks, bonds, notes, evidences of indebtedness, contracts, or other obligations
of, and otherwise aid in any manner which shall be lawful, any corporation or
association of which any bonds, stocks, voting trust certificates, or other
securities or evidences of indebtedness shall be held by or for this
Corporation, or in which, or in the welfare of which, this Corporation shall
have any interest, and to do any acts and things permitted by law and designed
to protect, preserve, improve, or enhance the value of
<PAGE>
any such bonds, stocks, or other securities or evidences of indebtedness or the
property of this Corporation;
2. To engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware;
3. To do any and all of the acts herein set forth or implied and such
other acts as are incidental or conducive to the attainment of the objects and
purposes of the Corporation; and to do any and all such acts either as principal
or in the capacity of agent, broker, factor, contractor, or otherwise;
4. To have one or more offices outside the State of Delaware and to the
same extent as natural persons might or could do to purchase or otherwise
acquire and to hold, own, maintain, sell, lease, exchange, hire, convey,
mortgage or otherwise dispose of, and deal in lands and leaseholds, and any
interest, estate and rights in real property and in personal or mixed property,
necessary, convenient or appropriate for any of the purposes and objects herein
expressed, either within or without the State of Delaware;
5. To engage in any lawful business, except banking, insurance, credit
unions, savings and loan associations, railroads and waterworks;
6. To do everything necessary, suitable or proper for the
accomplishment of any of the purposes, the attainment of any of the objects, or
the furtherance of any of the powers hereinbefore set forth, either alone or in
connection with other corporations, firms or individuals, and either as a
principal, broker, agent, partner, joint venturer, or independent contractor,
either alone or in conjunction with any other legal entity or person, and to do
every other act or thing incidental to, or growing out of or connected with the
aforesaid objects, purposes or powers or any of them, including power to borrow
money and mortgage the property of the Corporation as security for the payment
of such sums as may be borrowed, either within or without the State of Delaware;
and
7. The foregoing clauses shall be construed as objects, purposes and
powers, and it is hereby expressly provided that the foregoing enumerations of
specific powers shall not be held to limit or restrict in any manner the powers
of this Corporation.
ARTICLE IV
The authorized capital stock of the Corporation and the aggregate
number of shares which the Corporation shall have authority to issue shall be
3,000 shares of Common Stock with a par value of $0.10 per share ("Common
Stock"). The Common Stock shall have the designations, preferences, dividends,
voting
2
<PAGE>
powers or restrictions, qualifications, limitations and relative rights
hereinafter described.
A. Common Stock.
-------------
Except as otherwise expressly provided by law or in this Article IV, or
as determined by the Board of Directors of the Corporation, voting rights upon
any and all matters shall be vested in the holders of the Common Stock, each
share of such Common Stock having one vote on all matters. Each fractional
share, if any, of Common Stock shall be entitled to a corresponding fractional
vote. The Board of Directors of the Corporation, pursuant to the provisions
hereof, may declare and pay dividends, in their discretion, on the Common Stock
of the Corporation out of funds legally available for the payment of dividends.
Upon any voluntary or involuntary liquidation of the Corporation, as determined
by the Board of Directors of the Corporation pursuant to the provisions hereof,
the holders of shares of Common Stock shall be entitled to share in all
remaining assets of the Corporation. The Common Stock of the Corporation shall
not be redeemable without the consent of the holders of the shares to be
redeemed.
B. Pre-emptive Rights.
-------------------
No holder of shares of any class of stock of the Corporation shall be
entitled, as a matter of right, to subscribe for or purchase any part of any new
or additional issue of stock of any class whatsoever, or of obligations or other
securities convertible into, or exchangeable for, any stock of any class
whatsoever, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of dividend, stock split or other distribution.
ARTICLE V
The name and mailing address of the incorporators are as follows:
<TABLE>
<CAPTION>
Name Mailing Address
---- ----------------
<S> <C>
G. Douglas Fox......................... 2407 East Skelly Drive
Tulsa, OK 74105
Howard G. Barnett, Jr.................. 2407 East Skelly Drive
Tulsa, OK 74105
</TABLE>
ARTICLE VI
The Board of Directors may, from time to time, distribute to its
shareholders (i) out of capital surplus of the Corporation, a portion of its
assets, in cash or property; (ii) as dividends and out of the depletion
reserves, a portion of its assets in cash or property; (iii) as dividends,
authorized but
3
<PAGE>
unissued shares of the Corporation's stock out of unreserved and unrestricted
surplus subject to the limitations contained in the Delaware General Corporation
Law; and (iv) as dividends, the Corporation's shares out of any treasury shares
that have been reacquired out of surplus.
ARTICLE VII
The property and business of the Corporation shall be managed and
controlled by the Board of Directors. The number of Directors which shall
constitute the whole Board of Directors shall be such as from time to time shall
be fixed by or in the manner provided in the Bylaws but in no case shall the
number be less than three (3). Directors shall serve from' the date of their
election until the next Annual Meeting of Stockholders and until their
successors have been chosen and qualified or the number of directors reduced. In
furtherance of and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized:
(a) To make, alter, amend or repeal the Bylaws of the Corporation.
(b) To issue and sell all or any part of the shares of stock of any
class of the Corporation without further action by stockholders for such
consideration (but no less than the stated value thereof), and to such
persons on such terms and conditions as may, from time to time, be
determined.
(c) To authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation.
(d) To set apart out of any funds of the Corporation available for
dividends a reserve or reserves for any proper purposes and to abolish any
such reserve in the manner in which it was created.
(e) To borrow or raise money for any corporate purpose.
(f) To appoint an executive committee composed of two (2) or more
directors to have and exercise all of the authority of the Board as
permitted by law and the Bylaws.
A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors shall be filled by the stockholders at an
annual meeting or at a special meeting called for that purpose, unless the
vacancy was created by the stockholders at the previous annual meeting, in which
case such vacancy may be filled by the directors as in the case of any other
vacancy. No decrease in the
4
<PAGE>
number of directors shall have the effect of shortening the term of any
incumbent director.
ARTICLE VIII
All stock of the Corporation shall be non-assessable.
ARTICLE IX
The period of duration of the Corporation shall be perpetual.
ARTICLE X
To the extent permitted by law, 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 has a financial
interest, shall be void or voidable solely for this reason, or solely because
the Directors or officers are present at or participate in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because the directors or officers or their votes are
counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors
or the committee, and the board or committee in good faith authorizes the
contract or transaction by the affirmative vote of a majority of the
disinterested Directors, even though the disinterested Directors be less
than a quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
ARTICLE XI
The Corporation shall, to the fullest extent permitted by Section 145
of the Delaware General Corporation Law or the indemnification provisions of any
successor statute, indemnify every Director and officer and such person's heirs,
executors, administrators and personal representatives against all judgments,
penalties, fines, settlements and reasonable expenses actually incurred by the
person in connection with any threat-
5
<PAGE>
ened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnity to which any such person may
be entitled under any bylaw, agreement, vote of stockholders or disinterested
Directors or otherwise.
ARTICLE XII
No Director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of such director's fiduciary duty
as a director, provided that this provision shall not eliminate or limit the
liability of a Director as follows:
(a) For any breach of the Director's duty of loyalty to the Corporation
or its stockholders; or
(b) For acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; or
(c) Any liability for the unlawful payment of dividends or an unlawful
stock redemption, in accordance with Section 174 of the General Corporation
Law of the State of Delaware; or
(d) Any transaction from which the Director derived an improper
personal benefit.
The undersigned, being the incorporators hereinbefore named, for the
purpose of forming a corporation pursuant to the Delaware General Corporation
Law, make this Certificate hereby declaring and certifying that this is the act
and deed of the undersigned and that the facts herein stated are true as of this
31st day of August, 1990.
/s/ G. Douglas Fox
-------------------------
G. Douglas Fox
/s/ Howard G. Barnett, Jr.
-------------------------
Howard G. Barnett, Jr.
6
<PAGE>
BYLAWS
OF
T/SF INVESTMENT CO.
(a Delaware corporation)
ARTICLE I
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
Section 1. Place of Meetings. All meetings of the shareholders shall be held
----------------------------
at the principal office of the corporation or at such other place within or
without the State of Delaware as may be determined upon and set forth in the
respective notices, or waivers of notice thereof, or proxies to represent
shareholders thereat.
Section 2. Annual Meeting of Shareholders. The Annual Meeting of the
-----------------------------------------
shareholders of the corporation for the election of Directors and the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date and at such time as the Board of
Directors shall each year designate, which date shall be within thirteen
months subsequent to the date of the last annual meeting of the stockholders.
Such Annual Meeting shall be called in the same manner as herein provided in
respect of special meetings of the shareholders, except that the purposes of
such meeting need be enumerated in the notice and proxies of such meeting only
to the extent required by law in the case of Annual Meetings.
Section 3. Special Meetings of Shareholders. Special meetings of the
--------------------------------------------
shareholders may be called by the Board of Directors or as otherwise allowed by
law. Business transacted at all special meetings shall be confined to the object
stated in the call.
Section 4. Notice of Meeting of Shareholders. Written or printed notice
---------------------------------------------
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten (10) nor more than sixty (60) days before the date of
the meeting, by or at the direction of the Chairman, President, the Secretary or
the officer or person calling the meeting, to each shareholder of record
entitled to vote at such meeting. Each notice shall be deemed to be delivered
when deposited in the United States mail addressed to the shareholder at such
shareholder's address as it appears on the stock transfer books of the
corporation, with postage prepaid thereon.
Section 5. Quorum. The holders of a majority of the shares issued and
-------
outstanding, and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
law, by the Certificate of Incorporation or by these Bylaws (provided that in no
event shall a quorum consist of the holders of less than one-third (1/3) of the
shares entitled to vote and be thus represented at such meeting). If, however,
such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or by
proxy, shall have power to adjourn the meeting, until the holders of the
requisite amount of voting shares shall be present or represented. At such
adjourned meeting at which the requisite amount of voting shares shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The vote of the holders of a
majority of the shares entitled to vote and there represented at a meeting at
which a quorum is present shall be the act of the shareholders' meeting,
<PAGE>
unless the vote of a greater number is required by law, the Certificate of
Incorporation or by these Bylaws.
Section 6. Voting and Proxies. At each meeting of the shareholders, every
------------------------------
shareholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing subscribed by such shareholder and
bearing a date not more than eleven (11) months prior to said meeting unless
said instrument provides for a longer period. Each shareholder shall have one
vote for each share of stock having voting power registered in his name on the
books of the corporation.
Section 7. List of Shareholders Entitled to Vote. The Secretary shall make,
-------------------------------------------------
at least ten (10) days before each meeting of the shareholders, a complete list
of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each, which list, for a period of ten (10) days prior to such
meeting, shall be kept on file at the principal office of the corporation and
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to inspection of any shareholder
during the whole time of meeting. Provided, however, that failure to comply with
the requirements of this Bylaw shall not affect the validity of any action taken
at such meeting.
Section 8. Closing of Transfer Books. For the purpose of determining
-------------------------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books shall be closed for
a stated period, but not to exceed in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least ten (10) days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case not to be more than sixty (60) days nor less than ten (10) days prior
to the meeting. 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 Article, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of stock transfer books and the
stated period of closing has expired.
Section 9. Registered Shareholders. The corporation shall be entitled to
-----------------------------------
treat the holder of record of any share or shares of stock as the holder in fact
thereof for all purposes and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of Delaware.
Section 10. Actions of Shareholders. Any action which might be taken at
------------------------------------
a meeting of the shareholders may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the actions taken shall be signed by shareholders having not less than the
minimum number of votes necessary to
-2-
<PAGE>
authorize or take such action at a meeting at which all shares entitled to vote
were present, in accordance with the provisions of Delaware law.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number, Election, Qualification and Vacancies. The property and
---------------------------------------------------------
business of the corporation shall be managed by its Board of Directors. The
number of Directors to constitute the Board shall be not less than three (3) nor
more than fifteen (15), with the exact number to be elected each year to be
detemined by the Board prior to the mailing of the notice of the annual meeting
of shareholders, at any regular or special meeting of the Board. No decrease in
the number of Directors shall have the effect of shortening the term of any
incumbent Director.
A Director shall serve for one year from the date of the Annual Meeting
of shareholders at which he was elected and until his successor shall be elected
and qualified.
Any vacancy occurring or created in the Board of Directors may be filled by
the affirmative vote of a majority of the remaining Directors though less than a
quorum of the Board of Directors. A Director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any directorship to
be filled by reason of an increase in the number of Directors shall be filled by
election at an Annual Meeting or at a special meeting of the shareholders called
for that purpose, unless the vacancy was created by the shareholders, in which
case it may be filled by the Directors as in the case of any other vacancy.
Directors need not be residents of the State of Delaware.
Section 2. Powers of Board of Directors. In addition to the powers and
----------------------------------------
authorities by these Bylaws expressly conferred upon it, the Board may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the shareholders.
Section 3. Compensation of Directors. Directors, as such, may receive a
-------------------------------------
stated salary for their services, as determined by resolution of the Board; in
addition, a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board or committee
thereof; provided, however, that noting herein contained shall be construed to
preclude any Director from serving the corporation in any other capacity and
receiving compensation therefor.
Section 4. Place of Meetings. The Directors may hold their meetings and
-----------------------------
keep the books of the corporation at the office of the corporation in the city
of Tulsa, Oklahoma, or at other place or places either within or without the
State of Oklahoma as they may, from time to time, determine.
Section 5. First meeting of New Board of Directors. The first meeting of
--------------------------------------------------
each newly elected Board, for the purpose of organization or otherwise, may be
held at such time and place as shall be fixed by the vote of the shareholders at
the Annual Meeting, and no notice of such meeting to the newly elected Directors
shall be necessary in order to legally constitute the meeting, provided a
majority of the whole Board shall be present; or they may meet at such place and
time as shall be fixed by the consent in writing of all of the Directors.
-3-
<PAGE>
Section 6. Regular Meetings. Regular meetings of the Board may be held
----------------------------
without notice at such time and place as shall from time to time be determined
by the Board.
Section 7. Special Meetings and Notice. Special meetings of the Board may
---------------------------------------
be called by the Chairman or President by notice of the time and place of
meeting served personally upon each Director, or mailed, telegraphed or cabled
to his address upon the books of the corporation, at least forty-eight (48)
hours before the meeting; special meetings shall be called by the Chairman,
President or Secretary in like manner and on like notice on the written request
of a majority of the Directors. Each special meeting of the Board shall be held
at such a place as shall be specified in the notice of such meeting.
Section 8. Attendance and Waiver of Notice. 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 on the ground that 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 9. Quorum. At all meetings of the Board a majority of the Directors
------------------
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 statute or by the Articles of
Incorporation or by these Bylaws; provided, however, that whenever any meeting
of the Board of Directors shall be held outside of the United States of America,
no action taken at such meeting shall be effective unless concurred in by a
majority of the entire Board of Directors.
Section 10. Committees Appointed by Board of Directors. The Board of
-------------------------------------------------------
Directors may, by resolution, provide for such standing or special committee as
it deems desirable, and discontinue the same at pleasure. Each such committee
shall have such powers and perform such duties, not inconsistent with law, as
may be assigned to it by the Board of Directors. If provision be made for any
such committee, the members thereof shall be appointed by the Board of Directors
and shall serve during the pleasure of the Board of Directors. Vacancies in such
committees shall be filled by the Board of Directors.
Section 11. Directors' Statements. When requested to do so by the holders
----------------------------------
of at least one-third (1/3) of the outstanding shares of the corporation, the
Board of Directors shall present written reports of the financial condition and
the general condition of the corporation and may present such reports at such
other times as they deem advisable.
Section 12. Appointment of Executive Committee. The Board of Directors may,
-----------------------------------------------
by resolution adopted by a majority of the entire Board, designate an Executive
Committee composed of not less than three (3) of the Directors. The Executive
Committee shall have and may exercise all of the powers of the Board of
Directors in the management of the business affairs of the corporation and
may otherwise act in all respects as the Board of Directors between meetings of
the Board, except that, without specific approval or direction from the Board of
Directors, the Executive Committee may not:
(a) Approve the dissolution of the corporation, the merger or
consolidation of the corporation with another company or companies, or the
sale of substantially all of the assets of the corporation.
-4-
<PAGE>
(b) Authorize the issuance, purchase or redemption of any capital stock
of the corporation.
(c) Terminate the employment of any officer of the corporation or change
the title, duties or compensation of any officer.
(d) Approve any changes to any employment contract with any officer of
the corporation or any of its subsidiaries.
(e) Declare any dividends, other than dividends due with respect to
preferred stock of the corporation which has been issued pursuant to
approval of the Board of Directors.
(f) Approve an amendment to the Bylaws or Certificate of Incorporation
of the corporation or any of its subsidiaries.
(g) Make any expenditure or approve any action which will result in the
expenditure, as to any one matter, in excess of $100,000, other than
expenditures approved in or in conformity with any operating or capital
expenditure budget for the corporation approved by the Board of Directors.
(h) Approve any borrowings on behalf of the corporation other than (i)
purchase money mortgages for acquisitions of assets within the limits set in
(g) above, or (ii) as authorized by or in conformity with any operating or
capital expenditure budget approved by the Board of Directors.
(i) Invest in any other business not presently being conducted by the
corporation or its subsidiaries except as specifically budgeted by the Board
of Directors and, in any event, only to the extent that each such investment
is less than $200,000.
Section 13. Actions of Directors. Any action which might be taken at a
---------------------------------
meeting of the Board of Directors may be taken without a meeting if a record or
memorandum thereof be made, in writing, and signed by all of the members of the
Board.
ARTICLE III
OFFICERS
Section 1. Number, Qualification and Vacancies. The Board of Directors shall
-----------------------------------------------
appoint, as executive officers, a Chairman of the Board, a President, one or
more Vice Presidents, a Secretary and a Treasurer. The Chairman of the Board and
the President shall be chosen from among the Directors. The executive officers
shall be elected annually by the Board of Directors at its first meeting
following the Annual Meetings of shareholders, and each such officer shall hold
office until the corresponding meeting in the next year or until he shall have
resigned or shall have been removed in the manner provided in Section 11 of this
Article III. Any vacancy in any of the offices shall be filled for the unexpired
portion of the term by the Board of Directors at any regular or special meeting.
A resignation shall be deemed to take effect upon its receipt by the Secretary,
unless otherwise specified therein.
-5-
<PAGE>
Section 2. Chairman of the Board. The Chairman of the Board shall preside at
---------------------------------
all meetings of the Board of Directors of the corporation and may preside at
meetings of the shareholders. He shall be an ex-officio member of all standing
committees and shall see that all orders and resolutions of the Board are
carried into effect. He shall, with powers concurrent with the President, have
authority to execute, with the Secretary or an Assistant Secretary, certificates
of shares of the corporation and sign and execute in the name of the corporation
authorized deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the corporation.
Section 3. President. Either the Chairman or the President shall be
---------------------
designated as Chief Executive Officer of the corporation. The Chief Executive
Officer shall have direct charge and supervision of the business of the
corporation. If the President is not designated as the Chief Executive Officer,
he shall be designated as the Chief Operating Officer, in which case he shall
have the day-to-day responsibility for the operation of the corporation and,
generally, shall perform all duties incident to the office of a President of a
corporation and such other duties as, from time to time, may be assigned to him
by the Board of Directors. The President may preside at meetings of the
shareholders and at meetings of the Board of Directors at which the Chairman of
the Board is not present. He may sign with the Secretary or an Assistant
Secretary, certificates of shares of the corporation; he may sign and execute,
in the name of the corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, except in cases of which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the corporation.
Section 4. Vice President. If an Executive Vice President be elected, he
--------------------------
shall be the senior vice president of the Company and shall act as President in
the absence or incapacity of the President. The duties and authority of any
other vice presidents shall be as determined by the Board of Directors.
Section 5. Secretary. The Secretary shall keep the minutes of the meetings
---------------------
of the shareholders and of the Board of Directors in books provided for the
purpose, and shall see that all notices are duly given in accordance with the
provisions of these Bylaws, or as required by law; he or she shall be custodian
of the records and of the separate seal or seals of the corporation; he or she
shall see that the corporate seal is affixed to all documents, the execution of
which, on behalf of the corporation, under its seal, is duly authorized, and
when so affixed may attest the same; and, in general, he or she shall perform
all duties incident to the office of a Secretary of a corporation and such other
duties as, from time to time, may be assigned to him or her by the Board of
Directors. The Secretary may sign, with the Chairman, President or a Vice
President, certificates of stock of the corporation.
Section 6. Treasurer. The Treasurer shall have charge of and be responsible
---------------------
for all funds, securities, receipts and disbursements of the corporation and
shall deposit or cause to be deposited, in the name of the corporation all
monies or other valuable effects in such banks, trust companies or other
depositories as shall, from time to time, be selected by the Board of Directors;
he shall render to the Chairman, President and the Board of Directors whenever
requested an account of the financial condition of the corporation; and, in
general, shall perform all the duties incident to the office of a Treasurer of a
corporation, and such other duties as may be assigned to him by the Board of
Directors.
The Treasurer shall give the corporation a bond, if required by the Board of
Directors, in a sum and with one or more sureties satisfactory to the Board for
the faithful performance of the duties of his office, and for the restoration to
the
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<PAGE>
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 7. Assistant Officers. The Board of Directors may elect one or more
------------------------------
Assistant Secretaries and one or more Assistant Treasurers. Each Assistant
Secretary, if any, and each Assistant Treasurers if any, shall hold office for
such period as the Board of Directors may prescribe.
Any Assistant Secretary may, in the absence or the disability of the
Secretary, perform the duties and exercise the powers of the Secretary and any
Assistant Treasurer may, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer. Each of such officers shall
perform such other duties as the Board of Directors shall prescribe.
Section 8. Subordinate Officers. The Board of Directors may elect such
--------------------------------
subordinate officers as it may deem desirable. Each such officer shall
hold office for such period, have such authority and perform such duties as the
Board of Directors shall prescribe. The Board of Directors may, from time to
time, authorize any officer to appoint and remove subordinate officers and
prescribe the powers and duties thereof.
Section 9. Officers Holding Two (2) or More Offices. Any two or more
----------------------------------------------------
offices may be held by the same person except that the President and Secretary
shall not be the same person.
Section 10. Compensation of Officers. The Board of Directors shall have the
-------------------------------------
power to fix the compensation of all officers of the corporation. It may
authorize any officer upon whom the power of appointing subordinate officers may
have been conferred to fix the compensation of such subordinate officers.
Section 11. Removal of Officers. Any officer of the corporation may be
--------------------------------
removed, with or without cause, by a vote of a majority of the entire Board of
Directors at a meeting called for that purpose, or (except in case of an officer
elected by the Board of Directors) by an officer upon whom such power of removal
may have been conferred.
Section 12. Delegation of Duties. In case of the absence of any officer of
---------------------------------
the corporation or for any other reason that the Board may deem sufficient, the
Board may delegate, for the time being, the powers or duties, or any of them, of
such officer to another officer, or to any Director, provided a majority of the
entire Board concurs therein.
ARTICLE IV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification of Directors and officers shall be as provided for in the
corporation's Certificate of Incorporation.
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<PAGE>
ARTICLE V
CAPITAL STOCK
Section 1. Certificates of Shares. The certificates of shares of the
----------------------------------
corporation shall be numbered and shall be entered in the books of the
corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chairman, the President or a Vice President
and the Secretary or an Assistant Secretary, and may be sealed with the seal of
the corporation or a facsimile thereof. The designations, preferences and
relative participating options or other special rights of each class of shares
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 certificates which the corporation shall issue to represent such
class or series of shares.
The signatures of the Chairman, President or Vice President and the
Secretary or Assistant Secretary upon a certificate may be facsimiles, if the
certificate is countersigned by a transfer agent, or registered by a registrar
other than the corporation itself or an employee of the corporation. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be an officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issuance.
Section 2. Transfers of Certificates of Shares. Transfers of shares shall be
-----------------------------------------------
made on the books of the corporation only by the person named in the
certificate, or by attorney, lawfully constituted in writing and upon surrender
of the certificate therefor. The Board of Directors shall have power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue and registration of certificates of shares and may appoint
transfer agents and/or registrars thereof.
Section 3. 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 of that fact by the
person claiming the certificates of shares to be lost, and the Board of
Directors, when authorizing such issue of a new certificate or certificates, may
at its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost or destroyed certificate or certificates, or his legal
representatives, to advertise the same in such manner as it shall require and/or
give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Corporate Seal. The corporate seal shall be circular in form with
--------------------------
the name of the corporation appearing around the margin with the words
"Corporate Seal" in the center.
Said seal may be used by causing it, or a facsimile thereof, to be impressed
or affixed or reproduced or otherwise.
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<PAGE>
Section 2. Inspection of Books and Records by Shareholders. The Secretary
-----------------------------------------------------------
shall keep at the corporation's registered office or principal place of
business, or at the office of the corporation's transfer agent or registrar (if
there be such a transfer agent or registrar), a record of the corporation's
shareholders, the names and addresses of all shareholders and the number and
class of shares held by each. Any person who is a shareholder of record of the
corporation, upon written demand stating the purpose thereof, shall have the
right to examine in person or by agent or attorney, at any reasonable time or
times, for any proper purpose, its books and records of accounts, minutes, and
record of shareholder actions and shall be entitled to make extracts therefrom.
Section 3. Signature on Checks, Drafts and Notes. All checks, drafts, notes
------------------------------------------------
or other obligations of the corporation shall be signed by the following
officers, to-wit: Chairman, President or Vice President and Treasurer or any
Assistant Treasurer, or by any person or persons thereunto authorized by the
Board of Directors. Such signatures may be manual, or, if so authorized by the
Board of Directors, may be facsimile.
Section 4. Signatures on Endorsements, Assignments, Transfers and
-----------------------------------------------------------------
Securities. All endorsements, assignments, transfers, stock powers or other
- -----------
instruments of transfer of securities standing in the name of the corporation
shall be executed for and in the name of the corporation by the Chairman,
President or a Vice President and the Secretary or an Assistant Secretary, or by
any officers thereunder authorized by the Board of Directors.
Section 5. Signatures and Proxies of Stock Owned by Corporation. The
---------------------------------------------------------------
Chairman of the corporation, or in his absence or disability, the President of
the corporation, may authorize from time to time the signature and issuance of
proxies to vote upon shares of stock of other companies standing in the name of
the corporation; all such proxies shall be signed in the name of the corporation
by the President or Chairman and the Secretary or an Assistant Secretary.
Section 6. Fiscal Year. The fiscal year of the corporation shall and on the
------------
thirty-first (31st) day of December in each year, or on such other day as may be
fixed from time to time by the Board of Directors.
Section 7. Dividends. Dividends upon the capital stock of the corporation,
--------------------
subject to the provisions of the Certificate of Incorporation and applicable
provisions of law, may be declared by the Board of Directors at any regular or
special meeting. Dividends may be paid in cash, in property or in shares of the
capital stock.
Before payment of any dividend, there may be set aside out of any funds of
the corporation available for dividends such sum or sums as the Directors from
time to time, in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the Directors
shall think conducive to the interest of the corporation, and the Directors may
abolish any such reserve in the manner in which it was created.
Section 8. Notices. Whenever any notice is required to be given to any
-------------------
shareholder or Director under the provisions of these Bylaws, 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 equivalent to the giving of
such notice.
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<PAGE>
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. Procedure to Amend. These Bylaws may be altered or repealed or
------------------------------
new Bylaws may be made either by:
(a) The affirmative vote of the holders of record of a majority of the
outstanding shares of the corporation entitled to vote thereon, given at any
annual or special meeting of the shareholders, provided that notice of the
proposed alteration, repeal or the proposed new Bylaw or Bylaws be included
in the notice of such meeting or waiver thereof; or
(b) The affirmative vote of a majority of the members of the Board of
Directors given at any annual or regular meeting of the Board, or any
special meeting thereof, provided that notice of the proposed alteration,
repeal or the proposed new Bylaws or Bylaws be included in the notice of
such special meeting or waiver thereof, or all of the Directors at the time
in office be present at such special meeting; provided, however, that the
Board of Directors shall not adopt or alter any bylaw fixing their number,
qualifications, classifications or term of office.
-10-
<PAGE>
AMENDED ARTICLES OF INCORPORATION
OF
TRANSPORTATION INFORMATION SERVICES, INC.
STATE OF OKLAHOMA)
) ss.
COUNTY OF TULSA )
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
Transportation Information Services, Inc., a Corporation organized and
existing under the laws of the State of Oklahoma, hereby certifies as follows:
1. The name of the Corporation is Transportation Information Services,
Inc. The date of filing its original Articles of Incorporation with the
Secretary of State of the State of Oklahoma was November 12, 1982.
2. These Amended Articles of Incorporation incorporate the amendments in
the original Articles of Incorporation made by a Plan and Agreement of Merger
dated the 25th day of February, 1983 and these Articles of Incorporation only
restate and integrate said amendments into the original Articles of
Incorporation and do not further amend the provisions of the Articles of
Incorporation of this Corporation as heretofore amended or supplemented and
there is no discrepancy between those provisions and the provisions of these
Amended Articles of Incorporation.
3. These Amended Articles of Incorporation were duly adopted by the
shareholders in accordance with Section 167(5) of the Oklahoma Business
Corporation Act, 18 O.S. 1981, (S 1.167(5)).
4. The text of the Articles of Incorporation as amended or supplemented
heretofore are hereby restated without further amendments or changes to read as
herein set forth in full.
ARTICLE I
---------
The name of the corporation is:
-------------------------------
TRANSPORTATION INFORMATION SERVICES, INC.
ARTICLE II
----------
The address of its registered office in the State of Oklahoma is 2815 E.
Skelly Drive, Tulsa, Oklahoma 74105, and the name of its registered agent is
Charles R. Dees, at the same address.
<PAGE>
ARTICLE III
-----------
The duration of the corporation is perpetual.
ARTICLE IV
----------
The purpose or purposes for which the corporation is formed and the
business objects to be carried on and promoted by it are as follows:
To develop, operate and market systems to provide employment histories
to employers; to sell and collect fees from member employers for use of
the system(s); develop systems and programs for employment histories,
employment studies and other computerized information and data
processing services.
To acquire, own, hold, exchange and dispose of any property, real,
personal or mixed, being useful, necessary or convenient in connection
with the purposes of this corporation, and to sell for cash, property
and/or securities of any kind, or other things of value, any part or all
of the property or assets of this corporation at any time acquired,
owned or held by it, including the right to mortgage, pledge or
otherwise encumber any part or all of the assets of this corporation to
secure the payment of any of its obligations, but subject always to the
laws of the State of Oklahoma.
To enter into, make, perform, carry out and discharge contracts of any
and every kind, for any lawful purposes, without limit as to amount,
with any person, firm, association, partnership or corporation, either
public or private, And to guarantee the performance by other persons
or entities of contracts and other obligations of any and every kind.
To subscribe for or cause to be subscribed for, buy, own, hold,
purchase, receive and acquire, and to sell, negotiate, guarantee,
assign, deal in, exchange, transfer, mortgage, pledge or otherwise
dispose of shares of the capital stock, scrip, bonds, coupons,
mortgages, debentures, debenture stocks, securities, notes, acceptances,
drafts and evidences of indebtedness issued or created by other
corporations, joint stock companies, partnerships or associations,
whether public, private or municipal, or by any corporate body, and
while the owner thereof, to possess and exercise in respect thereto all
the rights, powers and privileges of ownership, including the right to
vote; and to do any and all acts or things designed to protect,
preserve, improve or enhance the value of any such shares, scrip, bonds,
coupons, mortgages, debentures, debenture stocks, securities, notes,
drafts, acceptances, bills of exchange or other evidences of
indebtedness.
-2-
<PAGE>
To buy, acquire in any manner, purchase, apply for or obtain any and all
letters patent, licenses, patent rights, trademarks, copyrights,
patented processes and similar rights granted by the United States or
any other sovereign or government or any interest therein or any
invention which may be capable of being used for or in connection with
any of the objects or purposes of this corporation, and any and all
franchises, and to use, exercise, develop, sell, lease, grant rights
in, and dispose of or grant rights with respect to any and all such
franchises, trademarks, patents and copyrights, and to carry on any
business, manufacturing or otherwise, which may be deemed to aid,
effectuate or develop, directly or indirectly, the general purposes of
the corporation, or any of them.
To issue shares of the capital stock of this corporation as authorized
for cash, labor performed, property either real or personal, or leases
thereof, or for any combination of the foregoing, or in exchange for the
stocks, debentures (including convertible debentures), debenture stocks,
bonds, securities, notes or obligations of any person, firm,
association, partnership, corporation or other organization.
To borrow money for any of the purposes of this corporation and to
issue bonds, debentures (including convertible debentures), debenture
stocks, notes and other obligations therefor, and to secure the same by
pledge or mortgage of the whole or any part of the property of this
corporation, either real or personal, whether at the time owned or
thereafter acquired, and/or to issue bonds, debentures, debenture
stocks, notes or other obligations without any such security.
To have one or more offices to carry on any authorized operations and
businesses, without restrictions or limits as to number, in any of the
states or territories of the United States or in any and all foreign
countries.
To do any and all things hereinabove set forth and, in addition, such
other acts and things as are necessary or convenient to the attainment
of the purposes of this corporation, to the same extent as natural
persons lawfully might or could do in any part of the world, insofar as
such acts or things are permitted to be done by corporations organized
under the general laws of the State of Oklahoma.
It is the intention that the objects and purposes specified in the
foregoing clauses of this Article IV shall not, unless otherwise specified
herein, be limited or restricted by any other clause or paragraph hereof, but
that the objects and purposes specified in each of said clauses shall be
regarded as independent objects and purposes. It is also the intention that said
clauses be construed both as purposes and powers; and generally that the
corporation shall be authorized to exercise and enjoy all other powers, rights
and privileges granted to or conferred upon corporations of this
-3-
<PAGE>
kind by the laws of the State of Oklahoma, and the enumeration of certain powers
as herein specified is not intended as exclusive of or as a waiver of any of the
powers, rights or privileges granted or conferred by the laws of the State of
Oklahoma now or hereafter in force.
ARTICLE V
---------
The aggregate number of shares which the corporation shall have authority
to issue is Two Hundred Forty Thousand (240,000) shares of Common Stock of the
par value of Ten Cents ($.10) per share.
There shall be no other class of stock of the corporation than the Common
Stock set out hereinabove.
ARTICLE VI
----------
The amount of the stated capital with which the corporation will begin
business is Five Hundred Dollars ($500.00), which has been fully paid in.
ARTICLE VII
-----------
The number and class of shares to be issued by the corporation before it
shall begin business will be Five Thousand (5,000) shares of Common Stock of the
par value of Ten Cents ($.10) per share, for which the corporation will receive
a consideration of Five Hundred Dollars ($500.00) cash.
ARTICLE VIII
------------
The number of directors to be elected at the first meeting of the
stockholders is three (3), who shall be and constitute the Board of Directors of
the corporation and serve as such until their successors are duly elected and
qualify, as provided in the by-laws of the corporation to be hereafter adopted.
The Board of Directors to be elected for future terms of office shall consist of
not less than three (3) nor more than ten (10) members, as may be provided by
the by-laws of the corporation. The Board of Directors shall be vested with
power and authority to accept or reject subscriptions for shares of the
corporation on such terms and conditions as may seem appropriate, except as
otherwise provided by law. The Board of Directors shall have authority to adopt
by-laws of the corporation, subject to the power of the stockholders to alter or
repeal such bylaws; provided, however, that the Board of Directors shall not
adopt or alter any by-law fixing the number, qualifications, classifications or
terms of office of Directors. The enumeration in this Article of certain powers
and authority expressly conferred on the Board of Directors of this corporation
shall not be construed as a restriction
-4-
<PAGE>
on or limitation of other powers, and the Board of Directors of this corporation
shall exercise all power and authority authorized to be exercised by boards of
directors of corporations organized under the Business Corporation Act of the
State of Oklahoma, in the absence of any restriction or limitation thereon in
the Articles of Incorporation, and any additional powers and authority which may
be reasonably necessary or convenient in connection therewith, in addition to
the powers expressly enumerated herein.
ARTICLE IX
----------
The corporation may, to the fullest extent allowed by Oklahoma law, provide
for the indemnification of any person against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement, incurred by him in any
threatened, pending or completed action, suit or proceeding (including appeals),
whether civil, criminal, administrative or investigative, if such action, suit
or proceeding arose by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or, if he 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. The
corporation may purchase and maintain insurance on behalf of any such person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against liability under the provisions
hereof.
ARTICLE X
---------
The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatsoever.
ARTICLE XI
----------
All voting powers shall be vested in the holders of the common stock of the
corporation except as may be otherwise herein specifically provided, and any
holder of common shares shall be entitled at each meeting of the stockholders
thereof to one vote for each common share outstanding in the name of such
stockholder on the books of the corporation.
ARTICLE XII
-----------
No right to dissent, as set out in the Business Corporation Act of the
State of Oklahoma or subsequent amendments and supplements thereto, shall exist
in behalf of any stockholders of this corporation as to any specified corporate
action or as to all corporate action, if such action be approved by the vote or
written
-5-
<PAGE>
consent of the holders of at least ninety per cent (90%) of all outstanding
shares of the corporation.
ARTICLE XIII
------------
The corporation reserves the right to amend, alter, change or repeal any
provisions contained in these Articles of Incorporation in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
DATED at Tulsa, Oklahoma, this 25th day of February, 1983.
TRANSPORTATION INFORMATION SERVICES, INC.
By /s/ Charles R. Dees
------------------------------
Charles R. Dees, President
[SEAL]
ATTEST:
/s/ Doris Marie Lockwood
-----------------------------
Secretary
STATE OF OKLAHOMA )
)ss.
COUNTY OF TULSA )
Before me, the undersigned, a Notary Public in and for said County and
State, on this 25th day of February, 1983, personally appeared Charles R. Dees
to me known to be the identical person who subscribed the name of the maker
thereof to the foregoing instrument as its President, and acknowledged to me
that he executed the same as his free and voluntary act and deed and as the free
and voluntary act and deed of such corporation, for the uses and purposes
therein set forth.
Given under my hand and seal of office the day and year last above written.
/s/ Barbara Bailey
-----------------------
Notary Public
My Commission Expires:
Jan. 5, 1986
- ------------
-6-
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
MERGER
CERTIFICATE OF INCORPORATION
To all to Whom these Presents shall Come, Greetings:
WHEREAS, Articles of Incorporation duly signed and verified of
TRANSPORTATION INFORMATION SERVICES, INC.
---------------------------------------------
have been filed in the office of the Secretary of State as provided by the Laws
of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma by virtue of the powers vested in me by law, do hereby issue this
Certificate of Incorporation.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
Filed at the City of Oklahoma City, this 22nd
day of March, A.D. 1983
----- --
/s/
______________________________
Secretary of State
By: /s/
__________________________
[SEAL]
-7-
<PAGE>
BYLAWS
OF
TRANSPORTATION INFORMATION
SERVICES, INC.
ARTICLE I
---------
Offices
Section 1. Principal Office.
----------------
The principal office of the corporation shall be located in the City of
Tulsa, County of Tulsa, State of Oklahoma. The corporation may have such other
offices, either within or without the State of Oklahoma, as the Board of
Directors may from time to time determine or as the business of the corporation
may from time to time require.
Section 2. Registered Office.
-----------------
The registered office of the corporation in the State of Oklahoma shall be
located in the City of Tulsa, County of Tulsa. The address of the registered
office may be, but need not be, identical with that of the principal office of
the corporation in the State of Oklahoma; and the address of the registered
office may be changed from time to time by the Board of Directors.
Section 3. Registered Agent.
----------------
The registered agent of the corporation in the State of Oklahoma shall
reside in the City of Tulsa, County of Tulsa. The address of the registered
agent shall be identical with that of the registered office of the corporation
in the State of Oklahoma; the identity and/or address of the registered agent
may be changed from time to time by the Board of Directors.
ARTICLE II
----------
Meetings of Shareholders
Section 1. Annual Meeting.
--------------
An annual meeting of the shareholders shall be held on the 15 day of October
in each year, beginning with the year 1982 at the hour of 10 o'clock a.m., for
the
<PAGE>
purpose of electing 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
Saturday, Sunday or legal holiday, such meeting shall be held on the next
succeeding business day. If for any reason the election of directors shall not
be held at the annual meeting, or at any adjournment thereof, or if for any
reason the annual meeting be not held, the Board of Directors shall cause a
special meeting of the shareholders to be held for that purpose as soon
thereafter as may be convenient.
Section 2. Special Meetings.
----------------
Special meetings of the shareholders, for any purpose or purposes
whatsoever, may be called by the President of the corporation, the Board of
Directors or the Executive Committee, and shall be called by the President at
the request of one or more shareholders holding not less than one-fourth of the
voting power of all the outstanding shares of the corporation entitled to vote
at the meeting.
Section 3. Place of Meeting.
----------------
Any annual, regular or special meeting of the shareholders of the
corporation may be held at any place, either within or without the State of
Oklahoma, if such place be designated in a written notice of the meeting sent to
all shareholders or in a waiver of notice signed by all shareholders entitled to
vote at a meeting. If no specific designation is made, the place of meeting
shall be the principal office of the corporation.
Section 4. Notice of Meeting.
-----------------
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten nor more than forty 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,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid. If any annual or special
meeting of the shareholders be adjourned to another time or place, no notice as
to such adjourned meeting need be given other than by announcement at the
meeting at which such adjournment is taken; provided, however, that in the event
such meeting be adjourned for thirty days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting. Notice of the
place, day, hour and purpose of any annual or special meeting of the
shareholders of the corporation may be
-2-
<PAGE>
waived in writing by any shareholder or by his attendance at such meeting. Such
waiver may be given before or after the meeting, and shall be filed with the
Secretary or entered upon the records of the meeting.
Section 5. Voting Lists.
------------
The officer or agent having charge of the stock transfer books for shares of
the corporation shall make, at least 48 hours before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of, and the number of shares held by, each, which list, for a period of
24 hours prior to such meeting, shall be kept on file at the principal office of
the corporation and shall be subject to inspection by any shareholder or person
representing shares at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting. Either such list, when certified by the officer or agent preparing the
same, or the original stock transfer books shall be prima facie evidence as to
who are the shareholders entitled to examine such list or transfer books or to
vote at any meeting of shareholders. Provided, however, it shall not be
necessary to prepare and produce a list of shareholders if the share ledger
reasonably shows in alphabetical order by classes of shares all persons entitled
to represent shares at such meeting with the number of shares entitled to be
voted by each shareholder.
Section 6. Quorum.
------
A majority of the outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than a majority of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 7. Proxy.
-----
At any meeting of the shareholders every shareholder having the right to
vote shall be entitled to vote in person or by proxy appointed by an instrument
in writing subscribed by such shareholder or by his duly authorized attorney and
filed
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<PAGE>
with the Secretary of the corporation at, or before, the meeting, but in no case
shall a proxy be appointed for a period in excess of seven years.
Section 8. Voting of Shares.
----------------
When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the shares entitled to vote, present in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which, by express provisions of the statutes or
of the articles of incorporation or of these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. Voting at any annual, regular or special
shareholders' meeting need not be by ballot unless demand therefor is made by a
shareholder, proxy or other person present at and entitled to vote at such
meeting. Each shareholder entitled to vote at any annual, regular or special
meeting shall have one vote, in person or by proxy, for each share of stock held
by him which has voting power upon the matter in question at the time, and every
fractional share of stock, if any, shall entitle its owner to the corresponding
fractional vote.
Section 9. Voting of Shares by Certain Holders.
-----------------------------------
Shares standing in the name of another corporation shall be voted by the
President of such corporation, or by proxy appointed by him, unless some other
person, by resolution of such other corporation's Board of Directors, shall be
appointed to vote such shares, in which case such person shall be entitled to
vote the shares upon the production of a certified copy of such resolution.
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 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
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<PAGE>
be entitled to vote the shares so transferred. Provided, however, that if the
instrument of transfer discloses the pledge, the transferor shall be entitled to
vote such pledged shares unless, in the instrument of transfer, the pledgor
shall have expressly empowered the pledgee to represent the shares. If the
pledgee is thus empowered, he or his proxy shall be exclusively entitled to
represent such shares. 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 the corporation in a fiduciary capacity may
be noted and shall be counted in determining the total number of outstanding
shares and the actual voting power of the shareholders at any given time.
Section 10. Inspectors of Election.
----------------------
In advance of any meeting of shareholders, the Board of Directors may
appoint inspectors of the election to act at such meeting or any adjournment
thereof. If the inspectors of the election be not so appointed, the Chairman of
any such meeting may, and on the request of any shareholder or his proxy shall,
make such appointment at the meeting. The number of such inspectors shall be one
or three. If appointed at a meeting on the request of one or more shareholders
or proxies, the majority of shares present and entitled to vote shall determine
whether one or three inspectors are to be appointed. An inspector need not be a
shareholder, but no person who is a candidate for an office of the corporation
shall act as an inspector.
In case any person appointed as inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the convening of the meeting, or at the meeting by the
person or officer acting as Chairman.
The inspectors shall first take and subscribe an oath or affirmation
faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of their ability.
The inspectors of the 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, the authenticity, validity and effect of proxies,
receive votes or ballots, take charge of the polls, hear and determine all
challenges and questions in any way arising in connection with the right to
vote, count and tabulate all votes, determine the result, and do such other
acts as may
-5-
<PAGE>
be proper to conduct the election or voting with fairness to all shareholders.
The inspectors of the election shall perform their duties impartially, in good
faith, to the best of their ability, and as expeditiously as is practical. If
there be three inspectors, the decision, act or certificate of a majority shall
be effective in all respects as the decision, act or certificate of all.
On request of the Chairman of the meeting, or of any shareholder or his
proxy, the inspectors shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein; provided, however, that any ruling by such
inspectors may, upon being disputed by any shareholder, proxy or other person,
present at and entitled to vote at such meeting, be appealed to the floor of the
shareholders' meeting.
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.
ARTICLE III
-----------
Directors
Section 1. Number, Tenure and Qualifications.
---------------------------------
The number of directors of the corporation shall be not less than three and
not more than ten, as determined by the vote of the shareholders at the annual
meeting, or at a special meeting called for such purpose. Directors need not be
residents of the State of Oklahoma or shareholders in the corporation. A
director to be qualified to take office shall be legally competent to enter into
contracts. Directors, other than the initial Board of Directors, shall be
elected at the annual meeting of the shareholders, and each director shall be
elected to serve until the next succeeding annual meeting and until his
successor shall have been elected and shall have qualified. The first Board of
Directors elected at the shareholders' organizational meeting following
incorporation shall hold office until the first annual meeting of shareholders
following such organizational meeting, and until their respective successors are
elected and have qualified.
-6-
<PAGE>
Section 2. Removal.
-------
The entire Board of Directors, or any individual director, may be removed
from office, with or without cause, by a vote of a majority of the outstanding
shares entitled to vote at any annual, regular or special meeting of the
shareholders.
Section 3. Vacancies.
---------
Any vacancy occurring in the Board of Directors by reason of death or
resignation may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors shall be filled by election at the annual, regular or special meeting
of shareholders which increased the number of directors. Any directorship or
directorships to be filled by reason of a removal by the shareholders shall be
filled by election at the annual, regular, or special meeting which voted the
removal.
Section 4. Compensation.
------------
By resolution of the Board of Directors, the directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors, and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor. Members of any committee appointed by the Board of Directors may be
allowed like compensation for attending committee meetings.
Section 5. General Powers.
--------------
The business and affairs of the corporation shall be managed and conducted
and all corporate powers shall be exercised by its Board of Directors, which may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the articles of incorporation or by these
bylaws directed or required to be exercised and done by the shareholders. The
Board of Directors shall elect all officers of the corporation and may impose
upon them such additional duties and give them such additional powers not
defined in these bylaws, and not inconsistent herewith, as they may determine.
-7-
<PAGE>
Section 6. Executive Committee.
-------------------
The Board of Directors, by resolution adopted by a majority of the entire
board, may designate two or more directors to constitute an Executive Committee,
which Committee, to the extent provided in such resolution, shall have and
exercise all of the authority of the Board in the management of the corporation;
but such Committee shall act only in the interval between meetings of the Board,
and shall be subject at all times to the control and direction of the Board. The
Board of Directors shall have the power at any time to fill vacancies in, to
change the membership of, or to dissolve such Committee. A majority of the
members of any such Committee may determine its action and fix the time and
place of its meetings unless the Board of Directors shall otherwise provide.
ARTICLE IV
----------
Meetings of the Board of Directors
Section 1. Regular Meetings.
----------------
A regular meeting of the Board of Directors shall be held without other
notice than this bylaw immediately after, and at the same place as, the annual
meeting of shareholders, or at such other time and place as shall be fixed by
the vote of the shareholders at the annual meeting, and no notice of such
meeting shall be necessary. The Board of Directors may provide, by resolution,
the time and place, either within or without the State of Oklahoma, for the
holding of additional regular meetings without other notice than such
resolution.
Section 2. Special Meeting
---------------
Special meetings of the Board of Directors may be called by or at the
request of the President or any two directors. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, either
within or without the State of Oklahoma, as the place for holding any special
meeting of the Board of Directors called by them. Meetings may be held at any
time and any place without notice, if all the directors are present or if those
not present waive notice of the meeting in writing.
Section 3. Notice.
------
Regular meetings of the Board of Directors may be held without notice of
---
such time and place, either within or without the State of Oklahoma, as shall
from time to time be determined by the Board of Directors. Notice of any special
meeting shall be given at least three days prior thereto by
-8-
<PAGE>
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 prepaid
thereon. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any director
may, in writing, waive notice of any meeting, either before or after such
meeting. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. 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, except as required by statute or specifically provided for herein.
Section 4. Quorum.
------
Two of the directors, or one-third of the entire number of directors,
whichever number is greater, shall be necessary to constitute a quorum for the
transaction of business, unless a greater number is required by the articles of
incorporation or by these bylaws. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is expressly required by
statute, the articles of incorporation or by these bylaws. If a quorum shall not
be present at any meeting of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 5. Action Without Meeting.
----------------------
Any action which might be taken at a meeting of the Board of Directors may
be taken without a meeting if a record or memorandum thereof be made in writing
and signed by all of the members of the Board.
Section 6. Presence at Meeting through Use of Telecommunications Equipment.
---------------------------------------------------------------
Members of the Board of Directors, or of the Executive Committee, if
designated by a majority of the Board of Directors, may participate in a meeting
of such Board or Committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting as provided herein
shall constitute presence in person at such meeting.
-9-
<PAGE>
ARTICLE V
---------
Officers
Section 1. Number.
------
The officers of the corporation shall be a President, a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors. The Board of
Directors may elect or appoint a Chairman of the Board, one or more Vice
Presidents, and any other officers, assistant officers and agents as it shall
deem necessary or desirable, who shall hold their offices for such terms and
shall have such authority and perform such duties as shall be determined from
time to time by the Board. Any two or more corporate offices, except those of
President and Vice President, or President and Secretary, may be held by the
same person; but no officer shall execute, acknowledge or verify any instrument
in more than one capacity if such instrument be required by law or by these
bylaws to be executed, acknowledged or verified by any two or more officers.
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 at such meeting, such election shall be
held as soon thereafter as conveniently may be. Additional officers and
assistant officers may be elected or appointed by the Board of Directors during
the year. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified, or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided.
Section 3. Qualifications.
--------------
To be qualified to take office, an officer shall be legally competent to
enter into contracts. Officers need not be residents of Oklahoma or of the
United States. officers need not be shareholders of the corporation, and only
the President need be a director of this corporation. The Treasurer may be a
corporation.
Section 4. Removal.
-------
Any officer or agent elected or appointed by the Board of Directors may be
removed at any time by the Board of Directors whenever in its judgment the best
interests of the corporation would be served.
-10-
<PAGE>
Section 5. Vacancies.
---------
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Board of Directors for the
unexpired portion of the term.
Section 6. Compensation.
------------
The compensation of all officers, assistant officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 7. President.
---------
The President shall be the principal executive officer of the corporation
and, subject to the control of the Board of Directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall, when present, preside at all meetings of the shareholders. He shall, when
present, preside at all meetings of the Board of Directors unless there be
elected a Chairman of the Board and the same is present at the meeting. He shall
be ex officio a member of any committee of directors. He shall have general and
active management of the business of the corporation, and shall see that all
orders and resolutions of the Board of Directors are carried into effect. He
shall have the power to execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the corporation. He shall vote any stock which may stand in the name of
the corporation on the books of any other company. He shall have power to
superintend any officers or heads of departments and to dismiss any of the
subordinate employees when he shall deem proper, and shall perform such other
duties and exercise such other powers as the Board of Directors may from time to
time prescribe.
Section 8. The Vice President.
------------------
In the absence of the President, or in the event of his death, or inability
or refusal to act, the Vice President (or in the event there be more than one
Vice President, the Vice Presidents in the order designated at the time of their
election, or in the absence of any designation, then in the order of their
election) 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
-11-
<PAGE>
be assigned to him by the President or by the Board of Directors.
Section 9. The Secretary.
-------------
The Secretary shall: (a) keep the minutes of the shareholders' meetings and
of 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 bylaws and as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation 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; (e) sign, with the President or a Vice
President, certificates for shares of the corporation, the allotment 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; (g) 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.
Section 10. 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 the name
of the corporation in such banks, trust companies or other depositories as shall
be selected; and (b) in general, perform all the duties as from time to time may
be assigned to him by the President or by the Board of Directors.
Section 11. Assistant Secretaries and Assistant Treasurers.
----------------------------------------------
The Assistant Secretaries shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary, and may
sign with the President or a Vice President, certificates for shares of the
corporation, the allotment of which shall have been authorized by a resolution
of the Board of Directors. The Assistant Treasurers shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of the
Treasurer, and, 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.
-12-
<PAGE>
ARTICLE VI
----------
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 a Vice President and by the Secretary or an Assistant
Secretary, and the corporate seal or a facsimile thereof affixed thereto. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the certificate is issued, the number
of shares represented thereby, and the date of issue, shall be entered on the
stock transfer books of the corporation. All certificates surrendered to the
corporation for transfer shall be canceled, and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled, except that in case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the Board of Directors may prescribe.
Section 2. Transfer of Shares.
------------------
Transfer of shares of the corporation shall be made only on the stock
transfer books of the corporation by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the corporation, and on surrender for
cancellation of the certificate for such shares. The person in whose name shares
stand on the books of the corporation shall be deemed by the corporation to be
the owner thereof for all purposes.
ARTICLE VII
-----------
Closing of Transfer Books and
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 the
shareholders entitled to receive payment of any dividend or distribution, or the
allotment of any rights, 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
-13-
<PAGE>
books shall be closed for a stated period, not to exceed forty days prior to the
date on which the particular action requiring such determination of shareholders
is to be taken. 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 forty
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 the shareholders
entitled to notice of or to vote at a meeting of shareholders, or of the
shareholders entitled to receive payment of a dividend or distribution or
allotment of rights, 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
or distribution or the allotment of rights 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.
ARTICLE VIII
------------
Fiscal Year
The fiscal year of the corporation shall commence on the
day of and close the day of
- --------- -------------- ----------
in each year.
ARTICLE IX
----------
Annual Report
The Board of Directors shall not be required to cause an annual report to be
sent to the shareholders, but may do so in its discretion.
ARTICLE X
--------
Dividends
The Board of Directors may declare, and the corporation may pay, dividends
on its outstanding shares in cash, property or its own shares, subject to the
provisions of the statutes and any provision of the articles of incorporation.
Before the payment of any dividend or other distribution of profits, there
may be set aside out of any funds of the corporation available for such purpose
such sum or sums as
-14-
<PAGE>
the directors from time to time, in their absolute discretion, consider to be a
proper reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall determine to be in the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ARTICLE XI
----------
Indemnification
Section 1. Good Faith Actions.
------------------
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 (including appeals), whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed not to be in or not opposed
to the best interests of the corporation, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Exclusion for Negligence or Misconduct.
--------------------------------------
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 (including appeals) 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
-15-
<PAGE>
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 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 District Court or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the District Court or such other court shall deem proper.
Section 3. Fees and Expenses.
-----------------
To the extent that a director, officer, employee or agent of the corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article XI 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 4. Coverage Determined by Board of Directors.
------------------------------------------
Any indemnification under Sections 1 and 2 of this Article XI (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 officer,
director, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Sections 1 and 2 of this Article
XI. 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 (who may be regular counsel to the corporation but who shall not be an
employee of the corporation) in a written opinion, or (c) by the stockholders.
Section 5. Advance Payment for Fees and 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
-16-
<PAGE>
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 in this
Article XI.
Section 6. Non-exclusive Remedy.
--------------------
The indemnification provided by this Article XI shall apply to acts and
transactions occurring heretofore or hereafter and shall not be deemed exclusive
of any other rights to which those seeking indemnification are entitled under
any statute, certificate or articles of incorporation, bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person, who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 7. Oklahoma Business Corporation Act.
---------------------------------
In furtherance, and not in limitation, of the foregoing provisions of this
Article XI, the corporation shall indemnify the persons referred to in this
Article XI to the fullest extent permitted by the Oklahoma Business Corporation
Act, as amended from time to time.
Section 8. Insurance Coverage.
------------------
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 him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article XI.
ARTICLE XII
-----------
Seal
The Board of Directors shall adopt and provide a corporate seal, which shall
be circular in form and shall have inscribed thereon the name of the
corporation, the state of incorporation and the words "Corporate Seal."
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<PAGE>
ARTICLE XIII
------------
Amendments
These bylaws may be altered or repealed, or new bylaws may be adopted by a
majority vote of a quorum of the members of the Board of Directors at any
annual, regular or special meeting duly convened after notice to the directors
setting out the purpose of the meeting, subject to the power of the shareholders
to alter or repeal such bylaws; provided, however, the Board shall not adopt or
alter any bylaw fixing their number, qualifications, classifications or terms of
office, but any such bylaw may be adopted or altered only by the vote of a
majority of a quorum of the shareholders entitled to exercise the voting power
of the corporation at any annual, regular or special meeting duly convened after
notice to the shareholders setting out the purpose of the meeting.
-18-
<PAGE>
EXHIBIT 3.29
CERTIFICATE OF FORMATION
OF
T/SF HOLDINGS, LLC
------------------
1. The name of the limited liability company is T/SF HOLDINGS, LLC.
2. The address of its registered office in the State of Delaware is
c/o United Corporate Services, Inc., 15 East North Street, Dover, Delaware. The
name of its registered agent at that address is United Corporate Services, Inc.
Dated: October 6, 1997
/s/ Lawrence H. Budish
----------------------
Lawrence H. Budish
Authorized Person
<PAGE>
EXHIBIT 3.30
================================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
T/SF HOLDINGS, LLC
Dated as of February 6, 1998
----------------------------
================================================================================
<PAGE>
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
T/SF HOLDINGS, LLC
Dated as of February 6, 1998
----------------------------
T/SF Holdings, LLC, a Delaware limited liability company (the
"Company"), was formed on October 9, 1997 to hold through subsidiary limited
liability companies the following businesses (collectively, the ABusinesses@)
previously operated by wholly-owned subsidiaries (the ASubsidiaries@) of T/SF
Communications Corporation, a Delaware corporation ("T/SF"): the business (the
"Atwood Business") previously operated by Atwood Convention Publishing, Inc., a
Missouri corporation ("Atwood"), the business (the "GEM Business") previously
operated by GEM Communications Inc., an Oklahoma corporation ("GEM"), the
business (the "Galaxy Business") previously operated by Galaxy Registration,
Inc., a Maryland corporation ("Galaxy Registration") and Galaxy Design and
Printing, Inc., a Maryland corporation ("Galaxy Design"), the business (the
"Expo Business") previously operated by Expo Magazine, Inc., a Kansas
corporation ("Expo"), the business previously operated by Casino Publishing
Company, a Delaware corporation (the "Casino Publishing Business"), the business
(the "Nevada Business") previously operated by T/SF of Nevada, Inc., a Nevada
corporation ("Nevada") and the business (the "Europe Business") previously
operated by T/SF Europe, Inc., a Oklahoma corporation ("T/SF Europe"). Until
the date hereof, the Company has had no business, assets or activities. The
parties now wish to organize the Company and to have the Subsidiaries contribute
the Businesses to the Company and to have T/SF, VS&A-T/SF, LLC, a Delaware
limited liability company ("VS&A"), and Fir Tree Value Fund L.P., Fir Tree
Institutional Value Fund L.P. and Fir Tree Partners L.D.C. (collectively, the
AFir Tree Entities") contribute an aggregate of $4,500,000 to the Company.
The parties (the "Members") wish to amend and restate the terms of the
Company's limited liability company agreement. It is therefore agreed as
follows:
1. Business. The Company shall hold, through subsidiary limited
--------
liability companies, the Atwood Business, the GEM Business, the Galaxy Business,
the Expo Business, the Casino Publishing Business, the Nevada Business and the
Europe Business (collectively the "Businesses") and shall conduct all activities
relating to the Businesses that the board of managers determines appropriate.
2. Management of the Company.
-------------------------
1
<PAGE>
2.1 Management by Board. The business and affairs of the Company
-------------------
shall be managed under the direction of a board of managers consisting of three
members. The board of managers shall act by majority vote of the total number of
members of the board. The members of the board of managers shall be designated
by vote of the Members voting as follows: The Priority Members (as defined in
section 4.1) shall have 90.9% of the votes, allocated among the Priority Members
in accordance with their Priority Percentages (as defined in section 4.1), and
the Common Members (as defined in section 4.1) shall have 9.1% of the votes,
allocated among the Common Members in accordance with their Common Percentages
(as defined in section 4.1). The Members hereby designate Ian L.M. Thomas,
Jeffrey T. Stevenson, Jeffrey Tannenbaum and S. Gerard Benford as the initial
members of the board of managers. Action may be taken by the board of managers
at a meeting (at which members of the board may participate in person or by
telephone), by polling members of the board without a meeting, or by a writing
signed by a majority of the members of the board of managers, except that no
action may be taken by a writing unless all members of the board are first given
notice of, and a reasonable opportunity to comment upon, the proposed action.
The board of managers shall hold meetings at such intervals, and shall adopt
such rules of procedure, as it may from time to time determine. Any member of
the board of managers may designate another person to act as his substitute at
any meeting or in connection with any action to be taken by the board of
managers. Members of the board of managers shall not be compensated for their
services as such.
2.2 Officers. The board of managers may appoint such officers
--------
of the Company as the board of managers determines desirable, including, but not
limited to, a chairman, a chief executive officer, a president, one or more
vice-presidents, a secretary, a treasurer, and one or more assistant secretaries
and assistant treasurers. The officers of the Company need not be members of the
Company and shall have the powers and duties delegated to them by the board of
managers. Officers of the Company shall serve at the pleasure of the board of
managers.
2.3 Persons Employed by the Company. The board of managers may
-------------------------------
cause the Company to employ and compensate such persons, firms or corporations,
including, but not limited to, accountants and attorneys, as it deems advisable
or necessary to carry on, assist or promote the Company's business. In addition,
the board of managers may utilize the services of persons employed by related
persons or entities to provide senior management service to the Company or for
tax, accounting, personnel and other similar services rendered to the Company.
The fact that the board of managers or any Member, or a person associated with a
member of the board of managers or any Member, is employed by, or is directly or
indirectly interested in or connected with, any person, firm or corporation
employed by the Company to render or perform any service shall not prohibit the
board of managers from employing or otherwise dealing with that person, firm or
corporation, and neither the Company nor any of the Members shall have any
rights in or to any income or profits derived therefrom.
2.4 Other Activities of Members. The members of the board of
---------------------------
managers and any Member may engage or have an interest in other business
ventures of any
2
<PAGE>
kind, independently or with others, and neither the Company nor any other Member
shall have any rights in or to those independent ventures.
3. Capital Contributions.
---------------------
3.1 Capital Contributions.
---------------------
(a) Simultaneously with the execution and delivery of this
agreement, each of the Members is making the following capital contribution to
the Company:
T/SF $45,000
Atwood Atwood Business
Galaxy Registration Galaxy Registration's portion of
the Galaxy Business
Galaxy Design Galaxy Design's portion of the
Galaxy Business
GEM GEM Business
Expo Expo Business
Casino Publishing Casino Publishing Business
T/SF Nevada Nevada Business
T/SF Europe Europe Business
VS&A $2,869,020
Fir Tree Entities $1,585,980
Each Member contributing its Business is doing so pursuant to a
separate Assignment to the Company and a separate Assumption Agreement with the
Company, pursuant to which the Member is contributing all of the assets of its
Business, subject to all of the liabilities of that Business.
For purposes of this agreement, each Business is valued as set forth
on Schedule A, and the Member contributing that Business shall be credited with
an initial capital contribution in that amount.
(b) Except as provided in this section 3.1, no Member shall
be required to make any capital contribution to the Company.
3
<PAGE>
3.2 No Withdrawals. No Member shall be entitled to withdraw any
--------------
part of its capital account or capital contribution or to receive any
distribution from the Company except as expressly provided in this agreement.
3.3 No Liability for Capital Contributions. No Member shall be
--------------------------------------
required to pay to the Company any deficit in its capital account (upon
dissolution or otherwise). No Member shall have the right to demand or receive
cash or other property for its interest in the Company.
3.4 No Interest. No Member shall receive any interest on its
capital contributions or capital account.
4. Distributions.
-------------
4.1 Distributions. Subject to the provisions of Section 4.2,
-------------
distributions shall be made to the Members at the time or times determined by
the board of managers, as set forth in this section 4.1:
As used in this agreement, (a) "Preferred Return" means an 11%
cumulative annually compounded return from the date hereof on the excess of the
aggregate amount of the capital contributions made by each Member (other than
VS&A and the Fir Tree Entities) pursuant to section 3.1(a) over the amount of
any distributions made to that Member pursuant to section 4.1(i)(B); (b)
"Priority Member" means each Member other than VS&A and the Fir Tree Entities;
(c) "Common Member" means VS&A and the Fir Tree Entities; (d) "Priority
Percentage" means for each Priority Member the percentage set forth on Schedule
A opposite that Member's name; and (e) "Common Percentage" means for each Common
Member the percentage set forth on Schedule A opposite that Member=s name.
Each distribution shall be allocated as follows:
(i) first, to each Priority Member, in proportion to their
respective Priority Percentages, until each Priority Member shall have received
pursuant to this section 4.1(i) an aggregate amount equal to the sum of: (A) the
Preferred Return for all prior years and for the portion of the year of the
distribution ending with the day of the distribution; and (B) the aggregate
amount of the capital contributions made by that Priority Member pursuant to
section 3.1; and
(ii) the balance, if any, to the Common Members in proportion to
their respective Common Percentages.
4.2 Tax Distributions. To the extent that for any fiscal year
-----------------
the amount of net income and gains of the Company allocated to any Common Member
exceeds the amount of losses of the Company allocated to that Member for that
and prior fiscal years reduced by the amount of net income and gains of the
Company allocated to that Member for prior fiscal years, the board of managers
shall use reasonable efforts to cause the Company to
4
<PAGE>
distribute to each Common Member, as an advance against the amounts thereafter
distributable to it pursuant to section 4.1, no later than April 1 of the
following year an amount of cash equal to (a) the amount reasonably calculated
by the board of managers to equal the amount of the federal, state and local tax
liability on that excess (based on the highest individual or corporate marginal
federal income tax rate for that year and the percentage with respect to state
and local income tax rates for that year that the board of managers determines
appropriate), less (b) the aggregate amount of prior distributions by the
Company to that Member (other than distributions pursuant to this provision). No
such distribution shall be made, however, to the extent that distributions are
restricted under the terms of any note or agreement relating to borrowings by
the Company or any Priority Member or to the extent that the board of managers
determines that the cash is necessary for the operation of the business of the
Company. The board of managers shall, to the extent practical, make
distributions under this section 4.2 quarterly based on projections of income.
If upon the liquidation of the Company the aggregate amount of distributions to
any Common Member pursuant to this section 4.2 exceeds the aggregate amount that
would have been distributed to that Member pursuant to section 4.1 (had there
been no distributions pursuant to this section 4.2), then that Member shall pay
to the Company an amount equal to such excess, to be distributed to the other
Members in accordance with section 4.1.
5. Resignations; Transfers.
-----------------------
5.1 Resignations. No Member may resign from the Company prior
------------
to the dissolution and winding up of the Company.
5.2 Transfers. No Member may sell, transfer, assign, pledge,
---------
grant a security interest in or otherwise dispose of or encumber all or any
portion of its membership interest in the Company without the unanimous written
consent of the other Members, and any other purported transfer shall be void,
except that any Member may pledge its interest to First Union National Bank, as
Administrative Agent, pursuant to the Credit Agreement dated as of October 9,
1997.
6. Exculpation; Indemnification.
----------------------------
6.1 Exculpation. To the extent not inconsistent with applicable
-----------
law, neither any member of the board of managers nor any Member, nor any of
their respective officers, directors, employees or affiliates, nor any officer
of the Company, shall be liable, responsible or accountable in damages or
otherwise to the Company or to any Member for any action taken or for any
failure to act on behalf of the Company in connection with the business or
operations of the Company, unless the act or omission constituted gross
negligence, willful misconduct or a breach of a fiduciary duty to the Company.
6.2 Indemnification. To the extent not inconsistent with
---------------
applicable law, the Company shall indemnify and hold harmless any member of the
board of managers and each Member and their respective officers, directors,
employees and affiliates, and all of the Company's officers, from any loss,
liability, damage or expense (including, but not limited
5
<PAGE>
to, any judgment, award or settlement and reasonable attorneys' fees and other
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim) arising out of (a) any acts or omissions
or alleged acts or omissions in connection with their activities or the
activities of any of their respective employees or agents on behalf of the
Company or in connection with the business or operations of the Company, and (b)
any liability imposed upon any of them under any statute, rule or regulation
(including, but not limited to, any statute, rule or regulation relating to
environmental matters) applicable to the Company, or its officers, directors or
employees; provided that the acts or omissions or the alleged acts or omissions
upon which the action or threatened action, proceeding or claim is based did not
constitute gross negligence, willful misconduct or a breach of a fiduciary duty
to the Company by the indemnified party. Reasonable expenses incurred by any
such indemnified party in connection with the matters referred to above may be
paid or reimbursed by the Company in advance of the final disposition of the
proceeding upon receipt by the Company of (i) a written affirmation by the
indemnified party of his or its good faith belief that he or it met the standard
of conduct necessary for indemnification by the Company, and (ii) a written
undertaking by or on behalf of the indemnified party to repay such amount if it
shall ultimately be determined by a court of competent jurisdiction that he or
it has not met that standard of conduct.
6.3 Contribution. In the event any lender to which the Members have
------------
pledged their interests in the Company exercises any rights with respect to that
pledge against less than all of the Members, the Members shall reallocate their
interests in the Company to account for that disproportionate exercise.
7. Duration of Company. The Company shall continue in existence until
the earlier of (a) December 31, 2010 and (b) the date the Company is dissolved
in accordance with section 8.
8. Dissolution; Liquidation.
------------------------
8.1 Dissolution. The Company shall be dissolved prior to
-----------
December 31, 2010 only upon the occurrence of one of the following events:
(a) the unanimous election by the Members to dissolve the
Company; or
(b) the termination of the Company's business as a result
of the sale or other disposition by the Company of substantially all of its
business and assets.
8.2 Liquidation and Distribution of Assets. Upon dissolution of
--------------------------------------
the Company, the board of managers shall proceed to sell or liquidate the assets
(to the extent feasible) within a reasonable time and, after paying or making
provision for all liabilities to creditors of the Company, shall distribute the
Company's cash and other assets to the Members in accordance with section 4.1.
6
<PAGE>
9. Accounting and Tax Matters.
--------------------------
9.1 Fiscal Year. The Company's fiscal year shall be the calendar
-----------
year unless changed by the board of managers.
9.2 Books of Account, etc. Complete and accurate books of account
---------------------
shall be kept by the Company at its principal office (or at such other office as
the board of managers may designate) and each Member shall have the right to
inspect those books during normal business hours. The Company's books of account
shall be kept on the cash or accrual basis of accounting, as the board of
managers may determine, in accordance with sound accounting practices and
principles applied in a consistent manner by the Company; all methods of
accounting and treatment of particular transactions reflected on these books
shall be in accordance with the methods of accounting employed for federal
income tax purposes. The determinations of the board of managers with respect to
the treatment of any item or its allocation for federal, state or local income
tax purposes shall be binding upon the Members so long as that determination is
not inconsistent with any express provision of this agreement.
9.3 Reports. The Company shall use its best efforts to furnish to
-------
each of the Members, within (a) 30 days after the end of each month, unaudited
consolidated monthly and year-to-date consolidated statements of income and a
consolidated balance sheet as of the end of that month, and (b) 90 days after
the end of each fiscal year, unaudited financial statements of the Company with
respect to that year (including a consolidated balance sheet of the Company as
of the end of the year and a consolidated statement of income and capital
accounts and a consolidated statement of changes in financial position of the
Company for the year).
9.4 Tax Information. Not later than the date of delivery of the
---------------
annual financial statements pursuant to section 9.3, the board of managers shall
furnish to each of the Members any information required by the Members to
complete any income tax return that it is required to file for that year. The
Company shall also furnish tax information to the Members on an interim basis to
the extent the board of managers determines appropriate.
9.5 Tax Allocations. For federal, state and local income tax
---------------
purposes, all items of income, deduction, gain and loss shall be allocated among
the Members on the same basis as profits are allocated and losses are charged as
provided in this section 9 and all items of credit shall be allocated among the
Members in the manner provided for in the Internal Revenue Code and the
applicable Treasury Regulations except that to the extent of the difference
between the fair market value and the basis for federal income tax purposes of
property contributed to the Company, income, gains, deductions (including
depreciation and amortization) and losses with respect to that property shall be
allocated among the Members in accordance with Internal Revenue Code section
704(c)(1)(A).
9.6 Capital Accounts. For the purpose of this agreement, the
----------------
balance of the capital account ("Capital Account") of each Member shall be
determined on the basis of an account maintained for the Member as part of the
books of account of the
7
<PAGE>
Company. The amount of each Member's Capital Account shall be equal to the
aggregate amount of cash and the fair market value of property contributed to
the Company by the Member, and shall be increased by the Member's share of
income and gains of the Company, and shall be decreased by (a) the aggregate
amount of cash and the fair market value of any property distributed by the
Company (less any liabilities assumed with respect to such distribution) to the
Member and (b) the Member's share of losses of the Company.
9.7 Allocation of Income and Gains. The Company's net income and
------------------------------
gains for each taxable year shall be allocated for federal income tax purposes
to the Members as follows:
(a) first, to the Members in proportion to their negative capital
account balances until those balances have been eliminated;
(b) then, to the Priority Members in proportion to their Priority
Percentages, until each of their capital account balances equals an amount (the
"Section 4.1(i) Amount") equal to the aggregate amount that it remains entitled
to receive pursuant to section 4.1(i); and
(c) then, the balance to the Common Members in proportion to their
respective Common Percentages as of the end of that taxable year.
9.8 Allocation of Losses. The Company's losses for each taxable year
--------------------
shall be allocated for federal income tax purposes to the Members as follows:
(a) first, to the Common Members, in proportion to their Common
Percentages as of the end of that fiscal year, until their capital account
balances have been reduced to zero;
(b) then, to the Priority Members in proportion to their Priority
Percentages as of the end of that taxable year, until their capital account
balances have been reduced to zero; and
(c) then, to the Common Members in proportion to their Common
Percentages as of the end of that taxable year.
9.9 Gross Income Allocations. Notwithstanding the provisions of
------------------------
sections 9.7 and 9.8, if (a) the aggregate amount of the Preferred Return of all
of the Priority Members for any taxable year (a "Preferred Return Shortfall
Year") exceeds the amount of the net income of the Company for that taxable year
and (b) the amount of the net income of the Company for any taxable year prior
to the Preferred Return Shortfall Year exceeded the aggregate amount of the
Preferred Return of all of the Priority Members for that prior taxable year,
there shall be allocated to the Priority Members, for the Preferred Return
Shortfall Year (and, to the extent there is insufficient gross income in that
year, for subsequent taxable years), prior to the allocations provided for in
sections 9.7 and 9.8 (the amounts of which will give
8
<PAGE>
effect to the gross income allocations provided for in this section 9.9), such
amounts of gross income as will cause the capital accounts of the Priority
Members, after the allocations of gross income provided for in this section 9.9
and the allocations provided for in sections 9.7 and 9.8, to reflect the
Priority Members' entitlements pursuant to section 4.1 as of the end of the
taxable year for which the allocations are being made.
9.10 Elections. To the extent that the Company may make elections
---------
for federal, state or local income tax purposes, the elections shall be made in
a manner best calculated, in the opinion of the board of managers, to minimize
the cash requirements of the Company and the Members. The Members shall treat
all Company items on its federal, state or local income tax returns in a manner
consistent with the treatment of the item on the Company's federal, state or
local income tax return.
9.11 Tax Matters Partner. T/SF shall be the tax matters partner
-------------------
(within the meaning of section 6231(a)(7) of the Internal Revenue Code) of the
Company.
10. Miscellaneous.
-------------
10.1 Entire Agreement; Amendment. This agreement contains a complete
statement of the arrangements with respect to the Company, supersedes all prior
arrangements and understandings with respect to the Company, and may not be
amended except by a writing executed by all of the Members.
10.2 Notices. Any notice or other communication under this agreement
-------
shall be in writing and shall be considered given when delivered in person or
sent by facsimile, one day after being sent by a major overnight courier, or
four days after being mailed by registered mail, return receipt requested, to
the each of Members at the address specified on Schedule A.
10.3 Governing Law. This agreement shall be governed by and construed
-------------
in accordance with the law of the State of Delaware applicable to agreements
made and to be performed entirely in Delaware.
10.4 Definition. As used in this agreement, the term "affiliate"
----------
means any person or entity directly or indirectly controlled by, controlling, or
under common control with, any other person or entity.
10.5 Severability. If any provision of this agreement is invalid or
------------
unenforceable, the balance of this agreement shall remain in effect and shall be
enforceable to the maximum extent permitted by law, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
10.6 Headings. The headings in this agreement are solely for the
--------
convenience of reference and shall not affect its interpretation.
9
<PAGE>
10.7 Other Action. Each Member shall execute and deliver such
------------
additional documents and instruments, and shall perform such additional acts, as
may be necessary or appropriate to carry out the terms of this agreement.
10.8 Waiver of Action for Partition. Each Member irrevocably waives,
------------------------------
during the term of the Company, any right it may have to maintain any action for
partition with respect to the Company or any property of the Company.
10
<PAGE>
10.9 Third Party Beneficiaries. Nothing in this agreement, express
-------------------------
or implied, is intended or shall be construed to give anyone other than the
parties to this Agreement or their respective successors or permitted assigns
any legal or equitable right, remedy or claim under or in respect of any
provision contained in this agreement.
T/SF COMMUNICATIONS CORPORATION
By:
-----------------------------------
ATWOOD CONVENTION PUBLISHING, INC.
By:
-----------------------------------
GEM COMMUNICATIONS, INC.
By:
-----------------------------------
GALAXY REGISTRATION, INC.
By:
-----------------------------------
GALAXY DESIGN AND PRINTING, INC.
By:
-----------------------------------
EXPO MAGAZINE, INC.
By:
-----------------------------------
11
<PAGE>
CASINO PUBLISHING COMPANY
By:
-----------------------------------
T/SF OF NEVADA, INC.
By:
------------------------------------
T/SF EUROPE, INC.
By:
-----------------------------------
VS&A-T/SF, LLC
By:
-----------------------------------
FIR TREE VALUE FUND L.P.
By:
-----------------------------------
FIR TREE INSTITUTIONAL
VALUE FUND L.P.
By:
-----------------------------------
FIR TREE PARTNERS L.D.C.
12
<PAGE>
By:
-----------------------------------
SCHEDULE A
<TABLE>
<CAPTION>
Value of Priority Common
Member Contribution Percentage Percentage
- ------ ------------ ---------- ----------
<S> <C> <C> <C>
(1) T/SF Communications Corporation $45,000
(1) Atwood Convention Publishing, Inc.
(1) Gem Communications, Inc.
(1) Galaxy Registration, Inc.
(1) Galaxy Design and Printing, Inc.
(1) Expo Magazine, Inc.
(1) Casino Publishing Company
(1) T/SF of Nevada, Inc.
(1) T/SF Europe, Inc.
(2) VS&A-T/SF, LLC $2,869,020 64.4%
(3) Fir Tree Value Fund L.P. )
)
(3) Fir Tree Institutional Value Fund L.P. ) $1,585,980 35.6%
)
(3) Fir Tree Partners L.D.C. )
(1) All addressed at:
T/SF Communications Corporation
888 Seventh Avenue
New York, N.Y. 10106
Attn: Brian A. Meyer
(2) At:
VS&A Communications Partners II, L.P.
350 Park Avenue
New York, New York 10022
Attn: Jeffrey T. Stevenson
(3) All at:
Fir Tree Partners
1211 Avenue of the Americas
New York, NY 10036
Attn: Jeffrey Tannenbaum
</TABLE>
13
<PAGE>
EXHIBIT 3.31
CERTIFICATE OF FORMATION
OF
T/SF OPERATING, LLC
This Certificate of Formation of T/SF Operating, LLC, dated as of the
2nd day of February, 1998, is being duly executed and filed by the undersigned,
as an authorized person, to form a limited liability company under the Delaware
Limited Liability Company Act (6 Del. C. (S) 18-101, et seq.).
------- -- ---
FIRST: The name of the limited liability company (the "Company")
formed hereby is T/SF Operating, LLC.
SECOND: The address of the registered office of the Company in the State
of Delaware is c/o Corporation Service Company, 1013 Centre Road, Wilmington,
New Castle County, State of Delaware, 19805.
THIRD: The name and address of the registered agent for service of
process on the Company in the State of Delaware is Corporation Service Company,
1013 Centre Road, Wilmington, New Castle County, State of Delaware, 19805.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the date first above written.
/s/ Helaine S. Fine, Esq.
-------------------------
Helaine S. Fine, Esq.
Authorized Person
<PAGE>
EXHIBIT 3.32
================================================================================
LIMITED LIABILITY COMPANY AGREEMENT
OF
T/SF OPERATING, LLC
Dated as of February 6, 1998
----------------------------
================================================================================
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
T/SF OPERATING, LLC
Dated as of February 6, 1998
----------------------------
The parties to this agreement are T/SF Holdings, LLC, a Delaware
limited liability company (the "Priority Member"), and VS&A-T/SF, LLC, a
Delaware limited liability company ("VS&A"), and Fir Tree Value Fund L.P., Fir
Tree Institutional Value Fund L.P. and Fir Tree Partners L.D.C. (collectively,
the AFir Tree Entities@). VS&A and the Fir Tree Entities are referred to
collectively as the "Common Members".
The parties (the "Members") wish to set forth the terms of the
Company's limited liability company agreement. It is therefore agreed as
follows:
1. Business. The Company shall hold a 1% interest as a member of
--------
Atwood Publishing, LLC, Galaxy Registration, LLC, GEM Gaming, LLC, Casino
Executive, LLC and GEM Nevada, LLC.
2. Management of the Company.
-------------------------
2.1 Management by Board. The business and affairs of the Company
-------------------
shall be managed under the direction of a board of managers consisting of three
members. The board of managers shall act by majority vote of the total number of
members of the board. The members of the board of managers shall be designated
by vote of the Members voting as follows: The Priority Member shall have 90.9%
of the votes, and the Common Members shall have 9.1% of the votes, allocated
among the Common Members in accordance with their Common Percentages (as defined
in section 4.1). The Members hereby designate Ian L.M. Thomas, Brian A. Meyer
and Steven J. Hunt as the initial members of the board of managers. Action may
be taken by the board of managers at a meeting (at which members of the board
may participate in person or by telephone), by polling members of the board
without a meeting, or by a writing signed by a majority of the members of the
board of managers, except that no action may be taken by a writing unless all
members of the board are first given notice of, and a reasonable opportunity to
comment upon, the proposed action. The board of managers shall hold meetings at
such intervals, and shall adopt such rules of procedure, as it may from time to
time determine. Any member of the board of managers may designate another person
to act as his substitute at any meeting or in connection with any action to be
taken by the board of managers. Members of the board of managers shall not be
compensated for their services as such.
2.2 Officers. The board of managers may appoint such officers
--------
of the Company as the board of managers determines desirable, including, but not
limited to, a
1
<PAGE>
chairman, a chief executive officer, a president, one or more vice-presidents, a
secretary, a treasurer, and one or more assistant secretaries and assistant
treasurers. The officers of the Company need not be members of the Company and
shall have the powers and duties delegated to them by the board of managers.
Officers of the Company shall serve at the pleasure of the board of managers.
2.3 Persons Employed by the Company. The board of managers may
-------------------------------
cause the Company to employ and compensate such persons, firms or corporations,
including, but not limited to, accountants and attorneys, as it deems advisable
or necessary to carry on, assist or promote the Company's business. In addition,
the board of managers may utilize the services of persons employed by related
persons or entities to provide senior management service to the Company or for
tax, accounting, personnel and other similar services rendered to the Company.
The fact that the board of managers or any Member, or a person associated with a
member of the board of managers or any Member, is employed by, or is directly or
indirectly interested in or connected with, any person, firm or corporation
employed by the Company to render or perform any service shall not prohibit the
board of managers from employing or otherwise dealing with that person, firm or
corporation, and neither the Company nor any of the Members shall have any
rights in or to any income or profits derived therefrom.
2.4 Other Activities of Members. The members of the board of
---------------------------
managers and any Member may engage or have an interest in other business
ventures of any kind, independently or with others, and neither the Company nor
any other Member shall have any rights in or to those independent ventures.
3. Capital Contributions.
---------------------
3.1 Capital Contributions.
---------------------
(a) Simultaneously with the execution and delivery of this
agreement, each of the Members is making the capital contribution indicated on
Schedule A opposite that Member's name.
(b) Except as provided in this section 3.1, no Member shall be
required to make any capital contribution to the Company.
3.2 No Withdrawals. No Member shall be entitled to withdraw any
--------------
part of its capital account or capital contribution or to receive any
distribution from the Company except as expressly provided in this agreement.
3.3 No Liability for Capital Contributions. No Member shall be
--------------------------------------
required to pay to the Company any deficit in its capital account (upon
dissolution or otherwise). No Member shall have the right to demand or receive
cash or other property for its interest in the Company.
2
<PAGE>
3.4 No Interest. No Member shall receive any interest on its
-----------
capital contributions or capital account.
4. Distributions.
-------------
4.1 Distributions. Subject to the provisions of Section 4.2,
-------------
distributions shall be made to the Members at the time or times determined by
the board of managers, as set forth in this section 4.1:
As used in this agreement, "Preferred Return" means an 11% cumulative
annually compounded return from the date hereof on the excess of the aggregate
amount of the capital contributions made by the Priority Member pursuant to
section 3.1(a) over the amount of any distributions made to that Member pursuant
to section 4.1(i)(B).
Each distribution shall be allocated as follows:
(i) first, to the Priority Member until the Priority Member shall have
received pursuant to this section 4.1(i) an aggregate amount equal to the sum
of: (A) the Preferred Return for all prior years and for the portion of the
year of the distribution ending with the day of the distribution; and (B) the
aggregate amount of the capital contributions made by the Priority Member
pursuant to section 3.1; and
(ii) the balance, if any, to the Common Members in proportion to their
respective Common Percentages. Each Common Member shall have the Common
Percentage set forth on Schedule A opposite that Common Member's name.
4.2 Tax Distributions. To the extent that for any fiscal year
-----------------
the amount of net income and gains of the Company allocated to any Common Member
exceeds the amount of losses of the Company allocated to that Member for that
and prior fiscal years reduced by the amount of net income and gains of the
Company allocated to that Member for prior fiscal years, the board of managers
shall use reasonable efforts to cause the Company to distribute to each Common
Member, as an advance against the amounts thereafter distributable to it
pursuant to section 4.1, no later than April 1 of the following year an amount
of cash equal to (a) the amount reasonably calculated by the board of managers
to equal the amount of the federal, state and local tax liability on that excess
(based on the highest individual or corporate marginal federal income tax rate
for that year and the percentage with respect to state and local income tax
rates for that year that the board of managers determines appropriate), less (b)
the aggregate amount of prior distributions by the Company to that Member (other
than distributions pursuant to this provision). No such distribution shall be
made, however, to the extent that distributions are restricted under the terms
of any note or agreement relating to borrowings by the Company or the Priority
Member or to the extent that the board of managers determines that the cash is
necessary for the operation of the business of the Company. The board of
managers shall, to the extent practical, make distributions under this section
4.2 quarterly based on projections of income. If upon the liquidation of the
Company the aggregate amount of distributions to any Common Member pursuant to
this section 4.2
3
<PAGE>
exceeds the aggregate amount that would have been distributed to that Member
pursuant to section 4.1 (had there been no distributions pursuant to this
section 4.2), then that Member shall pay to the Company an amount equal to such
excess, to be distributed to the other Members in accordance with section 4.1.
5. Resignations; Transfers.
-----------------------
5.1 Resignations. No Member may resign from the Company prior
------------
to the dissolution and winding up of the Company.
5.2 Transfers. No Member may sell, transfer, assign, pledge,
---------
grant a security interest in or otherwise dispose of or encumber all or any
portion of its membership interest in the Company without the unanimous written
consent of the other Members, and any other purported transfer shall be void,
except that any Member may pledge its interest to First Union National Bank, as
Administrative Agent, pursuant to the Credit Agreement dated as of October 9,
1997.
6. Exculpation; Indemnification.
----------------------------
6.1 Exculpation. To the extent not inconsistent with applicable
-----------
law, neither any member of the board of managers nor any Member, nor any of
their respective officers, directors, employees or affiliates, nor any officer
of the Company, shall be liable, responsible or accountable in damages or
otherwise to the Company or to any Member for any action taken or for any
failure to act on behalf of the Company in connection with the business or
operations of the Company, unless the act or omission constituted gross
negligence, willful misconduct or a breach of a fiduciary duty to the Company.
6.2 Indemnification. To the extent not inconsistent with
---------------
applicable law, the Company shall indemnify and hold harmless any member of the
board of managers and each Member and their respective officers, directors,
employees and affiliates, and all of the Company's officers, from any loss,
liability, damage or expense (including, but not limited to, any judgment, award
or settlement and reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim) arising out of (a) any acts or omissions or alleged acts or
omissions in connection with their activities or the activities of any of their
respective employees or agents on behalf of the Company or in connection with
the business or operations of the Company, and (b) any liability imposed upon
any of them under any statute, rule or regulation (including, but not limited
to, any statute, rule or regulation relating to environmental matters)
applicable to the Company, or its officers, directors or employees; provided
that the acts or omissions or the alleged acts or omissions upon which the
action or threatened action, proceeding or claim is based did not constitute
gross negligence, willful misconduct or a breach of a fiduciary duty to the
Company by the indemnified party. Reasonable expenses incurred by any such
indemnified party in connection with the matters referred to above may be paid
or reimbursed by the Company in advance of the final disposition of the
proceeding upon receipt by the Company of (i) a written affirmation by the
indemnified party of his or its good faith belief that
4
<PAGE>
he or it met the standard of conduct necessary for indemnification by the
Company, and (ii) a written undertaking by or on behalf of the indemnified party
to repay such amount if it shall ultimately be determined by a court of
competent jurisdiction that he or it has not met that standard of conduct.
6.3 Contribution. In the event any lender to which the Members
------------
have pledged their interests in the Company exercises any rights with respect to
that pledge against less than all of the Members, the Members shall reallocate
their interests in the Company to account for that disproportionate exercise.
7. Duration of Company. The Company shall continue in existence until
the earlier of (a) December 31, 2010 and (b) the date the Company is dissolved
in accordance with section 8.
8. Dissolution; Liquidation.
------------------------
8.1 Dissolution. The Company shall be dissolved prior to December
-----------
31, 2010 only upon the occurrence of one of the following events:
(a) the unanimous election by the Members to dissolve the
Company; or
(b) the termination of the Company's business as a result of
the sale or other disposition by the Company of substantially all of its
business and assets.
8.2 Liquidation and Distribution of Assets. Upon dissolution of
--------------------------------------
the Company, the board of managers shall proceed to sell or liquidate the assets
(to the extent feasible) within a reasonable time and, after paying or making
provision for all liabilities to creditors of the Company, shall distribute the
Company's cash and other assets to the Members in accordance with section 4.1.
9. Accounting and Tax Matters.
--------------------------
9.1 Fiscal Year. The Company's fiscal year shall be the calendar
-----------
year unless changed by the board of managers.
9.2 Books of Account, etc. Complete and accurate books of account
---------------------
shall be kept by the Company at its principal office (or at such other office as
the board of managers may designate) and each Member shall have the right to
inspect those books during normal business hours. The Company's books of account
shall be kept on the cash or accrual basis of accounting, as the board of
managers may determine, in accordance with sound accounting practices and
principles applied in a consistent manner by the Company; all methods of
accounting and treatment of particular transactions reflected on these books
shall be in accordance with the methods of accounting employed for federal
income tax purposes. The determinations of the board of managers with respect to
the treatment of any item or its
5
<PAGE>
allocation for federal, state or local income tax purposes shall be binding upon
the Members so long as that determination is not inconsistent with any express
provision of this agreement.
9.3 Reports. The Company shall use its best efforts to furnish
-------
to each of the Members, within (a) 30 days after the end of each month,
unaudited consolidated monthly and year-to-date consolidated statements of
income and a consolidated balance sheet as of the end of that month, and (b) 90
days after the end of each fiscal year, unaudited financial statements of the
Company with respect to that year (including a consolidated balance sheet of the
Company as of the end of the year and a consolidated statement of income and
capital accounts and a consolidated statement of changes in financial position
of the Company for the year).
9.4 Tax Information. Not later than the date of delivery of the
---------------
annual financial statements pursuant to section 9.3, the board of managers shall
furnish to each of the Members any information required by the Members to
complete any income tax return that it is required to file for that year. The
Company shall also furnish tax information to the Members on an interim basis to
the extent the board of managers determines appropriate.
9.5 Tax Allocations. For federal, state and local income tax
---------------
purposes, all items of income, deduction, gain and loss shall be allocated among
the Members on the same basis as profits are allocated and losses are charged as
provided in this section 9 and all items of credit shall be allocated among the
Members in the manner provided for in the Internal Revenue Code and the
applicable Treasury Regulations.
9.6 Capital Accounts. For the purpose of this agreement, the
----------------
balance of the capital account ("Capital Account") of each Member shall be
determined on the basis of an account maintained for the Member as part of the
books of account of the Company. The amount of each Member's Capital Account
shall be equal to the aggregate amount of cash and the fair market value of
property contributed to the Company by the Member, and shall be increased by the
Member's share of income and gains of the Company, and shall be decreased by (a)
the aggregate amount of cash and the fair market value of any property
distributed by the Company (less any liabilities assumed with respect to such
distribution) to the Member and (b) the Member's share of losses of the Company.
9.7 Allocation of Income and Gains. The Company's net income and
------------------------------
gains for each taxable year shall be allocated for federal income tax purposes
to the Members as follows:
(a) first, to the Members in proportion to their negative capital
account balances until those balances have been eliminated;
(b) then, to the Priority Member, until its capital account balance
equals an amount (the "Section 4.1(i) Amount") equal to the aggregate amount
that it remains entitled to receive pursuant to section 4.1(i); and
6
<PAGE>
(c) then, the balance to the Common Members in proportion to their
respective Common Percentages as of the end of that taxable year.
9.8 Allocation of Losses. The Company's losses for each taxable year
--------------------
shall be allocated for federal income tax purposes to the Members as follows:
(a) first, to the Common Members, in proportion to their Common
Percentages as of the end of that fiscal year, until their capital account
balances have been reduced to zero;
(b) then, to the Priority Member, until its capital account balance
has been reduced to zero; and
(c) then, to the Common Members in proportion to their Common
Percentages as of the end of that taxable year.
9.9 Gross Income Allocations. Notwithstanding the provisions of
------------------------
sections 9.7 and 9.8, if (a) the amount of the Preferred Return of the Priority
Member for any taxable year (a "Preferred Return Shortfall Year") exceeds the
amount of the net income of the Company for that taxable year and (b) the amount
of the net income of the Company for any taxable year prior to the Preferred
Return Shortfall Year exceeded the amount of the Preferred Return of the
Priority Member for that prior taxable year, there shall be allocated to the
Priority Member, for the Preferred Return Shortfall Year (and, to the extent
there is insufficient gross income in that year, for subsequent taxable years),
prior to the allocations provided for in sections 9.7 and 9.8 (the amounts of
which will give effect to the gross income allocations provided for in this
section 9.9), such amounts of gross income as will cause the capital account of
the Priority Member, after the allocations of gross income provided for in this
section 9.9 and the allocations provided for in sections 9.7 and 9.8, to reflect
the Priority Member's entitlements pursuant to section 4.1 as of the end of the
taxable year for which the allocations are being made.
9.10 Elections. To the extent that the Company may make elections
---------
for federal, state or local income tax purposes, the elections shall be made in
a manner best calculated, in the opinion of the board of managers, to minimize
the cash requirements of the Company and the Members. The Members shall treat
all Company items on its federal, state or local income tax returns in a manner
consistent with the treatment of the item on the Company's federal, state or
local income tax return.
9.11 Tax Matters Partner. The Priority Member shall be the tax
-------------------
matters partner (within the meaning of section 6231(a)(7) of the Internal
Revenue Code) of the Company.
7
<PAGE>
10. Miscellaneous.
-------------
10.1 Entire Agreement; Amendment. This agreement contains a
---------------------------
complete statement of the arrangements with respect to the Company, supersedes
all prior arrangements and understandings with respect to the Company, and may
not be amended except by a writing executed by all of the Members.
10.2 Notices. Any notice or other communication under this
-------
agreement shall be in writing and shall be considered given when delivered in
person or sent by facsimile, one day after being sent by a major overnight
courier, or four days after being mailed by registered mail, return receipt
requested, to the each of Members at the address specified on Schedule A.
10.3 Governing Law. This agreement shall be governed by and
-------------
construed in accordance with the law of the State of Delaware applicable to
agreements made and to be performed entirely in Delaware.
10.4 Definition. As used in this agreement, the term "affiliate"
----------
means any person or entity directly or indirectly controlled by, controlling, or
under common control with, any other person or entity.
10.5 Severability. If any provision of this agreement is invalid
------------
or unenforceable, the balance of this agreement shall remain in effect and shall
be enforceable to the maximum extent permitted by law, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
10.6 Headings. The headings in this agreement are solely for the
--------
convenience of reference and shall not affect its interpretation.
10.7 Other Action. Each Member shall execute and deliver such
------------
additional documents and instruments, and shall perform such additional acts, as
may be necessary or appropriate to carry out the terms of this agreement.
10.8 Waiver of Action for Partition. Each Member irrevocably
------------------------------
waives, during the term of the Company, any right it may have to maintain any
action for partition with respect to the Company or any property of the Company.
8
<PAGE>
10.9 Third Party Beneficiaries. Nothing in this agreement,
-------------------------
express or implied, is intended or shall be construed to give anyone other than
the parties to this Agreement or their respective successors or permitted
assigns any legal or equitable right, remedy or claim under or in respect of any
provision contained in this agreement.
T/SF HOLDINGS, LLC
By:
----------------------------
VS&A-T/SF, LLC
By:
-----------------------------
FIR TREE VALUE FUND L.P.
By:
----------------------------
FIR TREE INSTITUTIONAL
VALUE FUND L.P.
By:____________________________
FIR TREE PARTNERS L.D.C.
By:____________________________
9
<PAGE>
Schedule A
Common
Member Contribution Percentage
- ------ ------------ ----------
T/SF Communications Corporation $450,000
VS&A-T/SF, LLC $ 28,980 64.4%
Fir Tree Value Fund L.P. )
)
Fir Tree Institutional Value Fund L.P. ) $ 16,020 35.6%
)
Fir Tree Partners L.D.C. )
10
<PAGE>
EXHIBIT 3.33
CERTIFICATE OF FORMATION
OF
GALAXY REGISTRATION, LLC
------------------------
1. The name of the limited liability company is GALAXY REGISTRATION,
LLC.
2. The address of its registered office in the State of Delaware is
c/o United Corporate Services, Inc., 15 East North Street, Dover, Delaware. The
name of its registered agent at that address is United Corporate Services, Inc.
Dated: October 6, 1997
/s/ Lawrence H. Budish
----------------------
Lawrence H. Budish
Authorized Person
<PAGE>
EXHIBIT 3.34
================================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GALAXY REGISTRATION, LLC
Dated as of February 6, 1998
----------------------------
================================================================================
<PAGE>
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
GALAXY REGISTRATION, LLC
Dated as of February 6, 1998
----------------------------
Galaxy, LLC, a Delaware limited liability company (the "Company"), was
formed by T/SF Holdings, LLC, a Delaware limited liability company (the
"Original Member"), to operate the business (the "Galaxy Business") previously
operated by Galaxy Registration, Inc., a Maryland corporation (AGalaxy").
The Original Member wishes to admit T/SF Operating, LLC, a Delaware
limited liability company (the "Other Member"), as a Member and to amend and
restate the terms of the Company's limited liability company agreement. The
Original Member and the Other Member are referred to as the "Members". It is
therefore agreed as follows:
1. Business. The Company shall own and operate the Galaxy Business and
--------
shall conduct all activities relating to the Galaxy Business that the board of
managers determines appropriate.
2. Management of the Company
-------------------------
2.1 Management by Board. The business and affairs of the Company
-------------------
shall be managed under the direction of a board of managers consisting of three
members. The board of managers shall act by majority vote of the total number of
members of the board. The members of the board of managers shall be designated
by the Members, voting in accordance with their Percentage Interests (as defined
in section 4). The Members hereby designate Ian L.M. Thomas, Brian A. Meyer and
Steven J. Hunt as the initial members of the board of managers. Action may be
taken by the board of managers at a meeting (at which members of the board may
participate in person or by telephone), by polling members of the board without
a meeting, or by a writing signed by a majority of the members of the board of
managers, except that no action may be taken by a writing unless all members of
the board are first given notice of, and a reasonable opportunity to comment
upon, the proposed action. The board of managers shall hold meetings at such
intervals, and shall adopt such rules of procedure, as it may from time to time
determine. Any member of the board of managers may designate another person to
act as his substitute at any meeting or in connection with any action to be
taken by the board of managers. Members of the board of managers shall not be
compensated for their services as such.
1
<PAGE>
2.2 Officers. The board of managers may appoint such officers of
--------
the Company as the board of managers determines desirable, including, but not
limited to, a chairman, a chief executive officer, a president, one or more
vice-presidents, a secretary, a treasurer, and one or more assistant secretaries
and assistant treasurers. The officers of the Company need not be members of the
Company and shall have the powers and duties delegated to them by the board of
managers. Officers of the Company shall serve at the pleasure of the board of
managers.
2.3 Persons Employed by the Company. The board of managers
-------------------------------
may cause the Company to employ and compensate such persons, firms or
corporations, including, but not limited to, accountants and attorneys, as it
deems advisable or necessary to carry on, assist or promote the Company's
business. In addition, the board may utilize the services of persons employed by
related persons or entities for tax, accounting, personnel and other similar
services rendered to the Company. The fact that any Member or any member of the
board of managers, or a person associated with any Member or any member of the
board of managers, is employed by, or is directly or indirectly interested in or
connected with, any person, firm or corporation employed by the Company to
render or perform any service shall not prohibit the board of managers from
employing or otherwise dealing with that person, firm or corporation, and the
Company shall not have any rights in or to any income or profits derived
therefrom.
2.4 Other Activities of the Members. The members of the board
-------------------------------
of managers or the Members may engage or have an interest in other business
ventures of any kind, independently or with others, and the Company shall not
have any rights in or to those independent ventures.
3. Capital Contributions.
---------------------
3.1 Capital Contributions.
---------------------
(a) Simultaneously with the execution of this agreement, the
Original Member is contributing to the Company all of the assets of the Galaxy
Business, subject to the liabilities of the Galaxy Business, and the Other
Member is contributing $277,000 in cash.
(b) Except as provided in this section 3.1, the Members
shall not be required to make any capital contribution to the Company.
3.2 No Withdrawals. No Member shall be entitled to withdraw
--------------
any part of its capital account or capital contribution or to receive any
distribution from the Company except as expressly provided in this agreement.
3.3 No Liability for Capital Contributions. No Member shall
--------------------------------------
be required to pay to the Company any deficit in its capital account (upon
dissolution or
2
<PAGE>
otherwise). No Member shall have the right to demand or receive cash or other
property for its interest in the Company.
3.4 No Interest. No Member shall receive any interest on its
-----------
capital contributions or capital account.
4. Transfers; Distributions.
------------------------
Distributions shall be made to the Members at the time or times
determined by the board of managers. Any distributions shall be made to the
Members in accordance with their respective Percentage Interests. The Original
Member's Percentage Interest shall be 99% and the Other Member's Percentage
Interest shall be 1%.
5. Transfers; Resignation.
----------------------
No Member may sell, transfer, assign, pledge or otherwise dispose of
or encumber its interest in the Company without the consent of the other Member
except that any Member may pledge its interest to First Union National Bank, as
Administrative Agent, pursuant to the Credit Agreement dated as of October 9,
1997. No Member may resign from the Company prior to the dissolution and
winding up of the Company.
6. Exculpation; Indemnification.
----------------------------
6.1 Exculpation. To the extent not inconsistent with
-----------
applicable law, neither any Member nor any member of the board of managers, nor
any of its officers, directors, employees or affiliates, nor any officer of the
Company, shall be liable, responsible or accountable in damages or otherwise to
the Company or to any other Member for any action taken or for any failure to
act on behalf of the Company after the date hereof in connection with the
business or operations of the Company, unless the act or omission constituted
gross negligence, willful misconduct or a breach of a fiduciary duty to the
Company and the Members.
6.2 Indemnification. To the extent not inconsistent with
---------------
applicable law, the Company shall indemnify and hold harmless any Member and any
member of the board of managers and its officers, directors, employees and
affiliates, and all of the Company's officers, from any loss, liability, damage
or expense (including, but not limited to, any judgment, award or settlement and
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim)
arising out of (a) any acts or omissions or alleged acts or omissions in
connection with their activities or the activities of any of their respective
employees or agents on behalf of the Company after the date hereof or in
connection with the business or operations of the Company after the date hereof,
and (b) any liability imposed upon any of them under any statute, rule or
regulation (including, but not limited to, any statute, rule or regulation
relating to environmental matters) applicable to the Company, or its officers,
directors or employees; provided that the acts or omissions or the alleged acts
or omissions upon which the action or
3
<PAGE>
threatened action, proceeding or claim is based did not constitute gross
negligence, willful misconduct or a breach of a fiduciary duty to the Company
and the Members by the indemnified party. Reasonable expenses incurred by any
such indemnified party in connection with the matters referred to above may be
paid or reimbursed by the Company in advance of the final disposition of the
proceeding upon receipt by the Company of (i) a written affirmation by the
indemnified party of his or its good faith belief that he or it met the standard
of conduct necessary for indemnification by the Company, and (ii) a written
undertaking by or on behalf of the indemnified party to repay such amount if it
shall ultimately be determined by a court of competent jurisdiction that he or
it has not met that standard of conduct.
7. Duration of Company. The Company shall continue in existence
-------------------
until the earlier of (a) December 31, 2010 and (b) the date the Company is
dissolved in accordance with section 8.
8. Dissolution; Liquidation.
------------------------
8.1 Dissolution. The Company shall be dissolved prior to
-----------
December 31, 2010 only upon the occurrence of one of the following events:
(a) the election by the Members to dissolve the Company;
(b) the termination of the Company's business as a result of
the sale or other disposition by the Company of substantially all of its
business and assets; or
(c) the bankruptcy or dissolution of any Member, or the
occurrence of any event which terminates the continued membership of any Member
in the Company, unless the other Member determines, within 90 days following the
occurrence of any such event, to continue the Company.
8.2 Liquidation and Distribution of Assets. Upon dissolution
--------------------------------------
of the Company, the board of managers shall proceed to sell or liquidate the
assets (to the extent feasible) within a reasonable time and, after paying or
making provision for all liabilities to creditors of the Company, shall
distribute the Company's cash and other assets to the Members in proportion to
their respective Percentage Interests.
9. Accounting and Tax Matters.
--------------------------
9.1 Fiscal Year. The Company's fiscal year shall be the calendar
-----------
year unless changed by the board of managers.
9.2 Books of Account, etc. Complete and accurate books of
---------------------
account shall be kept by the Company at its principal office (or at such other
office as the board of managers may designate) and the Members shall have the
right to inspect those books during normal business hours. The Company's books
of account shall be kept on the cash or accrual basis of accounting, as the
board of managers may determine, in accordance with
4
<PAGE>
sound accounting practices and principles applied in a consistent manner by the
Company; all methods of accounting and treatment of particular transactions
reflected on these books shall be in accordance with the methods of accounting
employed for federal income tax purposes. The determinations of the board of
managers with respect to the treatment of any item or its allocation for
federal, state or local income tax purposes shall be binding upon the Members so
long as that determination is not inconsistent with any express provision of
this agreement.
9.3 Reports. The Company shall use its best efforts to
-------
furnish to the Members, within (a) 30 days after the end of each month,
unaudited monthly and year-to-date statements of income and a balance sheet as
of the end of that month, and (b) 90 days after the end of each fiscal year,
unaudited financial statements of the Company with respect to that year
(including a balance sheet of the Company as of the end of the year and a
statement of income and capital accounts and a statement of changes in financial
position of the Company for the year).
9.4 Tax Information. Not later than the date of delivery of
---------------
the annual financial statements pursuant to section 9.3, the board of managers
shall cause the Company's accountants to furnish to the Members any information
required by the Members to complete any income tax return that it is required to
file for that year. The Company shall also furnish tax information to the
Members on an interim basis to the extent the board of managers appropriate.
9.5 Tax Allocations. For federal, state and local income tax
---------------
purposes, all items of income, deduction, gain and loss shall be allocated to
the Members in proportion to their Percentage Interests, except that to the
extent of the difference between the fair market value and the basis for federal
income tax purposes of property contributed to the Company, income, gains,
deductions (including depreciation and amortization) and losses with respect to
that property shall be allocated among the Members in accordance with Internal
Revenue Code section 704(c)(1)(A).
9.6 Capital Accounts. For the purpose of this agreement, the
----------------
balance of the capital account ("Capital Account") of each of the Members shall
be determined on the basis of an account maintained for the Member as part of
the books of account of the Company. The amount of each Member's Capital Account
shall be equal to the aggregate amount of cash and the fair market value of
property contributed to the Company by the Member, and shall be increased by the
Member's share of income and gains of the Company, and shall be decreased by (a)
the aggregate amount of cash and the fair market value of any property
distributed by the Company (less any liabilities assumed with respect to such
distribution) to the Member and (b) the Member's share of losses of the Company.
9.7 Elections. To the extent that the Company may make
---------
elections for federal, state or local income tax purposes, the elections shall
be made in a manner best calculated, in the opinion of the board of managers, to
minimize the cash requirements of the Company and the Members. The Members shall
treat all Company items on its federal, state
5
<PAGE>
or local income tax returns in a manner consistent with the treatment of the
item on the Company's federal, state or local income tax return.
10. Miscellaneous.
-------------
10.1 Entire Agreement; Amendment. This agreement contains a
---------------------------
complete statement of the arrangements with respect to the Company, supersedes
all prior arrangements and understandings with respect to the Company, and may
not be amended except by a writing executed by the Members.
10.2 Notices. Any notice or other communication under this
-------
agreement shall be in writing and shall be considered given when delivered in
person or sent by facsimile, one day after being sent by a major overnight
courier, or four days after being mailed by registered mail, return receipt
requested, to each Member at 350 Park Avenue, New York, New York 10022, Fax
(212) 935-0877
10.3 Governing Law. This agreement shall be governed by and
-------------
construed in accordance with the law of the State of Delaware applicable to
agreements made and to be performed entirely in Delaware.
10.4 Definition. As used in this agreement, the term
----------
"affiliate" means any person or entity directly or indirectly controlled by,
controlling, or under common control with, any other person or entity.
10.5 Severability. If any provision of this agreement is
------------
invalid or unenforceable, the balance of this agreement shall remain in effect
and shall be enforceable to the maximum extent permitted by law, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
10.6 Headings. The headings in this agreement are solely for
--------
the convenience of reference and shall not affect its interpretation.
10.7 Other Action. The Members shall execute and deliver such
------------
additional documents and instruments, and shall perform such additional acts, as
may be necessary or appropriate to carry out the terms of this agreement.
10.8 Waiver of Action for Partition. Each Member irrevocably
------------------------------
waives, during the term of the Company, any right it may have to maintain any
action for partition with respect to the Company or any property of the Company.
6
<PAGE>
10.9 Third Party Beneficiaries. Nothing in this agreement, express
-------------------------
or implied, is intended or shall be construed to give anyone other than the
parties to this agreement or their respective successors or permitted assigns
any legal or equitable right, remedy or claim under or in respect of any
provision contained in this agreement.
T/SF HOLDINGS, LLC
By: T/SF Communications Corporation
By:
-----------------------------------
T/SF OPERATING, LLC
By: T/SF Communications Corporation
By:
-----------------------------------
7
<PAGE>
EXHIBIT 3.35
CERTIFICATE OF FORMATION
OF
ATWOOD, LLC
-----------
1. The name of the limited liability company is ATWOOD, LLC.
2. The address of its registered office in the State of Delaware is
c/o United Corporate Services, Inc., 15 East North Street, Dover, Delaware. The
name of its registered agent at that address is United Corporate Services, Inc.
Dated: October 6, 1997
/s/ Lawrence H. Budish
----------------------
Lawrence H. Budish
Authorized Person
<PAGE>
EXHIBIT 3.35(a)
State of Delaware
Secretary of State
Division of Corporations
Filed 09:00 AM 02/05/1998
981046368 - 2805894
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF FORMATION
OF
ATWOOD, LLC
The undersigned, on behalf of Atwood, LLC (the "Company"), a limited
liability company organized and existing under the Delaware Limited Liability
Company Act, does hereby certify as follows:
FIRST: The name of the limited liability company is:
Atwood, LLC
SECOND: The Certificate of Formation of the Company is hereby
amended as follows:
Paragraph FIRST of the Certificate of Formation is hereby amended to
read in its entirety, as follows:
FIRST: The name of the limited liability company is:
Atwood Publishing, LLC
IN WITNESS WHEREOF, the undersigned has duly executed, signed and
acknowledged this Certificate of Amendment, this 4th day of February, 1998.
By: /s/ Lawrence H. Budish
-----------------------
Lawrence H. Budish
Authorized Person
<PAGE>
EXHIBIT 3.36
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ATWOOD PUBLISHING, LLC
Dated as of February 6, 1998
----------------------------
<PAGE>
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ATWOOD PUBLISHING, LLC
Dated as of February 6, 1998
----------------------------
Atwood, LLC, a Delaware limited liability company (the "Company"), was
formed by T/SF Holdings, LLC, a Delaware limited liability company (the
"Original Member"), to operate the business (the "Atwood Business") previously
operated by Atwood Convention Publishing, Inc., a Missouri corporation
("Atwood"). On February 6, 1998, the Company changed its name to Atwood
Publishing, LLC.
The Original Member wishes to admit T/SF Operating, LLC, a Delaware
limited liability company (the "Other Member"), as a Member and to amend and
restate the terms of the Company's limited liability company agreement. The
Original Member and the Other Member are referred to as the "Members". It is
therefore agreed as follows:
1. Business. The Company shall own and operate the Atwood Business
--------
and shall conduct all activities relating to the Atwood Business that the board
of managers determines appropriate.
2. Management of the Company
-------------------------
.
-------------------
2.1 Management by Board. The business and affairs of the Company
-------------------
shall be managed under the direction of a board of managers consisting of three
members. The board of managers shall act by majority vote of the total number of
members of the board. The members of the board of managers shall be designated
by the Members, voting in accordance with their Percentage Interests (as defined
in section 4). The Members hereby designate Ian L.M. Thomas, Brian A. Meyer and
Steven J. Hunt as the initial members of the board of managers. Action may be
taken by the board of managers at a meeting (at which members of the board may
participate in person or by telephone), by polling members of the board without
a meeting, or by a writing signed by a majority of the members of the board of
managers, except that no action may be taken by a writing unless all members of
the board are first given notice of, and a reasonable opportunity to comment
upon, the proposed action. The board of managers shall hold meetings at such
intervals, and shall adopt such rules of procedure, as it may from time to time
determine. Any member of the board of managers may designate another person to
act as his substitute at any meeting or in connection with any action to be
taken by the board of managers. Members of the board of managers shall not be
compensated for their services as such.
<PAGE>
2.2 Officers. The board of managers may appoint such officers of
--------
the Company as the board of managers determines desirable, including, but not
limited to, a chairman, a chief executive officer, a president, one or more
vice-presidents, a secretary, a treasurer, and one or more assistant secretaries
and assistant treasurers. The officers of the Company need not be members of the
Company and shall have the powers and duties delegated to them by the board of
managers. Officers of the Company shall serve at the pleasure of the board of
managers.
2.3 Persons Employed by the Company. The board of managers may
-------------------------------
cause the Company to employ and compensate such persons, firms or corporations,
including, but not limited to, accountants and attorneys, as it deems advisable
or necessary to carry on, assist or promote the Company's business. In addition,
the board may utilize the services of persons employed by related persons or
entities for tax, accounting, personnel and other similar services rendered to
the Company. The fact that any Member or any member of the board of managers, or
a person associated with any Member or any member of the board of managers, is
employed by, or is directly or indirectly interested in or connected with, any
person, firm or corporation employed by the Company to render or perform any
service shall not prohibit the board of managers from employing or otherwise
dealing with that person, firm or corporation, and the Company shall not have
any rights in or to any income or profits derived therefrom.
2.4 Other Activities of the Members. The members of the board of
-------------------------------
managers or the Members may engage or have an interest in other business
ventures of any kind, independently or with others, and the Company shall not
have any rights in or to those independent ventures.
3. Capital Contributions
---------------------
3.1 Capital Contributions
---------------------
(a) Simultaneously with the execution of this agreement, the
Original Member is contributing to the Company all of the assets of the Atwood
Business, subject to the liabilities of the Atwood Business, and the Other
Member is contributing $68,000 in cash.
(b) Except as provided in this section 3.1, the Members shall
not be required to make any capital contribution to the Company.
3.2 No Withdrawals. No Member shall be entitled to withdraw any
--------------
part of its capital account or capital contribution or to receive any
distribution from the Company except as expressly provided in this agreement.
3.3 No Liability for Capital Contributions. No Member shall be
--------------------------------------
required to pay to the Company any deficit in its capital account (upon
dissolution or
2
<PAGE>
otherwise). No Member shall have the right to demand or receive cash or other
property for its interest in the Company.
3.4 No Interest. No Member shall receive any interest on its
-----------
capital contributions or capital account.
4. Transfers; Distributions.
------------------------
Distributions shall be made to the Members at the time or times
determined by the board of managers. Any distributions shall be made to the
Members in accordance with their respective Percentage Interests. The Original
Member's Percentage Interest shall be 99% and the Other Member's Percentage
Interest shall be 1%.
5. Transfers; Resignation.
----------------------
No Member may sell, transfer, assign, pledge or otherwise dispose
of or encumber its interest in the Company without the consent of the other
Member except that any Member may pledge its interest to First Union National
Bank, as Administrative Agent, pursuant to the Credit Agreement dated as of
October 9, 1997. No Member may resign from the Company prior to the dissolution
and winding up of the Company.
6. Exculpation; Indemnification.
----------------------------
6.1 Exculpation. To the extent not inconsistent with applicable
-----------
law, neither any Member nor any member of the board of managers, nor any of its
officers, directors, employees or affiliates, nor any officer of the Company,
shall be liable, responsible or accountable in damages or otherwise to the
Company or to any other Member for any action taken or for any failure to act on
behalf of the Company after the date hereof in connection with the business or
operations of the Company, unless the act or omission constituted gross
negligence, willful misconduct or a breach of a fiduciary duty to the Company
and the Members.
6.2 Indemnification. To the extent not inconsistent with
---------------
applicable law, the Company shall indemnify and hold harmless any Member and any
member of the board of managers and its officers, directors, employees and
affiliates, and all of the Company's officers, from any loss, liability, damage
or expense (including, but not limited to, any judgment, award or settlement and
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim)
arising out of (a) any acts or omissions or alleged acts or omissions in
connection with their activities or the activities of any of their respective
employees or agents on behalf of the Company after the date hereof or in
connection with the business or operations of the Company after the date hereof,
and (b) any liability imposed upon any of them under any statute, rule or
regulation (including, but not limited to, any statute, rule or regulation
relating to environmental matters) applicable to the Company, or its officers,
directors or employees; provided that the acts or omissions or the alleged acts
or omissions upon which the action or
3
<PAGE>
threatened action, proceeding or claim is based did not constitute gross
negligence, willful misconduct or a breach of a fiduciary duty to the Company
and the Members by the indemnified party. Reasonable expenses incurred by any
such indemnified party in connection with the matters referred to above may be
paid or reimbursed by the Company in advance of the final disposition of the
proceeding upon receipt by the Company of (i) a written affirmation by the
indemnified party of his or its good faith belief that he or it met the standard
of conduct necessary for indemnification by the Company, and (ii) a written
undertaking by or on behalf of the indemnified party to repay such amount if it
shall ultimately be determined by a court of competent jurisdiction that he or
it has not met that standard of conduct.
7. Duration of Company. The Company shall continue in existence
-------------------
until the earlier of (a) December 31, 2010 and (b) the date the Company is
dissolved in accordance with section 8.
8. Dissolution; Liquidation.
------------------------
8.1 Dissolution. The Company shall be dissolved prior to
-----------
December 31, 2010 only upon the occurrence of one of the following events:
(a) the election by the Members to dissolve the Company;
(b) the termination of the Company's business as a result of
the sale or other disposition by the Company of substantially all of its
business and assets; or
(c) the bankruptcy or dissolution of any Member, or the
occurrence of any event which terminates the continued membership of any Member
in the Company, unless the other Member determines, within 90 days following the
occurrence of any such event, to continue the Company.
8.2 Liquidation and Distribution of Assets. Upon dissolution of
--------------------------------------
the Company, the board of managers shall proceed to sell or liquidate the assets
(to the extent feasible) within a reasonable time and, after paying or making
provision for all liabilities to creditors of the Company, shall distribute the
Company's cash and other assets to the Members in proportion to their respective
Percentage Interests.
9. Accounting and Tax Matters
--------------------------
9.1 Fiscal Year. The Company's fiscal year shall be the calendar
-----------
year unless changed by the board of managers.
9.2 Books of Account, etc. Complete and accurate books of account
---------------------
shall be kept by the Company at its principal office (or at such other office as
the board of managers may designate) and the Members shall have the right to
inspect those books during normal business hours. The Company's books of account
shall be kept on the cash or accrual basis of accounting, as the board of
managers may determine, in accordance with
4
<PAGE>
sound accounting practices and principles applied in a consistent manner by the
Company; all methods of accounting and treatment of particular transactions
reflected on these books shall be in accordance with the methods of accounting
employed for federal income tax purposes. The determinations of the board of
managers with respect to the treatment of any item or its allocation for
federal, state or local income tax purposes shall be binding upon the Members so
long as that determination is not inconsistent with any express provision of
this agreement.
9.3 Reports. The Company shall use its best efforts to furnish
-------
to the Members, within (a) 30 days after the end of each month, unaudited
monthly and year-to-date statements of income and a balance sheet as of the end
of that month, and (b) 90 days after the end of each fiscal year, unaudited
financial statements of the Company with respect to that year (including a
balance sheet of the Company as of the end of the year and a statement of income
and capital accounts and a statement of changes in financial position of the
Company for the year).
9.4 Tax Information. Not later than the date of delivery of the
---------------
annual financial statements pursuant to section 9.3, the board of managers shall
cause the Company's accountants to furnish to the Members any information
required by the Members to complete any income tax return that it is required to
file for that year. The Company shall also furnish tax information to the
Members on an interim basis to the extent the board of managers appropriate.
9.5 Tax Allocations. For federal, state and local income tax
---------------
purposes, all items of income, deduction, gain and loss shall be allocated to
the Members in proportion to their Percentage Interests, except that to the
extent of the difference between the fair market value and the basis for federal
income tax purposes of property contributed to the Company, income, gains,
deductions (including depreciation and amortization) and losses with respect to
that property shall be allocated among the Members in accordance with Internal
Revenue Code section 704(c)(1)(A).
9.6 Capital Accounts. For the purpose of this agreement, the
----------------
balance of the capital account ("Capital Account") of each of the Members shall
be determined on the basis of an account maintained for the Member as part of
the books of account of the Company. The amount of each Member's Capital Account
shall be equal to the aggregate amount of cash and the fair market value of
property contributed to the Company by the Member, and shall be increased by the
Member's share of income and gains of the Company, and shall be decreased by (a)
the aggregate amount of cash and the fair market value of any property
distributed by the Company (less any liabilities assumed with respect to such
distribution) to the Member and (b) the Member's share of losses of the Company.
9.7 Elections. To the extent that the Company may make elections
---------
for federal, state or local income tax purposes, the elections shall be made in
a manner best calculated, in the opinion of the board of managers, to minimize
the cash requirements of the Company and the Members. The Members shall treat
all Company items on its federal, state
5
<PAGE>
or local income tax returns in a manner consistent with the treatment of the
item on the Company's federal, state or local income tax return.
10. Miscellaneous
-------------
10.1 Entire Agreement; Amendment. This agreement contains a
---------------------------
complete statement of the arrangements with respect to the Company, supersedes
all prior arrangements and understandings with respect to the Company, and may
not be amended except by a writing executed by the Members.
10.2 Notices. Any notice or other communication under this
-------
agreement shall be in writing and shall be considered given when delivered in
person or sent by facsimile, one day after being sent by a major overnight
courier, or four days after being mailed by registered mail, return receipt
requested, to each Member at 350 Park Avenue, New York, New York 10022, Fax
(212) 935-0877
10.3 Governing Law. This agreement shall be governed by and
-------------
construed in accordance with the law of the State of Delaware applicable to
agreements made and to be performed entirely in Delaware.
10.4 Definition. As used in this agreement, the term "affiliate"
----------
means any person or entity directly or indirectly controlled by, controlling, or
under common control with, any other person or entity.
10.5 Severability. If any provision of this agreement is invalid
------------
or unenforceable, the balance of this agreement shall remain in effect and shall
be enforceable to the maximum extent permitted by law, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
10.6 Headings. The headings in this agreement are solely for the
--------
convenience of reference and shall not affect its interpretation.
10.7 Other Action. The Members shall execute and deliver such
------------
additional documents and instruments, and shall perform such additional acts, as
may be necessary or appropriate to carry out the terms of this agreement.
10.8 Waiver of Action for Partition. Each Member irrevocably
------------------------------
waives, during the term of the Company, any right it may have to maintain any
action for partition with respect to the Company or any property of the Company.
6
<PAGE>
10.9 Third Party Beneficiaries. Nothing in this agreement, express
-------------------------
or implied, is intended or shall be construed to give anyone other than the
parties to this agreement or their respective successors or permitted assigns
any legal or equitable right, remedy or claim under or in respect of any
provision contained in this agreement.
T/SF HOLDINGS, LLC
By: T/SF Communications Corporation
By:_______________________________________
T/SF OPERATING, LLC
By: T/SF Communications Corporation
By:________________________________________
7
<PAGE>
EXHIBIT 3.37
CERTIFICATE OF FORMATION
OF
GEM GAMING, LLC
---------------
1. The name of the limited liability company is GEM GAMING, LLC.
2. The address of its registered office in the State of Delaware is
c/o United Corporate Services, Inc., 15 East North Street, Dover, Delaware. The
name of its registered agent at that address is United Corporate Services, Inc.
Dated: October 6, 1997
/s/ Lawrence H. Budish
----------------------
Lawrence H. Budish
Authorized Person
<PAGE>
EXHIBIT 3.38
================================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GEM GAMING, LLC
Dated as of February 6, 1998
----------------------------
================================================================================
<PAGE>
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GEM GAMING, LLC
Dated as of February 6, 1998
----------------------------
GEM Gaming, LLC, a Delaware limited liability company (the
"Company"), was formed by T/SF Holdings, LLC, a Delaware limited liability
company (the "Original Member"), to operate the business (the "GEM Business")
previously operated by G.E.M. Communications, Inc., an Oklahoma corporation
("GEM").
The Original Member wishes to admit T/SF Operating, LLC, a
Delaware limited liability company (the "Other Member"), as a Member and to
amend and restate the terms of the Company's limited liability company
agreement. The Original Member and the Other Member are referred to as the
"Members". It is therefore agreed as follows:
1. Business. The Company shall own and operate the GEM
--------
Business and shall conduct all activities relating to the GEM Business that the
board of managers determines appropriate.
2. Management of the Company.
-------------------------
2.1 Management by Board. The business and affairs of the
-------------------
Company shall be managed under the direction of a board of managers consisting
of three members. The board of managers shall act by majority vote of the total
number of members of the board. The members of the board of managers shall be
designated by the Members, voting in accordance with their Percentage Interests
(as defined in section 4). The Members hereby designate Ian L.M. Thomas, Brian
A. Meyer and Steven J. Hunt as the initial members of the board of managers.
Action may be taken by the board of managers at a meeting (at which members of
the board may participate in person or by telephone), by polling members of the
board without a meeting, or by a writing signed by a majority of the members of
the board of managers, except that no action may be taken by a writing unless
all members of the board are first given notice of, and a reasonable opportunity
to comment upon, the proposed action. The board of managers shall hold meetings
at such intervals, and shall adopt such rules of procedure, as it may from time
to time determine. Any member of the board of managers may designate another
person to act as his substitute at any meeting or in connection with any action
to be taken by the board of managers. Members of the board of managers shall not
be compensated for their services as such.
<PAGE>
2.2 Officers. The board of managers may appoint such
--------
officers of the Company as the board of managers determines desirable,
including, but not limited to, a chairman, a chief executive officer, a
president, one or more vice-presidents, a secretary, a treasurer, and one or
more assistant secretaries and assistant treasurers. The officers of the Company
need not be members of the Company and shall have the powers and duties
delegated to them by the board of managers. Officers of the Company shall serve
at the plea sure of the board of managers.
2.3 Persons Employed by the Company. The board of
-------------------------------
managers may cause the Company to employ and compensate such persons, firms or
corporations, including, but not limited to, accountants and attorneys, as it
deems advisable or necessary to carry on, assist or promote the Company's
business. In addition, the board may utilize the services of persons employed by
related persons or entities for tax, accounting, personnel and other similar
services rendered to the Company. The fact that any Member or any member of the
board of managers, or a person associated with any Member or any member of the
board of managers, is employed by, or is directly or indirectly interested in or
connected with, any person, firm or corporation employed by the Company to
render or perform any service shall not prohibit the board of managers from
employing or otherwise dealing with that person, firm or corporation, and the
Company shall not have any rights in or to any income or profits derived
therefrom.
2.4 Other Activities of the Members. The members of
-------------------------------
the board of managers or the Members may engage or have an interest in other
business ventures of any kind, independently or with others, and the Company
shall not have any rights in or to those independent ventures.
3. Capital Contributions.
---------------------
3.1 Capital Contributions.
---------------------
(a) Simultaneously with the execution of this
agreement, the Original Member is contributing to the Company all of the assets
of the GEM Business, subject to the liabilities of the GEM Business, and the
Other Member is contributing $52,400 in cash.
(b) Except as provided in this section 3.1, the
Members shall not be required to make any capital contribution to the Company.
3.2 No Withdrawals. No Member shall be entitled to
--------------
withdraw any part of its capital account or capital contribution or to receive
any distribution from the Company except as expressly provided in this
agreement.
3.3 No Liability for Capital Contributions. No Member
--------------------------------------
shall be required to pay to the Company any deficit in its capital account (upon
dissolution or otherwise). No Member shall have the right to demand or receive
cash or other property for its interest in the Company.
2
<PAGE>
3.4 No Interest. No Member shall receive any
-----------
interest on its capital contributions or capital account.
4. Transfers; Distributions.
------------------------
Distributions shall be made to the Members at the time or
times determined by the board of managers. Any distributions shall be made to
the Members in accordance with their respective Percentage Interests. The
Original Member's Percentage Interest shall be 99% and the Other Member's
Percentage Interest shall be 1%.
5. Transfers; Resignation.
----------------------
No Member may sell, transfer, assign, pledge or otherwise
dispose of or encumber its interest in the Company without the consent of the
other Member except that any Member may pledge its interest to First Union
National Bank, as Administrative Agent, pursuant to the Credit Agreement dated
as of October 9, 1997. No Member may resign from the Company prior to the
dissolution and winding up of the Company.
6. Exculpation; Indemnification.
----------------------------
6.1 Exculpation. To the extent not inconsistent with
-----------
applicable law, neither any Member nor any member of the board of managers, nor
any of its officers, directors, employees or affiliates, nor any officer of the
Company, shall be liable, responsible or accountable in damages or otherwise to
the Company or to any other Member for any action taken or for any failure to
act on behalf of the Company after the date hereof in connection with the
business or operations of the Company, unless the act or omission constituted
gross negligence, willful misconduct or a breach of a fiduciary duty to the
Company and the Members.
6.2 Indemnification. To the extent not inconsistent with
---------------
applicable law, the Company shall indemnify and hold harmless any Member and any
member of the board of managers and its officers, directors, employees and
affiliates, and all of the Company's officers, from any loss, liability, damage
or expense (including, but not limited to, any judgment, award or settlement and
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim)
arising out of (a) any acts or omissions or alleged acts or omissions in
connection with their activities or the activities of any of their respective
employees or agents on behalf of the Company after the date hereof or in
connection with the business or operations of the Company after the date hereof,
and (b) any liability imposed upon any of them under any statute, rule or
regulation (including, but not limited to, any statute, rule or regulation
relating to environmental matters) applicable to the Company, or its officers,
directors or employees; provided that the acts or omissions or the alleged acts
or omissions upon which the action or threatened action, proceeding or claim is
based did not constitute gross negligence, willful misconduct or a breach of a
fiduciary duty to the Company and the Members by the indemnified party.
Reasonable expenses incurred by any such indemnified party in connection
3
<PAGE>
with the matters referred to above may be paid or reimbursed by the Company in
advance of the final disposition of the proceeding upon receipt by the Company
of (i) a written affirmation by the indemnified party of his or its good faith
belief that he or it met the standard of conduct necessary for indemnification
by the Company, and (ii) a written undertaking by or on behalf of the
indemnified party to repay such amount if it shall ultimately be determined by a
court of competent jurisdiction that he or it has not met that standard of
conduct.
7. Duration of Company. The Company shall continue in
-------------------
existence until the earlier of (a) December 31, 2010 and (b) the date the
Company is dissolved in accordance with section 8.
8. Dissolution; Liquidation.
-------------------------
8.1 Dissolution. The Company shall be dissolved prior to
-----------
December 31, 2010 only upon the occurrence of one of the following events:
(a) the election by the Members to dissolve the Company;
(b) the termination of the Company's business as a result
of the sale or other disposition by the Company of substantially all of its
business and assets; or
(c) the bankruptcy or dissolution of any Member, or the
occurrence of any event which terminates the continued membership of any Member
in the Company, unless the other Member determines, within 90 days following the
occurrence of any such event, to continue the Company.
8.2 Liquidation and Distribution of Assets. Upon
--------------------------------------
dissolution of the Company, the board of managers shall proceed to sell or
liquidate the assets (to the extent feasible) within a reasonable time and,
after paying or making provision for all liabilities to creditors of the
Company, shall distribute the Company's cash and other assets to the Members in
proportion to their respective Percentage Interests.
9. Accounting and Tax Matters.
--------------------------
9.1 Fiscal Year. The Company's fiscal year shall be the
-----------
calendar year unless changed by the board of managers.
9.2 Books of Account, etc. Complete and accurate books
---------------------
of account shall be kept by the Company at its principal office (or at such
other office as the board of managers may designate) and the Members shall have
the right to inspect those books during normal business hours. The Company's
books of account shall be kept on the cash or accrual basis of accounting, as
the board of managers may determine, in accordance with sound accounting
practices and principles applied in a consistent manner by the Company; all
methods of accounting and treatment of particular transactions reflected on
these books shall be in accordance with the methods of accounting employed for
federal income tax purposes. The
4
<PAGE>
determinations of the board of managers with respect to the treatment of any
item or its allocation for federal, state or local income tax purposes shall be
binding upon the Members so long as that determination is not inconsistent with
any express provision of this agreement.
9.3 Reports. The Company shall use its best efforts to
-------
furnish to the Members, within (a) 30 days after the end of each month,
unaudited monthly and year-to-date statements of income and a balance sheet as
of the end of that month, and (b) 90 days after the end of each fiscal year,
unaudited financial statements of the Company with respect to that year
(including a balance sheet of the Company as of the end of the year and a
statement of income and capital accounts and a statement of changes in financial
position of the Company for the year).
9.4 Tax Information. Not later than the date of
---------------
delivery of the annual financial statements pursuant to section 9.3, the board
of managers shall cause the Company's accountants to furnish to the Members any
information required by the Members to complete any income tax return that it is
required to file for that year. The Company shall also furnish tax information
to the Members on an interim basis to the extent the board of managers
appropriate.
9.5 Tax Allocations. For federal, state and local
---------------
income tax pur poses, all items of income, deduction, gain and loss shall be
allocated to the Members in proportion to their Percentage Interests, except
that to the extent of the difference between the fair market value and the basis
for federal income tax purposes of property contributed to the Company, income,
gains, deductions (including depreciation and amortization) and losses with
respect to that property shall be allocated among the Members in accordance with
Internal Revenue Code section 704(c)(1)(A).
9.6 Capital Accounts. For the purpose of this agreement,
----------------
the balance of the capital account ("Capital Account") of each of the Members
shall be determined on the basis of an account maintained for the Member as part
of the books of account of the Company. The amount of each Member's Capital
Account shall be equal to the aggregate amount of cash and the fair market value
of property contributed to the Company by the Member, and shall be increased by
the Member's share of income and gains of the Company, and shall be decreased by
(a) the aggregate amount of cash and the fair market value of any property
distributed by the Company (less any liabilities assumed with respect to such
distribution) to the Member and (b) the Member's share of losses of the Company.
9.7 Elections. To the extent that the Company may make
---------
elections for federal, state or local income tax purposes, the elections shall
be made in a manner best calculated, in the opinion of the board of managers, to
minimize the cash requirements of the Company and the Members. The Members shall
treat all Company items on its federal, state or local income tax returns in a
manner consistent with the treatment of the item on the Company's federal, state
or local income tax return.
5
<PAGE>
10. Miscellaneous.
-------------
10.1 Entire Agreement; Amendment. This agreement
---------------------------
contains a complete statement of the arrangements with respect to the Company,
supersedes all prior arrangements and understandings with respect to the
Company, and may not be amended except by a writing executed by the Members.
10.2 Notices. Any notice or other communication
-------
under this agreement shall be in writing and shall be considered given when
delivered in person or sent by facsimile, one day after being sent by a major
overnight courier, or four days after being mailed by registered mail, return
receipt requested, to each Member at 350 Park Avenue, New York, New York 10022,
Fax (212) 935-0877
10.3 Governing Law. This agreement shall be governed
-------------
by and construed in accordance with the law of the State of Delaware applicable
to agreements made and to be performed entirely in Delaware.
10.4 Definition. As used in this agreement, the term
----------
"affiliate" means any person or entity directly or indirectly controlled by,
controlling, or under common control with, any other person or entity.
10.5 Severability. If any provision of this
------------
agreement is invalid or unenforceable, the balance of this agreement shall
remain in effect and shall be enforceable to the maximum extent permitted by
law, and if any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances.
10.6 Headings. The headings in this agreement are
--------
solely for the convenience of reference and shall not affect its interpretation.
10.7 Other Action. The Members shall execute and
deliver such additional documents and instruments, and shall perform such
additional acts, as may be necessary or appropriate to carry out the terms of
this agreement.
10.8 Waiver of Action for Partition. Each Member
------------------------------
irrevocably waives, during the term of the Company, any right it may have to
maintain any action for partition with respect to the Company or any property of
the Company.
6
<PAGE>
10.9 Third Party Beneficiaries. Nothing in this
-------------------------
agreement, express or implied, is intended or shall be construed to give anyone
other than the parties to this agreement or their respective successors or
permitted assigns any legal or equitable right, remedy or claim under or in
respect of any provision contained in this agreement.
T/SF HOLDINGS, LLC
By: T/SF Communications Corporation
By:
----------------------------------
T/SF OPERATING, LLC
By: T/SF Communications Corporation
By:
----------------------------------
7
<PAGE>
EXHIBIT 3.39
Articles of Organization
Limited-Liability Company
(PURSUANT TO NRS 86)
STATE OF NEVADA
Secretary of State
DEAN HELLER SECRETARY OF STATE
(For Office Use Only (For Office Use Only
--------------------------------------------------------------------
IMPORTANT: Read instructions on reverse side before completing this form.
TYPE OR PRINT (BLACK INK ONLY)
Dean Heller
No. LLC 535-98
==========
1. Name of Limited Liability Company: GEM Nevada, LLC
-----------------------------------------
2. Dissolution Date (latest date upon which the company is to dissolve):
------
3. Resident Agent: (designated resident agent and the STREET ADDRESS in Nevada
where process may be served)
Name of Resident Agent: CSC Services of Nevada, Inc.
----------------------------------------------------
Street Address: 502 East John Street, Carson City, Nevada 89706
------------------------------------------------------------
Mailing Address (if different):
--------------------------------------------
4. Right of remaining members of the company to continue the business on the
death, retirement, expulsion, bankruptcy or dissolution of a member or
occurrence of any other event which terminates the continued membership of a
member in the company:
X YES NO
--------- ---------
5. Management: The company shall be managed by 3 manager(s) OR members
-----
Names and addresses of manager(s) or members: (attach additional pages if
necessary)
1. Ian L. M. Thomas, c/o T/SF Communications Corporation, 888 Seventh
------------------------------------------------------------------------
Avenue, New York, NY 10106
------------------------------------------------------------------------
2. Steven J. Hunt, c/o T/SF Communications Corporation, 888 Seventh Avenue,
------------------------------------------------------------------------
New York, NY 10106
------------------------------------------------------------------------
3. Brian A. Meyer, c/o T/SF Communications Corporation, 888 Seventh Avenue,
------------------------------------------------------------------------
New York, NY 10106
------------------------------------------------------------------------
If managed by members, members may contract debts on behalf of the Company
YES NO
----- -----
6. Other matters: This form includes the minimal statutory requirements to
organize under NRS 86. Please attach any other information deemed
appropriate. Number of pages attached N/A .
--------
7. Signature of organizer(s): The name(s) and address(es) of the organizer(s)
executing the articles:
<TABLE>
<S> <C>
Helaine S. Fine, Esq. c/o Proskauer Rose LLP
- ---------------------------------------------- ----------------------------------------------
Name (print) Name (print)
1585 Broadway NY, NY 10036
- ---------------------------------------------- ----------------------------------------------
Address City/State/Zip Address City/State/Zip
/s/ Helaine S. Fine, Esq. 2/2/98
- ---------------------------------------------- ----------------------------------------------
Signature Date Signature Date
This instrument was acknowledged before me on This instrument was acknowledged before me on
2/2, 1998 by , 19 by
- ----------------------------------- -- ----------------------------------- --
Helaine S. Fine
- ---------------------------------------------- ----------------------------------------------
Name of Person Name of Person
as organizer as organizer
of GEM Nevada, LLC of
-------------------------------------------- --------------------------------------------
(name of party on behalf of whom instrument (name of party on behalf of whom instrument
was executed) was executed)
/s/ Vito S. Piacente
- ---------------------------------------------- ----------------------------------------------
Notary Public Signature Notary Public Signature
(affix notary stamp or seal) (affix notary stamp or seal)
</TABLE>
8. Certificate of acceptance of appointment of resident agent: I, CSC Services
------------
of Nevada, Inc. hereby accept appointment as resident agent for the above
---------------
named limited-liability company.
By: /s/ illegible 2-2-98
-------------------------------- ----------------------
Signature of resident agent Date
VITO S. PIACENTE
Notary Public, State of New York
No. 01P14983694
Qualified in New York County
Commission Expires July 8, 1999
STATE OF NEVADA
Secretary of State
I hereby certify that this is a
true and complete copy of
the document as filed in this office.
FEB 03 '98
/s/ Dean Heller
DEAN HELLER
Secretary of State
By /s/ Sandra D. Pestana
<PAGE>
EXHIBIT 3.40
================================================================================
LIMITED LIABILITY COMPANY AGREEMENT
OF
GEM NEVADA, LLC
DATED AS OF FEBRUARY 6, 1998
----------------------------
================================================================================
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
GEM NEVADA, LLC
Dated as of February 6, 1998
----------------------------
GEM Nevada, LLC, a Delaware limited liability company (the
"Company"), has been formed by T/SF Holdings, LLC, a Delaware limited liability
company ("T/SF Holdings") and T/SF Operating, LLC, a Delaware limited liability
company ("T/SF Operating"), to operate the business (the "T/SF Nevada Business")
previously operated by T/SF of Nevada, Inc., a Nevada corporation ("T/SF
Nevada").
T/SF Holdings and T/SF Operating are referred to as the
"Members". It is therefore agreed as follows:
1. Business. The Company shall own and operate the T/SF Nevada
--------
Business and shall conduct all activities relating to the T/SF Nevada Business
that the board of managers determines appropriate.
2. Management of the Company.
-------------------------
2.1 Management by Board. The business and affairs of the
-------------------
Company shall be managed under the direction of a board of managers consisting
of three members. The board of managers shall act by majority vote of the total
number of members of the board. The members of the board of managers shall be
designated by the Members, voting in accordance with their Percentage Interests
(as defined in section 4). The Members hereby designate Ian L.M. Thomas, Brian
A. Meyer and Steven J. Hunt as the initial members of the board of managers.
Action may be taken by the board of managers at a meeting (at which members of
the board may participate in person or by telephone), by polling members of the
board without a meeting, or by a writing signed by a majority of the members of
the board of managers, except that no action may be taken by a writing unless
all members of the board are first given notice of, and a reasonable opportunity
to comment upon, the proposed action. The board of managers shall hold meetings
at such intervals, and shall adopt such rules of procedure, as it may from time
to time determine. Any member of the board of managers may designate another
person to act as his substitute at any meeting or in connection with any action
to be taken by the board of managers. Members of the board of managers shall not
be compensated for their services as such.
2.2 Officers. The board of managers may appoint such
--------
officers of the Company as the board of managers determines desirable,
including, but not limited to, a chairman, a chief executive officer, a
president, one or more vice-presidents, a secretary, a treasurer, and one or
more assistant secretaries and assistant treasurers. The officers of the
<PAGE>
Company need not be members of the Company and shall have the powers and duties
delegated to them by the board of managers. Officers of the Company shall serve
at the plea sure of the board of managers.
2.3 Persons employed by the Company. The board of managers
-------------------------------
may cause the Company to employ and compensate such persons, firms or
corporations, including, but not limited to, accountants and attorneys, as it
deems advisable or necessary to carry on, assist or promote the Company's
business. In addition, the board may utilize the services of persons employed by
related persons or entities for tax, accounting, personnel and other similar
services rendered to the Company. The fact that any Member or any member of the
board of managers, or a person associated with any Member or any member of the
board of managers, is employed by, or is directly or indirectly interested in or
connected with, any person, firm or corporation employed by the Company to
render or perform any service shall not prohibit the board of managers from
employing or otherwise dealing with that person, firm or corporation, and the
Company shall not have any rights in or to any income or profits derived
therefrom.
2.4 Other Activities of the Members. The members of the
-------------------------------
board of managers or the Members may engage or have an interest in other
business ventures of any kind, independently or with others, and the Company
shall not have any rights in or to those independent ventures.
3. Capital Contributions.
---------------------
3.1 Capital Contributions.
(a) Simultaneously with the execution of this
agreement, T/SF Holdings is contributing to the Company all of the assets of the
T/SF Nevada Business, subject to the liabilities of the T/SF Nevada Business,
and T/SF Operating is contributing $52,500 in cash.
(b) Except as provided in this section 3.1, the
Members shall not be required to make any capital contribution to the Company.
3.2 No Withdrawals. No Member shall be entitled to
--------------
withdraw any part of its capital account or capital contribution or to receive
any distribution from the Company except as expressly provided in this
agreement.
3.3 No Liability For Capital Contributions. No Member
--------------------------------------
shall be required to pay to the Company any deficit in its capital account (upon
dissolution or otherwise). No Member shall have the right to demand or receive
cash or other property for its interest in the Company.
3.4 No Interest. No Member shall receive any interest
-----------
on its capital contributions or capital account.
2
<PAGE>
4. Transfers; Distributions.
------------------------
Distributions shall be made to the Members at the time or
times determined by the board of managers. Any distributions shall be made to
the Members in accordance with their respective Percentage Interests. T/SF
Holdings' Percentage Interest shall be 99% and the T/SF Operating's Percentage
Interest shall be 1%.
5. Transfers; Resignation.
----------------------
No Member may sell, transfer, assign, pledge or otherwise
dispose of or encumber its interest in the Company without the consent of the
other Member except that any Member may pledge its interest to First Union
National Bank, as Administrative Agent, pursuant to the Credit Agreement dated
as of October 9, 1997. No Member may resign from the Company prior to the
dissolution and winding up of the Company.
6. Exculpation; Indemnification.
6.1 Exculpation. To the extent not inconsistent with
-----------
applicable law, neither any Member nor any member of the board of managers, nor
any of its officers, directors, employees or affiliates, nor any officer of the
Company, shall be liable, responsible or accountable in damages or otherwise to
the Company or to any other Member for any action taken or for any failure to
act on behalf of the Company after the date hereof in connection with the
business or operations of the Company, unless the act or omission constituted
gross negligence, willful misconduct or a breach of a fiduciary duty to the
Company and the Members.
6.2 Indemnification. To the extent not inconsistent with
---------------
applicable law, the Company shall indemnify and hold harmless any Member and any
member of the board of managers and its officers, directors, employees and
affiliates, and all of the Company's officers, from any loss, liability, damage
or expense (including, but not limited to, any judgment, award or settlement and
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim)
arising out of (a) any acts or omissions or alleged acts or omissions in
connection with their activities or the activities of any of their respective
employees or agents on behalf of the Company after the date hereof or in
connection with the business or operations of the Company after the date hereof,
and (b) any liability imposed upon any of them under any statute, rule or
regulation (including, but not limited to, any statute, rule or regulation
relating to environmental matters) applicable to the Company, or its officers,
directors or employees; provided that the acts or omissions or the alleged acts
or omissions upon which the action or threatened action, proceeding or claim is
based did not constitute gross negligence, willful misconduct or a breach of a
fiduciary duty to the Company and the Members by the indemnified party.
Reasonable expenses incurred by any such indemnified party in connection with
the matters referred to above may be paid or reimbursed by the Company in
advance of the final disposition of the proceeding upon receipt by the Company
of (i) a written affirmation by the indemnified party of his or its good faith
belief that he or it met the standard of conduct
3
<PAGE>
necessary for indemnification by the Company, and (ii) a written undertaking by
or on behalf of the indemnified party to repay such amount if it shall
ultimately be determined by a court of competent jurisdiction that he or it has
not met that standard of conduct.
7. Duration of Company. The Company shall continue in
-------------------
existence until the earlier of (a) December 31, 2010 and (b) the date the
Company is dissolved in accordance with section 8.
8. Dissolution; Liquidation.
8.1 Dissolution. The Company shall be dissolved prior to
-----------
December 31, 2010 only upon the occurrence of one of the following events:
(a) the election by the Members to dissolve the
Company;
(b) the termination of the Company's business as a
result of the sale or other disposition by the Company of substantially all of
its business and assets; or
(c) the bankruptcy or dissolution of any Member, or the
occurrence of any event which terminates the continued membership of any Member
in the Company, unless the other Member determines, within 90 days following the
occurrence of any such event, to continue the Company.
8.2 Liquidation and Distribution of Assets. Upon
--------------------------------------
dissolution of the Company, the board of managers shall proceed to sell or
liquidate the assets (to the extent feasible) within a reasonable time and,
after paying or making provision for all liabilities to creditors of the
Company, shall distribute the Company's cash and other assets to the Members in
proportion to their respective Percentage Interests.
9. Accounting and Tax Matters.
9.1 Fiscal Year. The Company's fiscal year shall be the
-----------
calendar year unless changed by the board of managers.
9.2 Books of Account, etc. Complete and accurate books of
---------------------
account shall be kept by the Company at its principal office (or at such other
office as the board of managers may designate) and the Members shall have the
right to inspect those books during normal business hours. The Company's books
of account shall be kept on the cash or accrual basis of accounting, as the
board of managers may determine, in accordance with sound accounting practices
and principles applied in a consistent manner by the Company; all methods of
accounting and treatment of particular transactions reflected on these books
shall be in accordance with the methods of accounting employed for federal
income tax purposes. The determinations of the board of managers with respect to
the treatment of any item or its allocation for federal, state or local income
tax purposes shall be binding upon the Members so long as that determination is
not inconsistent with any express provision of this agreement.
4
<PAGE>
9.3 Reports. The Company shall use its best efforts to
-------
furnish to the Members, within (a) 30 days after the end of each month,
unaudited monthly and year-to-date statements of income and a balance sheet as
of the end of that month, and (b) 90 days after the end of each fiscal year,
unaudited financial statements of the Company with respect to that year
(including a balance sheet of the Company as of the end of the year and a
statement of income and capital accounts and a statement of changes in financial
position of the Company for the year).
9.4 Tax Information. Not later than the date of delivery
---------------
of the annual financial statements pursuant to section 9.3, the board of
managers shall cause the Company's accountants to furnish to the Members any
information required by the Members to complete any income tax return that it is
required to file for that year. The Company shall also furnish tax information
to the Members on an interim basis to the extent the board of managers
appropriate.
9.5 Tax Allocations. For federal, state and local income
---------------
tax purposes, all items of income, deduction, gain and loss shall be allocated
to the Members in proportion to their Percentage Interests, except that to the
extent of the difference between the fair market value and the basis for federal
income tax purposes of property contributed to the Company, income, gains,
deductions (including depreciation and amortization) and losses with respect to
that property shall be allocated among the Members in accordance with Internal
Revenue Code section 704(c)(1)(A).
9.6 Capital Accounts. For the purpose of this
----------------
agreement, the balance of the capital account ("Capital Account") of each of the
Members shall be determined on the basis of an account maintained for the Member
as part of the books of account of the Company. The amount of each Member's
Capital Account shall be equal to the aggregate amount of cash and the fair
market value of property contributed to the Company by the Member, and shall be
increased by the Member's share of income and gains of the Company, and shall be
decreased by (a) the aggregate amount of cash and the fair market value of any
property distributed by the Company (less any liabilities assumed with respect
to such distribution) to the Member and (b) the Member's share of losses of the
Company.
9.7 Elections. To the extent that the Company may make
elections for federal, state or local income tax purposes, the elections shall
be made in a manner best calculated, in the opinion of the board of managers, to
minimize the cash requirements of the Company and the Members. The Members shall
treat all Company items on its federal, state or local income tax returns in a
manner consistent with the treatment of the item on the Company's federal, state
or local income tax return.
10. Miscellaneous.
-------------
10.1 Entire Agreement; Amendment. This agreement contains
a complete statement of the arrangements with respect to the Company, supersedes
all prior arrangements and understandings with respect to the Company, and may
not be amended
5
<PAGE>
except by a writing executed by the Members.
10.2 Notices. Any notice or other communication under this
-------
agreement shall be in writing and shall be considered given when delivered in
person or sent by facsimile, one day after being sent by a major overnight
courier, or four days after being mailed by registered mail, return receipt
requested, to each Member at 350 Park Avenue, New York, New York 10022, Fax
(212) 935-0877
10.3 Governing Law. This agreement shall be governed by and
-------------
construed in accordance with the law of the State of Delaware applicable to
agreements made and to be performed entirely in Delaware.
10.4 Definition. As used in this agreement, the term
----------
"affiliate" means any person or entity directly or indirectly controlled by,
controlling, or under common control with, any other person or entity.
10.5 Severability. If any provision of this agreement is
------------
invalid or unenforceable, the balance of this agreement shall remain in effect
and shall be enforceable to the maximum extent permitted by law, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
10.6 Headings. The headings in this agreement are solely
--------
for the convenience of reference and shall not affect its interpretation.
10.7 Other Action. The Members shall execute and deliver
------------
such additional documents and instruments, and shall perform such additional
acts, as may be necessary or appropriate to carry out the terms of this
agreement.
10.8 Waiver of Action for Partition. Each Member
irrevocably waives, during the term of the Company, any right it may have to
maintain any action for partition with respect to the Company or any property of
the Company.
6
<PAGE>
10.9 Third Party Beneficiaries. Nothing in this agreement,
express or implied, is intended or shall be construed to give anyone other than
the parties to this agreement or their respective successors or permitted
assigns any legal or equitable right, remedy or claim under or in respect of any
provision contained in this agreement.
T/SF HOLDINGS, LLC
By: T/SF Communications Corporation
By:
-----------------------------------
T/SF OPERATING, LLC
By: T/SF Communications Corporation
By:
-----------------------------------
7
<PAGE>
EXHIBIT 3.41
Articles of Organization
Limited-Liability Company
(PURSUANT TO NRS 86)
STATE OF NEVADA
Secretary of State
DEAN HELLER SECRETARY OF STATE
(For Office Use Only (For Office Use Only
--------------------------------------------------------------------
IMPORTANT: Read instructions on reverse side before completing this form.
TYPE OR PRINT (BLACK INK ONLY)
Dean Heller
No. LLC 536-98
==========
1. Name of Limited Liability Company: Casino Executive, LLC
-----------------------------------------
2. Dissolution Date (latest date upon which the company is to dissolve):
------
3. Resident Agent: (designated resident agent and the STREET ADDRESS in Nevada
where process may be served)
Name of Resident Agent: CSC Services of Nevada, Inc.
----------------------------------------------------
Street Address: 502 East John Street, Carson City, Nevada 89706
------------------------------------------------------------
Mailing Address (if different):
--------------------------------------------
4. Right of remaining members of the company to continue the business on the
death, retirement, expulsion, bankruptcy or dissolution of a member or
occurrence of any other event which terminates the continued membership of a
member in the company:
X YES NO
--------- ---------
5. Management: The company shall be managed by 3 manager(s) OR members
-----
Names and addresses of manager(s) or members: (attach additional pages if
necessary)
1. Ian L. M. Thomas, c/o T/SF Communications Corporation, 888 Seventh
------------------------------------------------------------------------
Avenue, New York, NY 10106
------------------------------------------------------------------------
2. Steven J. Hunt, c/o T/SF Communications Corporation, 888 Seventh Avenue,
------------------------------------------------------------------------
New York, NY 10106
------------------------------------------------------------------------
3. Brian A. Meyer, c/o T/SF Communications Corporation, 888 Seventh Avenue,
------------------------------------------------------------------------
New York, NY 10106
------------------------------------------------------------------------
If managed by members, members may contract debts on behalf of the Company
YES NO
----- -----
6. Other matters: This form includes the minimal statutory requirements to
organize under NRS 86. Please attach any other information deemed
appropriate. Number of pages attached N/A .
--------
7. Signature of organizer(s): The name(s) and address(es) of the organizer(s)
executing the articles:
<TABLE>
<S> <C>
Helaine S. Fine, Esq. c/o Proskauer Rose LLP
- ---------------------------------------------- ----------------------------------------------
Name (print) Name (print)
1585 Broadway NY, NY 10036
- ---------------------------------------------- ----------------------------------------------
Address City/State/Zip Address City/State/Zip
/s/ Helaine S. Fine, Esq. 2/2/98
- ---------------------------------------------- ----------------------------------------------
Signature Date Signature Date
This instrument was acknowledged before me on This instrument was acknowledged before me on
2/2, 1998 by , 19 by
- ----------------------------------- -- ----------------------------------- --
Helaine S. Fine
- ---------------------------------------------- ----------------------------------------------
Name of Person Name of Person
as organizer as organizer
of Casino Executive, LLC of
-------------------------------------------- --------------------------------------------
(name of party on behalf of whom instrument (name of party on behalf of whom instrument
was executed) was executed)
/s/ Vito S. Piacente
- ---------------------------------------------- ----------------------------------------------
Notary Public Signature Notary Public Signature
(affix notary stamp or seal) (affix notary stamp or seal)
</TABLE>
8. Certificate of acceptance of appointment of resident agent: I, CSC Services
------------
of Nevada, Inc. hereby accept appointment as resident agent for the above
---------------
named limited-liability company.
By: /s/ illegible 2-2-90
-------------------------------- ----------------------
Signature of resident agent Date
VITO S. PIACENTE
Notary Public, State of New York
No. 01P14983694
Qualified in New York County
Commission Expires July 8, 1999
STATE OF NEVADA
Secretary of State
I hereby certify that this is a
true and complete copy of
the document as filed in this office.
FEB 03 '98
/s/ Dean Heller
DEAN HELLER
Secretary of State
By /s/ Sandra D. Pestana
<PAGE>
EXHIBIT 3.42
================================================================================
LIMITED LIABILITY COMPANY AGREEMENT
OF
CASINO EXECUTIVE, LLC
Dated as of February 6, 1998
----------------------------
================================================================================
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CASINO EXECUTIVE, LLC
Dated as of February 6, 1998
----------------------------
Casino Excecutive, LLC, a Nevada limited liability company
(the "Company"), has been formed by T/SF Holdings, LLC, a Delaware limited
liability company ("T/SF Holdings") and T/SF Operating, LLC, a Delaware limited
liability company ("T/SF Operating LLC"), to operate the business (the "Casino
Publishing Business") previously operated by Casino Publishing Company, a
Delaware corporation ("Casino Publishing").
T/SF Holdings and the T/SF Operating are referred to as the
"Members". It is therefore agreed as follows:
1. Business. The Company shall own and operate the Casino
--------
Publishing Business and shall conduct all activities relating to the Casino
Publishing Business that the board of managers determines appropriate.
2. Management of the Company.
-------------------------
2.1 Management by Board. The business and affairs of the
-------------------
Company shall be managed under the direction of a board of managers consisting
of three members. The board of managers shall act by majority vote of the total
number of members of the board. The members of the board of managers shall be
designated by the Members, voting in accordance with their Percentage Interests
(as defined in section 4). The Members hereby designate Ian L.M. Thomas, Brian
A. Meyer and Steven J. Hunt as the initial members of the board of managers.
Action may be taken by the board of managers at a meeting (at which members of
the board may participate in person or by telephone), by polling members of the
board without a meeting, or by a writing signed by a majority of the members of
the board of managers, except that no action may be taken by a writing unless
all members of the board are first given notice of, and a reasonable opportunity
to comment upon, the proposed action. The board of managers shall hold meetings
at such intervals, and shall adopt such rules of procedure, as it may from time
to time determine. Any member of the board of managers may designate another
person to act as his substitute at any meeting or in connection with any action
to be taken by the board of managers. Members of the board of managers shall not
be compensated for their services as such.
2.2 Officers. The board of managers may appoint such
--------
officers of the Company as the board of managers determines desirable,
including, but not limited to, a chairman, a chief executive officer, a
president, one or more vice-presidents, a secretary, a treasurer, and one or
more assistant secretaries and assistant treasurers. The officers of the
1
<PAGE>
Company need not be members of the Company and shall have the powers and duties
delegated to them by the board of managers. Officers of the Company shall serve
at the plea sure of the board of managers.
2.3 Persons Employed by the Company. The board of managers
-------------------------------
may cause the Company to employ and compensate such persons, firms or
corporations, including, but not limited to, accountants and attorneys, as it
deems advisable or necessary to carry on, assist or promote the Company's
business. In addition, the board may utilize the services of persons employed by
related persons or entities for tax, accounting, personnel and other similar
services rendered to the Company. The fact that any Member or any member of the
board of managers, or a person associated with any Member or any member of the
board of managers, is employed by, or is directly or indirectly interested in or
connected with, any person, firm or corporation employed by the Company to
render or perform any service shall not prohibit the board of managers from
employing or otherwise dealing with that person, firm or corporation, and the
Company shall not have any rights in or to any income or profits derived
therefrom.
2.4 Other Activities of the Members. The members of the
-------------------------------
board of managers or the Members may engage or have an interest in other
business ventures of any kind, independently or with others, and the Company
shall not have any rights in or to those independent ventures.
3. Capital Contributions.
---------------------
3.1 Capital Contributions.
---------------------
(a) Simultaneously with the execution of this
agreement, T/SF Holdings is contributing to the Company all of the assets of the
Casino Publishing Business, subject to the liabilities of the Casino Publishing
Business, and T/SF Operating is contributing $100 in cash.
(b) Except as provided in this section 3.1, the
Members shall not be required to make any capital contribution to the Company.
3.2 No Withdrawals. No Member shall be entitled to withdraw
--------------
any part of its capital account or capital contribution or to receive any
distribution from the Company except as expressly provided in this agreement.
3.3 No Liability for Capital Contributions. No Member shall
--------------------------------------
be required to pay to the Company any deficit in its capital account (upon
dissolution or otherwise). No Member shall have the right to demand or receive
cash or other property for its interest in the Company.
3.4 No Interest. No Member shall receive any interest on its
-----------
capital contributions or capital account.
2
<PAGE>
4. Transfers; Distributions.
------------------------
Distributions shall be made to the Members at the time or times
determined by the board of managers. Any distributions shall be made to the
Members in accordance with their respective Percentage Interests. T/SF Holding's
Percentage Interest shall be 99% and T/SF Operating's Percentage Interest shall
be 1%.
5. Transfers; Resignation.
----------------------
No Member may sell, transfer, assign, pledge or otherwise
dispose of or encumber its interest in the Company without the consent of the
other Member except that any Member may pledge its interest to First Union
National Bank, as Administrative Agent, pursuant to the Credit Agreement dated
as of October 9, 1997. No Member may resign from the Company prior to the
dissolution and winding up of the Company.
6. Exculpation; Indemnification.
----------------------------
6.1 Exculpation. To the extent not inconsistent with
-----------
applicable law, neither any Member nor any member of the board of managers, nor
any of its officers, directors, employees or affiliates, nor any officer of the
Company, shall be liable, responsible or accountable in damages or otherwise to
the Company or to any other Member for any action taken or for any failure to
act on behalf of the Company after the date hereof in connection with the
business or operations of the Company, unless the act or omission constituted
gross negligence, willful misconduct or a breach of a fiduciary duty to the
Company and the Members.
6.2 Indemnification. To the extent not inconsistent with
---------------
applicable law, the Company shall indemnify and hold harmless any Member and any
member of the board of managers and its officers, directors, employees and
affiliates, and all of the Company's officers, from any loss, liability, damage
or expense (including, but not limited to, any judgment, award or settlement and
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim)
arising out of (a) any acts or omissions or alleged acts or omissions in
connection with their activities or the activities of any of their respective
employees or agents on behalf of the Company after the date hereof or in
connection with the business or operations of the Company after the date hereof,
and (b) any liability imposed upon any of them under any statute, rule or
regulation (including, but not limited to, any statute, rule or regulation
relating to environmental matters) applicable to the Company, or its officers,
directors or employees; provided that the acts or omissions or the alleged acts
or omissions upon which the action or threatened action, proceeding or claim is
based did not constitute gross negligence, willful misconduct or a breach of a
fiduciary duty to the Company and the Members by the indemnified party.
Reasonable expenses incurred by any such indemnified party in connection with
the matters referred to above may be paid or reimbursed by the Company in
advance of the final disposition of the proceeding upon receipt by the Company
of (i) a written affirmation by the indemnified party of his or its good faith
belief that he or it met the standard of conduct
3
<PAGE>
necessary for indemnification by the Company, and (ii) a written undertaking by
or on behalf of the indemnified party to repay such amount if it shall
ultimately be determined by a court of competent jurisdiction that he or it has
not met that standard of conduct.
7. Duration of Company. The Company shall continue in
existence until the earlier of (a) December 31, 2010 and (b) the date the
Company is dissolved in accordance with section 8.
8. Dissolution; Liquidation.
------------------------
8.1 Dissolution. The Company shall be dissolved prior to
-----------
December 31, 2010 only upon the occurrence of one of the following events:
(a) the election by the Members to dissolve the Company;
(b) the termination of the Company's business as a
result of the sale or other disposition by the Company of substantially all of
its business and assets; or
(c) the bankruptcy or dissolution of any Member, or the
occurrence of any event which terminates the continued membership of any Member
in the Company, unless the other Member determines, within 90 days following the
occurrence of any such event, to continue the Company.
8.2 Liquidation and Distribution of Assets. Upon dissolution of
--------------------------------------
the Company, the board of managers shall proceed to sell or liquidate the assets
(to the extent feasible) within a reasonable time and, after paying or making
provision for all liabilities to creditors of the Company, shall distribute the
Company's cash and other assets to the Members in proportion to their respective
Percentage Interests.
9. Accounting and Tax Matters.
--------------------------
9.1 Fiscal Year. The Company's fiscal year shall be the
-----------
calendar year unless changed by the board of managers.
9.2 Books of Account, etc. Complete and accurate books of
account shall be kept by the Company at its principal office (or at such other
office as the board of managers may designate) and the Members shall have the
right to inspect those books during normal business hours. The Company's books
of account shall be kept on the cash or accrual basis of accounting, as the
board of managers may determine, in accordance with sound accounting practices
and principles applied in a consistent manner by the Company; all methods of
accounting and treatment of particular transactions reflected on these books
shall be in accordance with the methods of accounting employed for federal
income tax purposes. The determinations of the board of managers with respect to
the treatment of any item or its allocation for federal, state or local income
tax purposes shall be binding upon the Members so long as that determination is
not inconsistent with any express provision of this agreement.
4
<PAGE>
9.3 Reports. The Company shall use its best efforts to
-------
furnish to the Members, within (a) 30 days after the end of each month,
unaudited monthly and year-to-date statements of income and a balance sheet as
of the end of that month, and (b) 90 days after the end of each fiscal year,
unaudited financial statements of the Company with respect to that year
(including a balance sheet of the Company as of the end of the year and a
statement of income and capital accounts and a statement of changes in financial
position of the Company for the year).
9.4 Tax Information. Not later than the date of delivery
---------------
of the annual financial statements pursuant to section 9.3, the board of
managers shall cause the Company's accountants to furnish to the Members any
information required by the Members to complete any income tax return that it is
required to file for that year. The Company shall also furnish tax information
to the Members on an interim basis to the extent the board of managers
appropriate.
9.5 Tax Allocations. For federal, state and local income
---------------
tax pur poses, all items of income, deduction, gain and loss shall be allocated
to the Members in proportion to their Percentage Interests, except that to the
extent of the difference between the fair market value and the basis for federal
income tax purposes of property contributed to the Company, income, gains,
deductions (including depreciation and amortization) and losses with respect to
that property shall be allocated among the Members in accordance with Internal
Revenue Code section 704(c)(1)(A).
9.6 Capital Accounts. For the purpose of this agreement,
----------------
the balance of the capital account ("Capital Account") of each of the Members
shall be determined on the basis of an account maintained for the Member as part
of the books of account of the Company. The amount of each Member's Capital
Account shall be equal to the aggregate amount of cash and the fair market value
of property contributed to the Company by the Member, and shall be increased by
the Member's share of income and gains of the Company, and shall be decreased by
(a) the aggregate amount of cash and the fair market value of any property
distributed by the Company (less any liabilities assumed with respect to such
distribution) to the Member and (b) the Member's share of losses of the Company.
9.7 Elections. To the extent that the Company may make
---------
elections for federal, state or local income tax purposes, the elections shall
be made in a manner best calculated, in the opinion of the board of managers, to
minimize the cash requirements of the Company and the Members. The Members shall
treat all Company items on its federal, state
or local income tax returns in a manner consistent with the treatment of the
item on the Company's federal, state or local income tax return.
10. Miscellaneous.
-------------
10.1 Entire Agreement; Amendment. This agreement contains
----------------
a complete statement of the arrangements with respect to the Company, supersedes
all prior arrangements and understandings with respect to the Company, and may
not be amended
5
<PAGE>
except by a writing executed by the Members.
10.2 Notices. Any notice or other communication under this
-------
agreement shall be in writing and shall be considered given when delivered in
person or sent by facsimile, one day after being sent by a major overnight
courier, or four days after being mailed by registered mail, return receipt
requested, to each Member at 350 Park Avenue, New York, New York 10022, Fax
(212) 935-0877
10.3 Governing Law. This agreement shall be governed by
-------------
and construed in accordance with the law of the State of Delaware applicable to
agreements made and to be performed entirely in Delaware.
10.4 Definition. As used in this agreement, the term
----------
"affiliate" means any person or entity directly or indirectly controlled by,
controlling, or under common control with, any other person or entity.
10.5 Severability. If any provision of this agreement is
------------
invalid or unenforceable, the balance of this agreement shall remain in effect
and shall be enforceable to the maximum extent permitted by law, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
10.6 Headings. The headings in this agreement are solely
--------
for the convenience of reference and shall not affect its interpretation.
10.7 Other Action. The Members shall execute and deliver
------------
such additional documents and instruments, and shall perform such additional
acts, as may be necessary or appropriate to carry out the terms of this
agreement.
10.8 Waiver of Action for Partition. Each Member
------------------------------
irrevocably waives, during the term of the Company, any right it may have to
maintain any action for partition with respect to the Company or any property of
the Company.
6
<PAGE>
10.9 Third Party Beneficiaries. Nothing in this
-------------------------
agreement, express or implied, is intended or shall be construed to give anyone
other than the parties to this agreement or their respective successors or
permitted assigns any legal or equitable right, remedy or claim under or in
respect of any provision contained in this agreement.
T/SF HOLDINGS, LLC
By: T/SF Communications Corporation
By:
----------------------------------
T/SF OPERATING, LLC
By: T/SF Communications Corporation
By:
----------------------------------
7
<PAGE>
EXHIBIT 3.43
CERTIFICATE OF FORMATION
OF
EXPO MAGAZINE, LLC
This Certificate of Formation of Expo Magazine, LLC, dated as of the
2nd day of February, 1998, is being duly executed and filed by the undersigned,
as an authorized person, to form a limited liability company under the Delaware
Limited Liability Company Act (6 Del. C. (S) 18-101, et seq.).
------- -- ---
FIRST: The name of the limited liability company (the "Company")
formed hereby is Expo Magazine, LLC.
SECOND: The address of the registered office of the Company in the State
of Delaware is c/o Corporation Service Company, 1013 Centre Road, Wilmington,
New Castle County, State of Delaware, 19805.
THIRD: The name and address of the registered agent for service of
process on the Company in the State of Delaware is Corporation Service Company,
1013 Centre Road, Wilmington, New Castle County, State of Delaware, 19805.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the date first above written.
/s/ Helaine S. Fine, Esq.
-------------------------
Helaine S. Fine, Esq.
Authorized Person
<PAGE>
EXHIBIT 3.44
LIMITED LIABILITY COMPANY AGREEMENT
OF
EXPO MAGAZINE, LLC
February 6, 1998
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
EXPO MAGAZINE, LLC
February 6, 1998
----------------
EXPO Magazine, LLC, a Delaware limited liability company (the
"Company"), has been formed by Atwood Publishing, LLC, a Delaware limited
liability company (the "Member"), to operate the business (the "EXPO Magazine
Business") previously operated by Atwood Convention Publishing, Inc., a Missouri
corporation ("Atwood").
The following are the terms of the Company's limited liability company
agreement.
1. Business. The Company shall own and operate the EXPO Magazine
--------
Business and shall conduct all activities relating to the EXPO Magazine Business
that the Member determines appropriate.
2. Management of the Company
-------------------------
2.1 Management by Board. The business and affairs of the Company
-------------------
shall be managed under the direction of a board of managers consisting of three
members. The board of managers shall act by majority vote of the total number of
members of the board. The members of the board of managers shall be designated
by the Member. The Member hereby designates Ian L.M. Thomas, Brian A. Meyer and
Steven J. Hunt as the initial members of the board of managers. Action may be
taken by the board of managers at a meeting (at which members of the board may
participate in person or by telephone), by polling members of the board without
a meeting, or by a writing signed by a majority of the members of the board of
managers, except that no action may be taken by a writing unless all members of
the board are first given notice of, and a reasonable opportunity to comment
upon, the proposed action. The board of managers shall hold meetings at such
intervals, and shall adopt such rules of procedure, as it may from time to time
determine. Any member of the board of managers may designate another person to
act as his substitute at any meeting or in connection with any action to be
taken by the board of managers. Members of the board of managers shall not be
compensated for their services as such.
2.2 Officers. The board of managers may appoint such officers of
--------
the Company as the board of managers determines desirable, including, but not
limited to, a chairman, a chief executive officer, a president, one or more
vice-presidents, a secretary, a treasurer, and one or more assistant secretaries
and assistant treasurers. The officers of the Company need not be members of the
Company and shall have the powers and duties delegated
<PAGE>
to them by the board of managers. Officers of the Company shall serve at the
pleasure of the board of managers.
2.3 Persons Employed by the Company. The board of managers may
-------------------------------
cause the Company to employ and compensate such persons, firms or corporations,
including, but not limited to, accountants and attorneys, as it deems advisable
or necessary to carry on, assist or promote the Company's business. In addition,
the Member may utilize the services of persons employed by related persons or
entities for tax, accounting, personnel and other similar services rendered to
the Company. The fact that the Member, or any member of the board of managers or
a person associated with the Member or any member of the board of managers, is
employed by, or is directly or indirectly interested in or connected with, any
person, firm or corporation employed by the Company to render or perform any
service shall not prohibit the board of managers from employing or otherwise
dealing with that person, firm or corporation, and the Company shall not have
any rights in or to any income or profits derived therefrom.
2.4 Other Activities of Members. The members of the board of
---------------------------
managers or the Member may engage or have an interest in other business ventures
of any kind, independently or with others, and the Company shall not have any
rights in or to those independent ventures.
3. Capital Contributions.
---------------------
3.1 Capital Contributions.
---------------------
(a) At such time as the Member determines, the Member shall
contribute to the Company all of the assets of the EXPO Magazine Business,
subject to the liabilities of the EXPO Magazine Business.
(b) Except as provided in this section 3.1, the Member shall
not be required to make any capital contribution to the Company.
3.2 No Withdrawals. The Member shall not be entitled to withdraw
--------------
any part of its capital account or capital contribution or to receive any
distribution from the Company except as expressly provided in this agreement.
3.3 No Liability for Capital Contributions. The Member shall not
--------------------------------------
be required to pay to the Company any deficit in its capital account (upon
dissolution or otherwise). The Member shall not have the right to demand or
receive cash or other property for its interest in the Company.
3.4 No Interest. The Member shall not receive any interest on
its capital contributions or capital account.
4. Distributions.
-------------
2
<PAGE>
Distributions shall be made to the Member at the time or times
determined by the Member.
5. Transfers; Resignation.
----------------------
The Member may not sell, transfer, assign, pledge or otherwise
dispose of or encumber its interest in the Company, except that the Member may
pledge its interest to First Union National Bank, as Administrative Agent,
pursuant to the Credit Agreement dated as of October 9, 1997. The Member may not
resign from the Company prior to the dissolution and winding up of the Company.
6. Exculpation; Indemnification.
----------------------------
6.1 Exculpation. To the extent not inconsistent with applicable
-----------
law, neither the Member, nor any member of the board of managers, nor any of its
officers, directors, employees or affiliates, nor any officer of the Company,
shall be liable, responsible or accountable in damages or otherwise to the
Company or to the Member for any action taken or for any failure to act on
behalf of the Company after the date hereof in connection with the business or
operations of the Company, unless the act or omission constituted gross
negligence, willful misconduct or a breach of a fiduciary duty to the Company
and the Member.
6.2 Indemnification. To the extent not inconsistent with
---------------
applicable law, the Company shall indemnify and hold harmless the Member and any
member of the board of managers and its officers, directors, employees and
affiliates, and all of the Company's officers, from any loss, liability, damage
or expense (including, but not limited to, any judgment, award or settlement and
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim)
arising out of (a) any acts or omissions or alleged acts or omissions in
connection with their activities or the activities of any of their respective
employees or agents on behalf of the Company after the date hereof or in
connection with the business or operations of the Company after the date hereof,
and (b) any liability imposed upon any of them under any statute, rule or
regulation (including, but not limited to, any statute, rule or regulation
relating to environmental matters) applicable to the Company, or its officers,
directors or employees; provided that the acts or omissions or the alleged acts
or omissions upon which the action or threatened action, proceeding or claim is
based did not constitute gross negligence, willful misconduct or a breach of a
fiduciary duty to the Company and the Member by the indemnified party.
Reasonable expenses incurred by any such indemnified party in connection with
the matters referred to above may be paid or reimbursed by the Company in
advance of the final disposition of the proceeding upon receipt by the Company
of (i) a written affirmation by the indemnified party of his or its good faith
belief that he or it met the standard of conduct necessary for indemnification
by the Company, and (ii) a written undertaking by or on behalf of the
indemnified party to repay such amount if it shall ultimately be determined by a
court of competent jurisdiction that he or it has not met that standard of
conduct.
3
<PAGE>
7. Duration of Company. The Company shall continue in existence
until the earlier of (a) December 31, 2010 and (b) the date the Company is
dissolved in accordance with section 8.
8. Dissolution; Liquidation.
------------------------
8.1 Dissolution
-----------
The Company shall be dissolved prior to December 31, 2010 only upon the
occurrence of one of the following events:
(a) the election by the Member to dissolve the Company;
(b) the termination of the Company's business as a result of
the sale or other disposition by the Company of substantially all of its
business and assets; or
(c) the bankruptcy or dissolution of the Member, or the
occurrence of any event which terminates the continued membership of the Member
in the Company.
8.2 Liquidation and Distribution of Assets. Upon dissolution of
--------------------------------------
the Company, the Member shall proceed to sell or liquidate the assets (to the
extent feasible) within a reasonable time and, after paying or making provision
for all liabilities to creditors of the Company, shall distribute the Company's
cash and other assets to the Member.
9. Accounting and Tax Matters.
--------------------------
9.1 Fiscal Year. The Company's fiscal year shall be the calendar
-----------
year unless changed by the Member.
9.2 Books of Account, etc. Complete and accurate books of
---------------------
account shall be kept by the Company at its principal office (or at such other
office as the Member may designate) and the Member shall have the right to
inspect those books during normal business hours. The Company's books of account
shall be kept on the cash or accrual basis of accounting, as the Member may
determine, in accordance with sound accounting practices and principles applied
in a consistent manner by the Company; all methods of accounting and treatment
of particular transactions reflected on these books shall be in accordance with
the methods of accounting employed for federal income tax purposes. The
determinations of the Member with respect to the treatment of any item or its
allocation for federal, state or local income tax purposes shall be binding upon
the Member so long as that determination is not inconsistent with any express
provision of this agreement.
9.3 Reports. The Company shall use its best efforts to furnish
-------
to the Member, within (a) 30 days after the end of each month, unaudited monthly
and year-to-date statements of income and a balance sheet as of the end of that
month, and (b) 90 days after the end of each fiscal year, unaudited financial
statements of the Company with respect to that year (including a balance sheet
of the Company as of the end of the year and a statement of
4
<PAGE>
income and capital accounts and a statement of changes in financial position of
the Company for the year).
9.4 Tax Information. Not later than the date of delivery of the
---------------
annual financial statements pursuant to section 9.3, the Member shall cause the
Company's accountants to furnish to the Member any information required by the
Member to complete any income tax return that it is required to file for that
year. The Company shall also furnish tax information to the Member on an interim
basis to the extent the Member determines appropriate.
9.5 Tax Allocations. For federal, state and local income tax
purposes, all items of income, deduction, gain and loss shall be allocated to
the Member.
9.6 Capital Accounts. For the purpose of this agreement, the
----------------
balance of the capital account ("Capital Account") of the Member shall be
determined on the basis of an account maintained for the Member as part of the
books of account of the Company. The amount of the Member's Capital Account
shall be equal to the aggregate amount of cash and the fair market value of
property contributed to the Company by the Member, and shall be increased by the
Member's share of income and gains of the Company, and shall be decreased by (a)
the aggregate amount of cash and the fair market value of any property
distributed by the Company (less any liabilities assumed with respect to such
distribution) to the Member and (b) the Member's share of losses of the Company.
9.7 Elections. To the extent that the Company may make elections
---------
for federal, state or local income tax purposes, the elections shall be made in
a manner best calculated, in the opinion of the Member, to minimize the cash
requirements of the Company and the Member. The Member shall treat all Company
items on its federal, state or local income tax returns in a manner consistent
with the treatment of the item on the Company's federal, state or local income
tax return.
10. Miscellaneous
-------------
10.1 Entire Agreement; Amendment. This agreement contains a
---------------------------
complete statement of the arrangements with respect to the Company, supersedes
all prior arrangements and understandings with respect to the Company, and may
not be amended except by a writing executed by the Member.
10.2 Notices. Any notice or other communication under this
-------
agreement shall be in writing and shall be considered given when delivered in
person or sent by facsimile, one day after being sent by a major overnight
courier, or four days after being mailed by registered mail, return receipt
requested, at 350 Park Avenue, New York, New York, 10022. Fax (212) 935-0877.
5
<PAGE>
10.3 Governing Law. This agreement shall be governed by and
-------------
construed in accordance with the law of the State of Delaware applicable to
agreements made and to be performed entirely in Delaware.
10.4 Definition. As used in this agreement, the term "affiliate"
----------
means any person or entity directly or indirectly controlled by, controlling, or
under common control with, any other person or entity.
10.5 Severability. If any provision of this agreement is invalid
------------
or unenforceable, the balance of this agreement shall remain in effect and shall
be enforceable to the maximum extent permitted by law, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
10.6 Headings. The headings in this agreement are solely for the
--------
convenience of reference and shall not affect its interpretation.
10.7 Other Action. The Member shall execute and deliver such
------------
additional documents and instruments, and shall perform such additional acts, as
may be necessary or appropriate to carry out the terms of this agreement.
10.8 Waiver of Action for Partition. The Member irrevocably
------------------------------
waives, during the term of the Company, any right it may have to maintain any
action for partition with respect to the Company or any property of the Company.
6
<PAGE>
10.9 Third Party Beneficiaries. Nothing in this agreement, express
-------------------------
or implied, is intended or shall be construed to give anyone other than the
parties to this agreement or their respective successors or permitted assigns
any legal or equitable right, remedy or claim under or in respect of any
provision contained in this agreement.
ATWOOD PUBLISHING, LLC
By:______________________________________
Ian L.M. Thomas
Manager
By:______________________________________
Steven J. Hunt
Manager
By:_______________________________________
Brian A. Meyer
Manager
7
<PAGE>
EXHIBIT 4.1(a)
DRAFT 2/4/98
T/SF COMMUNICATIONS CORPORATION,
Issuer,
ATWOOD CONVENTION PUBLISHING, INC., ATWOOD PUBLISHING, LLC,
CORSEARCH, INC., CASINO EXECUTIVE, LLC,
CASINO PUBLISHING COMPANY, CRIMESEARCH, INC.,
EXPO MAGAZINE, INC., EXPO MAGAZINE, LLC,
GALAXY DESIGN & PRINTING, INC., GALAXY REGISTRATION, INC.,
GALAXY REGISTRATION, LLC, G.E.M. COMMUNICATIONS, INC.,
GEM COMMUNICATIONS, LLC, GEM NEVADA, LLC, TRANSPORTATION
COMMUNICATIONS SERVICES, INC.,TRANSPORTATION INFORMATION
SERVICES, INC., T/SF EUROPE, INC., T/SF HOLDINGS, LLC,
T/SF INVESTMENT CO., T/SF OF NEVADA, INC.,
and T/SF OPERATING, LLC,
Guarantors
and
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
---------------------------------------------
Supplemental Indenture
Dated as of February 6, 1998
--------------------------------------------
Supplementing and Amending the Indenture
Dated as of October 29, 1997
with respect to $100,000,000
10 3/8% Senior Subordinated Notes due 2007, Series A
and
10 3/8% Senior Subordinated Notes due 2007, Series B
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of February 6, 1998 (this
"Supplemental Indenture"), made by and among T/SF Communications Corporation, a
Delaware corporation (the "Company"), each of the Guarantors named herein, as
guarantors, and IBJ Schroder Bank and Trust Company, as Trustee, to the Original
Indenture (as such term is hereinafter defined).
WHEREAS, the Company, certain of the Guarantors and the Trustee
have heretofore entered into the Original Indenture, pursuant to the provisions
of which the Company has heretofore issued $100,000,000 in aggregate principal
amount of the Notes;
WHEREAS, the Company and the Guarantors desire to supplement and
amend the Original Indenture in accordance with its terms;
WHEREAS, Section 4.20 of the Original Indenture provides, among
other things, that if the Company or any of its Restricted Subsidiaries
transfers or causes to be transferred, in one transaction or a series of related
transactions, any property to any Restricted Subsidiary that is not a Guarantor
then such other Restricted Subsidiaries shall execute and deliver to the Trustee
a supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiaries shall unconditionally guarantee all of the
Company's obligations under the Notes and this Indenture on the terms set forth
in the Original Indenture;
WHEREAS, the Company and certain of its Restricted Subsidiaries
intend to cause the transfer, in a series of related transactions, of certain
property to certain Restricted Subsidiaries that are not Guarantors;
WHEREAS, the Company and certain of its Restricted Subsidiaries
intend to restructure certain of their ownership interests in such a manner as
does not adversely affect the rights of any Holder;
WHEREAS, Section 9.01 of the Original Indenture provides, among
other things, that the Company, the Guarantors and the Trustee may amend, waive
or supplement the Original Indenture without notice to or consent of any Holder
to make any change that does not adversely affect the rights of any Holder; and
WHEREAS, all conditions and requirements necessary to authorize
the execution and delivery of this Supplemental Indenture have been duly
complied with or done and performed by the Company and each of the Guarantors,
and all actions necessary to make this Supplemental Indenture and the Original
Indenture, as supplemented by this Supplemental Indenture, valid, binding and
legal instruments according to their terms (and, with respect to this
Supplemental Indenture, in accordance with the terms of the Original Indenture)
have been complied with or done and performed;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that,
for and in consideration of the premises and of the mutual covenants herein
contained, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Guarantors covenant and agree
with the Trustee, for the benefit of all present and future Holders of the
Notes, as follows:
Section 1. The definitions set forth or incorporated by reference
in the Original Indenture shall be applicable to this Supplemental Indenture as
fully and to the same extent and effect
<PAGE>
as if set forth herein, except as otherwise expressly provided herein. As used
in this Supplemental Indenture, the term "Original Indenture" shall mean the
Indenture, dated as of October 29, 1997, among the Company, the Guarantors and
the Trustee, with respect to the Notes.
Section 2. Section 1.01 is amended as follows:
(a) The definition of Guarantor is amended by adding, in
clause (i) thereof, "Casino Publishing Company, a Delaware corporation,"
immediately after "Atwood Convention Publishing, Inc., a Missouri corporation,"
and immediately before "CORSEARCH, Inc." and by adding, in clause (ii) thereof,
", Operating LLC" immediately after "Holdings LLC" and immediately before "and
each of the Operating LLCs and".
(b) The definition of Holdings LLC is amended by adding ",
directly or indirectly through Wholly Owned Restricted Subsidiaries,"
immediately after "whose preferred Equity Interests shall be owned" and
immediately before "by the Company."
(c) The definition of LLCs is amended by adding ",
Operating LLC" immediately after "Holdings LLC" and immediately before "and the
Operating LLCs."
(d) The definition of Operating LLC is added, as follows,
immediately after the definition of Obligations and immediately before the
definition of Operating LLCs:
"'Operating LLC' means T/SF Operating, LLC, a Delaware
limited liability company whose preferred Equity Interest is owned by Holdings
LLC and whose common Equity Interest is owned by VS&A-T/SF and Fir Tree in
proportion to their respective ownershp of the Common Stock following the
Recapitalization."
(e) The definition of Operating LLCs is amended in its
entirety as follows:
"'Operating LLCs' means each of: (i) Galaxy
Registration, LLC, a Delaware limited liability company, (ii) Atwood Publishing
LLC, a Delaware limited liability company, (iii) GEM Gaming, LLC, a Delaware
limited liability company, (iv) GEM Nevada, LLC, a Nevada limited liability
company, and (v) Casino Executive, LLC, a Nevada limited liability company, each
of whose Equity Interests is owned 99% by Holdings LLC and 1% by Operating LLC,
and (vi) EXPO Magazine, LLC, a Delaware limited liability company whose Equity
Interests are owned 100% by Atwood Publishing, LLC. For purposes of the
Indenture, the Operating LLCs shall be treated as Wholly Owned Restricted
Subsidiaries."
(f) The definition of Permitted Tax Distributions is
amended by adding "and Operating LLC" immediately after "Holdings LLC" in each
of the four instances in which "Holdings LLC" appears.
(g) The definition of VS&A-T/SF is amended in its entirety
as follows:
"VS&A-T/SF" means VS&A-T/SF, Inc., a Delaware
corporation, and, after the liquidation of VS&A-T/SF, Inc., if any, VS&A-
T/SF, LLC."
Section 3. Section 4.13 is amended by adding "and Operating LLC"
at the end of the parenthetical phrase in clause (a) thereof.
2
<PAGE>
Section 4. Section 4.14 is amended by adding "or its Wholly Owned
Restricted Subsidiaries" immediately after "voting control of Holdings LLC to
the Company" and immediately before "or its termination".
Section 5. This Supplemental Indenture is a supplemental
indenture pursuant to Sections 4.20 and 9.01 of the Original Indenture. Upon
execution and delivery of this Supplemental Indenture, the terms and conditions
of this Supplemental Indenture shall be part of the terms and conditions of the
Original Indenture for any and all purposes, and all the terms and conditions of
both shall be read together as though they constitute one instrument, except
that in case of conflict, the provisions of this Supplemental Indenture will
control.
Section 6. Except as they have been modified in this Supplemental
Indenture, each and every term and provision of the Original Indenture shall
continue in full force and effect, and all references to the Indenture in the
Original Indenture shall hereafter be deemed to mean the Original Indenture as
supplemented and amended pursuant hereto.
Section 7. All parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together shall represent the same agreement.
Section 8. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Supplemental Indenture.
[SIGNATURE PAGES FOLLOW]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first written above.
T/SF COMMUNICATIONS CORPORATION
By:
--------------------------------
Ian L.M. Thomas
President and Chief Executive
ATWOOD CONVENTION PUBLISHING, INC.
By:
--------------------------------
Name:
Title:
ATWOOD PUBLISHING, LLC
By:
--------------------------------
Name:
Title:
CORSEARCH, INC.
By:
--------------------------------
Name:
Title:
CASINO EXECUTIVE, LLC
By:
---------------------------------
Name:
Title:
S-1
<PAGE>
CASINO PUBLISHING COMPANY
By:
--------------------------------
Name:
Title:
CRIMESEARCH, INC.
By:
--------------------------------
Name:
Title:
EXPO MAGAZINE, INC.
By:
--------------------------------
Name:
Title:
EXPO MAGAZINE, LLC
By:
--------------------------------
Name:
Title:
GALAXY DESIGN & PRINTING, INC.
By:
--------------------------------
Name:
Title:
GALAXY REGISTRATION, INC.
By:
--------------------------------
Name:
Title:
S-2
<PAGE>
GALAXY REGISTRATION, LLC
By:
--------------------------------
Name:
Title:
G.E.M. COMMUNICATIONS, INC.
By:
--------------------------------
Name:
Title:
G.E.M. GAMING, LLC
By:
--------------------------------
Name:
Title:
GEM NEVADA, LLC
By:
--------------------------------
Name:
Title:
TRANSPORTATION COMMUNICATIONS
SERVICES, INC.
By:
--------------------------------
Name:
Title:
TRANSPORTATION INFORMATION SERVICES,
INC.
By:
---------------------------------
Name:
Title:
S-3
<PAGE>
T/SF EUROPE, INC.
By:
--------------------------------
Name:
Title:
T/SF HOLDINGS, LLC
By:
--------------------------------
Name:
Title:
T/SF INVESTMENT CO.
By:
--------------------------------
Name:
Title:
T/SF OF NEVADA, INC.
By:
--------------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:
--------------------------------
Name:
Title:
S-4
<PAGE>
EXHIBIT 4.5
LETTER OF TRANSMITTAL
for
10 3/8% Senior Subordinated Notes
of
T/SF COMMUNICATIONS CORPORATION
Pursuant to the
EXCHANGE OFFER
In Respect Of
All of its Outstanding 10 3/8% Senior Subordinated Notes Due 2007
for
10 3/8% Series B Senior Subordinated Notes Due 2007
--------------------
Pursuant to the Prospectus Dated February 9, 1998
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH
10, 1998 UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE").
TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
To: IBJ Schroder Bank & Trust Company, Exchange Agent
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Hand: By Overnight Delivery:
IBJ Schroder Bank and Trust Company IBJ Schroder Bank and Trust Company IBJ Schroder Bank and Trust Company
P.O. Box 84 One State Street One State Street
Bowling Green Station New York, NY 10004 New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Window, Attn: Securities Processing Window,
Attn: Reorganization Subcellar One (SC-1) Subcellar One (SC-1)
Operations Department
</TABLE>
For information, call:
Information and Facsimile
Confirmation (212) 858-2103
Facsimile: (212) 858-2611 (Eligible Institutions Only)
Delivery of this letter of transmittal to an address, or transmission via
telegram, telex or facsimile, other than as set forth above, will not constitute
a valid delivery. The instructions contained herein should be read carefully
before this letter of transmittal is completed.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
By execution hereof, the undersigned acknowledges receipt of the Prospectus
(the "Prospectus"), dated February 9, 1998, of T/SF Communications
Corporation, a Delaware corporation (the "Company"), which, together with this
letter of transmittal and the instructions hereto (the "Letter of Transmittal"),
constitute the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of its 10 3/8% Series B Senior Subordinated Notes Due 2007 (the
"New Notes") that have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus constitutes a part, for each $1,000 principal amount of its
outstanding 10 3/8% Senior Subordinated Notes Due 2007 (the "Old Notes"), upon
the terms and subject to the conditions set forth in the Prospectus.
This Letter of Transmittal is to be used by Holders if: (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Old Notes is to be made by book-entry
transfer to the Exchange Agent's account at The Depository Trust Company ("DTC")
pursuant to the
<PAGE>
procedures set forth in the Prospectus under "The Exchange Offer - Procedures
for Tendering" by any financial institution that is a participant in DTC and
whose name appears on a security position listing as the owner of Old Notes
(such participants, acting on behalf of Holders, are referred to herein,
together with such Holders, as "Acting Holders"); or (iii) tender of Old Notes
is to be made according to the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer - Guaranteed Delivery Procedures." DELIVERY
OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
If Holders desire to tender Old Notes pursuant to the Exchange Offer and (i)
certificates representing such Old Notes are not lost but are not immediately
available, (ii) time will not permit this Letter of Transmittal, certificates
representing such Old Notes or other required documents to reach the Exchange
Agent prior to the Expiration Date or (iii) the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, such Holders may
effect a tender of such Old Notes in accordance with the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer - Guaranteed
Delivery Procedures."
The term "Holder" with respect to the Exchange Offer means any person: (i) in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
Holder; or (ii) whose Old Notes are held of record by DTC who desires to deliver
such Old Notes by book-entry transfer at DTC.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this Letter of Transmittal in its entirety.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
The instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 8 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES MUST
COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this Letter
of Transmittal. Tenders of Old Notes will be accepted only in principal amounts
equal to $1,000 or integral multiples thereof.
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Name(s) and Address(es) of Holder(s) Certificate Number(s)* Aggregate Principal
(Please fill in, if blank) (Attach signed list if Amount Tendered
necessary) (if less than all)**
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF OLD NOTES TENDERED
- ---------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
* * Need not be completed by Holders who wish to tender with respect to all Old Notes listed. See
Instruction 2.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE
AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:______________________________________________
DTC Book Entry Account No.:_________________________________________________
Transaction Code No.:_______________________________________________________
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Holder(s) of Old Notes:_________________________________________
Window Ticket No. (if any):_________________________________________________
Date of Execution of Notice of Guaranteed Delivery:_________________________
Name of Eligible Institution that Guaranteed Delivery:______________________
____________________________________________________________________________
If Delivered by Book Entry Transfer: Name of Tendering Institution:_________
DTC Book Entry Account No.:_________________________________________________
Transaction Code No.:_______________________________________________________
[_] CHECK HERE IF YOU ARE A BROKER DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THIS PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:_______________________________________________________________________
Address:____________________________________________________________________
Ladies and Gentlemen:
Subject to the terms of the Exchange Offer, the undersigned hereby tenders to
the Company the principal amount of Old Notes indicated above. Subject to and
effective upon the acceptance for exchange of the principal amount of Old Notes
tendered in accordance with this Letter of Transmittal, the undersigned sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to the Old Notes tendered hereby. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent its agent and attorney-
in-fact (with full knowledge that the Exchange Agent also acts as the agent of
the Company and as Trustee under the Indenture for the Old Notes and the New
Notes) with respect to the tendered Old Notes with full power of substitution to
(i) deliver certificates for such Old Notes to the Company, or transfer
ownership of such Old Notes on the account books maintained by DTC, together in
either such case, with all accompanying evidences of transfer and authenticity
to, or upon the order of, the Company and (ii) present such Old Notes for
transfer on the books of the Company and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Old Notes, all in accordance
with the terms of the Exchange Offer. The power of attorney granted in this
paragraph shall be deemed irrevocable and coupled with an interest.
3
<PAGE>
The undersigned hereby represents and warrants that he has full power and
authority to tender, sell, assign and transfer the Old Notes tendered hereby and
that the Company will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim, when the same are acquired by the Company. The undersigned
also acknowledges that this Exchange Offer is being made in reliance upon an
interpretation by the staff of the Securities and Exchange Commission that the
New Notes issued in exchange for the Old Notes pursuant to the Exchange Offer
may be offered for sale, resold and otherwise transferred by holders thereof
(other than any such holder that is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such holders'
business and such holders have no arrangement with any person to participate in
the distribution of such New Notes. If the undersigned is not a broker-dealer,
the undersigned represents that it is not engaged in, and does not intend to
engage in, a distribution of the New Notes.
The undersigned represents that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of such holder's
business, (ii) such holder has no arrangements with any person to participate in
the distribution of such New Notes and (iii) such holder is not an "affiliate,"
as defined under Rule 405 of the Securities Act, of the Company or, if such
holder is an affiliate, that such holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New Notes.
If the undersigned is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of market-
making activities or other trading activities, it acknowledges that it has no
arrangements with any person to participate in the distribution of the New Notes
and that it will deliver a prospectus in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment and transfer of the Old Notes tendered
hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
or written notice thereof to the Exchange Agent. If any tendered Old Notes are
not accepted for exchange pursuant to the Exchange Offer for any reason,
certificates for any such unaccepted Old Notes will be returned (except as noted
below with respect to tenders through DTC), without expense, to the undersigned
at the address shown below or at a different address shown below or at a
different address as may be indicated under "Special Issuance Instructions" as
promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, successors and
assigns.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer - Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the certificates representing the New Notes issued in exchange for the Old
Notes accepted for exchange, and return any Old Notes not tendered or not
exchanged, in the name(s) of the undersigned (or in either such event in the
case of Old Notes tendered by DTC, by credit to the account at DTC). Similarly,
unless otherwise indicated under "Special Delivery Instructions," please send
the certificates representing the New Notes issued in exchange for the Old Notes
accepted for exchange and any certificates for Old Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at the
address shown below the undersigned's signature(s),
4
<PAGE>
unless, in either event, tender is being made through DTC. In the event that
both "Special Issuance Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange, and return any Old Notes not
tendered or not exchanged, in the name(s) of, and send said certificates to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
lnstructions" to transfer any Old Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the Old
Notes so tendered.
5
<PAGE>
PLEASE SIGN HERE
(To Be Completed by All Tendering Holders of
Old Notes Regardless of Whether Old Notes Are Being
Physically Delivered Herewith)
This Letter of Transmittal must be signed by the Holder(s) of Old Notes
exactly as their name(s) appear(s) on certificate(s) for Old Notes or, if
tendered by a participant in DTC, exactly as such participant's name appears on
a security position listing as the owner of Old Notes, or by person(s)
authorized to become registered Holder(s) by endorsements and documents
transmitted with this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer or other person
acting in a fiduciary or representative capacity, such person must set forth his
or her full title below under "Capacity" and submit evidence satisfactory to the
Company of such person's authority to so act. See Instruction 3 herein.
If the signature appearing below is not of the registered Holder(s) of the
Old Notes, then the registered Holder(s) must sign a valid proxy
x _______________________________________ Date:________________________________
x _______________________________________ Date:________________________________
Signature(s) of Holder(s) or
Authorized Signatory
Name(s):_________________________________ Address:______________________________
(including Zip Code)
_________________________________
(Please Print)
Capacity:________________________ Area Code and Telephone No:___________
Social Security No.______________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (See Instruction 3 herein)
Certain Signatures Must Be Guaranteed by an Eligible Institution
________________________________________________________________________________
(Name of Eligible Institution Guaranteeing Signatures)
________________________________________________________________________________
(Address (including zip code) and Telephone Number
(including area code) of Firm)
________________________________________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Printed Name)
________________________________________________________________________________
(Title)
6
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instruction 4 herein)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered are to be issued in the name of, or the New Notes issued pursuant to
the Exchange Offer are to be issued to the order of, someone other than the
person or persons whose signature(s) appear(s) within this Letter of Transmittal
or issued to an address different from that shown in the box entitled
"Description of Old Notes" within this Letter of Transmittal, or if Old Notes
tendered by book-entry transfer that are not accepted for purchase are to be
credited to an account maintained at DTC
Name:____________________________________________
(Please print)
Address:_________________________________________
(Please print)
_________________________________________________
Zip Code
_________________________________________________
Taxpayer identification or social security number
(See Substitute Form W-9 herein)
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 4 herein)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered or not accepted for purchase or the New Notes issued pursuant to the
Exchange Offer are to be sent to someone other than the person or persons whose
signature(s) appear(s) within this Letter of Transmittal or to an address
different from that shown in the box entitled "Description of Old Notes" within
this Letter of Transmittal
Name:____________________________________________
(Please print)
Address:_________________________________________
(Please print)
_________________________________________________
Zip Code
_________________________________________________
Taxpayer identification or social security number
(See Substitute Form W-9 herein)
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer and the Solicitation
1. Delivery of this Letter of Transmittal and Old Notes. The certificates for
the tendered Old Notes (or a confirmation of a book-entry transfer into the
Exchange Agent's account at DTC of all Old Notes delivered electronically), as
well as a properly completed and duly executed copy of this Letter of
Transmittal or facsimile hereof and any other documents required by this Letter
of Transmittal, must be received by the Exchange Agent at its address set forth
herein prior to 5:00 P.M., New York City time, on the Expiration Date. The
method of delivery of the tendered Old Notes, this Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder and, except as otherwise provided below, the delivery will be deemed
made only when actually received by the Exchange Agent. Instead of delivery by
mail, it is recommended that the Holder use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Transmittal or Old Notes should be sent to the Company.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date must tender their Old Notes and follow the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedures:
(i) such tender must be made by or through an Eligible Institution; (ii) prior
to the Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder of the Old Notes, the certificate number or numbers of
such Old Notes and the principal amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within five business days
after the Expiration Date, this Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Old Notes (or a confirmation
of electronic mail delivery of book-entry delivery into the Exchange Agent's
account at DTC) and any required documents will be deposited by the Eligible
Institution with the Exchange Agent; and (iii) such properly completed and
executed Letter of Transmittal (or facsimile hereof), as well as all other
documents required by this Letter of Transmittal and the certificate(s)
representing all tendered Old Notes in proper form for transfer (or a
confirmation of electronic mail delivery of book-entry delivery into the
Exchange Agent's account at DTC), must be received by the Exchange Agent within
five business days after the Expiration Date, all as provided in the Prospectus
under the caption, "The Exchange Offer - Guaranteed Delivery Procedures." Any
Holder of Old Notes who wishes to tender his Old Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 P.M., New York
City time, on the Expiration Date.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any irregularities or conditions of tender as to
particular Old Notes. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in this Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Neither the Company, the Exchange Agent nor
any other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Notes, nor shall any of them incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned without cost by the Exchange Agent to the
tendering Holders of Old Notes, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
8
<PAGE>
2. Partial Tenders. Tenders of Old Notes will be accepted in all
denominations of $1,000 and integral multiples in excess thereof. If less than
the entire principal amount of any Old Notes is tendered, the tendering Holder
should fill in the principal amount tendered in the third column of the chart
entitled "Description of Old Notes." The entire principal amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Old Notes is not
tendered, Old Notes for the principal amount of the Old Notes not tendered and a
certificate or certificates representing New Notes issued in exchange of any Old
Notes accepted will be sent to the Holder at his registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal or unless tender is made through DTC, promptly after the Old Notes
are accepted for exchange.
3. Signatures on the Letter of Transmittal; Bond Powers and Endorsements;
Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is
signed by the registered Holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of Old Notes tendered and the certificate(s) for New Notes
issued in exchange therefor is to be issued (or any untendered principal amount
of Old Notes is to be reissued) to the registered Holder, such Holder need not
and should not endorse any tendered Old Note, nor provide a separate bond power.
In any other case, such holder must either properly endorse the Old Notes
tendered or transmit a properly completed separate bond power with this Letter
of Transmittal, with the signatures on the endorsement or bond power guaranteed
by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder(s) of any Old Notes listed, such Old Notes must
be endorsed or accompanied by appropriate bond powers signed as the name of the
registered Holder(s) appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or bond
powers are signed by trustees, executors, administrators, guardians, attorneys-
in-fact, or officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 3 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution unless the Old Notes tendered pursuant
thereto are tendered (i) by a registered Holder (including any participant in
DTC whose name appears on a security position listing as the owner of Old Notes)
who has not completed the box set forth herein entitled "Special Issuance
Instructions" or the box entitled "Special Delivery Instructions" or (ii) for
the account of an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering Holders should
indicate, in the applicable spaces, the name and address to which New Notes or
substitute Old Notes for principal amounts not tendered or not accepted for
exchange are to be issued or sent, if different from the name and address of the
person signing this Letter of Transmittal (or in the case of tender of the Old
Notes through DTC, if different from DTC). In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
5. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Old Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered Holder
of the Old Notes tendered hereby, or if tendered Old Notes are registered in the
name of any person other than the person signing this Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the
9
<PAGE>
amount of any such transfer taxes (whether imposed on the registered Holder or
any other person) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
6. Waiver of Conditions. The Company reserves the absolute right to amend,
waive or modify specified conditions in the Exchange Offer in the case of any
Old Notes tendered.
7. Mutilated, Lost, Stolen or Destroyed Old Notes. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instruction.
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address specified in
the Prospectus. Holders may also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Exchange Offer.
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<CAPTION>
<S> <C> <C>
Certificate Surrendered Old Notes Tendered Old Notes Accepted
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
Delivery Prepared__________ Checked by__________________ Date_________________________
</TABLE>
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Old Notes are accepted
for payment is required to provide the Exchange Agent (as payer) with such
Holder's correct TIN on Substitute Form W-9 below or otherwise establish a basis
for exemption from backup withholding. If such Holder is an individual, the TIN
is his social security number. If the Exchange Agent is not provided with the
correct TIN, a $50 penalty may be imposed by the Internal Revenue Service, and
payments made with respect to New Notes may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Substitute
Form W-9. A foreign person may qualify as an exempt recipient by submitting to
the Exchange Agent a properly completed Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status. A
Form W-8 can be obtained from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the Holder or other payee. Backup withholding is not
an additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
10
<PAGE>
Purpose of Substitute Form W-9
To prevent backup withholding on payments made with respect to the Exchange
Offer, the Holder is required to provide the Exchange Agent with either: (i) the
Holder's correct TIN by completing the form below, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such Holder is awaiting a
TIN and that (A) the Holder has not been notified by the Internal Revenue
Service that the Holder is subject to backup withholding as a result of failure
to report all interest or dividends or (B) the Internal Revenue Service has
notified the Holder that the Holder is no longer subject to backup withholding);
or (ii) an adequate basis for exemption.
What Number to Give the Exchange Agent
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered Holder of
the Old Notes. If the Old Notes are held in more than one name or are held not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
11
<PAGE>
<TABLE>
<S> <C>
PAYER'S NAME
SUBSTITUTE Part 1 -PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number
RIGHT AND CERTIFY BY SIGNING AND DATING
FORM W-9 BELOW. OR_________________________________
Employer Identification Number
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE Part 2 -Certification - Under Penalties of Perjury, I certify that: Part 3 --
PAYER'S REQUEST FOR TAXPAYER (1) The number shown on this form is my correct Taxpayer Awaiting TIN
IDENTIFICATION NUMBER Identification Number (or I am waiting for a number to
be issued to me) and [_]
(2) I am not subject to backup withholding either because I have not been notified by the Internal
Revenue Servlce ("IRS") that I am subject to backup wIthholding as a result of failure to
report all interest or dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
Certificate instructions - You must cross out item (2) in Part 2 above if you have been notified by
the IRS that you are subject to backup withholding because of underreporting interest or dividends
on your tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out item (2).
SIGNATURE___________________________________________ DATE__________________________________________
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO HOLDERS OF NEW NOTES PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within 60 days, 31 percent of all
reportable payments made to me thereafter will be withheld until I provide a
number.
- -------------------------------------- ----------------------------------------
Signature Date
The Exchange Agent for the Exchange Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Hand: By Overnight Deilvery Courier:
IBJ Schroder Bank and Trust Company IBJ Schroder Bank and Trust Company IBJ Schroder Bank and Trust Company
P.O. Box 84 One State Street One State Street
Bowling Green Station New York, NY 10004 New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Window, Attn: Securities Processing Window,
Attn: Reorganization Subcellar One (SC-i) Subcellar One (SC-1)
Operations Department
</TABLE>
For information, call:
Information and Facsimile
Confirmation (212) 858-2103
Facsimile: (212) 858-2611 (Eligible Institutions Only)
12
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
10 3/8% Senior Subordinated Notes Due 2007
of
T/SF Communications Corporation
As set forth in the Prospectus, dated February 9, 1998 (the "Prospectus"),
of T/SF Communications Corporation (the "Company"), in the accompanying Letter
of Transmittal and instructions thereto (the "Letter of Transmittal"), this form
or one substantially equivalent hereto must be used to accept the Company's
exchange offer (the "Exchange Offer") to purchase all of its outstanding 10 3/8%
Senior Subordinated Notes Due 2007 (the "Old Notes") if (i) certificates
representing the Old Notes to be tendered for purchase and payment are not lost
but are not immediately available, (ii) time will not permit the Letter of
Transmittal, certificates representing such Old Notes or other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii) the
procedure for book-entry transfer cannot be completed prior to the Expiration
Date. This form may be delivered by an Eligible Institution by mail or hand
delivery or transmitted, via telegram, telex or facsimile, to the Exchange Agent
as set forth below. All capitalized terms used herein but not defined herein
shall have the meanings ascribed to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 10, 1998 UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE").
TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON
THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
To: IBJ Schroder Bank & Trust Company, Exchange Agent
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Hand: By Overnight Delivery:
IBJ Schroder Bank and Trust Company IBJ Schroder Bank and Trust Company IBJ Schroder Bank and Trust Company
P.O. Box 84 One State Street One State Street
Bowling Green Station New York, NY 10004 New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Window, Attn: Securities Processing Window,
Attn: Reorganization Subcellar One (SC-1) Subcellar One (SC-1)
Operations Department
</TABLE>
For information, call:
Information and Facsimile
Confirmation: (212) 858-2103
Facsimile: (212) 858-2611 (Eligible Institutions Only)
Delivery of this instrument to an address, or transmission via telegram,
telex or facsimile, other than as set forth above, will not constitute a valid
delivery.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Exchange Offer and the Letter of Transmittal,
receipt of which are hereby acknowledged, the aggregate principal amount of Old
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus.
The undersigned understands that tenders of Old Notes will be accepted only
in principal amounts equal to $1,000 or integral multiples thereof. The
undersigned understands that tenders of Old Notes pursuant to the Exchange Offer
may not be withdrawn after 5:00 p.m., New York City time on the Business Day
prior to the Expiration Date. Tenders of Old Notes may also be withdrawn if the
Exchange Offer is terminated without any such Old Notes being purchased
thereunder or as otherwise provided in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
13
<PAGE>
Signature(s) of the Registered Owner(s) or Name(s) of Registered Holder(s)
Authorized Signatory:_____________________ ____________________________________
__________________________________________ ____________________________________
__________________________________________ ____________________________________
Principal Amount of Old Notes Tendered: Address:____________________________
__________________________________________ ____________________________________
Certificate No(s). of Old Notes Area Code and Telephone No.:________
(if available): If Old Notes will be delivered by
book-entry transfer at
The Depository Trust Company,
Depository Account No.:_____________
Date:_____________________________________
This Notice of Guaranteed Delivery must be signed by the registered holder(s) of
Old Notes exactly as its (their) name(s) appear on certificates for Old Notes or
on a security position listing as the owner of Old Notes or by person(s)
authorized to become registered Holder(s) by endorsements and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must
provide the following information.
Please print name(s) and address(es)
Name(s): ____________________________________________________________________
____________________________________________________________________
Capacity: ____________________________________________________________________
Address(s): ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Do not send Old Notes with this form. [Debentures] should be sent to the
Exchange Agent together with a properly completed and duly executed Letter of
Transmittal.
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial bank
or trust company having an office or a correspondent in the United States,
hereby (a) represents that each holder of Old Notes on whose behalf this tender
is being made "own(s) the Old Notes covered hereby within the meaning of Rule
14e-4 under the Securities Act of 1934, as amended, (b) represents that such
tender of Old Notes complies with such Rule 14e-4, and (c) guarantees that,
within five New York Stock Exchange trading days from the date of this Notice of
Guaranteed Delivery, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with certificates representing
the Old Notes covered hereby, in proper form for transfer (or confirmation of
the book-entry transfer of such Old Notes into the Exchange Agent's account at
The Depository Trust Company, pursuant to the procedure for book-entry transfer
set forth in the Prospectus) and required documents will be deposited by the
undersigned with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal and
Old Notes tendered hereby to the Exchange Agent within the time period set forth
above and that failure to do so could result in financial loss to the
undersigned.
Name of Firm: _________________________ _______________________________________
Authorized Signature
Address: ______________________________ Name: _________________________________
_______________________________________ Title:_________________________________
Area Code and Telephone No.: __________ Date:__________________________________
14
<PAGE>
EXHIBIT 10.3
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of October 9, 1997 (as amended and modified,
the "Security Agreement" or this "Agreement") among T/SF COMMUNICATIONS
------------------ ---------
CORPORATION, a Delaware corporation (the "Borrower"), and the subsidiaries and
--------
affiliates identified on the signature pages hereto and such other subsidiaries
and affiliates as may hereafter join this Security Agreement (as referenced in
the Credit Agreement, the "Guarantors" and collectively with the Borrower but
----------
excluding VSA-T/SF and Fir Tree, the "SA Credit Parties") and FIRST UNION
-----------------
NATIONAL BANK, as Administrative Agent (in such capacity, the "Administrative
--------------
Agent") for the Lenders under the Credit Agreement described below and any
- -----
Affiliates of Lenders which provide Interest Protection Agreements as hereafter
provided (collectively, the "Lenders").
-------
W I T N E S S E T H
WHEREAS, the Lenders have severally agreed to make loans and extensions of
credit to the Borrower upon the terms and conditions provided in the terms of
that Credit Agreement dated as of the date hereof (as amended and modified, the
"Credit Agreement") among the Borrower, the Lenders identified therein and First
----------------
Union National Bank, as Administrative Agent, and the Guarantors have jointly
and severally agreed pursuant to the Guaranty to guaranty each of the payment
and performance obligations of each of the Borrower and each Credit Party under
the Credit Agreement and each other Credit Document to which any of the Borrower
or any Credit Party is a party;
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective loans and
extensions of credit to the Borrower thereunder that the SA Credit Parties shall
have executed and delivered this Security Agreement to the Administrative Agent
for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective loans and extensions of credit
thereunder, the SA Credit Parties hereby agree with the Administrative Agent,
for the ratable benefit of the Lenders, as follows:
1. Defined Terms.
-------------
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
-----------
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of North Carolina on the date hereof are
used herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, Fixtures, General Intangibles, Instruments, Inventory and Proceeds.
For purposes of this Agreement, the term "Lender" shall include any Affiliate of
<PAGE>
any Lender which has entered into an Interest Protection Agreement with a SA
Credit Party to the extent permitted by the Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Security Agreement, as the same may be amended,
---------
supplemented or otherwise modified from time to time.
"Code": the Uniform Commercial Code as from time to time in effect in the
----
State of North Carolina.
"Collateral": as defined in Section 2 of this Agreement; provided that
---------- --------
Collateral shall not include any property which is subject to a Lien
permitted under Section 6.2 of the Credit Agreement securing indebtedness
permitted under Section 6.1 of the Credit Agreement to the extent that the
grant of a security interest hereunder would be prohibited by such Lien or
by the terms of such indebtedness.
"Collateral Account": any collateral account established by the
------------------
Administrative Agent as provided in subsection 3.3 or subsection 7.2.
"Contracts": all contracts and agreements to which a SA Credit Party is a
---------
party, as each may be amended, supplemented or otherwise modified from time
to time, including, without limitation, (a) all rights of a SA Credit Party
to receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of a SA Credit Party to damages arising out of or
for breach or default in respect thereof and (c) all rights of a SA Credit
Party to exercise all remedies thereunder.
"Copyright Licenses": any written agreement, naming any SA Credit Party as
------------------
licensor, granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 3 hereto.
----------
"Copyrights": (i) all registered United States copyrights in all Works,
----------
now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
including, without limitation, registrations, recordings and applications
in the United States Copyright office including, without limitation, any
thereof referred to in Schedule 3 hereto, and (ii) all renewals thereof
----------
including, without limitation, any thereof referred to in Schedule 3
----------
hereto.
"Intellectual Property": collectively, all Copyrights, Copyright
---------------------
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses,
together with (a) all inventions, processes, production methods,
proprietary information, know-how and trade secrets; (b) all licenses or
user or other agreements granted with respect to any of the foregoing, in
each case whether now or hereafter owned or used including, without
limitation, the licenses or other agreements with respect to Copyrights or
Copyright Licenses, the Patents or Patent Licenses or Trademarks or
Trademark Licenses, including those listed
2
<PAGE>
on the Schedules hereto; (c) all information, customer lists,
identification of suppliers, data, plans, blueprints, specifications,
designs, drawings, recorded knowledge, surveys, engineering reports, test
reports, manuals, materials standards, processing standards, performance
standards, catalogs, computer and automatic machinery software and
programs; (d) all field repair data, sales data and other information
relating to sales or service of products now or hereafter manufactured; (e)
all accounting information and all media in which or on which any
information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such
information, knowledge, records or data; and (f) all licenses, consents,
permits, variances, certifications and approvals of governmental agencies
now or hereafter held.
"Patent License": all agreements, whether written or oral, providing for
--------------
the grant by or to a SA Credit Party of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 4 hereto.
----------
"Patents": (a) all letters patent of the United States or any other
-------
country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 4 hereto, and (b) all
----------
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 4
----------
hereto.
"Secured Obligations": the collective reference to the following:
-------------------
(a) All unpaid principal of and interest on (including, without
limitation, interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans and other
obligations owing under the Credit Agreement and interest accruing at
the then applicable rate provided in the Credit Agreement after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to the Administrative
Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Credit Agreement, any Notes, this Security Agreement, the other Credit
Documents, any Interest Protection Agreements with a Lender or an
Affiliate of a Lender to the extent permitted under the Credit
Agreement or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all reasonable fees and
disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of
the Credit Agreement, this Security Agreement, any other Credit
Document or any Interest Protection Agreements with a Lender or an
Affiliate of a Lender to the extent permitted under the Credit
Agreement); and
3
<PAGE>
(b) the prompt payment, performance and observance by the Guarantors of
all obligations of the Guarantors under the Guaranty and under this
Security Agreement and the other Credit Documents to which the
Guarantors are a party, or under any Interest Protection Agreement
with a Lender or an Affiliate of a Lender to the extent permitted
under the Credit Agreement, to which such Guarantor is a party or any
guaranty is given by it in connection therewith; and
(c) All other indebtedness, liabilities and obligations of any kind or
nature, now existing or hereafter arising, owing by the SA Credit
Parties to any Lender or the Administrative Agent, arising under this
Security Agreement or any of the other Credit Documents, whether
primary, secondary, direct, contingent, or joint and several; and
(d) All liabilities and obligations, now existing or hereafter arising,
owing by the Borrower to any Lender or any Affiliate of a Lender
arising under Interest Protection Agreements with a Lender or an
Affiliate of a Lender to the extent permitted under the Credit
Agreement.
"Trademark License": means any agreement, written or oral, providing for
-----------------
the grant by or to a SA Credit Party of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 5
----------
hereto.
"Trademarks": (a) all trademarks, trade names, corporate names, company
----------
names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in Schedule 5
----------
hereto, and (b) all renewals thereof.
"Work": any work which is subject to copyright protection pursuant to
----
Title 17 of the United States Code.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein" and
-----------------------------
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt and
--------------------------
complete payment and performance when due (whether at the stated maturity, by
acceleration or
4
<PAGE>
otherwise) of the Secured Obligations, each of the SA Credit Parties hereby
grants to the Administrative Agent, for the ratable benefit of the Lenders, a
security interest in all of the following property now owned or at any time
hereafter acquired by such SA Credit Party or in which such SA Credit Party now
has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"):
----------
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Copyrights;
(e) all Copyright Licenses;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures
(i) all General Intangibles, including the Contracts;
(j) all Instruments;
(k) all Intellectual Property;
(l) all Inventory;
(m) all Patents;
(n) all Patent Licenses;
(o) all Trademarks;
(p) all Trademark Licenses;
(q) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks, and related data processing software (owned by
such SA Credit Party or in which it has an interest) that at any time
evidence or contain information relating to any Collateral or are
otherwise necessary or helpful in the collection thereof or
realization thereupon; and
5
<PAGE>
(r) to the extent not otherwise included, all other tangible and
intangible personal property and fixtures of such SA Credit Party
and all Proceeds and products of any and all of the foregoing;
This Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until all the Secured Obligations, now
existing or hereafter arising, shall have been paid in full, the commitments
relating thereto shall have been terminated and the Credit Agreement and the
other Credit Documents shall no longer be in effect.
3. Provisions Relating to Accounts.
-------------------------------
3.1 SA Credit Parties Remain Liable under Accounts. Anything herein to
----------------------------------------------
the contrary notwithstanding, each of the SA Credit Parties shall remain liable
under each of the Accounts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account. Neither the
Administrative Agent nor any Lender shall have any obligation or liability under
any Account (or any agreement giving rise thereto) by reason of or arising out
of this Agreement or the receipt by the Administrative Agent or any Lender of
any payment relating to such Account pursuant hereto, nor shall the
Administrative Agent or any Lender be obligated in any manner to perform any of
the obligations of a SA Credit Party under or pursuant to any Account (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.
3.2 Analysis of Accounts. The Administrative Agent shall have the right,
--------------------
at any time after the occurrence and during the continuance of an Event of
Default, to make test verifications of the Accounts in any manner and through
any medium that it reasonably considers advisable, and the SA Credit Parties
shall furnish all such assistance and information as the Administrative Agent
may require in connection with such test verifications. At any time and from
time to time after the occurrence and during the continuation of an Event of
Default, upon the Administrative Agent's request and at the expense of the SA
Credit Parties, the SA Credit Parties shall cause independent public accountants
or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts. The Administrative
Agent in its own name or in the name of others may, after the occurrence of an
Event of Default and during the continuance, communicate with account debtors on
the Accounts to verify with them to the Administrative Agent's satisfaction the
existence, amount and terms of any Accounts.
3.3 Collections on Accounts. (a) The Administrative Agent hereby
-----------------------
authorizes the SA Credit Parties to collect the Accounts, provided that the
--------
Administrative Agent may curtail or terminate said authority at any time after
the occurrence and during the continuance of an Event of Default. If required
by the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Accounts, when collected by
the SA
6
<PAGE>
Credit Parties, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by the SA Credit Parties in a Collateral Account maintained
under the sole dominion and control of the Administrative Agent, subject to
withdrawal by the Administrative Agent for the account of the Lenders only as
provided in subsection 7.3, and (ii) until so turned over, shall be held by the
SA Credit Parties in trust for the Administrative Agent and the Lenders,
segregated from other funds of the SA Credit Parties.
(b) Each such deposit of Proceeds of Accounts shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments
included in the deposit.
(c) At the Administrative Agent's request after the occurrence and during
the continuance of an Event of Default, the SA Credit Parties shall deliver to
the Administrative Agent all original and other documents in their possession or
control (or as to which they have a right or ability to get) evidencing, and
relating to, the agreements and transactions which gave rise to the Accounts.
4. Provisions Relating to Contracts.
--------------------------------
4.1 SA Credit Parties Remain Liable under Contracts. Anything herein to
-----------------------------------------------
the contrary notwithstanding, each of the SA Credit Parties shall remain liable
under each of the Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with and pursuant to the terms and provisions of each Contract. Neither the
Administrative Agent nor any Lender shall have any obligation or liability under
any Contract by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any such Lender of any payment relating to such Contract
pursuant hereto, nor shall the Administrative Agent or any Lender be obligated
in any manner to perform any of the obligations of a SA Credit Party under or
pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
4.2 Communication with Contracting Parties. The Administrative Agent in
--------------------------------------
its own name or in the name of others at any time after the occurrence and
during the continuance of an Event of Default may communicate with parties to
the Contracts to verify with them to the Agent's satisfaction the existence,
amount and terms of any Contract.
5. Representations and Warranties. Each of the SA Credit Parties hereby
------------------------------
represents and warrants that:
5.1 Title; No Other Liens. Except for Permitted Liens, each SA Credit
---------------------
Party owns each item of the Collateral free and clear of any and all Liens or
claims of others. No security agreement, financing statement or other public
notice with respect to all or any part of the Collateral is on file or of record
in any public office, except such as have been filed with respect to Permitted
Liens.
7
<PAGE>
5.2 Perfected First Priority Liens. The security interests granted
------------------------------
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 2 attached hereto, and possession of such Collateral with
----------
respect to which perfection is acquired by possession, will constitute perfected
security interests in the Collateral in favor of the Administrative Agent, for
the ratable benefit of the Lenders, (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for Permitted Liens and (c)
are enforceable as such against all creditors of and purchasers from the SA
Credit Party (except purchasers of Inventory in the ordinary course of
business).
5.3 Inventory and Equipment. The Inventory and the Equipment of the SA
-----------------------
Credit Party are kept at the locations listed on Schedule 1 hereto. Insurance
----------
covering the Inventory and Equipment against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or similar businesses and similarly situated, of such types and in such
amounts as are customarily carried under similar circumstances by such other
corporations (hereinafter referred to as "Customary Business Insurance"), has
----------------------------
been obtained with financially sound and reputable insurers and such insurance
is in full force and effect and will remain in full force and effect so long as
any Secured Obligation remains unpaid or unsatisfied.
5.4 Chief Executive Office. The SA Credit Party's chief executive office
----------------------
and chief place of business, and the place where it keeps its books and records,
is located at the address shown on Schedule 1.
----------
5.5 Farm Products. None of the Collateral constitutes, or is the Proceeds
-------------
of, Farm Products.
5.6 Representations and Warranties Relating to Contracts. (a) SA Credit
----------------------------------------------------
Party will provide notice to the Administrative Agent within sixty (60) days of
the Closing Date as to whether the consent of any party (other than the SA
Credit Party) to any material Contract is required, or purports to be required,
in connection with the execution, delivery and performance of this Agreement.
In the event that any such consent is required, such SA Credit Party will use
its reasonable good faith efforts to obtain such consent as soon as practical
after the Closing Date and will promptly provide the Administrative Agent with
originals of all consents obtained. Within six (6) months from the Closing
Date, such SA Credit Party will provide the Administrative Agent information
relating to which consents, if any, it has been unable to procure.
(b) Each material Contract is in full force and effect, constitutes a valid
and legally enforceable obligation of the parties thereto, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing and is in compliance in
all material respects with all applicable laws concerning form, content and
manner of preparation and execution, including, but not limited to, where
applicable, consumer credit laws.
8
<PAGE>
(c) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any material
Contract by any party thereto other than those which have been duly obtained,
made or performed, are in full force and effect and do not subject the scope of
any such Contract to any material adverse limitation, either specific or general
in nature.
(d) Neither the SA Credit Party nor (to the best of the SA Credit Party's
knowledge) any other party to any material Contract is in default in any
material respects in the performance or observance of any of the terms thereof.
(e) The SA Credit Party has fully performed in all material respects all
its obligations under each material Contract.
(f) The right, title and interest of the SA Credit Party in, to and under
each material Contract are not subject, to the best of the SA Credit Party's
knowledge, to any defense, offset, counterclaim or claim which would materially
adversely affect the value of such Contract as Collateral, nor have any of the
foregoing been asserted or alleged against the SA Credit Party as to any
Contract.
(g) No amount payable to the SA Credit Party under or in connection with
any material Contract is evidenced by any Instrument or Chattel Paper which has
not been delivered to the Administrative Agent.
(h) Except as set forth on Schedule 6 hereto, none of the parties to any
----------
material Contracts is a Governmental Authority.
5.7 Copyrights, Patents and Trademarks. (a) Schedule 3 hereto includes
---------------------------------- ----------
all Copyrights and Copyright Licenses owned by the SA Credit Party in its own
name as of the date hereof. Schedule 4 hereto includes all Patents and Patent
----------
Licenses owned by the SA Credit Party in its own name as of the date hereof.
Schedule 5 hereto includes all Trademarks and Trademark Licenses owned by the SA
- ----------
Credit Party in its own name as of the date hereof. Registrations, if any, of
each such Copyright, Patent or Trademark is described in the applicable
Schedule.
(b) To the best of the SA Credit Party's knowledge, each Copyright, Patent
and Trademark of the SA Credit Party is valid, subsisting, unexpired,
enforceable and has not been abandoned, and such SA Credit Party has not done
anything to authorize or enable any other Person to use any such Copyright,
Patent or Trademark.
(c) Except as set forth in either Schedule 4 or Schedule 5, none of such
---------- ----------
Copyrights, Patents and Trademarks is the subject of any licensing, use or
franchise agreement.
(d) No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of any Copyright,
Patent or Trademark.
9
<PAGE>
(e) No action or proceeding is pending seeking to limit, cancel or question
the validity of any Copyright, Patent or Trademark, or which, if adversely
determined, would have a material adverse effect on the value of any Copyright,
Patent or Trademark.
(f) All registrations listed in Schedule 3, Schedule 4 or Schedule 5 with
respect to any Copyright, Patent or Trademark is valid and is in full force and
effect.
(g) No SA Credit Party owns any Trademark registered in the United States
of America that would be rendered invalid, abandoned, void or unenforceable by
reason of its being included as part of the Collateral.
6. Covenants. Each of the SA Credit Parties covenants and agrees with the
---------
Administrative Agent and the Lenders that, from and after the date of this
Agreement until this Agreement is terminated and the security interests created
hereby are released:
6.1 Delivery of Instruments and Chattel Paper. If any amount payable
-----------------------------------------
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
promptly delivered to the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
6.2 Marking of Records. At the request of the Administrative Agent upon
------------------
the occurrence and during the continuation of an Event of Default, the SA Credit
Party will mark its books and records pertaining to the Collateral to evidence
this Agreement and the security interests created hereby.
6.3 Maintenance of Perfected Security Interest; Further Documentation. (a)
-----------------------------------------------------------------
The SA Credit Party shall maintain the security interest created by this
Agreement as a perfected security interest subject only to the Liens permitted
to exist pursuant to the Credit Agreement and shall defend such security
interest against claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the SA Credit Party, the SA
Credit Party will promptly and duly execute and deliver such further instruments
and documents and take such further action (including without limitation all
actions required under the Federal Assignment of Claims Act or any similar state
statute) as the Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the security interests created hereby.
6.4 Changes in Locations, Name, etc. The SA Credit Party will not:
-------------------------------
(a) permit any of the Inventory or Equipment to be kept at a location other
than those listed on Schedule 5 hereto, unless it shall have given the
----------
Administrative
10
<PAGE>
Agent and the Lenders at least 30 days, prior written notice of such change
and any filings required under the Uniform Commercial Code in effect in the
affected jurisdiction to maintain the perfected security interest granted
pursuant to this Agreement shall have been made, except that Equipment may
be moved from such location for a reasonable period of time for purposes of
repair of such Equipment or for testing in the ordinary cause of business;
(b) change the location of its chief executive office and chief place of
business or the location at which it maintains its books and records from
that specified in subsection 5.4, unless it shall have given the
Administrative Agent and the Lenders at least 30 days' prior written notice
of such change and any filings required under the Uniform Commercial Code
in effect in the affected jurisdiction to maintain the perfected security
interest granted pursuant to this Agreement shall have been made; or
(c) change its name, identity or corporate structure to such an extent that
any financing statement filed by the Administrative Agent in connection
with this Agreement would become seriously misleading, unless it shall have
given the Administrative Agent and the Lenders at least 30 days' prior
written notice of such change and any filings required under the Uniform
Commercial Code in effect in the affected jurisdiction to maintain the
perfected security interest granted pursuant to this Agreement shall have
been made.
6.5 Further Identification of Collateral. The SA Credit Party will
------------------------------------
furnish to the Administrative Agent and the Lenders from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
6.6 Indemnification. The SA Credit Parties agree to indemnify, and to
---------------
save the Administrative Agent and the Lenders harmless from, any and all
liabilities, costs and expenses (including, without limitation, reasonable legal
fees and expenses) (i) with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, any delay in complying with any Requirement of Law applicable to
any of the Collateral and (iii) in connection with any of the transactions
contemplated by this Agreement, except for any such liabilities which result
from the gross negligence or willful misconduct of the Administrative Agent.
In any suit, proceeding or action brought by the Administrative Agent or any
Lender under any Account for any sum owing thereunder, the SA Credit Party will
save, indemnify and keep the Administrative Agent and such Lender harmless from
and against all expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability whatsoever of the
account debtor thereunder, arising out of a breach by the SA Credit Party of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or its
successors from the SA Credit Party, except for any such liabilities which
result from the gross negligence or willful misconduct of the Administrative
Agent.
11
<PAGE>
6.7 Covenants Relating to Accounts Upon Default. At any time after the
-------------------------------------------
occurrence and during the continuation of an Event of Default:
(a) the amount represented by the SA Credit Party to the Lenders from time
to time as owing by each account debtor or by all account debtors in
respect of the Accounts will at such time be the correct amount actually
owing by such account debtor or debtors thereunder;
(b) the SA Credit Party will not amend, modify, terminate or waive any
agreement giving rise to an Account in any manner which could reasonably be
expected to materially adversely affect the value of the Accounts as
Collateral;
(c) the SA Credit Party will not fail to exercise promptly and diligently
each and every material right which it may have under each agreement giving
rise to an Account (other than any right of termination);
(d) the SA Credit Party will not fail to deliver to the Administrative
Agent a copy of each material demand, notice or document received by it
relating in any way to any agreement giving rise to an Account; and
(e) other than in the ordinary course of business as generally conducted by
the SA Credit Party, the SA Credit Party will not grant any extension of
the time of payment of any of the Accounts, compromise, compound or settle
the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit
or discount whatsoever thereon.
6.8 Covenants Relating to Contracts. (a) The SA Credit Party will perform
-------------------------------
and comply in all material respects with all its obligations under the material
Contracts and all its other material contractual obligations relating to the
Collateral.
(b) The SA Credit Party will not amend, modify, terminate or waive any
provision of any material Contract in any manner which could reasonably be
expected to materially adversely affect the value of such material Contract as
Collateral.
(c) The SA Credit Party will not fail to exercise promptly and diligently
each and every material right which it may have under each material Contract
(other than any right of termination).
(d) The SA Credit Party will not fail to deliver to the Administrative
Agent a copy of each material demand, notice or document received by it relating
in any way to any material Contract.
(e) In any suit, proceeding or action brought by the Administrative Agent
or any Lender under any material Contract for any sum owing thereunder, or to
enforce any provisions of any material Contract, the SA Credit Party will save,
indemnify and keep the Administrative
12
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Agent and such Lender harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or reduction
or liability whatsoever of the obligor thereunder, arising out of a breach by
the SA Credit Party of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
obligor or its successors from the SA Credit Party except for any such expense,
loss or damage which results from the gross negligence or the willful misconduct
of the Administrative Agent or such Lender.
(f) No SA Credit Party will directly or indirectly sell any of its
Accounts.
6.9 Covenants Relating to Copyrights. (a) The SA Credit Party will employ
--------------------------------
the Copyright for each Work with such notice of copyright as may be required by
law to secure copyright protection.
(b) The SA Credit Party will not do any act or knowingly omit to do any act
whereby any material Copyright may become invalidated and (i) will not do any
act, or omit to do any act, whereby any material Copyright may become injected
into the public domain; (ii) shall notify the Administrative Agent immediately
if it knows, or has reason to know, that any material Copyright may become
injected into the public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or any other country)
regarding the SA Credit Party's ownership of any such Copyright or its validity;
(iii) will take all necessary steps as it shall deem appropriate under the
circumstances, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of each material
Copyright owned by the SA Credit Party including, without limitation, filing of
applications for renewal where necessary; and (iv) will promptly notify the
Administrative Agent of any material infringement of any material Copyright of
the SA Credit Party of which it becomes aware and will take such actions as it
shall reasonably deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit for infringement,
seeking injunctive relief and seeking to recover any and all damages for such
infringement.
6.10 Covenants Relating to Patents and Trademarks. (a) The SA Credit
--------------------------------------------
Party (either itself or through licensees) will, with respect to each material
Trademark, (i) continue to use each Trademark on each and every trademark class
of goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (ii) maintain as in the past the
quality of products and services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of registration, (iv) not adopt or use any
mark which is confusingly similar or a colorable imitation of such Trademark
unless the Administrative Agent, for the ratable benefit of the Lenders, shall
obtain a perfected security interest in such mark pursuant to this Agreement,
and (v) not (and not permit any licensee or sublicensee thereof to) do any act
or knowingly omit to do any act whereby any Trademark may become invalidated.
(b) The SA Credit Party will not, with respect to any material Patent do
any act, or omit to do any act, whereby any Patent may become abandoned or
dedicated.
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(c) The SA Credit Party will notify the Administrative Agent and the
Lenders promptly if it knows, or has reason to know, that any application or
registration relating to any material Patent or Trademark may become abandoned
or dedicated, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or any court or
tribunal in any country) regarding the SA Credit Party's ownership of any Patent
or Trademark or its right to register the same or to keep and maintain the same.
(d) Whenever the SA Credit Party, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Patent or Trademark with the United States Patent and Trademark Office or
any similar office or agency in any other country or any political subdivision
thereof, the SA Credit Party shall report such filing to the Administrative
Agent and the Lenders within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Upon request of the Administrative Agent,
the SA Credit Party shall execute and deliver any and all agreements,
instruments, documents and papers as the Agent may reasonably request to
evidence the Administrative Agent's and the Lenders' security interest in any
Patent or Trademark and the goodwill and general intangibles of the SA Credit
Party relating thereto or represented thereby.
(e) The SA Credit Party will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of all
material Patents and Trademarks, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of incontestability,
unless the SA Credit Party shall reasonably determine that i) the applicable
Patent or Trademark is of negligible economic value to it.
(f) In the event that any material Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third party, the SA
Credit Party shall promptly notify the Administrative Agent and the Lenders
after it learns thereof and shall, unless the SA Credit Party shall reasonably
determine that the likelihood of success of such action is slight, which
determination the SA Credit Party shall promptly report to the Administrative
Agent and the Lenders, promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any and all
damages for such infringement, misappropriation or dilution, or take such other
actions as the SA Credit Party shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark.
6.11 Covenants Regarding Equipment. Each SA Credit Party will at its own
-----------------------------
expense maintain or cause to be maintained Customary Business Insurance in
respect of Equipment and shall apply the proceeds of such insurance in
accordance with the terms of the Credit Agreement. Each Grantor shall maintain
or cause to be maintained, to the extent required by sound business practices,
all Equipment used by such SA Credit Party in its business in good repair,
working order and condition and shall make all necessary replacements thereof so
that the value and
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operating efficiency thereof shall at all times be maintained and preserved.
Each SA Credit Party, promptly on demand therefor by the Administrative Agent
(and in any event within ten (10) days of demand) shall use its good faith
efforts (provided upon the occurrence and continuance of a Default or an Event
of Default such SA Credit Party shall use its best efforts) to deliver to the
Administrative Agent any and all evidence of ownership of any of the Equipment.
7. Remedies.
--------
7.1 Notice to Account Debtors and Contract Parties. Upon the request of
----------------------------------------------
the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, the SA Credit Parties shall notify account
debtors on the Accounts and parties to the Contracts that the Accounts and the
Contracts have been assigned to the Administrative Agent for the ratable benefit
of the Lenders and that payments in respect thereof shall be made directly to
the Administrative Agent.
7.2 Proceeds to be Turned Over To Administrative Agent. In addition to
--------------------------------------------------
the rights of the Administrative Agent and the Lenders specified in subsection
3.3 with respect to payments of Accounts, upon the request of the Administrative
Agent after the occurrence during the continuance of an Event of Default all
Proceeds received by the SA Credit Parties consisting of cash, checks and other
near-cash items shall be held by the SA Credit Parties in trust for the
Administrative Agent and the Lenders, segregated from other funds of the SA
Credit Parties, and shall, forthwith upon receipt by the SA Credit Parties, be
turned over to the Administrative Agent in the exact form received by the SA
Credit Parties (duly endorsed by the SA Credit Parties to the Administrative
Agent, if required) and held by the Administrative Agent in a Collateral Account
maintained under the sole dominion and control of the Administrative Agent. All
Proceeds while held by the Administrative Agent in a Collateral Account (or by
the SA Credit Parties in trust for the Administrative Agent and the Lenders)
shall continue to be held as collateral security for all the Secured Obligations
and shall not constitute payment thereof until applied as provided in subsection
7.3.
7.3 Application of Proceeds. At any time after an Event of Default shall
-----------------------
have occurred and be continuing, at the Administrative Agent's election, the
Administrative Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Secured Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Secured Obligations shall be paid over from time to time by the
Administrative Agent to the SA Credit Parties or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Secured Obligations shall have been paid in full and the Commitments shall have
been terminated shall be paid over to the SA Credit Parties or to whomsoever may
be lawfully entitled to receive the same.
7.4 Code Remedies. At any time after an Event of Default shall have
-------------
occurred and be continuing, the Administrative Agent, on behalf of the Lenders
may exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of
15
<PAGE>
a secured party under the Code. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the SA Credit Parties or
any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived to the extent permitted by applicable law), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Administrative Agent or any Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Administrative Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in a SA Credit Parties, which
right or equity is hereby waived or released. The SA Credit Parties further
agree, at the Administrative Agent's request, to assemble the Collateral and
make it available to the Administrative Agent at places which the Administrative
Agent shall reasonably select, whether at the respective SA Credit Party's
premises or elsewhere. The Administrative Agent shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Administrative Agent may elect, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Administrative Agent account for the surplus,
if any, to each of the SA Credit Parties. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if received by the SA Credit Parties at least 10
days before such sale or other disposition.
7.5 Intellectual Property. (a) For the purpose of enabling the
---------------------
Administrative Agent to exercise rights and remedies hereunder after the
occurrence and during the continuation of an Event of Default, and for no other
purpose, each SA Credit Party hereby grants to the Administrative Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to any SA Credit Party) to use, assign,
license or sublicense any of the Intellectual Property now owned or hereafter
acquired by such SA Credit Party, wherever the same may be located, including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer programs used for the compilation
or printout thereof.
(b) Notwithstanding anything contained herein to the contrary, but subject
to the provisions of Section 6.5 of the Credit Agreement that limit the right of
the SA Credit Parties to dispose of their property, so long as no Event of
Default shall have occurred and be continuing, the SA Credit Parties will be
permitted to exploit, use, enjoy, protect, license, sublicense, assign,
16
<PAGE>
sell, dispose of or take other actions with respect to the Intellectual Property
in the ordinary course of the business. In furtherance of the foregoing, unless
an Event of Default shall have occurred and be continuing the Administrative
Agent shall from time to time, upon the request of any SA Credit Party, execute
and deliver any instruments, certificates or other documents, in the form so
requested and at the sole risk and expense of the SA Credit Parties, that any SA
Credit Party shall have certified are appropriate (in its judgment) to allow it
to take any action permitted above (including relinquishment of the license
provided pursuant to clause (a) immediately above as to any specific
Intellectual Property). Further, upon the payment in full of all of the Secured
Obligations and cancellation or termination of the commitments relating or
release of the Collateral, the license granted pursuant to clause (a)
immediately above shall automatically terminate. The exercise of rights and
remedies hereunder shall not terminate the rights of the holders of any licenses
or sublicenses theretofore granted by the SA Credit Parties as provided herein.
7.6 Deposit Accounts. Upon the occurrence and during the continuance of
----------------
an Event of Default, the Administrative Agent may exercise dominion and control
over, and refuse to permit further withdrawals (whether of money, securities,
instruments or other property) from, deposit accounts maintained with the
Administrative Agent or any Lender constituting part of the Collateral.
7.7 Deficiency. The SA Credit Parties shall remain liable for any
----------
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Secured Obligations and the reasonable fees and
disbursements of any attorneys employed by the Administrative Agent or any
Lender to collect such deficiency.
8. Administrative Agent's Appointment as Attorney-in-Fact; Administrative
----------------------------------------------------------------------
Agent's Performance of SA Credit Parties' Secured Obligations.
- -------------------------------------------------------------
8.1 Powers. Each of the SA Credit Parties hereby irrevocably constitutes
------
and appoints the Administrative Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such SA Credit Party
and in the name of such SA Credit Party or in its own name, from time to time in
the Administrative Agent's discretion, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to secure the
Secured Obligations and grant security interests in the Collateral as
contemplated by this Agreement, and, without limiting the generality of the
foregoing, each SA Credit Party hereby gives the Administrative Agent the power
and right, on behalf of such SA Credit Party, without notice to or assent by
such SA Credit Party to do the following:
(a) in the name of the Borrower or its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, or General Intangible or with respect to any other
Collateral and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
17
<PAGE>
Administrative Agent for the purpose of collecting any and all such moneys
due under any Account, Instrument or General Intangible or with respect to
any other Collateral whenever payable;
(b) in the case of any Copyrights, Patents or Trademarks, to execute and
deliver any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Administrative Agent's and
the Lenders', security interest in any copyright, Patent or Trademark and
the goodwill and general intangibles of the SA Credit Party relating
thereto or represented thereby;
(c) to pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, to effect any repairs or any insurance called for
by the terms hereof or of any Credit Document and to pay any part of the
premiums therefor and the costs thereof;
(d) to execute, in connection with the sale provided for in Section 7.4
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(e) (i) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (ii) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(iii) to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (iv) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in
respect of any Collateral; (v) to defend any suit, action or proceeding
brought against the SA Credit Party with respect to any Collateral; (vi) to
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, to give such discharges or releases as the
Administrative Agent may deem appropriate; (vii) to assign or grant
licenses to any Copyright, Patent or Trademark (along with the goodwill of
the business to which any such Copyright, Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and in
such manner, as the Administrative Agent shall in its sole discretion
determine; and (viii) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and to do, at the Administrative Agent's
option and the SA Credit Party's expense, at any time, or from time to
time, all reasonable acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as the SA
Credit Party might do.
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The Administrative Agent agrees that, except after the occurrence and during the
continuation of an Event of Default, it will forbear from exercising the power
of attorney or any rights granted to the Administrative Agent pursuant to this
subsection 8.1.
8.2 Performance by Administrative Agent of SA Credit Party's Secured
----------------------------------------------------------------
Obligations. If the SA Credit Parties fail to perform or comply with any of
- -----------
their agreements contained herein after a request from the Administrative Agent,
the Administrative Agent, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or compliance, with such
agreement.
8.3 SA Credit Parties' Reimbursement Obligation. The reasonable expenses
-------------------------------------------
of the Administrative Agent incurred in connection with actions undertaken as
provided in this Section, together with interest thereon at the rate per annum
set forth in Section 2.5 of the Credit Agreement for Base Rate Loans from the
date of payment by the Administrative Agent to the date reimbursed by the SA
Credit Parties, shall be payable by the SA Credit Parties to the Administrative
Agent on demand.
8.4 Ratification; Power Coupled With An Interest. The SA Credit Parties
--------------------------------------------
hereby ratify all that said attorneys shall lawfully do or cause to be done by
virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
9. Duty of Administrative Agent. The Administrative Agent's sole duty
----------------------------
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar property for its own account. Except as required by applicable
law, neither the Administrative Agent, any Lender nor any of their respective
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the SA Credit Parties or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon the Administrative Agent or any
Lender to exercise any such powers. The Administrative Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to the SA Credit Parties for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
10. Execution of Financing Statements. Pursuant to Section 9-402 of the
---------------------------------
Code, each of the SA Credit Parties authorizes the Administrative Agent to file
financing statements with respect to the Collateral without the signature of the
SA Credit Party in such form and in such filing offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent and the Lenders under this Agreement. A carbon,
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photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
11. Authority of Administrative Agent. The SA Credit Parties acknowledge
---------------------------------
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting right
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the SA Credit Parties, the Administrative Agent shall
be conclusively presumed to be acting as agent for the Lenders with full and
valid authority so to act or refrain from acting, and the SA Credit Parties
shall be under no obligation, or entitlement, to make any inquiry respecting
such authority.
12. Notices. All notices shall be given or made in accordance with
-------
Section 9.2 of the Credit Agreement.
13. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14. Amendments in Writing; No Waiver; Cumulative Remedies.
-----------------------------------------------------
14.1 Amendments in Writing. None of the terms or provisions of this
---------------------
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Administrative Agent and the SA Credit
Parties directly affected thereby; provided that any provision of this Agreement
--------
may be waived by the Administrative Agent in a letter or agreement executed by
the Administrative Agent or by facsimile transmission from the Administrative
Agent.
14.2 No Waiver by Course of Conduct. Neither the Administrative Agent nor
------------------------------
any Lender shall by any act (except by a written instrument pursuant to
subsection 14.1 hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent or such Lender would otherwise have on any future occasion.
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<PAGE>
14.3 Remedies Cumulative. The rights and remedies herein provided are
-------------------
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
15. Section Headings. The section and subsection headings used in this
----------------
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of the SA Credit Parties and shall inure to the benefit
of the Administrative Agent and the Lenders and their successors and assigns,
provided that the SA Credit Parties may not assign any of their rights or
- --------
obligations under this Agreement without the prior written consent of the
Administrative Agent and any such purported assignment shall be null and void.
17. Further Assurances and Covenants. Each SA Credit Party agrees that it
--------------------------------
will execute and delivery such further documents and do such other acts and
things as the Administrative Agent may reasonably request in order fully to
effect the purposes of this Agreement. Each SA Credit party will furnish to the
Administrative Agent from time to time statements and schedules further
identifying and describing the Collateral of such SA Credit Party and such other
reports in connection with such Collateral as the Administrative Agent may
reasonably request, all in reasonable detail. Each SA Credit Party will
promptly and as soon as reasonably possible (but in any event within ten (10)
days) notify the Administrative Agent of any material event causing loss or
depreciation in value of the Collateral which is outside the ordinary course of
business of such SA Credit Party or any event which, in respect to any single
such event, causes loss or depreciation in excess of $100,000 and in respect of
any of such Events will also notify the Administrative Agent of the amount of
such loss or depreciation.
18. Compliance with Laws. No SA Credit Party shall use or permit any
--------------------
Collateral to be used unlawfully in any material respect or in violation of any
provision of this Agreement or any other Credit Document or in violation in any
material respect of any applicable statute, regulation or ordinance or any
policy of insurance covering such Collateral. Each SA Credit Party shall pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Collateral. Each SA Credit Party will use
reasonable commercial efforts to enter into only such Contracts which do not
prohibit the assigning of any rights of any SA Credit Party thereunder in the
manner contemplated by this Agreement. In the event that any SA Credit Party
enters into any Contract which does not permit the assignment of rights
thereunder in the manner contemplated by this Agreement, such SA Credit Party
shall provide prompt written notice thereof to the Administrative Agent and
shall provide a copy of such Contract to the Administrative Agent.
19. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.
21
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20. Arbitration; Consent to Jurisdiction and Service of Process.
-----------------------------------------------------------
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial action, any dispute, claim or controversy arising
out of or connected with this Agreement or the Credit Documents ("Disputes")
--------
shall be resolved by binding arbitration as provided herein. Disputes may
include, without limitation, tort claims, counterclaims, claims brought as class
actions and claims arising from Credit Documents executed in the future.
Arbitration shall be conducted under the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
-----------------
Association and Title 9 of the U.S. Code. All arbitration hearings shall be
conducted in Charlotte, North Carolina or such other place as agreed to in
writing by the parties. A judgment upon the award may be entered in any court
having jurisdiction, and all decisions shall be in writing. The panel from
which all arbitrators are selected shall be comprised of licensed attorneys
having at least ten years' experience representing parties in secured lending
transactions. Notwithstanding the foregoing, this arbitration provision does
not apply to disputes under or related to Interest Protection Agreements.
(b) Notwithstanding the preceding binding arbitration provision, the
Administrative Agent preserves certain remedies that may be exercised during a
Dispute. The Administrative Agent shall have the right to proceed in any court
of proper jurisdiction or by self help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale granted in
this Agreement or the Credit Documents or under applicable law, (ii) all rights
of self help including peaceful occupation of real property and collection of
rents, set-off and peaceful possession of personal property, (iii) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment and appointment of receiver, (iv) when applicable, a
judgment by confession of judgment and (v) other remedies. Preservation of
these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
(c) By execution and delivery of this Agreement, each SA Credit Party
accepts, for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any arbitration
proceedings conducted under the Arbitration Rules in Charlotte, North Carolina
and irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Agreement from which no appeal has been taken or is
available. Each SA Credit Party and the Administrative Agent irrevocably waive
any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens which it may now or
hereafter have to the bringing of any such action or proceeding in any such
jurisdiction. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of the Administrative
Agent to bring proceedings against any or all SA Credit Parties in any court or
pursuant to arbitration proceedings in any other jurisdiction.
21. Security Interest Absolute. All rights of the Administrative Agent
--------------------------
and security interests hereunder, and all obligations of each SA Credit Party
hereunder, shall be absolute and unconditional, irrespective of:
22
<PAGE>
(i) any lack of validity or enforceability of any of the Credit Agreement
or any other Credit Document; or any other agreement or instrument relating
to any of the foregoing;
(ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement or any
other Credit Document;
(iii) any exchange, release or non-perfection of any other collateral, or
any release or amendment or waiver of or consent to any departure from any
guaranty, for all or any of the Secured Obligations; or
(iv) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, such SA Credit Party or a third party
grantor.
[Remainder of Page Intentionally Left Blank]
23
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
BORROWER:
T/SF COMMUNICATIONS CORPORATION,
a Delaware corporation
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
GUARANTORS/OTHER SA CREDIT PARTIES:
T/SF HOLDINGS, LLC
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
ATWOOD, LLC
GALAXY REGISTRATION, LLC
GEM GAMING, LLC
By: T/SF HOLDINGS, LLC
as Sole Member
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
(Signatures continued on the following page)
24
<PAGE>
ATWOOD CONVENTION PUBLISHING, INC.
CORSEARCH, INC.
CRIMESEARCH, INC.
(formerly DacNet, Inc.)
EXPO MAGAZINE, INC.
GALAXY DESIGN & PRINTING, INC.
GALAXY REGISTRATION, INC.
G.E.M. COMMUNICATIONS, INC.
TRANSPORTATION COMMUNICATIONS SERVICES, INC.
TRANSPORTATION INFORMATION SERVICES, INC.
T/SF EUROPE, INC.
T/SF INVESTMENT CO.
T/SF OF NEVADA, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
[Signatures continued on the following page]
25
<PAGE>
ADMINISTRATIVE AGENT:
FIRST UNION NATIONAL BANK
as Administrative Agent
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
26
<PAGE>
Schedule 1
----------
Chief Executive Office and Locations of Collateral
Chief Executive Locations of Record Owner
SA Credit Party Office Collateral (If other than SA Credit
- --------------- ------ ---------- ------------------------
Party)
------
<PAGE>
Schedule 2
----------
Filings and Actions required to Perfect Security Interests
UCC FILINGS
- -----------
<PAGE>
Schedule 3
----------
Copyrights and Copyright Licenses
<PAGE>
Schedule 4
----------
Patents and Patent Licenses
<PAGE>
Schedule 5
----------
Trademarks and Trademark Licenses
<PAGE>
Schedule 6
----------
Contracts with Governmental Authorities
<PAGE>
EXHIBIT 10.4
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Pledge Agreement" or the "Agreement"),
---------------- ---------
dated as of October 9, 1997 made by ATWOOD CONVENTION PUBLISHING, INC.
("ATWOOD"), a Missouri corporation, GALAXY REGISTRATION, INC. ("GALAXY"), a
Maryland corporation, G.E.M. COMMUNICATIONS, INC. ("G.E.M."), a Maryland
corporation, TRANSPORTATION INFORMATION SERVICES, INC. ("TISI"), an Oklahoma
corporation, T/SF INVESTMENT CO. ("T/SF INVESTMENT"), a Delaware corporation,
and T/SF OF NEVADA, INC. ("T/SF NEVADA"), a Nevada corporation (each of ATWOOD,
GALAXY, G.E.M., TISI, T/SF INVESTMENT, and T/SF NEVADA being a "Pledgor", and
-------
collectively the "Pledgors" which terms shall include their successors and
--------
assigns), in favor of FIRST UNION NATIONAL BANK, as Administrative Agent (in
such capacity, the "Administrative Agent") for the several banks, other
--------------------
financial institutions and other investors (collectively, the "Lenders") from
-------
time to time parties to the Credit Agreement dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among T/SF COMMUNICATIONS CORPORATION (the "Borrower"), the Lenders
- --------- --------
and FIRST UNION NATIONAL BANK (the "Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
Revolving Loans to the Borrower upon the terms and subject to the conditions set
forth therein;
WHEREAS, the Pledgors are the legal and beneficial owners of the shares of
Pledged Stock (as hereinafter defined);
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Revolving Loans to the Borrower under the Credit Agreement
that the Pledgors shall have executed and delivered this Pledge Agreement to the
Administrative Agent for the ratable benefit of the Lenders; and
WHEREAS, the Pledgors will receive a substantial benefit from the Revolving
Loans and desire that the Lenders make their respective Revolving Loans to the
Borrower pursuant to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Revolving Loans under the Credit
Agreement, the Pledgors hereby jointly and severally agree with the
Administrative Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in
-------------
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement. For purposes of this Agreement, the term "Lender" shall
------
include any Affiliate of any Lender which has
<PAGE>
entered into an Interest Protection Agreement with the Borrower pursuant to the
Credit Agreement with respect to the obligations thereunder.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be amended, modified
---------
or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code from time to time in effect in the
----
State of North Carolina.
"Collateral": the Pledged Stock and all Proceeds thereof.
----------
"Collateral Account": any account established to hold money Proceeds,
------------------
maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the Lenders
as provided in Section 8(a).
"Obligations": the collective reference to the unpaid principal of and
-----------
interest on (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Revolving Loans and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Revolving Loans and all other obligations and
liabilities of the Borrower, of the Pledgors and of any other Credit Party
executing an agreement similar to the Pledge Agreement, in each case to the
Administrative Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, any
Revolving Notes, this Agreement, the other Credit Documents, any Interest
Protection Agreement entered into by the Borrower with any Lender pursuant to
the Credit Agreement with respect to the obligations thereunder or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by the Borrower or the Pledgors pursuant to the terms of the
Credit Agreement, this Agreement, any other Credit Document or any Interest
Protection Agreement entered into by the Borrower with any Lender pursuant to
the Credit Agreement with respect to the obligations thereunder).
"Permitted Transfer": any sale, assignment, transfer, exchange or other
------------------
disposition of any Pledged Stock by either Pledgor or any permitted successor or
assign, whether in exchange for money or other property, gift, bequest or
otherwise, expressly permitted under the Credit Agreement and under the terms
of this Agreement.
"Pledged Stock": the shares of the Capital Stock of each Subsidiary (each
-------------
a "Company" and hereinafter, the "Companies") that are owned by each Pledgor
------- ---------
(Schedule 1 hereto setting forth each class of Capital Stock of each Company and
- -----------
the percentage thereof owned by each Pledgor),
2
<PAGE>
together with all stock certificates, options or rights of any nature whatsoever
that may be issued or granted by any Company to such Pledgor or other Person in
respect of the Pledged Stock while this Agreement is in effect and any other
stock or equity interest obtained by any Pledgor or any Person in any Company
during the term hereof.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1) of
--------
the Uniform Commercial Code in effect in the State of North Carolina and, in any
event, shall include, without limitation, all dividends or other income from the
Pledged Stock, collections thereon or distributions with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
--------------
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
"Transfer": as defined in Section 5(b).
--------
2. Pledge; Grant of Security Interest. Each Pledgor hereby delivers to
----------------------------------
the Administrative Agent, for the ratable benefit of the Lenders, all of the
Pledged Stock of such Pledgor and hereby grants to the Administrative Agent, for
the ratable benefit of the Lenders, a first security interest in the Collateral
of such Pledgor, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the Administrative
------------
Agent of each certificate of each Pledgor representing one or more shares of
Pledged Stock of such Pledgor to the Administrative Agent, such Pledgor shall
deliver an undated stock power covering such certificate, duly executed in blank
with, if the Administrative Agent so requests, signature guaranteed.
4. Representations and Warranties. Each Pledgor represents and warrants
------------------------------
that:
(a) Except as set forth on Schedule 1, the shares of Pledged Stock
----------
identified in Schedule 1 constitute all the issued and outstanding shares
----------
of all classes of Capital Stock and equity interests of any kind of each
Company.
(b) All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable.
3
<PAGE>
(c) Such Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock, free of any and all Liens or
options in favor of, or claims of, any other Person, except the security
interests created by this Agreement.
(d) Upon delivery by each Pledgor to the Administrative Agent of the stock
certificates evidencing the Pledged Stock identified in Schedule 1, the
----------
security interest created by this Agreement will constitute a valid,
perfected first priority security interest in the Pledged Stock of each
Pledgor and the other Collateral arising therefrom, enforceable in
accordance with its terms against all creditors of the Pledgors, or any of
them, any Company or any Persons purporting to purchase any Collateral from
any Pledgor or any Company, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law).
5. Covenants. The Pledgors jointly and severally covenant and agree with
---------
the Administrative Agent and the Lenders that, from and after the date of this
Agreement until this Agreement is terminated and the security interests created
hereby are released:
(a) If any Pledgor shall, as a result of its ownership of any Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any shares of any
Pledged Stock, or otherwise in respect thereof, such Pledgor shall accept
the same as the agent of the Administrative Agent and the Lenders, hold the
same in trust for the Administrative Agent and the Lenders and deliver the
same forthwith to the Administrative Agent in the exact form received, duly
endorsed by such Pledgor to the Administrative Agent, if required, together
with an undated stock power covering such certificate duly executed in
blank by such Pledgor and with, if the Administrative Agent so requests,
signature guaranteed, to be held by the Administrative Agent, subject to
the terms hereof, as additional collateral security for the Obligations.
Upon the occurrence and during the continuance of an Event of Default, any
sums paid upon or in respect of the Pledged Stock as a dividend or other
distribution or upon the liquidation or dissolution of any Company shall be
paid over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged Stock
or any property shall be distributed upon or with respect to the Pledged
Stock pursuant to the recapitalization or reclassification of the capital
of any Company or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Administrative Agent to be held by it
hereunder as additional collateral security for the Obligations. If any
sums of money or property so paid or distributed in respect of the Pledged
Stock shall be received by any Pledgor, such Pledgor shall, until such
money or property is paid or delivered to the Administrative Agent, hold
such money or property in trust for the Lenders,
4
<PAGE>
segregated from other funds of such Pledgor, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the Administrative Agent, no
Pledgor will (1) vote to enable, or take any other action to permit, any
Company to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to
purchase or exchange for any stock or equity securities of any nature of
any Company, (2) except for any Permitted Transfer, sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral or any portion thereof, (3) create, incur or permit to exist any
Lien or option in favor of, or any claim of any Person with respect to, any
of the Collateral, or any interest therein, except for the security
interests created by this Agreement or (4) enter into any agreement or
undertaking restricting the right or ability of any Company or the
Administrative Agent to sell, assign or transfer any of the Collateral.
Notwithstanding the foregoing, any sale, assignment, transfer, exchange or
other disposition (specifically excluding any collateral assignment or
other transaction that permits to exist any Lien) (in each case, a
"Transfer"), of any Pledged Stock shall be permitted hereunder so long as
---------
the following conditions shall be satisfied:
(i) No Default or Event of Default shall exist prior to, and taking into
account, the proposed Transfer, including without limitation
pursuant to Section 7(h) of the Credit Agreement, or immediately
thereafter;
(ii) The transferee with respect to such Transfer shall have executed and
delivered a stock pledge agreement in substance and form similar in
all material respects to this Agreement and shall have agreed to be
bound thereby;
(iii) The Administrative Agent shall have received on behalf of the
Lenders an opinion of counsel (reasonably acceptable to the
Administrative Agent) of the transferee and similar in content to
the opinion of counsel for the Pledgors rendered on the Closing Date
in connection with the closing of the transactions contemplated by
the Credit Agreement;
(iv) The transferee of the Transfer shall have delivered an undated stock
power covering the certificate or certificates to be issued to such
transferee, such undated stock power to be duly executed in blank
and the Administrative Agent shall have received a written agreement
from the transferee pursuant to which such transferee agrees,
immediately upon receipt, to deliver any certificate or certificates
issued to such Person in connection with the Transfer to the
Administrative Agent to be held by it on behalf of the Lenders
pursuant to this Agreement; and
(v) The Administrative Agent shall have received on behalf of the
Lenders such other assurances as it or any Lender shall reasonably
require.
5
<PAGE>
Upon satisfaction by the transferring Pledgor and the transferee of the
conditions set forth herein, in such case, the Administrative Agent shall
deliver the certificate evidencing the Pledged Stock of the transferor
Pledgor that is subject to the Permitted Transfer to an Authorized
Signatory which certificate the Authorized Signatory and the Pledgors shall
cause to be canceled and shall immediately thereafter cause a new
certificate evidencing the shares of the Pledged Stock subject to the
Permitted Transfer to be issued in the name of the transferee and shall
deliver such certificate to the Administrative Agent to be held pursuant to
and under the terms of this Agreement.
(c) Each Pledgor shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such
security interest against claims and demands of all Persons whomsoever. At
any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the Pledgors, the Pledgors
and each of them will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the
Administrative Agent or any Lender may reasonably request for the purposes
of obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note, instrument
or chattel paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative Agent,
to be held as Collateral pursuant to this Agreement.
(d) The Pledgors shall pay, and save the Administrative Agent and the
Lenders harmless from, any and all liabilities (i) with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral and (ii) in connection with any of the
transactions contemplated by this Agreement, except for any such
liabilities which result from the gross negligence or willful misconduct of
the Administrative Agent.
6. Permitted Distributions; Dividends; Voting Rights. Unless an Event of
-------------------------------------------------
Default shall have occurred and be continuing, the Pledgors shall be permitted
to receive all cash dividends and similar distributions paid in the normal
course of business of the Companies and to exercise all voting and corporate
rights with respect to the Pledged Stock; provided, however, that no vote shall
-------- -------
be cast or corporate right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Credit Document.
7. Rights of the Lenders and the Administrative Agent.
--------------------------------------------------
(a) All money Proceeds received by the Administrative Agent hereunder shall
be held by the Administrative Agent for the benefit of the Lenders in a
Collateral Account. All Proceeds while held by the Administrative Agent in
a Collateral Account (or by the Pledgors or any of them in trust for the
Administrative Agent and the Lenders) shall
6
<PAGE>
continue to be held as collateral security for all the Obligations and
shall not constitute payment thereof until applied as provided in Section
8(a).
(b) If an Event of Default shall occur and be continuing, (1) the
Administrative Agent shall have the right to receive any and all cash
dividends and other distributions paid in respect of the Pledged Stock and
make application thereof to the Obligations in such order as the
Administrative Agent may determine, and (2) all shares of the Pledged Stock
shall be registered in the name of the Administrative Agent or its nominee,
and the Administrative Agent or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to such shares of the Pledged
Stock at any meeting of shareholders of any Company or otherwise and (B)
any and all rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the Pledged
Stock as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
any Company, or upon the exercise by any Pledgor or the Administrative
Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Stock with any committee, depository,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without
liability except to account for property actually received by it, but the
Administrative Agent shall have no duty to any Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
8. Remedies.
--------
(a) If an Event of Default shall have occurred and be continuing, at any
time at the Administrative Agent's election, the Administrative Agent may
apply all or any part of Proceeds held in any Collateral Account in payment
of the Obligations in such order as the Administrative Agent may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Administrative Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Administrative Agent,
without resort to any other collateral or remedy under any Credit Document
or demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law
referred to below) to or upon any Pledgor or any other Person (including
without limitation the Borrower) (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, assign, give an option or
options to purchase or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-counter market,
at any
7
<PAGE>
exchange, broker's board or office of the Administrative Agent or any
Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent or
any Lender shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in any Pledgor, which right or equity of redemption
is hereby waived or released. The Administrative Agent shall apply any
Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements of counsel to the
Administrative Agent, to the payment in whole or in part of the
Obligations, in such order as the Administrative Agent may elect, and only
after such application and after the payment by the Administrative Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent
account for the surplus, if any, to the Pledgors. To the extent permitted
by applicable law, each Pledgor waives all claims, damages and demands it
may acquire against the Administrative Agent or any Lender arising out of
the exercise by it of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition. The Borrower shall remain liable for
any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Administrative Agent or any
Lender to collect such deficiency.
9. [Intentionally Omitted]
10. Irrevocable Authorization and Instruction to Borrower. The Pledgors
-----------------------------------------------------
hereby authorize and instruct the Companies (and each of them) to comply with
any instruction received by the Pledgors (or any of them) from the
Administrative Agent in writing that (a) states that an Event of Default has
occurred and (b) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from the Pledgors (or any of them),
and the Pledgors agree that each Company shall be fully protected in so
complying.
11. Administrative Agent's Appointment as Attorney-in-Fact.
------------------------------------------------------
(a) The Pledgors and each of them hereby irrevocably constitute and appoint
the Administrative Agent and any officer or agent of the Administrative
Agent, with full power of substitution, as its true and lawful attorney-in-
fact with full irrevocable power and authority in the place and stead of
the Pledgors and each of them and in the name of the Pledgors and each of
them or in the Administrative Agent's own name, from time to time in the
Administrative Agent's discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and
8
<PAGE>
instruments which may be necessary or desirable to accomplish the purposes
of this Agreement, including, without limitation, any financing statements,
endorsement, assignment or other instruments of transfer.
(b) The Pledgors and each of them hereby ratify all that said attorneys
shall lawfully do or cause to be done pursuant to the power of attorney
granted in Section 11(a). All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
12. Duty of Administrative Agent. The Administrative Agent's sole duty
----------------------------
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar securities and property for its own account, except that the
Administrative Agent shall have no obligation to invest funds held in any
Collateral Account and may hold the same as demand deposits. Neither the
Administrative Agent, any Lender nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section 9-402 of the
---------------------------------
Code, the Pledgors and each of them authorize the Administrative Agent to file
financing statements with respect to the Collateral without the signature of the
Pledgors and any of them in such form and in such filing offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
14. Authority of Administrative Agent. Each Pledgor acknowledges that the
---------------------------------
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Pledgors and each of them, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and neither such Pledgor
nor any Company shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
15. Notices. All notices shall be given or made in accordance with
-------
Section 9.2 of the Credit Agreement and if to any Pledgor, addressed as set
forth below the signature line for such Pledgor.
9
<PAGE>
16. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies.
-----------------------------------------------------
(a) None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Pledgors and the Administrative Agent, provided that any
--------
provision of this Agreement may be waived by the Administrative Agent and
the Majority Lenders (or such greater number or percentage of Lenders as
provided in the Credit Agreement) in a letter or agreement executed by the
Administrative Agent or by facsimile transmission from the Administrative
Agent.
(b) Neither the Administrative Agent nor any Lender shall by any act
(except by a written instrument pursuant to Section 17(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default
or in any breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which
the Administrative Agent or such Lender would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
18. Section Headings. The section headings used in this Agreement are for
----------------
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of each Pledgor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns, provided
that the Pledgors may not assign their rights or obligations under this
Agreement, except as otherwise expressly provided in Section 5(b) hereof,
without the prior written consent of the Administrative Agent and any such
purported assignment shall be null and void.
20. Joint and Several Obligations. Each Pledgor hereby acknowledges that
-----------------------------
the obligations hereunder are joint and several obligations of the Shareholders.
10
<PAGE>
21. Arbitration; Consent to Jurisdiction and Service of Process.
-----------------------------------------------------------
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial action, any dispute, claim or controversy
arising out of or connected with the Credit Documents ("Disputes") shall be
--------
resolved by binding arbitration as provided herein. Institution of a
judicial proceeding by a party does not waive the right of that party to
demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions and claims
arising from Credit Documents executed in the future. Arbitration shall be
conducted under the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association and Title 9 of
------------------
the U.S. Code. All arbitration hearings shall be conducted in Charlotte,
Mecklenburg County, North Carolina or any place agreed to in writing by the
parties. A judgment upon the award may be entered in any court having
jurisdiction, and all decisions shall be in writing. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys
having at least ten years' experience representing parties in lending
transactions. Notwithstanding the foregoing, this arbitration provision
does not apply to disputes under or related to Interest Protection
Agreements.
(b) Notwithstanding the preceding binding arbitration provision, the
Administrative Agent and Lenders preserve certain remedies that may be
exercised during a Dispute. The Administrative Agent and Lenders shall
have the right to proceed in any court of proper jurisdiction or by self
help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other
security by exercising a power of sale granted in the Credit Documents or
under applicable law, (ii) all rights of self help including peaceful
occupation of real property and collection of rents, set-off and peaceful
possession of personal property, (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment,
attachment and appointment of receiver, (iv) when applicable, a judgment by
confession of judgment and (v) other remedies. Preservation of these
remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
(c) By execution and delivery of this Agreement, the Pledgors (and each of
them) accept, for themselves and in connection with their properties,
generally and unconditionally, the non-exclusive jurisdiction relating to
any arbitration proceedings conducted under the Arbitration Rules in
Charlotte, Mecklenburg County, North Carolina and irrevocably agree to be
bound by any final judgment rendered thereby in connection with this
Agreement from which no appeal has been taken or is available. The
Pledgors irrevocably agree that all process in any such arbitration
proceedings or otherwise may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to it at its address set forth in Section 15 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto, such service being hereby acknowledged by the Pledgors to
be effective and binding service in every respect. The Pledgors, the
Administrative Agent and the Lenders irrevocably waive any objection,
including, without limitation, any objection to the laying of venue or
11
<PAGE>
based on the grounds of forum non conveniens which it may now or hereafter
have to the bringing of any such action or proceeding in any such
jurisdiction. Nothing herein shall affect the right to serve process in
any other manner permitted by law or shall limit the right of the
Administrative Agent or the Lenders to bring proceedings against the
Pledgors or any of them in any court or pursuant to arbitration proceedings
in any other jurisdiction.
22. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.
[Remainder of Page Intentionally Left Blank]
12
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
FIRST UNION NATIONAL BANK
as Administrative Agent
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
[Signatures continued on the following page]
<PAGE>
PLEDGORS:
ATWOOD CONVENTION PUBLISHING, INC.
GALAXY REGISTRATION, INC.
G.E.M. COMMUNICATIONS, INC.
TRANSPORTATION INFORMATION SERVICES, INC.
T/SF INVESTMENT CO.
T/SF OF NEVADA, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
ATWOOD CONVENTION PUBLISHING, INC.
Address:
---------------------------
---------------------------
---------------------------
---------------------------
GALAXY REGISTRATION, INC.
Address:
---------------------------
---------------------------
---------------------------
---------------------------
G.E.M. COMMUNICATIONS, INC.
Address:
---------------------------
---------------------------
---------------------------
---------------------------
TRANSPORTATION INFORMATION SERVICES, INC.
Address:
---------------------------
---------------------------
---------------------------
---------------------------
<PAGE>
T/SF INVESTMENT CO.
Address:
---------------------------
---------------------------
---------------------------
---------------------------
T/SF OF NEVADA, INC.
Address:
---------------------------
---------------------------
---------------------------
---------------------------
<PAGE>
SCHEDULE 1 - DESCRIPTION OF PLEDGED STOCK
Total
Percentage
Certificate No. of of
Subsidiary Class No. Shares Ownership
- ---------- ----- --- ------ ----------
<PAGE>
SCHEDULE 2
----------
to
Stock Pledge Agreement
Irrevocable Stock Power
-----------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers the
following shares of Capital Stock of [ ], a
---------- ---------------------------
corporation:
Certificate No. No. of Shares
-------------- -------------
and irrevocably appoints
[-------------------------------------------------------------------------------
its agent and attorney-in-fact to transfer all or any part of such Capital Stock
and to take all necessary and appropriate action to effect any such transfer.
The agent and attorney-in-fact may substitute and appoint one or more persons to
act for him. The effectiveness of a transfer pursuant to this stock power shall
be subject to any and all transfer restrictions referenced on the face of the
certificates evidencing such interest or in the certificate of incorporation or
bylaws of the subject corporation, to the extent they may from time to time
exist.
Date: PLEDGOR:
-----------
By:
-----------------------------
Name:
-----------------------------
<PAGE>
EXHIBIT 10.5
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Pledge Agreement" or the "Agreement"),
---------------- ---------
dated as of October 9, 1997 made by VS&A-T/SF, INC. ("VS&A-T/SF"), a Delaware
corporation, and FIR TREE VALUE FUND, L.P., FIR TREE INSTITUTIONAL VALUE FUND,
L.P., and FIR TREE VALUE PARTNERS, LDC, all Delaware limited partnerships (each
of VS&A-T/SF and the partnerships referenced above being a "Pledgor", and
-------
collectively the "Pledgors" which terms shall include their successors and
--------
assigns), in favor of FIRST UNION NATIONAL BANK, as Administrative Agent (in
such capacity, the "Administrative Agent") for the several banks, other
--------------------
financial institutions and other investors (collectively, the "Lenders") from
-------
time to time parties to the Credit Agreement dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among T/SF COMMUNICATIONS CORPORATION (the "Borrower"), the Lenders
- --------- --------
and FIRST UNION NATIONAL BANK (the "Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
Revolving Loans to the Borrower upon the terms and subject to the conditions set
forth therein;
WHEREAS, the Pledgors are the legal and beneficial owners of the shares of
Pledged Stock (as hereinafter defined);
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Revolving Loans to the Borrower under the Credit Agreement
that the Pledgors shall have executed and delivered this Pledge Agreement to the
Administrative Agent for the ratable benefit of the Lenders; and
WHEREAS, the Pledgors will receive a substantial benefit from the Revolving
Loans and desire that the Lenders make their respective Revolving Loans to the
Borrower pursuant to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Revolving Loans under the Credit
Agreement, the Pledgors hereby jointly and severally agree with the
Administrative Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in
-------------
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement. For purposes of this Agreement, the term "Lender" shall
------
include any Affiliate of any Lender which has entered into an Interest
Protection Agreement with the Borrower pursuant to the Credit Agreement with
respect to the obligations thereunder.
(b) The following terms shall have the following meanings:
<PAGE>
"Agreement": this Pledge Agreement, as the same may be amended, modified
---------
or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code from time to time in effect in the
----
State of North Carolina.
"Collateral": the Pledged Stock and all Proceeds thereof.
----------
"Collateral Account": any account established to hold money Proceeds,
------------------
maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the Lenders
as provided in Section 8(a).
"Obligations": the collective reference to the unpaid principal of and
-----------
interest on (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Revolving Loans and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Revolving Loans and all other obligations and
liabilities of the Borrower, of the Pledgors and of any other Credit Party
executing an agreement similar to the Pledge Agreement, in each case to the
Administrative Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, any
Revolving Notes, this Agreement, the other Credit Documents, any Interest
Protection Agreement entered into by the Borrower with any Lender pursuant to
the Credit Agreement with respect to the obligations thereunder or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by the Borrower or the Pledgors pursuant to the terms of the
Credit Agreement, this Agreement, any other Credit Document or any Interest
Protection Agreement entered into by the Borrower with any Lender pursuant to
the Credit Agreement with respect to the obligations thereunder).
"Permitted Transfer": any sale, assignment, transfer, exchange or other
------------------
disposition of any Pledged Stock by either Pledgor or any permitted successor or
assign, whether in exchange for money or other property, gift, bequest or
otherwise, expressly permitted under the Credit Agreement and under the terms
of this Agreement.
"Pledged Stock": the shares of the Capital Stock of T/SF Communications
-------------
Corporation and T/SF Holdings, LLC (each a "Company" and hereinafter, the
-------
"Companies") that are owned by each Pledgor (Schedule 1 hereto setting forth
- ---------- ----------
each class of Capital Stock of each Company and the percentage thereof owned by
each Pledgor), together with all stock certificates, options or rights of any
nature whatsoever that may be issued or granted by any Company to such Pledgor
or other Person in respect of the Pledged Stock while this Agreement is in
effect and any other stock or equity interest obtained by any Pledgor or any
Person in any Company during the term hereof.
2
<PAGE>
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1) of
--------
the Uniform Commercial Code in effect in the State of North Carolina and, in any
event, shall include, without limitation, all dividends or other income from the
Pledged Stock, collections thereon or distributions with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
--------------
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
"Transfer": as defined in Section 5(b).
--------
2. Pledge; Grant of Security Interest; Non-Recourse Obligations
------------------------------------------------------------
(a) Each Pledgor hereby delivers to the Administrative Agent, for the
ratable benefit of the Lenders, all of the Pledged Stock of such Pledgor
and hereby grants to the Administrative Agent, for the ratable benefit of
the Lenders, a first security interest in the Collateral of such Pledgor,
as collateral security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of
the Obligations.
(b) Notwithstanding anything to the contrary contained in the Credit
Agreement, this Pledge Agreement or any other Credit Document, whether
expressed or implied, (i) no Pledgor shall have any personal liability to
the Administrative Agent or any Lender under this Pledge Agreement or any
other Credit Document beyond the interest of the Pledgor in the Collateral,
(ii) the Obligations are nonrecourse to the Pledgor, (iii) no deficiency or
other judgment may be sought or obtained against any Pledgor or any
equityholder of any Pledgor for the payment of any of the Obligations, or
for the performance of any obligation of any Pledgor hereunder, and (iv)
except for the enforcement by the Administrative Agent of its rights in and
to the Collateral, no attachment, execution or other process shall be
sought, issued or levied against or upon any assets, properties or funds of
any Pledgor or any equityholder of any Pledgor: provided, however, that
-------- -------
notwithstanding the following:
(i) each Pledgor and its equityholders shall be personally liable to the
full extent of its respective assets for any loss suffered by the
Administrative Agent or any Lender to the extent directly and
proximately caused by such Person's intentional fraud in connection
with the Pledge Agreement, willful or grossly negligent
misrepresentation in this Pledge Agreement or in any certificate or
document provided in connection herewith to the Administrative Agent
or the
3
<PAGE>
Lenders of a material fact or any breach in bad faith of any such
Pledgor's material obligations hereunder: and
(ii) Nothing herein shall be construed to bar an action for specific
performance against any Pledgor to perform any obligation imposed on
any such Pledgor hereunder.
3. Stock Powers. Concurrently with the delivery to the Administrative
------------
Agent of each certificate of each Pledgor representing one or more shares of
Pledged Stock of such Pledgor to the Administrative Agent, such Pledgor shall
deliver an undated stock power covering such certificate, duly executed in blank
with, if the Administrative Agent so requests, signature guaranteed.
4. Representations and Warranties. Each Pledgor represents and warrants
------------------------------
that:
(a) Except as set forth on Schedule 1, the shares of Pledged Stock
----------
identified in Schedule 1 constitute all the issued and outstanding shares
----------
of all classes of Capital Stock and equity interests of any kind of each
Company.
(b) All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable.
(c) Such Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock, free of any and all Liens or
options in favor of, or claims of, any other Person, except the security
interests created by this Agreement.
(d) Upon delivery by each Pledgor to the Administrative Agent of the stock
certificates evidencing the Pledged Stock identified in Schedule 1, the
----------
security interest created by this Agreement will constitute a valid,
perfected first priority security interest in the Pledged Stock of each
Pledgor and the other Collateral arising therefrom, enforceable in
accordance with its terms against all creditors of the Pledgors, or any of
them, any Company or any Persons purporting to purchase any Collateral from
any Pledgor or any Company, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law).
5. Covenants. The Pledgors jointly and severally covenant and agree with
---------
the Administrative Agent and the Lenders that, from and after the date of this
Agreement until this Agreement is terminated and the security interests created
hereby are released:
(a) If any Pledgor shall, as a result of its ownership of any Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any shares of any
Pledged Stock, or otherwise in respect
4
<PAGE>
thereof, such Pledgor shall accept the same as the agent of the
Administrative Agent and the Lenders, hold the same in trust for the
Administrative Agent and the Lenders and deliver the same forthwith to the
Administrative Agent in the exact form received, duly endorsed by such
Pledgor to the Administrative Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by such
Pledgor and with, if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Except in
connection with any distributions that are otherwise expressly permitted
under Section 6 hereof and except as expressly permitted by Section 6.12 of
the Credit Agreement, any sums paid upon or in respect of the Pledged Stock
as a dividend or other distribution or upon the liquidation or dissolution
of any Company shall be paid over to the Administrative Agent to be held by
it hereunder as additional collateral security for the Obligations, and in
case any distribution of capital shall be made on or in respect of the
Pledged Stock or any property shall be distributed upon or with respect to
the Pledged Stock pursuant to the recapitalization or reclassification of
the capital of any Company or pursuant to the reorganization thereof, the
property so distributed shall be delivered to the Administrative Agent to
be held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or distributed in
respect of the Pledged Stock shall be received by any Pledgor, such Pledgor
shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the Lenders,
segregated from other funds of such Pledgor, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the Administrative Agent, no
Pledgor will (1) vote to enable, or take any other action to permit, any
Company to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to
purchase or exchange for any stock or equity securities of any nature of
any Company, (2) except for any Permitted Transfer, sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral or any portion thereof, (3) create, incur or permit to exist any
Lien or option in favor of, or any claim of any Person with respect to, any
of the Collateral, or any interest therein, except for the security
interests created by this Agreement or (4) enter into any agreement or
undertaking restricting the right or ability of any Company or the
Administrative Agent to sell, assign or transfer any of the Collateral.
Notwithstanding the foregoing, any sale, assignment, transfer, exchange or
other disposition (specifically excluding any collateral assignment or
other transaction that permits to exist any Lien) (in each case, a
"Transfer"), of any Pledged Stock shall be permitted hereunder so long as
---------
the following conditions shall be satisfied:
(i) No Default or Event of Default shall exist prior to, and taking into
account, the proposed Transfer, including without limitation
pursuant to Section 7(h) of the Credit Agreement, or immediately
thereafter;
(ii) The transferee with respect to such Transfer shall have executed and
delivered a stock pledge agreement in substance and form similar in
all material respects to this Agreement and shall have agreed to be
bound thereby;
5
<PAGE>
(iii) The Administrative Agent shall have received on behalf of the
Lenders an opinion of counsel (reasonably acceptable to the
Administrative Agent) of the transferee and similar in content to
the opinion of counsel for the Pledgors rendered on the Closing Date
in connection with the closing of the transactions contemplated by
the Credit Agreement;
(iv) The transferee of the Transfer shall have delivered an undated stock
power covering the certificate or certificates to be issued to such
transferee, such undated stock power to be duly executed in blank
and the Administrative Agent shall have received a written agreement
from the transferee pursuant to which such transferee agrees,
immediately upon receipt, to deliver any certificate or certificates
issued to such Person in connection with the Transfer to the
Administrative Agent to be held by it on behalf of the Lenders
pursuant to this Agreement; and
(v) The Administrative Agent shall have received on behalf of the
Lenders such other assurances as it or any Lender shall reasonably
require.
Upon satisfaction by the transferring Pledgor and the transferee of the
conditions set forth herein, in such case, the Administrative Agent shall
deliver the certificate evidencing the Pledged Stock of the transferor
Pledgor that is subject to the Permitted Transfer to an Authorized
Signatory which certificate the Authorized Signatory and the Pledgors shall
cause to be canceled and shall immediately thereafter cause a new
certificate evidencing the shares of the Pledged Stock subject to the
Permitted Transfer to be issued in the name of the transferee and shall
deliver such certificate to the Administrative Agent to be held pursuant to
and under the terms of this Agreement.
(c) Each Pledgor shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such
security interest against claims and demands of all Persons whomsoever. At
any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the Pledgors, the Pledgors
and each of them will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the
Administrative Agent or any Lender may reasonably request for the purposes
of obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note, instrument
or chattel paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative Agent,
to be held as Collateral pursuant to this Agreement.
(d) The Pledgors shall pay, and save the Administrative Agent and the
Lenders harmless from, any and all liabilities (i) with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral and (ii) in connection with any of the
6
<PAGE>
transactions contemplated by this Agreement, except for any such
liabilities which result from the gross negligence or willful misconduct of
the Administrative Agent.
6. Permitted Distributions; Dividends; Voting Rights. Unless an Event of
-------------------------------------------------
Default shall have occurred and be continuing, the Pledgors shall be permitted
to receive all cash dividends permitted under the Credit Agreement paid in the
normal course of business of the Companies and to exercise all voting and
corporate rights with respect to the Pledged Stock; provided, however, that no
-------- -------
vote shall be cast or corporate right exercised or other action taken which, in
the Administrative Agent's reasonable judgment, would impair the Collateral or
which would be inconsistent with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other Credit Document.
7. Rights of the Lenders and the Administrative Agent.
--------------------------------------------------
(a) All money Proceeds received by the Administrative Agent hereunder shall
be held by the Administrative Agent for the benefit of the Lenders in a
Collateral Account. All Proceeds while held by the Administrative Agent in
a Collateral Account (or by the Pledgors or any of them in trust for the
Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 8(a).
(b) If an Event of Default shall occur and be continuing, (1) the
Administrative Agent shall have the right to receive any and all cash
dividends and other distributions permitted to be made under the Credit
Agreement (including without limitation Restricted Payments permitted under
Section 6.12 of the Credit Agreement) paid in respect of the Pledged Stock
and make application thereof to the Obligations in such order as the
Administrative Agent may determine, and (2) all shares of the Pledged Stock
shall be registered in the name of the Administrative Agent or its nominee,
and the Administrative Agent or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to such shares of the Pledged
Stock at any meeting of shareholders of any Company or otherwise and (B)
any and all rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the Pledged
Stock as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
any Company, or upon the exercise by any Pledgor or the Administrative
Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Stock with any committee, depository,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without
liability except to account for property actually received by it, but the
Administrative Agent shall have no duty to any Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
8. Remedies.
--------
7
<PAGE>
(a) If an Event of Default shall have occurred and be continuing, at any
time at the Administrative Agent's election, the Administrative Agent may
apply all or any part of Proceeds held in any Collateral Account in payment
of the Obligations in such order as the Administrative Agent may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Administrative Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under
the Code. Without limiting the generality of the foregoing, the
Administrative Agent, without resort to any other collateral or remedy
under any Credit Document or demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Pledgor or any
other Person (including without limitation the Borrower) (all and each of
which demands, defenses, advertisements and notices are hereby waived), may
in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give an option or options to purchase or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, in
the over-the-counter market, at any exchange, broker's board or office of
the Administrative Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any
credit risk. The Administrative Agent or any Lender shall have the right
upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Pledgor, which right or equity of redemption is hereby waived or released.
The Administrative Agent shall apply any Proceeds from time to time held by
it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs
and expenses of every kind incurred in respect thereof or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Administrative Agent, to the payment in
whole or in part of the Obligations, in such order as the Administrative
Agent may elect, and only after such application and after the payment by
the Administrative Agent of any other amount required by any provision of
law, including, without limitation, Section 9-504(1)(c) of the Code, need
the Administrative Agent account for the surplus, if any, to the Pledgors.
To the extent permitted by applicable law, each Pledgor waives all claims,
damages and demands it may acquire against the Administrative Agent or any
Lender arising out of the exercise by it of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given
at least 10 days before such sale or other disposition. The Borrower shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Administrative
Agent or any Lender to collect such deficiency.
8
<PAGE>
9. [Intentionally Omitted]
10. Irrevocable Authorization and Instruction to Borrower. The Pledgors
-----------------------------------------------------
hereby authorize and instruct the Companies (and each of them) to comply with
any instruction received by the Pledgors (or any of them) from the
Administrative Agent in writing that (a) states that an Event of Default has
occurred and (b) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from the Pledgors (or any of them),
and the Pledgors agree that each Company shall be fully protected in so
complying.
11. Administrative Agent's Appointment as Attorney-in-Fact.
------------------------------------------------------
(a) The Pledgors and each of them hereby irrevocably constitute and appoint
the Administrative Agent and any officer or agent of the Administrative
Agent, with full power of substitution, as its true and lawful attorney-in-
fact with full irrevocable power and authority in the place and stead of
the Pledgors and each of them and in the name of the Pledgors and each of
them or in the Administrative Agent's own name, from time to time in the
Administrative Agent's discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, including, without
limitation, any financing statements, endorsement, assignment or other
instruments of transfer.
(b) The Pledgors and each of them hereby ratify all that said attorneys
shall lawfully do or cause to be done pursuant to the power of attorney
granted in Section 11(a). All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
12. Duty of Administrative Agent. The Administrative Agent's sole duty
----------------------------
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar securities and property for its own account, except that the
Administrative Agent shall have no obligation to invest funds held in any
Collateral Account and may hold the same as demand deposits. Neither the
Administrative Agent, any Lender nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section 9-402 of the
---------------------------------
Code, the Pledgors and each of them authorize the Administrative Agent to file
financing statements with respect to the Collateral without the signature of the
Pledgors and any of them in such form and in such filing offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
9
<PAGE>
14. Authority of Administrative Agent. Each Pledgor acknowledges that the
---------------------------------
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Pledgors and each of them, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and neither such Pledgor
nor any Company shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
15. Notices. All notices shall be given or made in accordance with
-------
Section 9.2 of the Credit Agreement and if to any Pledgor, addressed as set
forth below the signature line for such Pledgor.
16. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies.
-----------------------------------------------------
(a) None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Pledgors and the Administrative Agent, provided that any
--------
provision of this Agreement may be waived by the Administrative Agent and
the Majority Lenders (or such greater number or percentage of Lenders as
provided in the Credit Agreement) in a letter or agreement executed by the
Administrative Agent or by facsimile transmission from the Administrative
Agent.
(b) Neither the Administrative Agent nor any Lender shall by any act
(except by a written instrument pursuant to Section 17(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default
or in any breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which
the Administrative Agent or such Lender would otherwise have on any future
occasion.
10
<PAGE>
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
18. Section Headings. The section headings used in this Agreement are for
----------------
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of each Pledgor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns, provided
that the Pledgors may not assign their rights or obligations under this
Agreement, except as otherwise expressly provided in Section 5(b) hereof,
without the prior written consent of the Administrative Agent and any such
purported assignment shall be null and void.
20. Joint and Several Obligations. Each Pledgor hereby acknowledges that
-----------------------------
the obligations hereunder are joint and several obligations of the Shareholders.
21. Arbitration; Consent to Jurisdiction and Service of Process.
-----------------------------------------------------------
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial action, any dispute, claim or controversy
arising out of or connected with the Credit Documents ("Disputes") shall be
--------
resolved by binding arbitration as provided herein. Institution of a
judicial proceeding by a party does not waive the right of that party to
demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions and claims
arising from Credit Documents executed in the future. Arbitration shall be
conducted under the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association and Title 9 of
------------------
the U.S. Code. All arbitration hearings shall be conducted in Charlotte,
Mecklenburg County, North Carolina or any place agreed to in writing by the
parties. A judgment upon the award may be entered in any court having
jurisdiction, and all decisions shall be in writing. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys
having at least ten years' experience representing parties in lending
transactions. Notwithstanding the foregoing, this arbitration provision
does not apply to disputes under or related to Interest Protection
Agreements.
(b) Notwithstanding the preceding binding arbitration provision, the
Administrative Agent and Lenders preserve certain remedies that may be
exercised during a Dispute. The Administrative Agent and Lenders shall
have the right to proceed in any court of proper jurisdiction or by self
help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other
security by exercising a power of sale granted in the Credit Documents or
under applicable law, (ii) all rights of self help including peaceful
occupation of real property and collection of rents, set-off and peaceful
possession of personal property, (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment,
attachment and appointment of receiver, (iv) when applicable, a judgment by
confession of judgment and
11
<PAGE>
(v) other remedies. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party
in a Dispute.
(c) By execution and delivery of this Agreement, the Pledgors (and each of
them) accept, for themselves and in connection with their properties,
generally and unconditionally, the non-exclusive jurisdiction relating to
any arbitration proceedings conducted under the Arbitration Rules in
Charlotte, Mecklenburg County, North Carolina and irrevocably agree to be
bound by any final judgment rendered thereby in connection with this
Agreement from which no appeal has been taken or is available. The
Pledgors irrevocably agree that all process in any such arbitration
proceedings or otherwise may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to it at its address set forth in Section 15 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto, such service being hereby acknowledged by the Pledgors to
be effective and binding service in every respect. The Pledgors, the
Administrative Agent and the Lenders irrevocably waive any objection,
including, without limitation, any objection to the laying of venue or
based on the grounds of forum non conveniens which it may now or hereafter
have to the bringing of any such action or proceeding in any such
jurisdiction. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of the
Administrative Agent or the Lenders to bring proceedings against the
Pledgors or any of them in any court or pursuant to arbitration proceedings
in any other jurisdiction.
12
<PAGE>
22. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.
[Remainder of Page Intentionally Left Blank]
13
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
FIRST UNION NATIONAL BANK
as Administrative Agent
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
[Signatures continued on the following page]
<PAGE>
PLEDGORS:
VS&A-T/SF, INC.,
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Address:
------------------------------
------------------------------
------------------------------
------------------------------
FIR TREE VALUE FUND, L.P.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Address:
------------------------------
------------------------------
------------------------------
FIR TREE INSTITUTIONAL VALUE FUND, L.P.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Address:
------------------------------
------------------------------
------------------------------
------------------------------
<PAGE>
FIR TREE VALUE PARTNERS LDC
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Address:
------------------------------
------------------------------
------------------------------
------------------------------
[Signatures continued on the following page]
<PAGE>
ACCEPTED AND AGREED TO BY:
T/SF COMMUNICATIONS CORPORATION
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
T/SF HOLDINGS, LLC
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE>
SCHEDULE 1 - DESCRIPTION OF PLEDGED STOCK
Total
Percentage
Certificate No. of of
Subsidiary Class No. Shares Ownership
- ---------- ----- --- ------ ---------
<PAGE>
SCHEDULE 2
----------
to
Stock Pledge Agreement
Irrevocable Stock Power
-----------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers the
following shares of Capital Stock of [ ], a ___________________
corporation:
Certificate No. No. of Shares
-------------- -------------
and irrevocably appoints
- --------------------------------------------------------------------------------
its agent and attorney-in-fact to transfer all or any part of such Capital Stock
and to take all necessary and appropriate action to effect any such transfer.
The agent and attorney-in-fact may substitute and appoint one or more persons to
act for him. The effectiveness of a transfer pursuant to this stock power shall
be subject to any and all transfer restrictions referenced on the face of the
certificates evidencing such interest or in the certificate of incorporation or
bylaws of the subject corporation, to the extent they may from time to time
exist.
Date: PLEDGOR:
------------
By:
--------------------------
Name:
--------------------------
<PAGE>
EXHIBIT 10.6
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Pledge Agreement" or the "Agreement"), dated
---------------- ---------
as of October 9, 1997 made by T/SF COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Pledgor," which term shall include its successors and
-------
assigns), in favor of FIRST UNION NATIONAL BANK, as Administrative Agent (in
such capacity, the "Administrative Agent") for the several banks, other
--------------------
financial institutions and other investors (collectively, the "Lenders") from
-------
time to time parties to the Credit Agreement dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among T/SF COMMUNICATIONS CORPORATION, a Delaware corporation (the
- ---------
"Borrower"), the Lenders and FIRST UNION NATIONAL BANK (the "Administrative
--------
Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
Revolving Loans to the Borrower upon the terms and subject to the conditions set
forth therein;
WHEREAS, the Pledgor is the legal and beneficial owner of the shares of Pledged
Stock (as hereinafter defined);
WHEREAS, it is a condition precedent to the obligation of the Lenders to make
their respective Revolving Loans to the Borrower under the Credit Agreement that
the Pledgor shall have executed and delivered this Pledge Agreement to the
Administrative Agent for the ratable benefit of the Lenders; and
WHEREAS, the Pledgor will receive a substantial benefit from the Revolving
Loans and desires that the Lenders make their respective Revolving Loans to the
Borrower pursuant to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Revolving Loans under the Credit
Agreement, the Pledgor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in the
-------------
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement. For purposes of this Agreement, the term "Lender" shall
------
include any Affiliate of any Lender which has entered into an Interest
Protection Agreement with the Borrower pursuant to the Credit Agreement with
respect to the obligations thereunder.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be amended, modified or
---------
otherwise supplemented from time to time.
<PAGE>
"Code": the Uniform Commercial Code from time to time in effect in the State
----
of North Carolina.
"Collateral": the Pledged Stock and all Proceeds thereof.
----------
"Collateral Account": any account established to hold money Proceeds,
------------------
maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the Lenders
as provided in Section 8(a).
"Obligations": the collective reference to the unpaid principal of and
-----------
interest on (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Revolving Loans and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Revolving Loans and all other obligations and
liabilities of the Borrower, of the Pledgor and of any other Credit Party
executing an agreement similar to the Pledge Agreement, in each case to the
Administrative Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, any
Revolving Notes, this Agreement, the other Credit Documents, any Interest
Protection Agreement entered into by the Borrower with any Lender pursuant to
the Credit Agreement with respect to the obligations thereunder or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by the Borrower or the Pledgor pursuant to the terms of the
Credit Agreement, this Agreement, any other Credit Document or any Interest
Protection Agreement entered into by the Borrower with any Lender pursuant to
the Credit Agreement with respect to the obligations thereunder).
"Permitted Transfer": any sale, assignment, transfer, exchange or other
------------------
disposition of any Pledged Stock by the Pledgor or any permitted successor or
assign, whether in exchange for money or other property, gift, bequest or
otherwise, expressly permitted under the Credit Agreement and under the terms
of this Agreement.
"Pledged Stock": the shares of the Capital Stock of each Subsidiary of
-------------
Pledgor and of T/SF Holdings, LLC (including without limitation any Capital
Stock containing any preferential rights as to dividends or other distributions)
that are owned by the Pledgor (Schedule 1 hereto setting forth each class of
----------
Capital Stock of each such Subsidiary and of T/SF Holdings, LLC and the
percentage thereof owned by the Pledgor), together with all stock certificates,
options or rights of any nature whatsoever that may be issued or granted by any
Subsidiary or by T/SF Holdings, LLC to the Pledgor or other Person in respect of
the Pledged Stock while this Agreement is in effect and any other stock or
equity interest obtained by the Pledgor or any Person in any Subsidiary or in
T/SF Holdings, LLC during the term hereof.
2
<PAGE>
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1) of the
--------
Uniform Commercial Code in effect in the State of North Carolina and, in any
event, shall include, without
limitation, all dividends or other income from the Pledged Stock, collections
thereon or distributions with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
--------------
(c) The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.
"Transfer": as defined in Section 5(b).
--------
2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to the
----------------------------------
Administrative Agent, for the ratable benefit of the Lenders, all of the Pledged
Stock of the Pledgor and hereby grants to the Administrative Agent, for the
ratable benefit of the Lenders, a first security interest in the Collateral of
the Pledgor, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the Administrative Agent
------------
of each certificate of the Pledgor representing one or more shares of Pledged
Stock of the Pledgor to the Administrative Agent, the Pledgor shall deliver an
undated stock power covering such certificate, duly executed in blank with, if
the Administrative Agent so requests, signature guaranteed.
4. Representations and Warranties. The Pledgor represents and warrants that:
------------------------------
(a) The shares of Pledged Stock identified in Schedule 1 constitute all of the
----------
issued and outstanding shares of all classes of Capital Stock and equity
interests of any kind of each Subsidiary and all of the class of Capital
Stock and equity interests of T/SF Holdings, LLC having preferential rights
to dividends or other distributions and provides voting, operational and
management control of T/SF Holdings, LLC.
(b) All the shares of the Pledged Stock have been duly and validly issued and
are fully paid and nonassessable.
(c) The Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock, free of any and all Liens or
options in favor of, or claims of, any other Person, except the security
interests created by this Agreement.
(d) Upon delivery by the Pledgor to the Administrative Agent of the stock
certificates evidencing the Pledged Stock identified in Schedule 1, the
----------
security interest
3
<PAGE>
created by this Agreement will constitute a valid, perfected first priority
security interest in the Pledged Stock of the Pledgor and the other
Collateral arising therefrom, enforceable in accordance with its terms
against all creditors of the Pledgor, the Subsidiaries, T/SF Holdings, LLC
or any Persons purporting to purchase any Collateral from the Pledgor, any
Subsidiary or T/SF Holdings, LLC, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law).
5. Covenants. The Pledgor covenants and agrees with the Administrative Agent
---------
and the Lenders that, from and after the date of this Agreement until this
Agreement is terminated and the security interests created hereby are released:
(a) If the Pledgor shall, as a result of its ownership of any Pledged Stock,
become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any shares of any
Pledged Stock, or otherwise in respect thereof, the Pledgor shall accept
the same as the agent of the Administrative Agent and the Lenders, hold the
same in trust for the Administrative Agent and the Lenders and deliver the
same forthwith to the Administrative Agent in the exact form received, duly
endorsed by the Pledgor to the Administrative Agent, if required, together
with an undated stock power covering such certificate duly executed in
blank by the Pledgor and with, if the Administrative Agent so requests,
signature guaranteed, to be held by the Administrative Agent, subject to
the terms hereof, as additional collateral security for the Obligations.
Any sums paid upon or in respect of the Pledged Stock as a dividend or
other distribution or upon the liquidation or dissolution of any Subsidiary
or T/SF Holdings, LLC shall be paid over to the Administrative Agent to be
held by it hereunder as additional collateral security for the Obligations,
and in case any distribution of capital shall be made on or in respect of
the Pledged Stock or any property shall be distributed upon or with respect
to the Pledged Stock pursuant to the recapitalization or reclassification
of the capital of any Subsidiary or T/SF Holdings, LLC or pursuant to the
reorganization thereof, the property so distributed shall be delivered to
the Administrative Agent to be held by it hereunder as additional
collateral security for the Obligations. If any sums of money or property
so paid or distributed in respect of the Pledged Stock shall be received by
the Pledgor, the Pledgor shall, until such money or property is paid or
delivered to the Administrative Agent, hold such money or property in trust
for the Lenders, segregated from other funds of the Pledgor, as additional
collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent, the Pledgor
will not (1) vote to enable, or take any other action to permit, any
Subsidiary or T/SF Holdings, LLC to issue any stock or other equity
securities of any nature or to issue any other securities convertible into
or granting the right to purchase or exchange for any stock or equity
securities of any nature of any Subsidiary or T/SF Holdings, LLC, (2)
except for any Permitted Transfer, sell, assign, transfer, exchange, or
otherwise dispose of, or grant
4
<PAGE>
any option with respect to, the Collateral or any portion thereof, (3)
create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Collateral, or any interest
therein, except for the security interests created by this Agreement or (4)
enter into any agreement or undertaking restricting the right or ability of
any Subsidiary, T/SF Holdings, LLC or the Administrative Agent to sell,
assign or transfer any of the Collateral. Notwithstanding the foregoing,
any sale, assignment, transfer, exchange or other disposition (specifically
excluding any collateral assignment or other transaction that permits to
exist any Lien) (in each case, a "Transfer"), of any Pledged Stock shall be
--------
permitted hereunder so long as the following conditions shall be satisfied:
(i) No Default or Event of Default shall exist prior to, and
taking into account, the proposed Transfer, including without
limitation pursuant to Section 7(h) of the Credit Agreement, or
immediately thereafter;
(ii) The transferee with respect to such Transfer shall have
executed and delivered a stock pledge agreement in substance and form
similar in all material respects to this Agreement and shall have
agreed to be bound thereby;
(iii) The Administrative Agent shall have received on
behalf of the Lenders an opinion of counsel (reasonably acceptable to
the Administrative Agent) of the transferee and similar in content to
the opinion of counsel for the Pledgor rendered on the Closing Date in
connection with the closing of the transactions contemplated by the
Credit Agreement;
(iv) The transferee of the Transfer shall have delivered an
undated stock power covering the certificate or certificates to be
issued to such transferee, such undated stock power to be duly
executed in blank and the Administrative Agent shall have received a
written agreement from the transferee pursuant to which such
transferee agrees, immediately upon receipt, to deliver any
certificate or certificates issued to such Person in connection with
the Transfer to the Administrative Agent to be held by it on behalf of
the Lenders pursuant to this Agreement; and
(v) The Administrative Agent shall have received on behalf
of the Lenders such other assurances as it or any Lender shall
reasonably require.
Upon satisfaction by the transferring Pledgor and the transferee of the
conditions set forth herein, in such case, the Administrative Agent shall
deliver the certificate evidencing the Pledged Stock of the transferor
Pledgor that is subject to the Permitted Transfer to an Authorized
Signatory which certificate the Authorized Signatory and the Pledgor shall
cause to be canceled and shall immediately thereafter cause a new
certificate evidencing the shares of the Pledged Stock subject to the
Permitted Transfer to be issued in the name of the transferee and shall
deliver such certificate to the Administrative Agent to be held pursuant to
and under the terms of this Agreement.
5
<PAGE>
(c) The Pledgor shall maintain the security interest created by this Agreement
as a first, perfected security interest and shall defend such security
interest against claims and demands of all Persons whomsoever. At any time
and from time to time, upon the written request of the Administrative
Agent, and at the sole expense of the Pledgor, the Pledgor will promptly
and duly execute and deliver such further instruments and documents and
take such further actions as the Administrative Agent or any Lender may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted. If
any amount payable under or in connection with any of the Collateral shall
be or become evidenced by any promissory note, other instrument or chattel
paper, such note, instrument or chattel paper shall be immediately
delivered to the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant
to this Agreement.
(d) The Pledgor shall pay, and save the Administrative Agent and the Lenders
harmless from, any and all liabilities (i) with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral and (ii) in connection with any of the transactions contemplated
by this Agreement, except for any such liabilities which result from the
gross negligence or willful misconduct of the Administrative Agent.
6. Permitted Distributions; Dividends; Voting Rights. Unless an Event of
-------------------------------------------------
Default shall have occurred and be continuing, the Pledgor shall be permitted to
receive all cash dividends and similar distributions paid in the normal course
of business of the Subsidiaries and T/SF Holdings, LLC and to exercise all
voting and corporate rights with respect to the Pledged Stock; provided,
--------
however, that no vote shall be cast or corporate right exercised or other action
- -------
taken which, in the Administrative Agent's reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Credit Agreement, this Agreement or any other Credit Document.
7. Rights of the Lenders and the Administrative Agent.
--------------------------------------------------
(a) All money Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent for the benefit of the Lenders in a
Collateral Account. All Proceeds while held by the Administrative Agent in
a Collateral Account (or by the Pledgor in trust for the Administrative
Agent and the Lenders) shall continue to be held as collateral security for
all the Obligations and shall not constitute payment thereof until applied
as provided in Section 8(a).
(b) If an Event of Default shall occur and be continuing, (1) the
Administrative Agent shall have the right to receive any and all cash
dividends and other distributions permitted to be made under the Credit
Agreement (including without limitation Restricted Payments permitted under
Section 6.12 of the Credit Agreement) paid in respect of the Pledged Stock
and make application thereof to the Obligations in such order as the
Administrative Agent may determine, and (2) all shares of the Pledged Stock
shall be registered in the name of the Administrative Agent or its nominee,
and the Administrative Agent or its nominee may thereafter exercise (A) all
voting, corporate and other rights
6
<PAGE>
pertaining to such shares of the Pledged Stock at any meeting of
shareholders of any Subsidiary or otherwise and (B) any and all rights of
conversion, exchange, subscription and any other rights, privileges or
options pertaining to such shares of the Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Pledged Stock upon the
merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of any Subsidiary or T/SF
Holdings, LLC, or upon the exercise by the Pledgor or the Administrative
Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Stock with any committee, depository,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without
liability except to account for property actually received by it, but the
Administrative Agent shall have no duty to the Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
8. Remedies.
--------
(a) If an Event of Default shall have occurred and be continuing, at any time
at the Administrative Agent's election, the Administrative Agent may apply
all or any part of Proceeds held in any Collateral Account in payment of
the Obligations in such order as the Administrative Agent may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Administrative Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Administrative Agent,
without resort to any other collateral or remedy under any Credit Document
or demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law
referred to below) to or upon the Pledgor or any other Person (including
without limitation the Borrower) (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, assign, give an option or
options to purchase or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-counter market,
at any exchange, broker's board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The
Administrative Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Pledgor, which
right or equity of redemption is hereby waived or released. The
Administrative Agent shall apply any Proceeds from time to time held by it
and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs
and expenses of every kind incurred in respect thereof or
7
<PAGE>
incidental to the care or safekeeping of any of the Collateral or in any
way relating to the Collateral or the rights of the Administrative Agent
and the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of counsel to the Administrative Agent,
to the payment in whole or in part of the Obligations, in such order as the
Administrative Agent may elect, and only after such application and after
the payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Administrative Agent account for the surplus, if any, to the
Pledgor. To the extent permitted by applicable law, the Pledgor waives all
claims, damages and demands it may acquire against the Administrative Agent
or any Lender arising out of the exercise by it of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given
at least 10 days before such sale or other disposition. The Borrower shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Administrative
Agent or any Lender to collect such deficiency.
9. [Intentionally Omitted]
10. Irrevocable Authorization and Instruction to Subsidiaries. The Pledgor
---------------------------------------------------------
hereby authorizes and instructs the Subsidiaries (and each of them) and T/SF
Holdings, LLC to comply with any instruction received by the Pledgor from the
Administrative Agent in writing that (a) states that an Event of Default has
occurred and (b) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from the Pledgor, and the Pledgor
agrees that each Subsidiary and T/SF Holdings, LLC shall be fully protected in
so complying.
11. Administrative Agent's Appointment as Attorney-in-Fact.
------------------------------------------------------
(a) The Pledgor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent of the Administrative Agent, with full power
of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Pledgor and
in the name of the Pledgor or in the Administrative Agent's own name, from
time to time in the Administrative Agent's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement,
including, without limitation, any financing statements, endorsement,
assignment or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said attorneys shall lawfully do or
cause to be done pursuant to the power of attorney granted in Section
11(a). All powers, authorizations and agencies contained in this Agreement
are coupled with an interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are released.
12. Duty of Administrative Agent. The Administrative Agent's sole duty with
----------------------------
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under
8
<PAGE>
Section 9-207 of the Code or otherwise, shall be to deal with it in the same
manner as the Administrative Agent deals with similar securities and property
for its own account, except that the Administrative Agent shall have no
obligation to invest funds held in any Collateral Account and may hold the same
as demand deposits. Neither the Administrative Agent, any Lender nor any of
their respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Pledgor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section 9-402 of the
---------------------------------
Code, the Pledgor authorizes the Administrative Agent to file financing
statements with respect to the Collateral without the signature of the Pledgor
in such form and in such filing offices as the Administrative Agent reasonably
determines appropriate to perfect the security interests of the Administrative
Agent under this Agreement. A carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
14. Authority of Administrative Agent. The Pledgor acknowledges that the
---------------------------------
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and neither the Pledgor, any
Subsidiary nor T/SF Holdings, LLC shall be under any obligation, or entitlement,
to make any inquiry respecting such authority.
15. Notices. All notices shall be given or made in accordance with Section
-------
9.2 of the Credit Agreement.
16. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies.
-----------------------------------------------------
(a) None of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed
by the Pledgor and the Administrative Agent, provided that any provision of
--------
this Agreement may be waived by the Administrative Agent and the Majority
Lenders (or such greater number or percentage of Lenders as provided in the
Credit Agreement) in a letter or agreement executed by the Administrative
Agent or by facsimile transmission from the Administrative Agent.
9
<PAGE>
(b) Neither the Administrative Agent nor any Lender shall by any act (except by
a written instrument pursuant to Section 17(a) hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which
the Administrative Agent or such Lender would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
18. Section Headings. The section headings used in this Agreement are for
----------------
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of the Pledgor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns, provided
that the Pledgor may not assign its rights or obligations under this Agreement,
except as otherwise expressly provided in Section 5(b) hereof, without the prior
written consent of the Administrative Agent and any such purported assignment
shall be null and void.
20. Arbitration; Consent to Jurisdiction and Service of Process.
-----------------------------------------------------------
(a) Upon demand of any party hereto, whether made before or after institution
of any judicial action, any dispute, claim or controversy arising out of or
connected with the Credit Documents ("Disputes") shall be resolved by
--------
binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort
claims, counterclaims, claims brought as class actions and claims arising
from Credit Documents executed in the future. Arbitration shall be
conducted under the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association and Title 9 of
------------------
the U.S. Code. All arbitration hearings shall be conducted in Charlotte,
Mecklenburg County, North Carolina or any place agreed to in writing by the
parties. A judgment upon the award may be entered in any court having
jurisdiction, and all decisions shall be in writing. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys
having at least ten years' experience representing parties in lending
transactions. Notwithstanding the foregoing, this arbitration provision
does not apply to disputes under or related to Interest Protection
Agreements.
10
<PAGE>
(b) Notwithstanding the preceding binding arbitration provision, the
Administrative Agent and Lenders preserve certain remedies that may be
exercised during a Dispute. The Administrative Agent and Lenders shall
have the right to proceed in any court of proper jurisdiction or by self
help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other
security by exercising a power of sale granted in the Credit Documents or
under applicable law, (ii) all rights of self help including peaceful
occupation of real property and collection of rents, set-off and peaceful
possession of personal property, (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment,
attachment and appointment of receiver, (iv) when applicable, a judgment by
confession of judgment and (v) other remedies. Preservation of these
remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
(c) By execution and delivery of this Agreement, the Pledgor accepts, for
itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any arbitration
proceedings conducted under the Arbitration Rules in Charlotte, Mecklenburg
County, North Carolina and irrevocably agree to be bound by any final
judgment rendered thereby in connection with this Agreement from which no
appeal has been taken or is available. The Pledgor irrevocably agrees that
all process in any such arbitration proceedings or otherwise may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to it at its address
set forth in Section 15 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto, such
service being hereby acknowledged by the Pledgor to be effective and
binding service in every respect. The Pledgor, the Administrative Agent
and the Lenders irrevocably waive any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens which it may now or hereafter have to the bringing of
any such action or proceeding in any such jurisdiction. Nothing herein
shall affect the right to serve process in any other manner permitted by
law or shall limit the right of the Administrative Agent or the Lenders to
bring proceedings against the Pledgor in any court or pursuant to
arbitration proceedings in any other jurisdiction.
22. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.
[Remainder of Page Intentionally Left Blank]
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
FIRST UNION NATIONAL BANK
as Administrative Agent
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
[Signatures continued on the following page]
<PAGE>
PLEDGOR:
T/SF COMMUNICATIONS CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
ACCEPTED AND AGREED TO BY:
CASINO PUBLISHING COMPANY
CORSEARCH, INC.
NEW YORK COMMUNITY NEWSPAPER, INC.
TRANSPORTATION INFORMATION SERVICES, INC.
T/SF INVESTMENT CO.
T/SF NEW JERSEY, INC.
T/SF NEW YORK, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
T/SF HOLDINGS, LLC
By: T/S COMMUNICATIONS CORPORATION,
as Managing Member
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
<PAGE>
SCHEDULE 1 - DESCRIPTION OF PLEDGED STOCK
Total
Percentage
Certificate No. of of
Subsidiary * Class No. Shares Ownership
- ---------- ----- --- ------ ---------
* T/SF Holdings, LLC, although not a Subsidiary of the Pledgor, is listed in
this column for convenience
<PAGE>
SCHEDULE 2
----------
to
Stock Pledge Agreement
Irrevocable Stock Power
-----------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers the
following shares of Capital Stock of [ ], a
---------------- --------------------
corporation:
Certificate No. No. of Shares
--------------- -------------
and irrevocably appoints
- --------------------------------------------------------------------------------
its agent and attorney-in-fact to transfer all or any part of such Capital Stock
and to take all necessary and appropriate action to effect any such transfer.
The agent and attorney-in-fact may substitute and appoint one or more persons to
act for him. The effectiveness of a transfer pursuant to this stock power shall
be subject to any and all transfer restrictions referenced on the face of the
certificates evidencing such interest or in the certificate of incorporation or
bylaws of the subject corporation, to the extent they may from time to time
exist.
Date: PLEDGOR:
------------
By:
--------------------
Name:
--------------------
<PAGE>
EXHIBIT 10.7
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Pledge Agreement" or the "Agreement"),
---------------- ---------
dated as of October 9, 1997 made by T/SF HOLDINGS, LLC, a Delaware limited
liability company (the "Pledgor," which term shall include its successors and
-------
assigns), in favor of FIRST UNION NATIONAL BANK, as Administrative Agent (in
such capacity, the "Administrative Agent") for the several banks, other
--------------------
financial institutions and other investors (collectively, the "Lenders") from
-------
time to time parties to the Credit Agreement dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among T/SF COMMUNICATIONS CORPORATION (the "Borrower"), the Lenders
- --------- --------
and FIRST UNION NATIONAL BANK (the "Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
Revolving Loans to the Borrower upon the terms and subject to the conditions set
forth therein;
WHEREAS, the Pledgor is the legal and beneficial owner of the shares of
Pledged Stock (as hereinafter defined);
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Revolving Loans to the Borrower under the Credit Agreement
that the Pledgor shall have executed and delivered this Pledge Agreement to the
Administrative Agent for the ratable benefit of the Lenders; and
WHEREAS, the Pledgor will receive a substantial benefit from the Revolving
Loans and desires that the Lenders make their respective Revolving Loans to the
Borrower pursuant to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Revolving Loans under the Credit
Agreement, the Pledgor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in
-------------
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement. For purposes of this Agreement, the term "Lender" shall
------
include any Affiliate of any Lender which has entered into an Interest
Protection Agreement with the Borrower pursuant to the Credit Agreement with
respect to the obligations thereunder.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be amended, modified
---------
or otherwise supplemented from time to time.
<PAGE>
"Code": the Uniform Commercial Code from time to time in effect in the
----
State of North Carolina.
"Collateral": the Pledged Stock and all Proceeds thereof.
----------
"Collateral Account": any account established to hold money Proceeds,
------------------
maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the Lenders
as provided in Section 8(a).
"Obligations": the collective reference to the unpaid principal of and
-----------
interest on (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Revolving Loans and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Revolving Loans and all other obligations and
liabilities of the Borrower, of the Pledgor and of any other Credit Party
executing an agreement similar to the Pledge Agreement, in each case to the
Administrative Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, any
Revolving Notes, this Agreement, the other Credit Documents, any Interest
Protection Agreement entered into by the Borrower with any Lender pursuant to
the Credit Agreement with respect to the obligations thereunder or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by the Borrower or the Pledgor pursuant to the terms of the
Credit Agreement, this Agreement, any other Credit Document or any Interest
Protection Agreement entered into by the Borrower with any Lender pursuant to
the Credit Agreement with respect to the obligations thereunder).
"Permitted Transfer": any sale, assignment, transfer, exchange or other
------------------
disposition of any Pledged Stock by the Pledgor or any permitted successor or
assign, whether in exchange for money or other property, gift, bequest or
otherwise, expressly permitted under the Credit Agreement and under the terms
of this Agreement.
"Pledged Stock": the shares of the Capital Stock of each Subsidiary that
-------------
are owned by the Pledgor (Schedule 1 hereto setting forth each class of Capital
----------
Stock of each Subsidiary and the percentage thereof owned by the Pledgor),
together with all stock certificates, options or rights of any nature whatsoever
that may be issued or granted by any Subsidiary to the Pledgor or other Person
in respect of the Pledged Stock while this Agreement is in effect and any other
stock or equity interest obtained by the Pledgor or any Person in any Subsidiary
during the term hereof.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1) of
--------
the Uniform Commercial Code in effect in the State of North Carolina and, in any
event, shall include, without limitation, all dividends or other income from the
Pledged Stock, collections thereon or distributions with respect thereto.
2
<PAGE>
"Securities Act": the Securities Act of 1933, as amended.
--------------
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
"Transfer": as defined in Section 5(b).
--------
2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to the
----------------------------------
Administrative Agent, for the ratable benefit of the Lenders, all of the Pledged
Stock of the Pledgor and hereby grants to the Administrative Agent, for the
ratable benefit of the Lenders, a first security interest in the Collateral of
the Pledgor, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the Administrative
------------
Agent of each certificate of the Pledgor representing one or more shares of
Pledged Stock of the Pledgor to the Administrative Agent, the Pledgor shall
deliver an undated stock power covering such certificate, duly executed in blank
with, if the Administrative Agent so requests, signature guaranteed.
4. Representations and Warranties. The Pledgor represents and warrants
------------------------------
that:
(a) The shares of Pledged Stock identified in Schedule 1 constitute all the
----------
issued and outstanding shares of all classes of Capital Stock and equity
interests of any kind of each Subsidiary.
(b) All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable.
(c) The Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock, free of any and all Liens or
options in favor of, or claims of, any other Person, except the security
interests created by this Agreement.
(d) Upon delivery by the Pledgor to the Administrative Agent of the stock
certificates evidencing the Pledged Stock identified in Schedule 1, the
----------
security interest created by this Agreement will constitute a valid,
perfected first priority security interest in the Pledged Stock of the
Pledgor and the other Collateral arising therefrom, enforceable in
accordance with its terms against all creditors of the Pledgor, the
Subsidiaries or any Persons purporting to purchase any Collateral from the
Pledgor or any Subsidiary, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
3
<PAGE>
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity
or at law).
5. Covenants. The Pledgor covenants and agrees with the Administrative
---------
Agent and the Lenders that, from and after the date of this Agreement until this
Agreement is terminated and the security interests created hereby are released:
(a) If the Pledgor shall, as a result of its ownership of any Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any shares of any
Pledged Stock, or otherwise in respect thereof, the Pledgor shall accept
the same as the agent of the Administrative Agent and the Lenders, hold the
same in trust for the Administrative Agent and the Lenders and deliver the
same forthwith to the Administrative Agent in the exact form received, duly
endorsed by the Pledgor to the Administrative Agent, if required, together
with an undated stock power covering such certificate duly executed in
blank by the Pledgor and with, if the Administrative Agent so requests,
signature guaranteed, to be held by the Administrative Agent, subject to
the terms hereof, as additional collateral security for the Obligations.
Upon he occurrence and during the continuance of an Event of Default any
sums paid upon or in respect of the Pledged Stock as a dividend or other
distribution or upon the liquidation or dissolution of any Subsidiary shall
be paid over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged Stock
or any property shall be distributed upon or with respect to the Pledged
Stock pursuant to the recapitalization or reclassification of the capital
of any Subsidiary or pursuant to the reorganization thereof, the property
so distributed shall be delivered to the Administrative Agent to be held by
it hereunder as additional collateral security for the Obligations. If any
sums of money or property so paid or distributed in respect of the Pledged
Stock shall be received by the Pledgor, the Pledgor shall, until such money
or property is paid or delivered to the Administrative Agent, hold such
money or property in trust for the Lenders, segregated from other funds of
the Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent, the
Pledgor will not (1) vote to enable, or take any other action to permit,
any Subsidiary to issue any stock or other equity securities of any nature
or to issue any other securities convertible into or granting the right to
purchase or exchange for any stock or equity securities of any nature of
any Subsidiary, (2) except for any Permitted Transfer, sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral or any portion thereof, (3) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person
with respect to, any of the Collateral, or any interest therein, except for
the security interests created by this Agreement or (4) enter into any
agreement or undertaking restricting the right or ability of any Subsidiary
or the Administrative Agent to sell, assign or transfer any of the
Collateral. Notwithstanding the foregoing, any sale, assignment,
4
<PAGE>
transfer, exchange or other disposition (specifically excluding any
collateral assignment or other transaction that permits to exist any Lien)
(in each case, a "Transfer"), of any Pledged Stock shall be permitted
--------
hereunder so long as the following conditions shall be satisfied:
(i) No Default or Event of Default shall exist prior to, and taking into
account, the proposed Transfer, including without limitation
pursuant to Section 7(h) of the Credit Agreement, or immediately
thereafter;
(ii) The transferee with respect to such Transfer shall have executed and
delivered a stock pledge agreement in substance and form similar in
all material respects to this Agreement and shall have agreed to be
bound thereby;
(iii) The Administrative Agent shall have received on behalf of the
Lenders an opinion of counsel (reasonably acceptable to the
Administrative Agent) of the transferee and similar in content to
the opinion of counsel for the Pledgor rendered on the Closing Date
in connection with the closing of the transactions contemplated by
the Credit Agreement;
(iv) The transferee of the Transfer shall have delivered an undated stock
power covering the certificate or certificates to be issued to such
transferee, such undated stock power to be duly executed in blank
and the Administrative Agent shall have received a written agreement
from the transferee pursuant to which such transferee agrees,
immediately upon receipt, to deliver any certificate or certificates
issued to such Person in connection with the Transfer to the
Administrative Agent to be held by it on behalf of the Lenders
pursuant to this Agreement; and
(v) The Administrative Agent shall have received on behalf of the
Lenders such other assurances as it or any Lender shall reasonably
require.
Upon satisfaction by the transferring Pledgor and the transferee of the
conditions set forth herein, in such case, the Administrative Agent shall
deliver the certificate evidencing the Pledged Stock of the transferor
Pledgor that is subject to the Permitted Transfer to an Authorized
Signatory which certificate the Authorized Signatory and the Pledgor shall
cause to be canceled and shall immediately thereafter cause a new
certificate evidencing the shares of the Pledged Stock subject to the
Permitted Transfer to be issued in the name of the transferee and shall
deliver such certificate to the Administrative Agent to be held pursuant to
and under the terms of this Agreement.
(c) The Pledgor shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such
security interest against claims and demands of all Persons whomsoever. At
any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the Pledgor, the Pledgor
will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Administrative Agent or any
Lender may reasonably request for
5
<PAGE>
the purposes of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced by
any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to the
Administrative Agent, duly endorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.
(d) The Pledgor shall pay, and save the Administrative Agent and the
Lenders harmless from, any and all liabilities (i) with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral and (ii) in connection with any of the
transactions contemplated by this Agreement, except for any such
liabilities which result from the gross negligence or willful misconduct of
the Administrative Agent.
6. Permitted Tax Distributions; Dividends; Voting Rights. Unless an Event
-----------------------------------------------------
of Default shall have occurred and be continuing, the Pledgor shall be permitted
to receive all cash dividends permitted under the Credit Agreement paid in the
normal course of business of the Subsidiaries and to exercise all voting and
corporate rights with respect to the Pledged Stock; provided, however, that no
-------- -------
vote shall be cast or corporate right exercised or other action taken which, in
the Administrative Agent's reasonable judgment, would impair the Collateral or
which would be inconsistent with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other Credit Document.
7. Rights of the Lenders and the Administrative Agent.
--------------------------------------------------
(a) All money Proceeds received by the Administrative Agent hereunder shall
be held by the Administrative Agent for the benefit of the Lenders in a
Collateral Account. All Proceeds while held by the Administrative Agent in
a Collateral Account (or by the Pledgor in trust for the Administrative
Agent and the Lenders) shall continue to be held as collateral security for
all the Obligations and shall not constitute payment thereof until applied
as provided in Section 8(a).
(b) If an Event of Default shall occur and be continuing, (1) the
Administrative Agent shall have the right to receive any and all cash
dividends and other distributions (including without limitation Restricted
Payments permitted under Section 6.12 of the Credit Agreement) permitted to
be made under the Credit Agreement paid in respect of the Pledged Stock and
make application thereof to the Obligations in such order as the
Administrative Agent may determine, and (2) all shares of the Pledged Stock
shall be registered in the name of the Administrative Agent or its nominee,
and the Administrative Agent or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to such shares of the Pledged
Stock at any meeting of shareholders of any Subsidiary or otherwise and (B)
any and all rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the Pledged
Stock as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
6
<PAGE>
any Subsidiary, or upon the exercise by the Pledgor or the Administrative
Agent of any right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Stock with any committee, depository,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without
liability except to account for property actually received by it, but the
Administrative Agent shall have no duty to the Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
8. Remedies.
--------
(a) If an Event of Default shall have occurred and be continuing, at any
time at the Administrative Agent's election, the Administrative Agent may
apply all or any part of Proceeds held in any Collateral Account in payment
of the Obligations in such order as the Administrative Agent may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Administrative Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Administrative Agent,
without resort to any other collateral or remedy under any Credit Document
or demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law
referred to below) to or upon the Pledgor or any other Person (including
without limitation the Borrower) (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, assign, give an option or
options to purchase or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-counter market,
at any exchange, broker's board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The
Administrative Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Pledgor, which
right or equity of redemption is hereby waived or released. The
Administrative Agent shall apply any Proceeds from time to time held by it
and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs
and expenses of every kind incurred in respect thereof or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Administrative Agent, to the payment in
whole or in part of the Obligations, in such order as the Administrative
Agent may elect, and only after such application and after the payment by
the Administrative Agent of any other amount required by any provision of
7
<PAGE>
law, including, without limitation, Section 9-504(1)(c) of the Code, need
the Administrative Agent account for the surplus, if any, to the Pledgor.
To the extent permitted by applicable law, the Pledgor waives all claims,
damages and demands it may acquire against the Administrative Agent or any
Lender arising out of the exercise by it of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given
at least 10 days before such sale or other disposition. The Borrower shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Administrative
Agent or any Lender to collect such deficiency.
9. [Intentionally Omitted]
10. Irrevocable Authorization and Instruction to Borrower. The Pledgor
-----------------------------------------------------
hereby authorizes and instructs the Subsidiaries (and each of them) to comply
with any instruction received by the Pledgor from the Administrative Agent in
writing that (a) states that an Event of Default has occurred and (b) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from the Pledgor, and the Pledgor agrees that each
Subsidiary shall be fully protected in so complying.
11. Administrative Agent's Appointment as Attorney-in-Fact.
------------------------------------------------------
(a) The Pledgor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent of the Administrative Agent,
with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of the
Pledgor and in the name of the Pledgor or in the Administrative Agent's own
name, from time to time in the Administrative Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, including, without limitation, any financing statements,
endorsement, assignment or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said attorneys shall lawfully do
or cause to be done pursuant to the power of attorney granted in Section
11(a). All powers, authorizations and agencies contained in this Agreement
are coupled with an interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are released.
12. Duty of Administrative Agent. The Administrative Agent's sole duty
----------------------------
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar securities and property for its own account, except that the
Administrative Agent shall have no obligation to invest funds held in any
Collateral Account and may hold the same as demand deposits. Neither the
Administrative Agent, any Lender nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to
8
<PAGE>
sell or otherwise dispose of any Collateral upon the request of the Pledgor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section 9-402 of the
---------------------------------
Code, the Pledgor authorizes the Administrative Agent to file financing
statements with respect to the Collateral without the signature of the Pledgor
in such form and in such filing offices as the Administrative Agent reasonably
determines appropriate to perfect the security interests of the Administrative
Agent under this Agreement. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
14. Authority of Administrative Agent. The Pledgor acknowledges that the
---------------------------------
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and neither the Pledgor nor any
Subsidiary shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
15. Notices. All notices shall be given or made in accordance with
-------
Section 9.2 of the Credit Agreement and if to the Pledgor, addressed as set
forth below the signature line for the Pledgor.
16. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies.
-----------------------------------------------------
(a) None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Pledgor and the Administrative Agent, provided that any
--------
provision of this Agreement may be waived by the Administrative Agent and
the Majority Lenders (or such greater number or percentage of Lenders as
provided in the Credit Agreement) in a letter or agreement executed by the
Administrative Agent or by facsimile transmission from the Administrative
Agent.
(b) Neither the Administrative Agent nor any Lender shall by any act
(except by a written instrument pursuant to Section 17(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default
or in any breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising on the part of the Administrative
9
<PAGE>
Agent or any Lender, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which
the Administrative Agent or such Lender would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
18. Section Headings. The section headings used in this Agreement are for
----------------
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of the Pledgor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns, provided
that the Pledgor may not assign its rights or obligations under this Agreement,
except as otherwise expressly provided in Section 5(b) hereof, without the prior
written consent of the Administrative Agent and any such purported assignment
shall be null and void.
20. Arbitration; Consent to Jurisdiction and Service of Process.
-----------------------------------------------------------
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial action, any dispute, claim or controversy
arising out of or connected with the Credit Documents ("Disputes") shall be
--------
resolved by binding arbitration as provided herein. Institution of a
judicial proceeding by a party does not waive the right of that party to
demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions and claims
arising from Credit Documents executed in the future. Arbitration shall be
conducted under the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association and Title 9 of
------------------
the U.S. Code. All arbitration hearings shall be conducted in Charlotte,
Mecklenburg County, North Carolina or any place agreed to in writing by the
parties. A judgment upon the award may be entered in any court having
jurisdiction, and all decisions shall be in writing. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys
having at least ten years' experience representing parties in lending
transactions. Notwithstanding the foregoing, this arbitration provision
does not apply to disputes under or related to Interest Protection
Agreements.
(b) Notwithstanding the preceding binding arbitration provision, the
Administrative Agent and Lenders preserve certain remedies that may be
exercised during a Dispute. The Administrative Agent and Lenders shall
have the right to proceed in any court of proper jurisdiction or by self
help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other
security by exercising a power of sale granted in the Credit Documents or
under applicable law, (ii)
10
<PAGE>
all rights of self help including peaceful occupation of real property and
collection of rents, set-off and peaceful possession of personal property,
(iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment and appointment of receiver,
(iv) when applicable, a judgment by confession of judgment and (v) other
remedies. Preservation of these remedies does not limit the power of an
arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
(c) By execution and delivery of this Agreement, the Pledgor accepts, for
itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any arbitration
proceedings conducted under the Arbitration Rules in Charlotte, Mecklenburg
County, North Carolina and irrevocably agree to be bound by any final
judgment rendered thereby in connection with this Agreement from which no
appeal has been taken or is available. The Pledgor irrevocably agrees that
all process in any such arbitration proceedings or otherwise may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to it at its address
set forth in Section 15 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto, such
service being hereby acknowledged by the Pledgor to be effective and
binding service in every respect. The Pledgor, the Administrative Agent and
the Lenders irrevocably waive any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have to the bringing of any such
action or proceeding in any such jurisdiction. Nothing herein shall affect
the right to serve process in any other manner permitted by law or shall
limit the right of the Administrative Agent or the Lenders to bring
proceedings against the Pledgor in any court or pursuant to arbitration
proceedings in any other jurisdiction.
22. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.
[Remainder of Page Intentionally Left Blank]
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
FIRST UNION NATIONAL BANK
as Administrative Agent
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
[Signatures continued on the following page]
<PAGE>
PLEDGOR:
T/SF HOLDINGS, LLC
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
ACCEPTED AND AGREED TO BY:
ATWOOD, LLC
By: T/SF HOLDINGS, LLC,
as Sole Member
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
GALAXY REGISTRATION, LLC
By: T/SF HOLDINGS, LLC,
as Sole Member
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
[Signatures continued on the following page]
<PAGE>
GEM GAMING, LLC
By: T/SF HOLDINGS, LLC,
as Sole Member
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
<PAGE>
SCHEDULE 1 - DESCRIPTION OF PLEDGED STOCK
Total
Percentage
Certificate No. of of
Subsidiary Class No. Shares Ownership
- ---------- ----- --- ------ ---------
<PAGE>
SCHEDULE 2
----------
to
Stock Pledge Agreement
Irrevocable Stock Power
-----------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers the
following shares of Capital Stock of [ ], a
---------- --------------------------
corporation:
Certificate No. No. of Shares
-------------- -------------
and irrevocably appoints
[-------------------------------------------------------------------------------
its agent and attorney-in-fact to transfer all or any part of such Capital Stock
and to take all necessary and appropriate action to effect any such transfer.
The agent and attorney-in-fact may substitute and appoint one or more persons to
act for him. The effectiveness of a transfer pursuant to this stock power shall
be subject to any and all transfer restrictions referenced on the face of the
certificates evidencing such interest or in the certificate of incorporation or
bylaws of the subject corporation, to the extent they may from time to time
exist.
Date: PLEDGOR:
--------------
By:
----------------------
Name:
----------------------
<PAGE>
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT, dated as of January 1, 1998, by and between
Transportation Information Services, Inc., an Oklahoma corporation ("Employer"),
and Richard A. Wimbish ("Executive"):
Background
----------
Employer wishes to retain Executive and Executive wishes to be
employed by Employer on the terms and conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
---------
TERM OF AGREEMENT AND EMPLOYMENT
Section 1.01 Commencing on the date of this Agreement and for a
period ending on December 31, 2000, subject to earlier termination as provided
in Article VI hereof, Employer hereby employs Executive and Executive hereby
accepts employment with Employer as the President and Chief Operating Officer of
Employer. Subject to the direction and ultimate authority of the Chief
Executive Officer and the Board of Directors of Employer, Executive shall be
responsible for the overall performance of Employer and its subsidiaries (the
"Business"). In particular, Executive shall be responsible for growing the
Business' EBITDA on a consistent and aggressive basis by exploiting the
Business' strengths in the trucking pre-employment screening market and
expanding the Business into other specific pre-employment screening markets.
Employer, T/SF Communications Corporation ("T/SF") and Employer's and T/SF's
subsidiaries are collectively referred to below as the "Related Entities."
Section 1.02 The term of this Agreement shall continue from year to
year after December 31, 2000, unless terminated by written notice, given by
either party to the other, on or before the date which is one year prior to the
expiration date of the term hereof or prior to the expiration of any extended
term.
ARTICLE II
----------
DUTIES AND OBLIGATIONS OF EXECUTIVE
Section 2.01 At all times during the performance of this Agreement,
Executive shall adhere to each Related Entity's policies, rules and regulations
governing the conduct of its employees, now in effect, or as subsequently
adopted or amended.
Section 2.02 Executive shall devote substantially all of his business
time, ability and attention to the operations of the Businesses during the term
of this Agreement and shall not, whether directly or indirectly, render any
services to any other person or organization, whether for compensation or
otherwise, except with Employer's prior written consent.
<PAGE>
ARTICLE III
-----------
COMPENSATION
Section 3.01 As full compensation for his services hereunder,
Employer shall pay Executive an annual salary of One Hundred Seventy-Five
Thousand ($175,000), payable in equal semi-monthly installments (the "Base
Salary"). On each December 31, the Base Salary shall be increased by an amount
equal to the percentage increase during the previous calendar year in the
Consumer Price Index, All Items, in the Tulsa, Oklahoma metropolitan area.
Section 3.02 In addition to the Base Salary, Executive shall be
eligible to participate in T/SF's Key Employee Bonus Plan (the "Bonus Plan").
The Chief Executive Officer of T/SF has the authority in its sole and absolute
discretion to select the participants in the Bonus Plan and to determine the
bonus formula for each participant. If Executive is selected to participant in
the Bonus Plan for any year after 1998, Executive shall be notified in writing
prior to the beginning of such year. Contemporaneously with the execution of
this Agreement, Employer shall deliver a letter stating that Executive has been
selected to participate in the Bonus Plan with respect to 1998.
Section 3.03 Contemporaneously with the execution of this Agreement,
Employer and Executive are executing an agreement in the form attached as
Exhibit A pursuant to which Executive is being granted 3,000 Equity Appreciation
Units under the T/SF Communications Corporation Key Executive Equity
Appreciation Plan.
ARTICLE IV
----------
BENEFITS
Section 4.01 Executive shall be entitled to participate in all
benefit plans generally available to employees of Employer and, subject to
Section 6, to receive vacation, sick leave and leaves of absence in accordance
with general employee policies.
ARTICLE V
---------
BUSINESS EXPENSES
Section 5.01 Employer shall reimburse Executive, in accordance with
Employer's policies, for all reasonable out-of-pocket business expenses incurred
by Executive in the performance of his duties hereunder. Executive shall
furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and state
tax statutes and regulations issued thereunder for the substantiation of such
expense as a tax deduction.
ARTICLE VI
----------
TERMINATION OF EMPLOYMENT
2
<PAGE>
Section 6.01 Termination with Cause. Employer may terminate
----------------------
Executive's employment at any time for Cause by giving written notice of such
termination to Executive. For purposes of this Agreement, cause shall mean:
(a) The conviction of Executive of a felony;
(b) Fraud, embezzlement or other misappropriation by Executive
of funds or property of Employer or any of its affiliates;
(c) A breach of any of Executive's fiduciary duties as an
employee of Employer;
(d) Any gross misconduct of Executive which is injurious in any
material respect to Employer or any of its affiliates; or
(e) Executive's failure to perform in any material respect his
obligations under this Agreement.
If Employer terminates Executive's employment for Cause under
this Section 6.01, Executive shall cease receiving his Base Salary as of the
date of such termination, shall not be entitled to any severance pay, and shall
cease as of the date of such termination to participate in the benefit plans
generally available to employees of Employer in which Executive is then
participating. Employer will assure that Executive receives all benefits
required by law, e.g., COBRA, but Executive will receive no other benefit
-----
hereunder.
Section 6.02 Termination Resulting from Death or Disability. If, as the
----------------------------------------------
result of any physical or mental disability, Executive shall fail or be unable
to perform in a satisfactory manner a material portion of his duties and
obligations hereunder for a period of 180 consecutive days or for a total of 180
days in any twelve (12) month period, Employer may, upon thirty (30) days prior
written notice to Executive, terminate Executive's employment hereunder. Any
dispute as to a disability shall be resolved by a medical doctor selected
jointly by Employer and Executive, or, failing agreement, by the President of
the American Medical Association.
The death of Executive shall terminate this Agreement and his employment
hereunder, effective at the time of death.
In the event of termination resulting from disability or death,
Executive or his estate, as the case may be, shall receive Executive's Base
Salary through the date of termination and a pro-rated portion (based on the
number of days in the year in which Executive was employed) of the Bonus, if
any, calculated for the portion of such calendar year through the last day of
the month preceding the month in which Executive's employment terminated.
Executive's participation in the benefits plans generally available to employees
of Employer shall cease as of the date of such termination, with the exception
of a disability insurance plan, if any.
Section 6.03 Termination upon a Change of Control. This Agreement and
------------------------------------
Executive's employment hereunder shall be terminated automatically effective
upon a Change of Control. In the event of termination resulting from a Change
of Control, Executive shall receive Executive's Base Salary through the date of
termination and a pro-rated portion (based on the number of days in the year in
which Executive was employed) of the Bonus, if any, calculated for the portion
of such calendar year through the last day of the month preceding the month in
which Executive's employment terminated. Executive's participation in the
benefits plans generally available to employees of Employer shall cease as of
the date of such termination. "Change-in-Control" means a sale of a common
equity interest of 50% or more in T/SF to persons who are not affiliates of VS&A
Communications Partners II, L.P. ("VS&A"), or a merger of T/SF with, or a sale
of all or substantially all of the assets of the T/SF and its subsidiaries to,
any other entity in which VS&A
3
<PAGE>
does not in the aggregate own at least 50% of the equity interests; provided,
--------
however, that a Change-in-Control shall not be deemed to have occurred if,
- -------
following a sale of common equity interests of T/SF pursuant to a public
offering, VS&A and its affiliates continue to have a controlling interest in
T/SF, even though such interest may constitute less than 50% of the equity
interests of T/SF.
Section 6.04 Termination for Other Reasons. Employer may terminate this
-----------------------------
Agreement and Executive's employment for any reason at any time by giving
written notice of such termination to Executive. If Executive's employment is
terminated by Employer pursuant to this provision (i.e., other than for Cause,
----
death or disability), Executive shall cease receiving his Base Salary and to
participate in Employer's benefit plans as of the date of such termination. If,
however, Employer shall promptly receive from Executive a release of Employer
and its affiliates, in form and substance satisfactory to Employer, from any and
all claims which Executive may have in respect of such termination or under this
Agreement, (a) Employer shall pay Executive severance pay in an amount equal to
Executive's Base Salary (calculated at the rate of Executive's annual salary at
the time of such termination) through the earlier of (i) the then current term
of this Agreement and (ii) one (1) year after the date of such termination (the
"Severance Period") and a pro-rated portion (based on the number of days in the
year in which Executive was employed) of the Bonus, if any, calculated for the
portion of such calendar year through the last day of the month preceding the
month in which Executive's employment terminated, and (b) Employer shall
maintain in full force and effect Executive's continued participation in the
benefit plans generally available to employees of Employer in which Executive
was participating immediately prior to such termination until the earlier of (i)
one (1) year after the date of such termination and (ii) Executive's
commencement of full-time employment with a new employer. At the end of the
period of participation in such benefit plans, Employer will assure that
Executive receives all additional benefits required by law, e.g., COBRA. The
----
payment of the severance pay referred to in clause (a) above shall be made as
follows: (i) the amount calculated based upon Executive's Base Salary shall be
payable during the Severance Period in accordance with the same schedule of
payments provided for Executive's Base Salary pursuant to Section 3.01 and (ii)
the amount calculated based upon the pro-rated bonus shall be payable in
accordance with the Key Employee Bonus Plan.
Section 6.05 Mitigation. Executive agrees to use his best efforts to
----------
mitigate any severance pay hereunder by seeking other suitable employment or
consultancy arrangements. If during the Severance Period the Executive accepts
other employment or consultancy, the portion of the severance pay awarded to the
Executive hereunder that is based upon Executive's Base Salary shall be reduced
by the amount of any compensation payable as a result of such other employment
or consultancy.
ARTICLE VII
-----------
NON-COMPETITION, CONFIDENTIALITY
AND NON-SOLICITATION COVENANTS
Section 7.01 Executive acknowledges that Executive's employment
hereunder will provide Executive with access on a continual basis to
confidential and proprietary information concerning each of the Businesses,
which is not readily available to the public; and that Employer would not enter
into this Agreement but for the covenants (the "Restrictive Covenants")
contained in this Article VII. Accordingly, Executive agrees that:
4
<PAGE>
(a) During the term of employment hereunder and, for a period of one (1)
year thereafter (the "Restricted Period"), Executive shall not, directly or
indirectly, (i) engage in any of the Businesses for his own account; or (ii)
render any services which constitute engaging in any of the Businesses in any
capacity to any person (other than with the consent or at the direction of
Employer); nor shall Executive own an equity interest in any person which is
engaged in any of the Businesses, provided, however, that Executive may own,
directly or indirectly, solely as a passive investment, securities of any person
which are traded on any national securities exchange or NASDAQ, if Executive is
not a controlling person of, or a member of a group which controls, such person,
and does not, directly or indirectly, own five percent (5%) or more of any class
of securities of such person.
(b) Executive shall forever maintain in strictest confidence all
information relating to each of the Businesses and to each of the Related
Entities, which is known or becomes known to Executive, including, without
limitation, trade secrets, know-how, financial statements and data, contracts
(whether oral or written), customer and advertiser lists, rate schedules,
pricing policies, marketing plans and strategies, and business acquisition plans
(collectively, the "Confidential Information"), and shall not, except in
connection with the business affairs of Employer and its affiliates, disclose
any Confidential Information to any person, other than with the express written
consent of Employer. Confidential Information shall not include information
which Executive can demonstrate (A) has become generally available to the public
other than as a result of a disclosure by Executive, (B) was available to
Executive on a non-confidential basis prior to its disclosure to Executive by
Employer, or (C) has become available to Executive on a non-confidential basis
from a source other than Employer, provided that such source is not known by
Executive after reasonable inquiry to be bound by a confidentiality agreement
with Employer or otherwise prohibited from transmitting the information to
Executive by a legally binding obligation.
Notwithstanding anything in this Agreement to the contrary, in the event
that a request or demand is made upon Executive, by written interrogatory,
request for information or documents, subpoena, court order, civil investigative
demand or other legal process, to disclose any Confidential Information, which
disclosure is not otherwise permitted hereunder, Executive will provide Employee
with prompt notice of any such request or demand so that Employer may seek an
appropriate protective order or waive compliance with the provisions of this
Agreement. Executive will not oppose action by, and will cooperate with,
Employer in any effort to obtain an appropriate protective order.
All memoranda, notes, lists, records and other documents (and all copies
thereof) constituting Confidential Information heretofore or hereafter made or
compiled by Executive or made available to Executive concerning any of the
Businesses shall be the property of the respective Related Entities, shall be
kept confidential in accordance with the provisions of this Section 7.01(b), and
shall be delivered to the respective Related Entities promptly upon termination
of this Agreement or at any earlier or later time upon the request of Employer.
(c) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any current employee, officer or director of
any of the Related Entities to leave the employment of his employer, or hire any
current or former employee, officer or director of, any of the Related Entities.
(d) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any person who is a customer or advertiser of
any of the Related Entities, or the affiliates or associates thereof, to
discontinue such person's business relationship with any of the Related
Entities.
Section 7.02 Executive acknowledges and agrees that (i) Executive has
had an opportunity to seek advice of counsel in connection with this Agreement;
(ii) the Restrictive Covenants are reasonable in scope and in all other
respects; (iii) any violation of the Restrictive Covenants will result in
irreparable injury to the Related Entities; (iv) money damages would be an
inadequate remedy at law for the Related Entities in the event of a breach of
any of the Restrictive Covenants by Executive; and (v) specific performance in
the form of injunctive relief would be an adequate remedy for the Related
Entities.
5
<PAGE>
Employer and Executive hereby submit to the jurisdiction of the Courts
of the State of New York to enforce the Restrictive Covenants and agree that if
Executive breaches or threatens to breach a Restrictive Covenant, Employer (or
any of the other Related Entities) shall be entitled, in addition to all other
remedies, to an injunction restraining any such breach, without any bond or
other security being required and without the necessity of showing actual
damages.
ARTICLE VIII
------------
ARBITRATION
Section 8.01 Except as otherwise set forth in Section 7.02 above,
Employer and Executive each waives any right each may have to a civil lawsuit
and trial by jury in connection with any dispute between them arising out of,
concerning or connected with this Agreement and each agrees that, upon the
written request of the other party, any such dispute shall be submitted to
arbitration. Arbitration shall take place in the City of New York, or such other
place as the parties may agree, and shall be governed by the rules of the
American Arbitration Association .
Section 8.02 Employer and Executive shall select one (1) arbitrator to
hear and determine the dispute from a list of five (5) candidates provided by
the American Arbitration Association.
Section 8.03 The arbitrator's award shall be final and binding on the
parties and the arbitrator may invoke any remedy available in equity or at law,
including, without limitation, injunctions and restraining orders. The parties
agree to the jurisdiction of the Courts of the State of New York for
confirmation and enforcement of the arbitrator's award.
ARTICLE IX
----------
GENERAL PROVISIONS
Section 9.01 In the event of arbitration or an action at law or in
equity to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees and costs. The arbitrator's fees
and costs incurred shall be borne by the losing party.
Section 9.02 This Agreement supersedes any and all other agreements,
whether oral or in writing, between the parties hereto with respect to the
subject matter hereof. Each party acknowledges that no representations,
inducements, promises or agreements, whether oral or in writing, have been made
by any party, or on behalf of any party, which are not embodied herein. No
agreement, promise or statement not contained in this Agreement shall be valid
and binding, unless agreed to in writing and signed by the parties sought to be
bound thereby.
Section 9.03 Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, faxed, or sent
by courier service (with next day delivery requested) or the U.S. Postal Service
by express mail (with next day delivery requested). Any such notice or
communication shall be deemed given and effective, in the case of personal
delivery, upon receipt by the other party, in the case of faxed, upon
transmission of the fax, in the case of a courier service or the U.S. Postal
Service, upon the next business day, after dispatch of the notice or
communication. Any such notice or communication shall be addressed as follows:
6
<PAGE>
If to Employer:
T/SF Communications Corporation
888 Seventh Avenue
New York, New York 10106
Attn: President
If to Executive:
Richard A. Wimbish
10206 South Fulton
Tulsa, OK 74137
Any person named above may designate another address or fax number by giving
notice in accordance with this Section to the other persons named above.
Section 9.04 This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to principles
of conflicts of law.
Section 9.05 No breach of any provision hereof may be waived unless in
writing. Waiver of any breach of any provision hereof shall not be deemed a
waiver of any other breach of the same or any other provision hereof. This
Agreement may be amended only by a written agreement, executed by the parties
hereto.
Section 9.06 In the event any one or more of the provisions contained in
this Agreement shall be held by an arbitrator or court of competent jurisdiction
to be invalid or unenforceable in any respect, the validity and enforceability
of the remaining provisions contained herein shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute for such invalid
and unenforceable provision in light of the tenor of this Agreement, and, upon
so agreeing, shall incorporate such substitute provision in this Agreement.
Section 9.07 This Agreement may be executed in any number of
counterparts and each such duplicate counterpart shall constitute an original,
any one of which may be introduced in evidence or used for any other purpose
without the production of its duplicate counterpart. Moreover, notwithstanding
that any of the parties did not execute the same counterpart, each counterpart
shall be deemed for all purposes to be an original, and all such counterparts
shall constitute one and the same instrument, binding on all the parties hereto.
Section 9.08 Both parties hereto acknowledge that they have had the
advice of counsel before entering into this Agreement, have fully read the
Agreement and understand the meaning and import of all the terms hereof.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the day and year first above written.
TRANSPORTATION INFORMATION
SERVICES, INC.
By:_______________________________
__________________________________
Richard A. Wimbish
8
<PAGE>
EXHIBIT 10.9
FORM OF
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT, dated as of _______, 1998, by and between T/SF
COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and Ian L.M.
Thomas ("Executive"):
Background
----------
Employer wishes to retain Executive and Executive wishes to be
employed by Employer on the terms and conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
---------
TERM OF AGREEMENT AND EMPLOYMENT
Section 1.01 Commencing on the date of this Agreement and for a
period ending on October 9, 2002, subject to earlier termination as provided in
Article VI hereof, Employer hereby employs Executive and Executive hereby
accepts employment with Employer as the President and Chief Executive Officer of
Employer. Executive shall also serve as President and Chief Executive Officer
of each of Employer's subsidiaries. Subject to the direction and ultimate
authority of the board of directors of Employer, Executive shall be responsible
for the day-to-day management of the businesses presently or hereafter conducted
by Employer and Employer's subsidiaries (the "Businesses"), and shall have such
duties as are compatible with the position of chief executive officer of those
businesses. During the term of this Agreement, Executive shall serve on the
board of directors of Employer and the management board of each of Employer's
subsidiaries. Employer and Employer's subsidiaries are collectively referred to
below as the "Related Entities."
Section 1.02 The term of this Agreement shall continue from year to
year after October 9, 2002, unless terminated by written notice, given by either
party to the other, on or before the date which is six months prior to the
expiration date of the term hereof or prior to the expiration of any extended
term.
ARTICLE II
----------
DUTIES AND OBLIGATIONS OF EXECUTIVE
Section 2.01 At all times during the performance of this Agreement,
Executive shall adhere to each Related Entity's policies, rules and regulations
governing the conduct of its employees, now in effect, or as subsequently
adopted or amended.
Section 2.02 Executive shall devote substantially all of his business
time, ability and
<PAGE>
attention to the operations of the Businesses during the term of this Agreement
and shall not, whether directly or indirectly, render any services to any other
person or organization, whether for compensation or otherwise, except with
Employer's prior written consent which shall include non-executive directorships
with ITE and Watmoughs (Holdings) PLC.
ARTICLE III
-----------
COMPENSATION
Section 3.01 As full compensation for his services hereunder
(including the services to Employer's subsidiaries), Employer shall pay
Executive an annual salary of One Hundred Seventy Five Thousand Dollars
($175,000), payable in equal semi-monthly installments (the "Base Salary"). On
each December 31, the Base Salary shall be increased by an amount equal to the
percentage increase during the previous calendar year in the Consumer Price
Index, All Items, in the New York, New York metropolitan area.
Section 3.02 In addition to the Base Salary, for 1998 and each
subsequent calendar year during the term of this Agreement, Employer shall pay
Executive a bonus (the "Bonus") in an amount equal to 3.33% of his Base Salary
as of the beginning of that year for each 1% (rounded to the nearest whole
percentage) by which EBITDA for that year exceeds the prior year's EBITDA by 15%
or more, provided that the maximum Bonus the Executive shall be entitled to
receive with respect to any year shall be 100% of his Base Salary as of the end
of that year. As used in this Agreement, the term "EBITDA" means the
consolidated earnings of the Related Entities before interest, taxes,
depreciation and amortization, excluding extraordinary or unusual nonrecurring
items of income and expense, determined in accordance with generally accepted
accounting principles by Employer's independent accountants. If in any year any
of the Related Entities acquires or disposes of any material business, the Bonus
payable with respect to such year shall be adjusted equitably to account for
such acquisition or disposition. The Bonus for any year shall be paid not later
than 30 days after delivery of Employer's audited financial statements for that
year.
Section 3.03 Contemporaneously with the execution of this Agreement,
Employer and Executive are executing agreements in the form attached as Exhibits
--------
A-1 and A-2 pursuant to which Executive is being granted 25,000 Equity
- --- ---
Appreciation Units under each of Employer's Chief Executive Officer Equity
Appreciation Plan (Exhibit A-1) and Supplemental Chief Executive Officer Equity
Appreciation Plan (Exhibit A-2).
ARTICLE IV
----------
BENEFITS
Section 4.01 Executive shall be entitled to participate in all
benefit plans generally available to employees of Employer and, subject to
Section 6, to receive vacation, sick leave and leaves of absence in accordance
with general employee policies.
ARTICLE V
---------
2
<PAGE>
BUSINESS EXPENSES
Section 5.01 Employer shall reimburse Executive, in accordance with
Employer's policies, for all reasonable out-of-pocket business expenses incurred
by Executive in the performance of his duties hereunder. Executive shall
furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and state
tax statutes and regulations issued thereunder for the substantiation of such
expense as a tax deduction.
ARTICLE VI
----------
TERMINATION OF EMPLOYMENT
Section 6.01 Termination with Cause. Employer may terminate
----------------------
Executive's employment at any time for Cause by giving written notice of such
termination to Executive. For purposes of this Agreement, cause shall mean:
(a) The conviction of Executive of a felony;
(b) Fraud, embezzlement or other misappropriation by Executive of
funds or property of Employer or any of its affiliates;
(c) A breach of any of Executive's fiduciary duties as an employee of
Employer;
(d) Any gross misconduct of Executive which is injurious in any
material respect to Employer or any of its affiliates; or
(e) Executive's failure to perform in any material respect his
obligations under this Agreement.
If Employer terminates Executive's employment for Cause under this
Section 6.01, Executive shall cease receiving his Base Salary as of the date of
such termination, shall not be entitled to any severance pay, and shall cease as
of the date of such termination to participate in the benefit plans generally
available to employees of Employer in which Executive is then participating.
Employer will assure that Executive receives all benefits required by law, e.g.,
----
COBRA, but Executive will receive no other benefit hereunder.
Section 6.02 Termination Resulting from Death or Disability. If, as
----------------------------------------------
the result of any physical or mental disability, Executive shall fail or be
unable to perform in a satisfactory manner a material portion of his duties and
obligations hereunder for a period of 180 consecutive days or for a total of 180
days in any twelve (12) month period, Employer may, upon thirty (30) days prior
written notice to Executive, terminate Executive's employment hereunder. Any
dispute as to a disability shall be resolved by a medical doctor selected
jointly by Employer and Executive, or, failing agreement, by the President of
the American Medical Association.
The death of Executive shall terminate this Agreement and his
employment hereunder, effective at the time of death.
In the event of termination resulting from disability or death,
Executive or his estate, as the case may be, shall receive Executive's Base
Salary through the date of termination and a pro-rated portion (based on the
number of days in the year in which Executive was employed) of the Bonus, if
any, calculated for the portion of such calendar year through the last day of
the month preceding the month in which Executive's employment terminated.
Executive's participation in the benefits plans generally available to employees
of Employer shall cease as of the date of such termination, with the exception
of a disability insurance plan, if any.
3
<PAGE>
Section 6.03 Termination upon a Change of Control. This Agreement and
------------------------------------
Executive's employment hereunder shall be terminated automatically effective
upon a Change in Control. In the event of termination resulting from a Change
in Control, Executive shall receive Executive's Base Salary through the date of
termination and a pro-rated portion (based on the number of days in the year in
which Executive was employed) of the Bonus, if any, calculated for the portion
of such calendar year through the last day of the month preceding the month in
which Executive's employment terminated. Executive's participation in the
benefits plans generally available to employees of Employer shall cease as of
the date of such termination. "Change-in-Control" means a sale of a common
equity interest of 50% or more in Employer to persons who are not affiliates of
VS&A Communications Partners II, L.P. ("VS&A"), or a merger of Employer with, or
a sale of all or substantially all of the assets of the Employer and its
subsidiaries to, any other entity in which VS&A does not in the aggregate own at
least 50% of the equity interests; provided, however, that a Change-in-Control
-------- -------
shall not be deemed to have occurred if, following a sale of common equity
interests of Employer pursuant to a public offering, VS&A and its affiliates
continue to have a controlling interest in Employer, even though such interest
may constitute less than 50% of the equity interests of Employer.
Section 6.04 Termination for Other Reasons. Employer may terminate
-----------------------------
this Agreement and Executive's employment for any reason at any time by giving
written notice of such termination to Executive. If Executive's employment is
terminated by Employer pursuant to this provision (i.e., other than for Cause,
----
death or disability), Executive shall cease receiving his Base Salary and to
participate in Employer's benefit plans as of the date of such termination. If,
however, Employer shall promptly receive from Executive a release of Employer
and its affiliates, in form and substance satisfactory to Employer, from any and
all claims which Executive may have in respect of such termination or under this
Agreement, (a) Employer shall pay Executive severance pay in an amount equal to
Executive's Base Salary (calculated at the rate of Executive's annual salary at
the time of such termination) through the then current term of the Agreement
(the "Severance Period") and a pro-rated portion (based on the number of days in
the year in which Executive was employed) of the Bonus, if any, calculated for
the portion of such calendar year through the last day of the month preceding
the month in which Executive's employment terminated, and (b) Employer shall
maintain in full force and effect Executive's continued participation in the
benefit plans generally available to employees of Employer in which Executive
was participating immediately prior to such termination until the earlier of (i)
one (1) year after the date of such termination and (ii) Executive's
commencement of full-time employment with a new employer. At the end of the
period of participation in such benefit plans, Employer will assure that
Executive receives all additional benefits required by law, e.g., COBRA. The
----
payment of the severance pay referred to in clause (a) above shall be made as
follows: (i) the amount calculated based upon Executive's Base Salary shall be
payable in accordance with the same schedule of payments provided for
Executive's Base Salary pursuant to Section 3.01 and (ii) the amount calculated
based upon the pro-rated bonus shall be payable in accordance with Section 3.02.
Section 6.05 Breach of Agreement by Employer. In the event that
-------------------------------
Employer shall breach in any material respect any of its obligations under this
Agreement or there shall be a relocation of the primary business offices of
Employer outside of the New York City metropolitan area, upon receipt from
Executive of a release of Employer and its affiliates, in form and substance
satisfactory
4
<PAGE>
to Employer, from any and all claims which Executive may have in respect of such
termination or under this Agreement, (a) Employer shall pay Executive severance
pay in an amount equal to Executive's Base Salary (calculated at the rate of
Executive's annual salary at the time of such termination) through the Severance
Period and a pro-rated portion (based on the number of days in the year in which
Executive was employed) of the Bonus, if any, calculated for the portion of such
calendar year through the last day of the month preceding the month in which
Executive's employment terminated, and (b) Employer shall maintain in full force
and effect Executive's continued participation in the benefit plans generally
available to employees of Employer in which Executive was participating
immediately prior to such termination until the earlier of (i) one (1) year
after the date of such termination and (ii) Executive's commencement of full-
time employment with a new employer. At the end of the period of participation
in such benefit plans, Employer will assure that Executive receives all
additional benefits required by law, e.g., COBRA. The payment of the severance
----
pay referred to in clause (a) above shall be made as follows: (i) the amount
calculated based upon Executive's Base Salary shall be payable in accordance
with the same schedule of payments provided for Executive's Base Salary pursuant
to Section 3.01 and (ii) the amount calculated based upon the pro-rated bonus
shall be payable in accordance with Section 3.02.
Section 6.06 Mitigation. Executive agrees to use his best efforts to
----------
mitigate any severance pay hereunder by seeking other suitable employment or
consultancy arrangements. If during the Severance Period the Executive accepts
other employment or consultancy, the portion of the severance pay awarded to the
Executive hereunder that is based upon Executive's Base Salary shall be reduced
by the amount of any compensation payable as a result of such other employment
or consultancy.
ARTICLE VII
-----------
NON-COMPETITION, CONFIDENTIALITY
AND NON-SOLICITATION COVENANTS
Section 7.01 Executive acknowledges that Executive's employment
hereunder will provide Executive with access on a continual basis to
confidential and proprietary information concerning each of the Businesses,
which is not readily available to the public; and that Employer would not enter
into this Agreement but for the covenants (the "Restrictive Covenants")
contained in this Article VII. Accordingly, Executive agrees that:
(a) During the term of employment hereunder and, for a period of one
(1) year thereafter (the "Restricted Period"), Executive shall not, directly or
indirectly, (i) engage in any of the Businesses for his own account; or (ii)
render any services which constitute engaging in any of the Businesses in any
capacity to any person (other than with the consent or at the direction of
Employer); nor shall Executive own an equity interest in any person which is
engaged in any of the Businesses, provided, however, that Executive may own,
directly or indirectly, solely as a passive investment, securities of any person
which are traded on any national securities exchange or NASDAQ, if Executive is
not a controlling person of, or a member of a group which controls, such person,
and does not, directly or indirectly, own five percent (5%) or more of any class
of securities of such person.
(b) Executive shall forever maintain in strictest confidence all
information relating to each of the Businesses and to each of the Related
Entities, which is known or becomes known to Executive, including, without
limitation, trade secrets, know-how, financial statements and data, contracts
(whether oral or written), customer and advertiser lists, rate schedules,
pricing policies, marketing plans and strategies, and business acquisition plans
(collectively, the "Confidential Information"), and shall not, except in
connection with the business affairs of Employer
5
<PAGE>
and its affiliates, disclose any Confidential Information to any person, other
than with the express written consent of Employer. Confidential Information
shall not include information which Executive can demonstrate (A) has become
generally available to the public other than as a result of a disclosure by
Executive, (B) was available to Executive on a non-confidential basis prior to
its disclosure to Executive by Employer, or (C) has become available to
Executive on a non-confidential basis from a source other than Employer,
provided that such source is not known by Executive after reasonable inquiry to
be bound by a confidentiality agreement with Employer or otherwise prohibited
from transmitting the information to Executive by a legally binding obligation.
Notwithstanding anything in this Agreement to the contrary, in the
event that a request or demand is made upon Executive, by written interrogatory,
request for information or documents, subpoena, court order, civil investigative
demand or other legal process, to disclose any Confidential Information, which
disclosure is not otherwise permitted hereunder, Executive will provide Employee
with prompt notice of any such request or demand so that Employer may seek an
appropriate protective order or waive compliance with the provisions of this
Agreement. Executive will not oppose action by, and will cooperate with,
Employer in any effort to obtain an appropriate protective order.
All memoranda, notes, lists, records and other documents (and all
copies thereof) constituting Confidential Information heretofore or hereafter
made or compiled by Executive or made available to Executive concerning any of
the Businesses shall be the property of the respective Related Entities, shall
be kept confidential in accordance with the provisions of this Section 7.01(b),
and shall be delivered to the respective Related Entities promptly upon
termination of this Agreement or at any earlier or later time upon the request
of Employer.
(c) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any current employee, officer or director of
any of the Related Entities to leave the employment of his employer, or hire any
current or former employee, officer or director of, any of the Related Entities.
(d) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any person who is a customer or advertiser of
any of the Related Entities, or the affiliates or associates thereof, to
discontinue such person's business relationship with any of the Related
Entities.
Section 7.02 Executive acknowledges and agrees that (i) Executive has
had an opportunity to seek advice of counsel in connection with this Agreement;
(ii) the Restrictive Covenants are reasonable in scope and in all other
respects; (iii) any violation of the Restrictive Covenants will result in
irreparable injury to the Related Entities; (iv) money damages would be an
inadequate remedy at law for the Related Entities in the event of a breach of
any of the Restrictive Covenants by Executive; and (v) specific performance in
the form of injunctive relief would be an adequate remedy for the Related
Entities.
Employer and Executive hereby submit to the jurisdiction of the Courts
of the State of New York to enforce the Restrictive Covenants and agree that if
Executive breaches or threatens to breach a Restrictive Covenant, Employer (or
any of the other Related Entities) shall be entitled, in addition to all other
remedies, to an injunction restraining any such breach, without any bond or
other security being required and without the necessity of showing actual
damages.
6
<PAGE>
ARTICLE VIII
------------
ARBITRATION
Section 8.01 Except as otherwise set forth in Section 7.02 above,
Employer and Executive each waives any right each may have to a civil lawsuit
and trial by jury in connection with any dispute between them arising out of,
concerning or connected with this Agreement and each agrees that, upon the
written request of the other party, any such dispute shall be submitted to
arbitration. Arbitration shall take place in the City of New York, or such other
place as the parties may agree, and shall be governed by the rules of the
American Arbitration Association.
Section 8.02 Employer and Executive shall select one (1) arbitrator
to hear and determine the dispute from a list of five (5) candidates provided by
the American Arbitration Association.
Section 8.03 The arbitrator's award shall be final and binding on the
parties and the arbitrator may invoke any remedy available in equity or at law,
including, without limitation, injunctions and restraining orders. The parties
agree to the jurisdiction of the Courts of the State of New York for
confirmation and enforcement of the arbitrator's award.
ARTICLE IX
----------
GENERAL PROVISIONS
Section 9.01 In the event of arbitration or an action at law or in
equity to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees and costs. The arbitrator's fees
and costs incurred shall be borne by the losing party.
Section 9.02 This Agreement supersedes any and all other agreements,
whether oral or in writing, between the parties hereto with respect to the
subject matter hereof. Each party acknowledges that no representations,
inducements, promises or agreements, whether oral or in writing, have been made
by any party, or on behalf of any party, which are not embodied herein. No
agreement, promise or statement not contained in this Agreement shall be valid
and binding, unless agreed to in writing and signed by the parties sought to be
bound thereby.
Section 9.03 Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, faxed, or sent
by courier service (with next day delivery requested) or the U.S. Postal Service
by express mail (with next day delivery requested). Any such notice or
communication shall be deemed given and effective, in the case of personal
delivery, upon receipt by the other party, in the case of faxed, upon
transmission of the fax, in the case of a courier service or the U.S. Postal
Service, upon the next business day, after dispatch of the notice or
communication. Any such notice or communication shall be addressed as follows:
7
<PAGE>
If to Employer:
T/SF Communications Corporation
888 Seventh Avenue
New York, New York 10106
Attn: General Counsel
With a copy to:
VS&A Communications Partners II, L.P.
350 Park Avenue
New York, New York 10022
Attn: President
If to Executive:
Ian L.M. Thomas
Silver Birches
Quill Hall Lane
Amersham
Bucks HP6 6LV
ENGLAND
Any person named above may designate another address or fax number by giving
notice in accordance with this Section to the other persons named above.
Section 9.04 This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to principles
of conflicts of law.
Section 9.05 No breach of any provision hereof may be waived unless
in writing. Waiver of any breach of any provision hereof shall not be deemed a
waiver of any other breach of the same or any other provision hereof. This
Agreement may be amended only by a written agreement, executed by the parties
hereto.
Section 9.06 In the event any one or more of the provisions contained
in this Agreement shall be held by an arbitrator or court of competent
jurisdiction to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby and the parties will attempt to agree upon a
valid and enforceable provision which shall be a reasonable substitute for such
invalid and unenforceable provision in light of the tenor of this Agreement,
and, upon so agreeing, shall incorporate such substitute provision in this
Agreement.
Section 9.07 This Agreement may be executed in any number of
counterparts and each such duplicate counterpart shall constitute an original,
any one of which may be introduced in evidence or used for any other purpose
without the production of its duplicate counterpart. Moreover, notwithstanding
that any of the parties did not execute the same counterpart, each counterpart
shall be deemed for all purposes to be an original, and all such counterparts
shall constitute one and the same instrument, binding on all the parties hereto.
8
<PAGE>
Section 9.08 Both parties hereto acknowledge that they have had the advice of
counsel before entering into this Agreement, have fully read the Agreement and
understand the meaning and import of all the terms hereof.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the day and year first above written.
T/SF COMMUNICATIONS CORPORATION
By:_______________________________
__________________________________
Ian L.M. Thomas
10
<PAGE>
EXHIBIT 10.9(a)
VERONIS SUHLER & ASSOCIATES, INC
350 PARK AVENUE
NEW YORK, NEW YORK 10022
Mr. Ian L. M. Thomas
October 9, 1997
Page 1
October 9, 1997
Mr. Ian L. M. Thomas
435 East 65th Street
Apartment 15D
New York, New York 10021
Dear Ian:
As you know, VS&A Communications Partners II, L.P. ("VS&A") has
acquired an indirect controlling interest (through VS&A-T/SF, L.L.C., a Delaware
limited liability company ("Parent LLC")) in T/SF Communications Corporation
("T/SF"), as provided for in the stock purchase agreement dated August 15, 1997
(the "Stock Purchase Agreement") among T/SF, VS&A-T/SF, Inc. and VS&A.
This will confirm our agreement that you shall continue to be employed
by Veronis, Suhler & Associates Inc. ("Veronis, Suhler") on the terms provided
for in the form of employment agreement attached as Exhibit A, but that those
---------
services shall be considered to be performed on behalf of Veronis, Suhler and
you shall continue to be an employee of Veronis, Suhler until your obtaining an
appropriate visa that permits you to be employed by T/SF, at which point, you
shall execute and deliver an employment agreement with T/SF in substantially the
form attached as Exhibit A, and your employment by Veronis, Suhler shall then
---------
terminate.
This will also confirm that, within ninety days after the closing of
the tender offer, you will personally contribute (or arrange for one or more
trusts or other entities controlled by you to contribute) an aggregate of
$750,000 to the capital of Parent LLC and shall receive for that contribution
equity interests in that entity that bear the same relation to the equity
interests held by VS&A as the capital contributions by VS&A bear to the
aggregate contributions by you (or those trusts or other entities) and VS&A.
If VS&A shall contribute additional amounts to the capital of Parent LLC or T/SF
or its subsidiaries following the closing of the tender offer, you shall have
the right to maintain your proportionate interest in the entities by
contributing additional amounts on a
<PAGE>
Mr. Ian L. M. Thomas
October 9, 1997
Page 2
pro rata basis but you shall have no obligation to do so. Upon making your
contribution to Parent LLC you shall execute and deliver a counterpart of the
limited liability company agreement then in effect among the members of the LLC.
Copies of all relevant agreements will be sent to you.
This agreement shall terminate upon the termination of the Stock
Purchase Agreement in accordance with its terms.
If the foregoing accurately reflects our agreement, please so indicate
by signing and returning to us a copy of this agreement.
Very truly yours,
VERONIS SUHLER & ASSOCIATES, INC.
By:_________________________________
VS&A COMMUNICATIONS PARTNERS
II, L.P.
By: VS&A Equities II, L.P.,
its general partner
By:_________________________________
ACCEPTED AND AGREED:
_________________________________
Ian L. M. Thomas
<PAGE>
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT, dated as of November 10, 1997, by and between
T/SF COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and Steven
J. Hunt ("Executive"):
Background
----------
Employer wishes to retain Executive and Executive wishes to be
employed by Employer on the terms and conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
---------
TERM OF AGREEMENT AND EMPLOYMENT
Section 1.01 Commencing on the date of this Agreement and for a
period ending on November 10, 2002, subject to earlier termination as provided
in Article VI hereof, Employer hereby employs Executive and Executive hereby
accepts employment with Employer as the Chief Financial Officer of Employer and
each of Employer's subsidiaries (the "Businesses"). Subject to the direction
and ultimate authority of the President and Chief Executive Officer of Employer,
Executive shall be responsible for (i) helping the President and Chief Executive
Officer of Employer to grow EBITDA consistently and aggressively, (ii) ensuring
that all of Employer's financial and management information reporting is
accurate, timely and meets the requirements of Federal and state laws,
Employer's shareholders and management, and (iii) developing and implementing
the agreed information systems for Employer and its subsidiaries; and shall have
such duties as are compatible with the position of Chief Financial Officer.
Employer and Employer's subsidiaries are collectively referred to below as the
"Related Entities."
Section 1.02 The term of this Agreement shall continue from year to
year after November 10, 2002, unless terminated by written notice, given by
either party to the other, on or before the date which is one year prior to the
expiration date of the term hereof or prior to the expiration of any extended
term.
ARTICLE II
----------
DUTIES AND OBLIGATIONS OF EXECUTIVE
Section 2.01 At all times during the performance of this Agreement,
Executive shall adhere to each Related Entity's policies, rules and regulations
governing the conduct of its employees, now in effect, or as subsequently
adopted or amended.
Section 2.02 Executive shall devote substantially all of his business
time, ability and attention to the operations of the Businesses during the term
of this Agreement and shall not, whether directly or indirectly, render any
services to any other person or organization, whether for
<PAGE>
compensation or otherwise, except with Employer's prior written consent.
ARTICLE III
-----------
COMPENSATION
Section 3.01 As full compensation for his services hereunder
(including the services to T/SF Communications Corporation and to Employer's
subsidiaries), Employer shall pay Executive an annual salary of One Hundred
Seventy Five Thousand Dollars ($175,000), payable in equal semi-monthly
installments (the "Base Salary"). On each December 31, the Base Salary shall be
increased by an amount equal to the percentage increase during the previous
calendar year in the Consumer Price Index, All Items, in the New York, New York
metropolitan area.
Section 3.02 In addition to the Base Salary, for 1998 and each
subsequent calendar year during the term of this Agreement, Employer shall pay
Executive a bonus (the "Bonus") in an amount equal to 2% of his Base Salary as
of the beginning of that year for each 1% (rounded to the nearest whole
percentage) by which EBITDA for that year exceeds the EBITDA Budget for that
year, provided that the maximum Bonus the Executive shall be entitled to receive
with respect to any year shall be 50% of his Base Salary as of the end of that
year. As used in this Agreement, (a) the term "EBITDA" means the consolidated
earnings of the Related Entities before interest, taxes, depreciation and
amortization, excluding extraordinary or unusual nonrecurring items of income
and expense, determined in accordance with generally accepted accounting
principles by Employer's independent accountants and (b) the term "Annual EBITDA
Budget" means the aggregate amount (on a consolidated basis) of budgeted
earnings of the Related Entities, before interest, taxes, depreciation and
amortization, excluding extraordinary or unusual nonrecurring items of income
and expense, based upon the budget for each calendar year determined not later
than 30 days prior to the commencement of each year by the respective boards of
the Related Entities (as those budgets may be modified from time to time as
contemplated by this paragraph). If in any year any of the Related Entities
acquires or disposes of any material business, the EBITDA for that year shall be
adjusted to reflect the increase or decrease, as the case may be, in annual
income and expense reasonably attributable to the acquired or disposed of
business as determined by the board of that entity. The Bonus for any year
shall be paid not later than 30 days after delivery of Employer's audited
financial statements for that year.
Section 3.03 Contemporaneously with the execution of this Agreement,
Employer and Executive are executing an agreement in the form attached as
Exhibit A pursuant to which Executive is being granted 15,000 Equity
- ---------
Appreciation Units under Employer's Chief Financial Officer and General Counsel
Equity Appreciation Plan.
2
<PAGE>
ARTICLE IV
----------
BENEFITS
Section 4.01 Executive shall be entitled to participate in all
benefit plans generally available to employees of Employer and, subject to
Section 6, to receive vacation, sick leave and leaves of absence in accordance
with general employee policies.
ARTICLE V
---------
BUSINESS EXPENSES
Section 5.01 Employer shall reimburse Executive, in accordance with
Employer's policies, for all reasonable out-of-pocket business expenses incurred
by Executive in the performance of his duties hereunder. Executive shall
furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and state
tax statutes and regulations issued thereunder for the substantiation of such
expense as a tax deduction.
Section 5.02 Employer pay Executive up to $75,000 (plus a gross-up
for any taxes paid by Executive with respect to such relocation) for customary
and necessary expenses to (i) move his family, household goods and other
personal property from Chicago to the New York City metropolitan area, (ii) pre-
move house hunting trips and (iii) real estate expenses related to selling
Employee's Chicago house and purchasing a house in the New York City
metropolitan area. Such relocation costs shall be advanced to Executive in the
form of a promissory note in the form attached as Exhibit B hereto. Executive
---------
shall furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and state
tax statutes and regulations issued thereunder for the substantiation of such
expense as a tax deduction. Executive shall have completed his relocation by no
later than September 1, 1998.
ARTICLE VI
----------
TERMINATION OF EMPLOYMENT
Section 6.01 Termination with Cause. Employer may terminate
----------------------
Executive's employment at any time for Cause by giving written notice of such
termination to Executive. For purposes of this Agreement, cause shall mean:
(a) The conviction of Executive of a felony;
(b) Fraud, embezzlement or other misappropriation by Executive of
funds or property of Employer or any of its affiliates;
(c) A breach of any of Executive's fiduciary duties as an employee of
Employer;
(d) Any gross misconduct of Executive which is injurious in any
material respect to Employer or any of its affiliates; or
(e) Executive's failure to perform in any material respect his
obligations under this Agreement.
If Employer terminates Executive's employment for Cause under this
Section 6.01, Executive shall cease receiving his Base Salary as of the date of
such termination, shall not be entitled to any severance pay, and shall
3
<PAGE>
cease as of the date of such termination to participate in the benefit plans
generally available to employees of Employer in which Executive is then
participating. Employer will assure that Executive receives all benefits
required by law, e.g., COBRA, but Executive will receive no other benefit
----
hereunder.
Section 6.02 Termination Resulting from Death or Disability. If, as
----------------------------------------------
the result of any physical or mental disability, Executive shall fail or be
unable to perform in a satisfactory manner a material portion of his duties and
obligations hereunder for a period of 180 consecutive days or for a total of 180
days in any twelve (12) month period, Employer may, upon thirty (30) days prior
written notice to Executive, terminate Executive's employment hereunder. Any
dispute as to a disability shall be resolved by a medical doctor selected
jointly by Employer and Executive, or, failing agreement, by the President of
the American Medical Association.
The death of Executive shall terminate this Agreement and his
employment hereunder, effective at the time of death.
In the event of termination resulting from disability or death,
Executive or his estate, as the case may be, shall receive Executive's Base
Salary through the date of termination and a pro-rated portion (based on the
number of days in the year in which Executive was employed) of the Bonus, if
any, calculated for the portion of such calendar year through the last day of
the month preceding the month in which Executive's employment terminated.
Executive's participation in the benefits plans generally available to employees
of Employer shall cease as of the date of such termination, with the exception
of a disability insurance plan, if any.
Section 6.03 Termination upon a Change of Control. This Agreement and
------------------------------------
Executive's employment hereunder shall be terminated automatically effective
upon a Change of Control. In the event of termination resulting from a Change
of Control, Executive shall receive Executive's Base Salary through the date of
termination and a pro-rated portion (based on the number of days in the year in
which Executive was employed) of the Bonus, if any, calculated for the portion
of such calendar year through the last day of the month preceding the month in
which Executive's employment terminated. Executive's participation in the
benefits plans generally available to employees of Employer shall cease as of
the date of such termination. "Change-in-Control" means a sale of a common
equity interest of 50% or more in Employer to persons who are not affiliates of
VS&A Communications Partners II, L.P. ("VS&A"), or a merger of Employer with, or
a sale of all or substantially all of the assets of the Employer and its
subsidiaries to, any other entity in which VS&A does not in the aggregate own at
least 50% of the equity interests; provided, however, that a Change-in-Control
-------- -------
shall not be deemed to have occurred if, following a sale of common equity
interests of Employer pursuant to a public offering, VS&A and its affiliates
continue to have a controlling interest in Employer, even though such interest
may constitute less than 50% of the equity interests of Employer.
Section 6.04 Termination for Other Reasons. Employer may terminate
-----------------------------
this Agreement and Executive's employment for any reason at any time by giving
written notice of such termination to Executive. If Executive's employment is
terminated by Employer pursuant to this provision (i.e., other than for Cause,
----
death or disability), Executive shall cease receiving his Base Salary and to
participate in Employer's benefit plans as of the date of such termination. If,
however, Employer shall promptly receive from Executive a release of Employer
and its affiliates, in form and substance satisfactory to Employer, from any and
all claims which Executive may have in respect of such termination or under this
Agreement, (a) Employer shall pay Executive severance pay in an amount equal to
Executive's Base Salary (calculated at the rate of Executive's annual salary at
the time of such termination) through the earlier of (i) the then current term
of this Agreement and (ii) two (2)
4
<PAGE>
years after the date of such termination (the "Severance Period") and a pro-
rated portion (based on the number of days in the year in which Executive was
employed) of the Bonus, if any, calculated for the portion of such calendar year
through the last day of the month preceding the month in which Executive's
employment terminated, and (b) Employer shall maintain in full force and effect
Executive's continued participation in the benefit plans generally available to
employees of Employer in which Executive was participating immediately prior to
such termination until the earlier of (i) one (1) year after the date of such
termination and (ii) Executive's commencement of full-time employment with a new
employer. At the end of the period of participation in such benefit plans,
Employer will assure that Executive receives all additional benefits required by
law, e.g., COBRA. The payment of the severance pay referred to in clause (a)
----
above shall be made as follows: (i) the amount calculated based upon Executive's
Base Salary shall be payable during the Severance Period in accordance with the
same schedule of payments provided for Executive's Base Salary pursuant to
Section 3.01 and (ii) the amount calculated based upon the pro-rated bonus shall
be payable in accordance with Section 3.02.
Section 6.05 Breach of Agreement by Employer. In the event that (i)
-------------------------------
Employer shall breach in any material respect any of its obligations under this
Agreement, (ii) there is a material diminution of Employee's duties as set forth
in this Agreement or (iii) there shall be a relocation of the primary business
offices of Employer outside of the New York City metropolitan area., upon
receipt from Executive of a release of Employer and its affiliates, in form and
substance satisfactory to Employer, from any and all claims which Executive may
have in respect of such termination or under this Agreement, (a) Employer shall
pay Executive severance pay in an amount equal to Executive's Base Salary
(calculated at the rate of Executive's annual salary at the time of such
termination) through the Severance Period and a pro-rated portion (based on the
number of days in the year in which Executive was employed) of the Bonus, if
any, calculated for the portion of such calendar year through the last day of
the month preceding the month in which Executive's employment terminated, and
(b) Employer shall maintain in full force and effect Executive's continued
participation in the benefit plans generally available to employees of Employer
in which Executive was participating immediately prior to such termination until
the earlier of (i) one (1) year after the date of such termination and (ii)
Executive's commencement of full-time employment with a new employer. At the
end of the period of participation in such benefit plans, Employer will assure
that Executive receives all additional benefits required by law, e.g., COBRA.
----
The payment of the severance pay referred to in clause (a) above shall be made
as follows: (i) the amount calculated based upon Executive's Base Salary shall
be payable during the Severance Period in accordance with the same schedule of
payments provided for Executive's Base Salary pursuant to Section 3.01 and (ii)
the amount calculated based upon the pro-rated bonus shall be payable in
accordance with Section 3.02.
Section 6.06 Mitigation. Executive agrees to use his best efforts to
----------
mitigate any severance pay hereunder by seeking other suitable employment or
consultancy arrangements. If during the Severance Period the Executive accepts
other employment or consultancy, the portion of the severance pay awarded to the
Executive hereunder that is based upon Executive's Base Salary shall be reduced
by the amount of any compensation payable as a result of such other employment
or consultancy.
5
<PAGE>
ARTICLE VII
-----------
NON-COMPETITION, CONFIDENTIALITY
AND NON-SOLICITATION COVENANTS
Section 7.01 Executive acknowledges that Executive's employment
hereunder will provide Executive with access on a continual basis to
confidential and proprietary information concerning each of the Businesses,
which is not readily available to the public; and that Employer would not enter
into this Agreement but for the covenants (the "Restrictive Covenants")
contained in this Article VII. Accordingly, Executive agrees that:
(a) During the term of employment hereunder and, for a period of one
(1) year thereafter (the "Restricted Period"), Executive shall not, directly or
indirectly, (i) engage in any of the Businesses for his own account; or (ii)
render any services which constitute engaging in any of the Businesses in any
capacity to any person (other than with the consent or at the direction of
Employer); nor shall Executive own an equity interest in any person which is
engaged in any of the Businesses, provided, however, that Executive may own,
directly or indirectly, solely as a passive investment, securities of any person
which are traded on any national securities exchange or NASDAQ, if Executive is
not a controlling person of, or a member of a group which controls, such person,
and does not, directly or indirectly, own five percent (5%) or more of any class
of securities of such person.
(b) Executive shall forever maintain in strictest confidence all
information relating to each of the Businesses and to each of the Related
Entities, which is known or becomes known to Executive, including, without
limitation, trade secrets, know-how, financial statements and data, contracts
(whether oral or written), customer and advertiser lists, rate schedules,
pricing policies, marketing plans and strategies, and business acquisition plans
(collectively, the "Confidential Information"), and shall not, except in
connection with the business affairs of Employer and its affiliates, disclose
any Confidential Information to any person, other than with the express written
consent of Employer. Confidential Information shall not include information
which Executive can demonstrate (A) has become generally available to the public
other than as a result of a disclosure by Executive, (B) was available to
Executive on a non-confidential basis prior to its disclosure to Executive by
Employer, or (C) has become available to Executive on a non-confidential basis
from a source other than Employer, provided that such source is not known by
Executive after reasonable inquiry to be bound by a confidentiality agreement
with Employer or otherwise prohibited from transmitting the information to
Executive by a legally binding obligation.
Notwithstanding anything in this Agreement to the contrary, in the
event that a request or demand is made upon Executive, by written interrogatory,
request for information or documents, subpoena, court order, civil investigative
demand or other legal process, to disclose any Confidential Information, which
disclosure is not otherwise permitted hereunder, Executive will provide Employee
with prompt notice of any such request or demand so that Employer may seek an
appropriate protective order or waive compliance with the provisions of this
Agreement. Executive will not oppose action by, and will cooperate with,
Employer in any effort to obtain an appropriate protective order.
All memoranda, notes, lists, records and other documents (and all
copies thereof) constituting Confidential Information heretofore or hereafter
made or compiled by Executive or made available to Executive concerning any of
the Businesses shall be the property of the respective Related Entities, shall
be kept confidential in accordance with the provisions of this Section 7.01(b),
and shall be delivered to the respective Related Entities promptly upon
termination of this Agreement or at any earlier or later time upon the request
of Employer.
(c) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any current employee, officer or director of
any of the Related Entities to leave the employment of his employer, or hire any
current or former employee, officer or director of, any of the Related Entities.
(d) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any person who is a customer or advertiser of
any of the Related Entities, or the affiliates or associates thereof, to
discontinue
6
<PAGE>
such person's business relationship with any of the Related Entities.
Section 7.02 Executive acknowledges and agrees that (i) Executive has
had an opportunity to seek advice of counsel in connection with this Agreement;
(ii) the Restrictive Covenants are reasonable in scope and in all other
respects; (iii) any violation of the Restrictive Covenants will result in
irreparable injury to the Related Entities; (iv) money damages would be an
inadequate remedy at law for the Related Entities in the event of a breach of
any of the Restrictive Covenants by Executive; and (v) specific performance in
the form of injunctive relief would be an adequate remedy for the Related
Entities.
Employer and Executive hereby submit to the jurisdiction of the Courts
of the State of New York to enforce the Restrictive Covenants and agree that if
Executive breaches or threatens to breach a Restrictive Covenant, Employer (or
any of the other Related Entities) shall be entitled, in addition to all other
remedies, to an injunction restraining any such breach, without any bond or
other security being required and without the necessity of showing actual
damages.
ARTICLE VIII
------------
ARBITRATION
Section 8.01 Except as otherwise set forth in Section 7.02 above,
Employer and Executive each waives any right each may have to a civil lawsuit
and trial by jury in connection with any dispute between them arising out of,
concerning or connected with this Agreement and each agrees that, upon the
written request of the other party, any such dispute shall be submitted to
arbitration. Arbitration shall take place in the City of New York, or such other
place as the parties may agree, and shall be governed by the rules of the
American Arbitration Association.
Section 8.02 Employer and Executive shall select one (1) arbitrator
to hear and determine the dispute from a list of five (5) candidates provided by
the American Arbitration Association.
Section 8.03 The arbitrator's award shall be final and binding on the
parties and the arbitrator may invoke any remedy available in equity or at law,
including, without limitation, injunctions and restraining orders. The parties
agree to the jurisdiction of the Courts of the State of New York for
confirmation and enforcement of the arbitrator's award.
ARTICLE IX
----------
GENERAL PROVISIONS
Section 9.01 In the event of arbitration or an action at law or in
equity to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees and costs. The arbitrator's fees
and costs incurred shall be borne by the losing party.
Section 9.02 This Agreement supersedes any and all other agreements,
whether oral or in writing, between the parties hereto with respect to the
subject matter hereof. Each party acknowledges that no representations,
inducements, promises or agreements, whether oral or in writing, have been made
by any party, or on behalf of any party, which are not embodied herein. No
agreement, promise or statement not contained in this Agreement shall be valid
and binding,
7
<PAGE>
unless agreed to in writing and signed by the parties sought to be bound
thereby.
Section 9.03 Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, faxed, or sent
by courier service (with next day delivery requested) or the U.S. Postal Service
by express mail (with next day delivery requested). Any such notice or
communication shall be deemed given and effective, in the case of personal
delivery, upon receipt by the other party, in the case of faxed, upon
transmission of the fax, in the case of a courier service or the U.S. Postal
Service, upon the next business day, after dispatch of the notice or
communication. Any such notice or communication shall be addressed as follows:
If to Employer:
T/SF Communications Corporation
888 Seventh Avenue
New York, New York 10106
Attn: General Counsel
With a copy to:
VS&A Communications Partners II, L.P.
350 Park Avenue
New York, New York 10022
Attn: President
If to Executive:
Steven J. Hunt
2130 Lincoln Park West, #3N
Chicago, IL 60614
Any person named above may designate another address or fax number by giving
notice in accordance with this Section to the other persons named above.
Section 9.04 This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to principles
of conflicts of law.
Section 9.05 No breach of any provision hereof may be waived unless
in writing. Waiver of any breach of any provision hereof shall not be deemed a
waiver of any other breach of the same or any other provision hereof. This
Agreement may be amended only by a written agreement, executed by the parties
hereto.
Section 9.06 In the event any one or more of the provisions contained
in this Agreement shall be held by an arbitrator or court of competent
jurisdiction to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby and the parties will attempt to agree upon a
valid and enforceable provision which shall be a reasonable substitute for such
invalid and unenforceable provision in light of the tenor of this Agreement,
and, upon so agreeing, shall incorporate such substitute provision in this
Agreement.
8
<PAGE>
Section 9.07 This Agreement may be executed in any number of
counterparts and each such duplicate counterpart shall constitute an original,
any one of which may be introduced in evidence or used for any other purpose
without the production of its duplicate counterpart. Moreover, notwithstanding
that any of the parties did not execute the same counterpart, each counterpart
shall be deemed for all purposes to be an original, and all such counterparts
shall constitute one and the same instrument, binding on all the parties hereto.
Section 9.08 Both parties hereto acknowledge that they have had the advice of
counsel before entering into this Agreement, have fully read the Agreement and
understand the meaning and import of all the terms hereof.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the day and year first above written.
T/SF COMMUNICATIONS CORPORATION
By:_______________________________
__________________________________
Steven J. Hunt
10
<PAGE>
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT, dated as of November 10, 1997, by and between
T/SF COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and Brian
A. Meyer ("Executive"):
Background
----------
Employer wishes to retain Executive and Executive wishes to be
employed by Employer on the terms and conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
----------
TERM OF AGREEMENT AND EMPLOYMENT
Section 1.01 Commencing on the date of this Agreement and for a
period ending on November 10, 2002, subject to earlier termination as provided
in Article VI hereof, Employer hereby employs Executive and Executive hereby
accepts employment with Employer as the General Counsel of Employer and each of
Employer's subsidiaries (the "Businesses"). Subject to the direction and
ultimate authority of the President and Chief Executive Officer of Employer,
Executive shall be responsible for (a) helping the President and Chief Executive
Officer of Employer to grow its EBITDA consistently and aggressively, (b)
ensuring the Businesses are conducted in a manner which is consistent with all
Federal, state and other laws on a worldwide basis and (c) maintaining
employment policies which are fair, consistent, legal and offer significant
incentives to individuals to achieve their full potential while contributing to
the success of Employer, and shall have such duties as are compatible with the
position of General Counsel. Employer and Employer's subsidiaries are
collectively referred to below as the "Related Entities."
Section 1.02 The term of this Agreement shall continue from year to
year after November 10, 2002, unless terminated by written notice, given by
either party to the other, on or before the date which is one year prior to the
expiration date of the term hereof or prior to the expiration of any extended
term.
ARTICLE II
-----------
DUTIES AND OBLIGATIONS OF EXECUTIVE
Section 2.01 At all times during the performance of this Agreement,
Executive shall adhere to each Related Entity's policies, rules and regulations
governing the conduct of its employees, now in effect, or as subsequently
adopted or amended.
Section 2.02 Executive shall devote substantially all of his business
time, ability and attention to the operations of the Businesses during the term
of this Agreement and shall not, whether directly or indirectly, render any
services to any other person or organization, whether for
<PAGE>
compensation or otherwise, except with Employer's prior written consent.
ARTICLE III
------------
COMPENSATION
Section 3.01 As full compensation for his services hereunder
(including the services to Employer's subsidiaries), Employer shall pay
Executive an annual salary of One Hundred Sixty Thousand Dollars ($160,000),
payable in equal semi-monthly installments (the "Base Salary"). On each
December 31, the Base Salary shall be increased by an amount equal to the
percentage increase during the previous calendar year in the Consumer Price
Index, All Items, in the New York, New York metropolitan area.
Section 3.02 In addition to the Base Salary, for 1998 and each
subsequent calendar year during the term of this Agreement, Employer shall pay
Executive a bonus (the "Bonus") in an amount equal to 2% of his Base Salary as
of the beginning of that year for each 1% (rounded to the nearest whole
percentage) by which EBITDA for that year exceeds the EBITDA Budget for that
year, provided that the maximum Bonus the Executive shall be entitled to receive
with respect to any year shall be 50% of his Base Salary as of the end of that
year. As used in this Agreement, (a) the term "EBITDA" means the consolidated
earnings of the Related Entities before interest, taxes, depreciation and
amortization, excluding extraordinary or unusual nonrecurring items of income
and expense, determined in accordance with generally accepted accounting
principles by Employer's independent accountants and (b) the term "Annual EBITDA
Budget" means the aggregate amount (on a consolidated basis) of budgeted
earnings of the Related Entities, before interest, taxes, depreciation and
amortization, excluding extraordinary or unusual nonrecurring items of income
and expense, based upon the budget for each calendar year determined not later
than 30 days prior to the commencement of each year by the respective boards of
the Related Entities (as those budgets may be modified from time to time as
contemplated by this paragraph). If in any year any of the Related Entities
acquires or disposes of any material business, the EBITDA for that year shall be
adjusted to reflect the increase or decrease, as the case may be, in annual
income and expense reasonably attributable to the acquired or disposed of
business as determined by the board of that entity. The Bonus for any year
shall be paid not later than 30 days after delivery of Employer's audited
financial statements for that year.
Section 3.03 Contemporaneously with the execution of this Agreement,
Employer and Executive are executing an agreement in the form attached as
Exhibit A pursuant to which Executive is being granted 10,000 Equity
- ---------
Appreciation Units under the Employer's Chief Financial Officer and General
Counsel Equity Appreciation Plan.
2
<PAGE>
ARTICLE IV
-----------
BENEFITS
Section 4.01 Executive shall be entitled to participate in all
benefit plans generally available to employees of Employer and, subject to
Section 6, to receive vacation, sick leave and leaves of absence in accordance
with general employee policies.
ARTICLE V
----------
BUSINESS EXPENSES
Section 5.01 Employer shall reimburse Executive, in accordance with
Employer's policies, for all reasonable out-of-pocket business expenses incurred
by Executive in the performance of his duties hereunder. Executive shall
furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and state
tax statutes and regulations issued thereunder for the substantiation of such
expense as a tax deduction.
ARTICLE VI
-----------
TERMINATION OF EMPLOYMENT
Section 6.01 Termination with Cause. Employer may terminate
----------------------
Executive's employment at any time for Cause by giving written notice of such
termination to Executive. For purposes of this Agreement, cause shall mean:
(a) The conviction of Executive of a felony;
(b) Fraud, embezzlement or other misappropriation by Executive of funds or
property of Employer or any of its affiliates;
(c) A breach of any of Executive's fiduciary duties as an employee of
Employer;
(d) Any gross misconduct of Executive which is injurious in any material
respect to Employer or any of its affiliates; or
(e) Executive's failure to perform in any material respect his obligations
under this Agreement.
If Employer terminates Executive's employment for Cause under this Section
6.01, Executive shall cease receiving his Base Salary as of the date of such
termination, shall not be entitled to any severance pay, and shall cease as of
the date of such termination to participate in the benefit plans generally
available to employees of Employer in which Executive is then participating.
Employer will assure that Executive receives all benefits required by law, e.g.,
----
COBRA, but Executive will receive no other benefit hereunder.
Section 6.02 Termination Resulting from Death or Disability. If, as the
----------------------------------------------
result of any physical or mental disability, Executive shall fail or be unable
to perform in a satisfactory manner a material portion of his duties and
obligations hereunder for a period of 180 consecutive days or for a total of 180
days in any twelve (12) month period, Employer may, upon thirty (30) days prior
written notice to Executive, terminate Executive's employment hereunder. Any
dispute as to a disability shall be resolved by a medical doctor selected
jointly by Employer and Executive, or, failing agreement, by the President of
the American Medical Association.
3
<PAGE>
The death of Executive shall terminate this Agreement and his employment
hereunder, effective at the time of death.
In the event of termination resulting from disability or death, Executive
or his estate, as the case may be, shall receive Executive's Base Salary through
the date of termination and a pro-rated portion (based on the number of days in
the year in which Executive was employed) of the Bonus, if any, calculated for
the portion of such calendar year through the last day of the month preceding
the month in which Executive's employment terminated. Executive's participation
in the benefits plans generally available to employees of Employer shall cease
as of the date of such termination, with the exception of a disability insurance
plan, if any.
Section 6.03 Termination upon a Change of Control. This Agreement and
------------------------------------
Executive's employment hereunder shall be terminated automatically effective
upon a Change of Control. In the event of termination resulting from a Change
of Control, Executive shall receive Executive's Base Salary through the date of
termination and a pro-rated portion (based on the number of days in the year in
which Executive was employed) of the Bonus, if any, calculated for the portion
of such calendar year through the last day of the month preceding the month in
which Executive's employment terminated. Executive's participation in the
benefits plans generally available to employees of Employer shall cease as of
the date of such termination. "Change-in-Control" means a sale of a common
equity interest of 50% or more in Employer to persons who are not affiliates of
VS&A Communications Partners II, L.P. ("VS&A"), or a merger of Employer with, or
a sale of all or substantially all of the assets of the Employer and its
subsidiaries to, any other entity in which VS&A does not in the aggregate own at
least 50% of the equity interests; provided, however, that a Change-in-Control
-------- -------
shall not be deemed to have occurred if, following a sale of common equity
interests of Employer pursuant to a public offering, VS&A and its affiliates
continue to have a controlling interest in Employer, even though such interest
may constitute less than 50% of the equity interests of Employer.
Section 6.04 Termination for Other Reasons. Employer may terminate this
-----------------------------
Agreement and Executive's employment for any reason at any time by giving
written notice of such termination to Executive. If Executive's employment is
terminated by Employer pursuant to this provision (i.e., other than for Cause,
----
death or disability), Executive shall cease receiving his Base Salary and to
participate in Employer's benefit plans as of the date of such termination. If,
however, Employer shall promptly receive from Executive a release of Employer
and its affiliates, in form and substance satisfactory to Employer, from any and
all claims which Executive may have in respect of such termination or under this
Agreement, (a) Employer shall pay Executive severance pay in an amount equal to
Executive's Base Salary (calculated at the rate of Executive's annual salary at
the time of such termination) through the earlier of (i) the then current term
of this Agreement and (ii) two (2) years after the date of such termination (the
"Severance Period") and a pro-rated portion (based on the number of days in the
year in which Executive was employed) of the Bonus, if any, calculated for the
portion of such calendar year through the last day of the month preceding the
month in which Executive's employment terminated, and (b) Employer shall
maintain in full force and effect Executive's continued participation in the
benefit plans generally available to employees of Employer in which Executive
was participating immediately prior to such termination until the earlier of (i)
one (1) year after the date of such termination and (ii) Executive's
commencement of full-time employment with a new employer. At the end of the
period of participation in such benefit
4
<PAGE>
plans, Employer will assure that Executive receives all additional benefits
required by law, e.g., COBRA. The payment of the severance pay referred to in
----
clause (a) above shall be made as follows: (i) the amount calculated based upon
Executive's Base Salary shall be payable during the Severance Period in
accordance with the same schedule of payments provided for Executive's Base
Salary pursuant to Section 3.01 and (ii) the amount calculated based upon the
pro-rated bonus shall be payable in accordance with Section 3.02.
Section 6.05 Breach of Agreement by Employer. In the event that (i) Employer
-------------------------------
shall breach in any material respect any of its obligations under this
Agreement, (ii) there is a material diminution of Employee's duties as set forth
in this Agreement or (iii) there shall be a relocation of the primary business
offices of Employer outside of the New York City metropolitan area., upon
receipt from Executive of a release of Employer and its affiliates, in form and
substance satisfactory to Employer, from any and all claims which Executive may
have in respect of such termination or under this Agreement, (a) Employer shall
pay Executive severance pay in an amount equal to Executive's Base Salary
(calculated at the rate of Executive's annual salary at the time of such
termination) through the Severance Period and a pro-rated portion (based on the
number of days in the year in which Executive was employed) of the Bonus, if
any, calculated for the portion of such calendar year through the last day of
the month preceding the month in which Executive's employment terminated, and
(b) Employer shall maintain in full force and effect Executive's continued
participation in the benefit plans generally available to employees of Employer
in which Executive was participating immediately prior to such termination until
the earlier of (i) one (1) year after the date of such termination and (ii)
Executive's commencement of full-time employment with a new employer. At the
end of the period of participation in such benefit plans, Employer will assure
that Executive receives all additional benefits required by law, e.g., COBRA.
----
The payment of the severance pay referred to in clause (a) above shall be made
as follows: (i) the amount calculated based upon Executive's Base Salary shall
be payable during the Severance Period in accordance with the same schedule of
payments provided for Executive's Base Salary pursuant to Section 3.01 and (ii)
the amount calculated based upon the pro-rated bonus shall be payable in
accordance with Section 3.02.
Section 6.06 Mitigation. Executive agrees to use his best efforts to mitigate
----------
any severance pay hereunder by seeking other suitable employment or consultancy
arrangements. If during the Severance Period the Executive accepts other
employment or consultancy, the portion of the severance pay awarded to the
Executive hereunder that is based upon Executive's Base Salary shall be reduced
by the amount of any compensation payable as a result of such other employment
or consultancy.
ARTICLE VII
-----------
NON-COMPETITION, CONFIDENTIALITY
AND NON-SOLICITATION COVENANTS
Section 7.01 Executive acknowledges that Executive's employment hereunder will
provide Executive with access on a continual basis to confidential and
proprietary information concerning each of the Businesses, which is not readily
available to the public; and that Employer would not enter into this Agreement
but for the covenants (the "Restrictive Covenants") contained in this Article
VII. Accordingly, Executive agrees that:
5
<PAGE>
(a) During the term of employment hereunder and, for a period of one (1) year
thereafter (the "Restricted Period"), Executive shall not, directly or
indirectly, (i) engage in any of the Businesses for his own account; or (ii)
render any services which constitute engaging in any of the Businesses in any
capacity to any person (other than with the consent or at the direction of
Employer); nor shall Executive own an equity interest in any person which is
engaged in any of the Businesses, provided, however, that Executive may own,
directly or indirectly, solely as a passive investment, securities of any person
which are traded on any national securities exchange or NASDAQ, if Executive is
not a controlling person of, or a member of a group which controls, such person,
and does not, directly or indirectly, own five percent (5%) or more of any class
of securities of such person.
(b) Executive shall forever maintain in strictest confidence all information
relating to each of the Businesses and to each of the Related Entities, which is
known or becomes known to Executive, including, without limitation, trade
secrets, know-how, financial statements and data, contracts (whether oral or
written), customer and advertiser lists, rate schedules, pricing policies,
marketing plans and strategies, and business acquisition plans (collectively,
the "Confidential Information"), and shall not, except in connection with the
business affairs of Employer and its affiliates, disclose any Confidential
Information to any person, other than with the express written consent of
Employer. Confidential Information shall not include information which
Executive can demonstrate (A) has become generally available to the public other
than as a result of a disclosure by Executive, (B) was available to Executive on
a non-confidential basis prior to its disclosure to Executive by Employer, or
(C) has become available to Executive on a non-confidential basis from a source
other than Employer, provided that such source is not known by Executive after
reasonable inquiry to be bound by a confidentiality agreement with Employer or
otherwise prohibited from transmitting the information to Executive by a legally
binding obligation.
Notwithstanding anything in this Agreement to the contrary, in the event that
a request or demand is made upon Executive, by written interrogatory, request
for information or documents, subpoena, court order, civil investigative demand
or other legal process, to disclose any Confidential Information, which
disclosure is not otherwise permitted hereunder, Executive will provide Employee
with prompt notice of any such request or demand so that Employer may seek an
appropriate protective order or waive compliance with the provisions of this
Agreement. Executive will not oppose action by, and will cooperate with,
Employer in any effort to obtain an appropriate protective order.
All memoranda, notes, lists, records and other documents (and all copies
thereof) constituting Confidential Information heretofore or hereafter made or
compiled by Executive or made available to Executive concerning any of the
Businesses shall be the property of the respective Related Entities, shall be
kept confidential in accordance with the provisions of this Section 7.01(b), and
shall be delivered to the respective Related Entities promptly upon termination
of this Agreement or at any earlier or later time upon the request of Employer.
(c) During the Restricted Period, Executive shall not, directly or indirectly,
solicit or encourage any current employee, officer or director of any of the
Related Entities to leave the employment of his employer, or hire any current or
former employee, officer or director of, any of the Related Entities.
(d) During the Restricted Period, Executive shall not, directly or indirectly,
solicit or encourage any person who is a customer or advertiser of any of the
Related Entities, or the affiliates or associates thereof, to discontinue such
person's business relationship with any of the Related Entities.
Section 7.02 Executive acknowledges and agrees that (i) Executive has had an
opportunity to seek advice of counsel in connection with this Agreement; (ii)
the Restrictive Covenants are reasonable in scope and in all other respects;
(iii) any violation of the Restrictive Covenants will result in irreparable
injury to the Related Entities; (iv) money damages would be an inadequate remedy
at law for the Related Entities in the event of a breach of any of the
Restrictive Covenants by Executive; and (v) specific performance in the form of
injunctive relief would be an adequate remedy for the Related Entities.
Employer and Executive hereby submit to the jurisdiction of the Courts of the
State of New York to enforce
6
<PAGE>
the Restrictive Covenants and agree that if Executive breaches or threatens to
breach a Restrictive Covenant, Employer (or any of the other Related Entities)
shall be entitled, in addition to all other remedies, to an injunction
restraining any such breach, without any bond or other security being required
and without the necessity of showing actual damages.
ARTICLE VIII
-------------
ARBITRATION
Section 8.01 Except as otherwise set forth in Section 7.02 above, Employer and
Executive each waives any right each may have to a civil lawsuit and trial by
jury in connection with any dispute between them arising out of, concerning or
connected with this Agreement and each agrees that, upon the written request of
the other party, any such dispute shall be submitted to arbitration.
Arbitration shall take place in the City of New York, or such other place as the
parties may agree, and shall be governed by the rules of the American
Arbitration Association.
Section 8.02 Employer and Executive shall select one (1) arbitrator to
hear and determine the dispute from a list of five (5) candidates provided by
the American Arbitration Association.
Section 8.03 The arbitrator's award shall be final and binding on the
parties and the arbitrator may invoke any remedy available in equity or at law,
including, without limitation, injunctions and restraining orders. The parties
agree to the jurisdiction of the Courts of the State of New York for
confirmation and enforcement of the arbitrator's award.
ARTICLE IX
-----------
GENERAL PROVISIONS
Section 9.01 In the event of arbitration or an action at law or in equity
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees and costs. The arbitrator's fees and
costs incurred shall be borne by the losing party.
Section 9.02 This Agreement supersedes any and all other agreements,
whether oral or in writing, between the parties hereto with respect to the
subject matter hereof. Each party acknowledges that no representations,
inducements, promises or agreements, whether oral or in writing, have been made
by any party, or on behalf of any party, which are not embodied herein. No
agreement, promise or statement not contained in this Agreement shall be valid
and binding, unless agreed to in writing and signed by the parties sought to be
bound thereby.
Section 9.03 Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, faxed, or sent
by courier service (with next day delivery requested) or the U.S. Postal Service
by express mail (with next day delivery requested). Any such notice or
communication shall be deemed given and effective, in the case of personal
delivery, upon receipt by the other party, in the case of faxed, upon
transmission of the fax, in the case of a courier service or the U.S. Postal
Service, upon the next business day, after dispatch of the notice or
communication. Any such notice or communication shall be addressed as follows:
7
<PAGE>
If to Employer:
T/SF Communications Corporation
888 Seventh Avenue
New York, New York 10106
Attn: President
With a copy to:
VS&A Communications Partners II, L.P.
350 Park Avenue
New York, New York 10022
Attn: President
If to Executive:
Brian A. Meyer
800 West End Avenue
Apartment 4A
New York, New York 10025
Any person named above may designate another address or fax number by giving
notice in accordance with this Section to the other persons named above.
Section 9.04 This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to principles
of conflicts of law.
Section 9.05 No breach of any provision hereof may be waived unless in
writing. Waiver of any breach of any provision hereof shall not be deemed a
waiver of any other breach of the same or any other provision hereof. This
Agreement may be amended only by a written agreement, executed by the parties
hereto.
Section 9.06 In the event any one or more of the provisions contained in
this Agreement shall be held by an arbitrator or court of competent jurisdiction
to be invalid or unenforceable in any respect, the validity and enforceability
of the remaining provisions contained herein shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute for such invalid
and unenforceable provision in light of the tenor of this Agreement, and, upon
so agreeing, shall incorporate such substitute provision in this Agreement.
Section 9.07 This Agreement may be executed in any number of counterparts
and each such duplicate counterpart shall constitute an original, any one of
which may be introduced in evidence or used for any other purpose without the
production of its duplicate counterpart. Moreover, notwithstanding that any of
the parties did not execute the same counterpart, each counterpart shall be
deemed for all purposes to be an original, and all such counterparts shall
constitute one and the same instrument, binding on all the parties hereto.
Section 9.08 Both parties hereto acknowledge that they have had the advice of
counsel before entering into this Agreement, have fully read the Agreement and
understand the meaning and import
8
<PAGE>
of all the terms hereof.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the day and year first above written.
T/SF COMMUNICATIONS CORPORATION
By:_______________________________
__________________________________
Brian A. Meyer
10
<PAGE>
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT, dated as of January 1, 1998, by and between
Galaxy Registration, LLC, a Delaware limited liability company ("Employer"), and
Michael Goodwin ("Executive"):
Background
----------
Employer wishes to retain Executive and Executive wishes to be
employed by Employer on the terms and conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
---------
TERM OF AGREEMENT AND EMPLOYMENT
Section 1.01 Commencing on the date of this Agreement and for a
period ending on December 31, 2000, subject to earlier termination as provided
in Article VI hereof, Employer hereby employs Executive and Executive hereby
accepts employment with Employer as the President and Chief Executive Officer of
Employer. In addition, Executive shall serve as an executive officer of Atwood,
LLC, Delaware limited liability company ("Atwood"), which executive officer
position is currently President and Chief Executive Officer. Subject to the
direction and ultimate authority of the Chairman of the Board and the Board of
Directors of Employer and Atwood, Executive shall be responsible for the overall
performance of Employer and Atwood (the "Businesses") and, in particular,
Executive shall be responsible for growing the Businesses' EBITDA on a
consistent and aggressive basis. In the future, it is anticipated that
Executive shall be directed to focus increasingly upon transforming Employer
into an "information-based" company and growing Employer's European operations.
The Executive's responsibilities shall be determined from time to time in the
sole discretion of the Chairman of the Board of Galaxy; provided, however, that
Executive shall not be required to relocate without his consent. Employer, T/SF
Communications Corporation ("T/SF") and Employer's and T/SF's subsidiaries are
collectively referred to below as the "Related Entities."
Section 1.02 The term of this Agreement shall continue from year to
year after December 31, 2000, unless terminated by written notice, given by
either party to the other, on or before the date which is one year prior to the
expiration date of the term hereof or prior to the expiration of any extended
term.
ARTICLE II
----------
DUTIES AND OBLIGATIONS OF EXECUTIVE
Section 2.01 At all times during the performance of this Agreement,
Executive shall adhere to each Related Entity's policies, rules and regulations
governing the conduct of its employees, now in effect, or as subsequently
adopted or amended.
<PAGE>
Section 2.02 Executive shall devote substantially all of his business
time, ability and attention to the operations of the Businesses during the term
of this Agreement and shall not, whether directly or indirectly, render any
services to any other person or organization, whether for compensation or
otherwise, except with Employer's prior written consent.
ARTICLE III
-----------
COMPENSATION
Section 3.01 As full compensation for his services hereunder,
Employer shall pay Executive an annual salary of One Hundred Sixty-Five Thousand
($165,000), payable in equal semi-monthly installments (the "Base Salary"). On
each December 31, the Base Salary shall be increased by an amount equal to the
percentage increase during the previous calendar year in the Consumer Price
Index, All Items, in the Fredrick, Maryland metropolitan area.
Section 3.02 In addition to the Base Salary, Executive shall be
eligible to participate in T/SF's Key Employee Bonus Plan (the "Bonus Plan").
The Chief Executive Officer of T/SF has the authority in its sole and absolute
discretion to select the participants in the Bonus Plan and to determine the
bonus formula for each participant. If Executive is selected to participant in
the Bonus Plan for any year after 1998, Executive shall be notified in writing
prior to the beginning of such year. Contemporaneously with the execution of
this Agreement, Employer shall deliver a letter stating that Executive has been
selected to participate in the Bonus Plan with respect to 1998.
Section 3.03 Contemporaneously with the execution of this Agreement,
Employer and Executive are executing an agreement in the form attached as
Exhibit A pursuant to which Executive is being granted 2,000 Equity Appreciation
- ---------
Units under the T/SF Communications Corporation Key Executive Equity
Appreciation Plan.
ARTICLE IV
----------
BENEFITS
Section 4.01 Executive shall be entitled to participate in all
benefit plans generally available to employees of Employer and, subject to
Section 6, to receive vacation, sick leave and leaves of absence in accordance
with general employee policies.
ARTICLE V
---------
BUSINESS EXPENSES
Section 5.01 Employer shall reimburse Executive, in accordance with
Employer's policies, for all reasonable out-of-pocket business expenses incurred
by Executive in the performance of his duties hereunder. Executive shall
furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and state
tax statutes and regulations issued thereunder for the substantiation of such
expense as a tax deduction.
2
<PAGE>
ARTICLE VI
----------
TERMINATION OF EMPLOYMENT
Section 6.01 Termination with Cause. Employer may terminate
----------------------
Executive's employment at any time for Cause by giving written notice of such
termination to Executive. For purposes of this Agreement, cause shall mean:
(a) The conviction of Executive of a felony;
(b) Fraud, embezzlement or other misappropriation by Executive of
funds or property of Employer or any of its affiliates;
(c) A breach of any of Executive's fiduciary duties as an employee of
Employer;
(d) Any gross misconduct of Executive which is injurious in any
material respect to Employer or any of its affiliates; or
(e) Executive's failure to perform in any material respect his
obligations under this Agreement.
If Employer terminates Executive's employment for Cause under this
Section 6.01, Executive shall cease receiving his Base Salary as of the date of
such termination, shall not be entitled to any severance pay, and shall cease as
of the date of such termination to participate in the benefit plans generally
available to employees of Employer in which Executive is then participating.
Employer will assure that Executive receives all benefits required by law, e.g.,
----
COBRA, but Executive will receive no other benefit hereunder.
Section 6.02 Termination Resulting from Death or Disability. If, as
----------------------------------------------
the result of any physical or mental disability, Executive shall fail or be
unable to perform in a satisfactory manner a material portion of his duties and
obligations hereunder for a period of 180 consecutive days or for a total of 180
days in any twelve (12) month period, Employer may, upon thirty (30) days prior
written notice to Executive, terminate Executive's employment hereunder. Any
dispute as to a disability shall be resolved by a medical doctor selected
jointly by Employer and Executive, or, failing agreement, by the President of
the American Medical Association.
The death of Executive shall terminate this Agreement and his
employment hereunder, effective at the time of death.
In the event of termination resulting from disability or death,
Executive or his estate, as the case may be, shall receive Executive's Base
Salary through the date of termination and a pro-rated portion (based on the
number of days in the year in which Executive was employed) of the Bonus, if
any, calculated for the portion of such calendar year through the last day of
the month preceding the month in which Executive's employment terminated.
Executive's participation in the benefits plans generally available to employees
of Employer shall cease as of the date of such termination, with the exception
of a disability insurance plan, if any.
Section 6.03 Termination upon a Change of Control. This Agreement and
------------------------------------
Executive's employment hereunder shall be terminated automatically effective
upon a Change of Control. In the event of termination resulting from a Change
of Control, Executive shall receive Executive's Base Salary through the date of
termination and a pro-rated portion (based on the number of days in the year in
which Executive was employed) of the Bonus, if any, calculated for the portion
of such calendar year through the last day of the month preceding the month in
which Executive's employment terminated. Executive's participation in the
benefits plans generally available to
3
<PAGE>
employees of Employer shall cease as of the date of such termination. "Change-
in-Control" means a sale of a common equity interest of 50% or more in T/SF to
persons who are not affiliates of VS&A Communications Partners II, L.P.
("VS&A"), or a merger of T/SF with, or a sale of all or substantially all of the
assets of the T/SF and its subsidiaries to, any other entity in which VS&A does
not in the aggregate own at least 50% of the equity interests; provided,
--------
however, that a Change-in-Control shall not be deemed to have occurred if,
- -------
following a sale of common equity interests of T/SF pursuant to a public
offering, VS&A and its affiliates continue to have a controlling interest in
T/SF, even though such interest may constitute less than 50% of the equity
interests of T/SF.
Section 6.04 Termination for Other Reasons. Employer may terminate
-----------------------------
this Agreement and Executive's employment for any reason at any time by giving
written notice of such termination to Executive. If Executive's employment is
terminated by Employer pursuant to this provision (i.e., other than for Cause,
----
death or disability), Executive shall cease receiving his Base Salary and to
participate in Employer's benefit plans as of the date of such termination. If,
however, Employer shall promptly receive from Executive a release of Employer
and its affiliates, in form and substance satisfactory to Employer, from any and
all claims which Executive may have in respect of such termination or under this
Agreement, (a) Employer shall pay Executive severance pay in an amount equal to
Executive's Base Salary (calculated at the rate of Executive's annual salary at
the time of such termination) through the earlier of (i) the then current term
of this Agreement and (ii) one (1) year after the date of such termination (the
"Severance Period") and a pro-rated portion (based on the number of days in the
year in which Executive was employed) of the Bonus, if any, calculated for the
portion of such calendar year through the last day of the month preceding the
month in which Executive's employment terminated, and (b) Employer shall
maintain in full force and effect Executive's continued participation in the
benefit plans generally available to employees of Employer in which Executive
was participating immediately prior to such termination until the earlier of (i)
one (1) year after the date of such termination and (ii) Executive's
commencement of full-time employment with a new employer. At the end of the
period of participation in such benefit plans, Employer will assure that
Executive receives all additional benefits required by law, e.g., COBRA. The
----
payment of the severance pay referred to in clause (a) above shall be made as
follows: (i) the amount calculated based upon Executive's Base Salary shall be
payable during the Severance Period in accordance with the same schedule of
payments provided for Executive's Base Salary pursuant to Section 3.01 and (ii)
the amount calculated based upon the pro-rated bonus shall be payable in
accordance with the Key Employee Bonus Plan.
Section 6.05 Mitigation. Executive agrees to use his best efforts to
----------
mitigate any severance pay hereunder by seeking other suitable employment or
consultancy arrangements. If during the Severance Period the Executive accepts
other employment or consultancy, the portion of the severance pay awarded to the
Executive hereunder that is based upon Executive's Base Salary shall be reduced
by the amount of any compensation payable as a result of such other employment
or consultancy.
4
<PAGE>
ARTICLE VII
-----------
NON-COMPETITION, CONFIDENTIALITY
AND NON-SOLICITATION COVENANTS
Section 7.01 Executive acknowledges that Executive's employment
hereunder will provide Executive with access on a continual basis to
confidential and proprietary information concerning each of the Businesses,
which is not readily available to the public; and that Employer would not enter
into this Agreement but for the covenants (the "Restrictive Covenants")
contained in this Article VII. Accordingly, Executive agrees that:
(a) During the term of employment hereunder and, for a period of one
(1) year thereafter (the "Restricted Period"), Executive shall not, directly or
indirectly, (i) engage in any of the Businesses for his own account; or (ii)
render any services which constitute engaging in any of the Businesses in any
capacity to any person (other than with the consent or at the direction of
Employer); nor shall Executive own an equity interest in any person which is
engaged in any of the Businesses, provided, however, that Executive may own,
directly or indirectly, solely as a passive investment, securities of any person
which are traded on any national securities exchange or NASDAQ, if Executive is
not a controlling person of, or a member of a group which controls, such person,
and does not, directly or indirectly, own five percent (5%) or more of any class
of securities of such person.
(b) Executive shall forever maintain in strictest confidence all
information relating to each of the Businesses and to each of the Related
Entities, which is known or becomes known to Executive, including, without
limitation, trade secrets, know-how, financial statements and data, contracts
(whether oral or written), customer and advertiser lists, rate schedules,
pricing policies, marketing plans and strategies, and business acquisition plans
(collectively, the "Confidential Information"), and shall not, except in
connection with the business affairs of Employer and its affiliates, disclose
any Confidential Information to any person, other than with the express written
consent of Employer. Confidential Information shall not include information
which Executive can demonstrate (A) has become generally available to the public
other than as a result of a disclosure by Executive, (B) was available to
Executive on a non-confidential basis prior to its disclosure to Executive by
Employer, or (C) has become available to Executive on a non-confidential basis
from a source other than Employer, provided that such source is not known by
Executive after reasonable inquiry to be bound by a confidentiality agreement
with Employer or otherwise prohibited from transmitting the information to
Executive by a legally binding obligation.
Notwithstanding anything in this Agreement to the contrary, in the
event that a request or demand is made upon Executive, by written interrogatory,
request for information or documents, subpoena, court order, civil investigative
demand or other legal process, to disclose any Confidential Information, which
disclosure is not otherwise permitted hereunder, Executive will provide Employee
with prompt notice of any such request or demand so that Employer may seek an
appropriate protective order or waive compliance with the provisions of this
Agreement. Executive will not oppose action by, and will cooperate with,
Employer in any effort to obtain an appropriate protective order.
All memoranda, notes, lists, records and other documents (and all
copies thereof) constituting Confidential Information heretofore or hereafter
made or compiled by Executive or made available to Executive concerning any of
the Businesses shall be the property of the respective Related Entities, shall
be kept confidential in accordance with the provisions of this Section 7.01(b),
and shall be delivered to the respective Related Entities promptly upon
termination of this Agreement or at any earlier or later time upon the request
of Employer.
(c) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any current employee, officer or director of
any of the Related Entities to leave the employment of his employer, or hire any
current or former employee, officer or director of, any of the Related Entities.
(d) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any person who is a customer or advertiser of
any of the Related Entities, or the affiliates or associates thereof, to
discontinue
5
<PAGE>
such person's business relationship with any of the Related Entities.
Section 7.02 Executive acknowledges and agrees that (i) Executive has
had an opportunity to seek advice of counsel in connection with this Agreement;
(ii) the Restrictive Covenants are reasonable in scope and in all other
respects; (iii) any violation of the Restrictive Covenants will result in
irreparable injury to the Related Entities; (iv) money damages would be an
inadequate remedy at law for the Related Entities in the event of a breach of
any of the Restrictive Covenants by Executive; and (v) specific performance in
the form of injunctive relief would be an adequate remedy for the Related
Entities.
Employer and Executive hereby submit to the jurisdiction of the Courts
of the State of New York to enforce the Restrictive Covenants and agree that if
Executive breaches or threatens to breach a Restrictive Covenant, Employer (or
any of the other Related Entities) shall be entitled, in addition to all other
remedies, to an injunction restraining any such breach, without any bond or
other security being required and without the necessity of showing actual
damages.
ARTICLE VIII
------------
ARBITRATION
Section 8.01 Except as otherwise set forth in Section 7.02 above,
Employer and Executive each waives any right each may have to a civil lawsuit
and trial by jury in connection with any dispute between them arising out of,
concerning or connected with this Agreement and each agrees that, upon the
written request of the other party, any such dispute shall be submitted to
arbitration. Arbitration shall take place in the City of New York, or such other
place as the parties may agree, and shall be governed by the rules of the
American Arbitration Association.
Section 8.02 Employer and Executive shall select one (1) arbitrator
to hear and determine the dispute from a list of five (5) candidates provided by
the American Arbitration Association.
Section 8.03 The arbitrator's award shall be final and binding on the
parties and the arbitrator may invoke any remedy available in equity or at law,
including, without limitation, injunctions and restraining orders. The parties
agree to the jurisdiction of the Courts of the State of New York for
confirmation and enforcement of the arbitrator's award.
ARTICLE IX
----------
GENERAL PROVISIONS
Section 9.01 In the event of arbitration or an action at law or in
equity to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees and costs. The arbitrator's fees
and costs incurred shall be borne by the losing party.
Section 9.02 This Agreement supersedes any and all other agreements,
whether oral or in writing, between the parties hereto with respect to the
subject matter hereof. Each party acknowledges that no representations,
inducements, promises or agreements, whether oral or in writing, have been made
by any party, or on behalf of any party, which are not embodied herein. No
agreement, promise or statement not contained in this Agreement shall be valid
and binding,
6
<PAGE>
unless agreed to in writing and signed by the parties sought to be bound
thereby.
Section 9.03 Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, faxed, or sent
by courier service (with next day delivery requested) or the U.S. Postal Service
by express mail (with next day delivery requested). Any such notice or
communication shall be deemed given and effective, in the case of personal
delivery, upon receipt by the other party, in the case of faxed, upon
transmission of the fax, in the case of a courier service or the U.S. Postal
Service, upon the next business day, after dispatch of the notice or
communication. Any such notice or communication shall be addressed as follows:
If to Employer:
T/SF Communications Corporation
888 Seventh Avenue
New York, New York 10106
Attn: President
If to Executive:
Michael Goodwin
7071 St. George Place
Ijamsville, MD
Any person named above may designate another address or fax number by giving
notice in accordance with this Section to the other persons named above.
Section 9.04 This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to principles
of conflicts of law.
Section 9.05 No breach of any provision hereof may be waived unless
in writing. Waiver of any breach of any provision hereof shall not be deemed a
waiver of any other breach of the same or any other provision hereof. This
Agreement may be amended only by a written agreement, executed by the parties
hereto.
Section 9.06 In the event any one or more of the provisions contained
in this Agreement shall be held by an arbitrator or court of competent
jurisdiction to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby and the parties will attempt to agree upon a
valid and enforceable provision which shall be a reasonable substitute for such
invalid and unenforceable provision in light of the tenor of this Agreement,
and, upon so agreeing, shall incorporate such substitute provision in this
Agreement.
Section 9.07 This Agreement may be executed in any number of
counterparts and each such duplicate counterpart shall constitute an original,
any one of which may be introduced in evidence or used for any other purpose
without the production of its duplicate counterpart. Moreover, notwithstanding
that any of the parties did not execute the same counterpart, each
7
<PAGE>
counterpart shall be deemed for all purposes to be an original, and all such
counterparts shall constitute one and the same instrument, binding on all the
parties hereto.
Section 9.08 Both parties hereto acknowledge that they have had the advice of
counsel before entering into this Agreement, have fully read the Agreement and
understand the meaning and import of all the terms hereof.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the day and year first above written.
GALAXY REGISTRATION, LLC
By:_______________________________
__________________________________
Michael Goodwin
9
<PAGE>
EXHIBIT 10.14
T/SF COMMUNICATIONS CORPORATION
CHIEF EXECUTIVE OFFICER EQUITY APPRECIATION PLAN
Purpose. The purpose of this Chief Executive Officer Equity Appreciation Plan
- -------
is to motivate and retain the Chief Executive Officer of T/SF to attain the
T/SF Group's primary long-term performance goals.
Definitions. As used in the Plan, the following terms shall have the indicated
- -----------
meanings:
"Administrator" means T/SF's board of directors or any committee or
individual appointed by the board of directors as Administrator of the
Plan.
"Base Amount" means $59.6 million.
"Cause" means (a) conviction of a felony; (b) fraud, embezzlement or other
misappropriation by Participant of funds or property of a member of the
T/SF Group; (c) a breach of any of the Participant's fiduciary duties as an
employee of a member of the T/SF Group; (d) any gross misconduct of the
Participant which is injurious in any material respect to a member of the
T/SF Group; or (e) Participant's failure to perform in any material respect
the obligations under his Employment Agreement with T/SF.
"Change-in-Control" means a sale of a common equity interest of 50% or more
in T/SF to persons who are not affiliates of VS&A Communications Partners
II, L.P. ("VS&A"), or a merger of T/SF with, or a sale of all or
substantially all of the assets of the T/SF Group to, any other entity in
which VS&A does not in the aggregate own at least 50% of the equity
interests; provided, however, that a Change-in-Control shall not be deemed
-------- -------
to have occurred if, following a sale of common equity interests of T/SF
pursuant to a public offering, VS&A and its affiliates continue to have a
controlling interest in T/SF, even though such interest may constitute less
than 50% of the equity interests of T/SF.
"Closing Value" means:
(i) in the event the Participant's employment is terminated
on account of death, disability or termination by a member of
the T/SF Group without Cause (each, a "Qualified Termination
Event"), an amount equal to the Fair Market Value as of the date
of such Qualified Termination Event; or
(ii) in the event of a Change in Control prior to a
Qualified Termination Event, an amount equal to the Fair Market
Value as of the effective date of the Change in Control.
"Equity Appreciation Unit" means a hypothetical unit of interest in the
T/SF Group granted
<PAGE>
to the Participant.
"Fair Market Value" means, on any day, the fair market value of the equity
of the T/SF Group as determined by the Administrator in its sole
discretion.
"Fiscal Year" means the period beginning on January 1 and ending on
December 31.
"Participant" means Ian L.M. Thomas.
"Person" means any individual, partnership, firm, trust, corporation,
limited liability company or other similar entity.
"Plan" means this Chief Executive Officer Equity Appreciation Plan.
"T/SF" means T/SF Communications Corporation, a Delaware corporation,
or any successor thereto.
"T/SF Group" means T/SF and any entity in which T/SF and its shareholders
own all of the preferred and common equity interests.
Administration. The Plan shall be administered by the Administrator. Subject
- --------------
to the provisions of the Plan, the Administrator shall have the authority to
establish from time to time regulations for the administration of the Plan,
interpret the Plan, delegate in writing administrative matters to employees or
other persons, and make such other determinations and take such other action
as it deems necessary or advisable for the administration of the Plan. All
decisions, actions and interpretations of the Administrator shall be final,
conclusive and binding upon all parties.
Participation. The Participant in the Plan shall be limited to the Chief
- -------------
Executive Officer of T/SF.
Vesting of Equity Appreciation Units. Except as otherwise provided in the
------------------------------------
Plan:
(a) Vesting. 20% of the Equity Appreciation Units granted to the
- --- -------
Participant shall vest on the last day of each Fiscal Year after the
date of the award provided that the Participant is an employee of a
member of the T/SF Group on that date.
(b) Vesting Upon a Change of Control. Notwithstanding the foregoing, all
- --- --------------------------------
of the Equity Appreciation Units of the Participant shall vest upon
the effective date of Change of Control provided that the Participant
is an employee of a member of the T/SF Group on that date.
(c) Vesting Upon Termination in Connection with an IPO. In the event that
- --- --------------------------------------------------
the Participant's employment is terminated by a member of the T/SF
Group in anticipation of or upon an initial public offering of a
member of the T/SF Group, all of the Equity Appreciation Units of the
Participant shall vest upon the date of such termination.
2
<PAGE>
Entitlement to Payments Under the Plan.
--------------------------------------
(a) Qualified Termination Event. If the Participant's employment is
- --- ---------------------------
terminated on account of a Qualified Termination Event, the
Participant shall be entitled to receive from the shareholders of
T/SF, in full payment of all amounts payable to the Participant under
the Plan, an amount equal to (i) the excess of the Closing Value over
the Base Amount multiplied by (ii) the quotient obtained by dividing
the number of vested Equity Appreciation Units held by the Participant
as of the effective date of termination by one million. Payment of the
amount to which the Participant is entitled shall be deferred until,
and shall be paid (without interest) within thirty business days
after, the occurrence of a Change in Control, unless the
Administrator, in its sole discretion, elects to pay the Participant
earlier. In the event of the death of the Participant after
termination of his employment and prior to payment, the payment shall
be made to such beneficiary as the Participant may have designated in
writing during his or her lifetime or, if none, to his or her estate.
(b) Change in Control. If there is a Change in Control, the Participant
- --- -----------------
shall be entitled to receive from the shareholders of T/SF, in full
payment of all amounts payable to the Participant under the Plan, an
amount, payable in cash within thirty days after the effective date of
the Change in Control, equal to (i) the excess of the Closing Value
over the Base Amount multiplied by (ii) the quotient obtained by
dividing the number of vested Equity Appreciation Units held by the
Participant as of the effective date of the Change in Control by one
million. T/SF shall give the Participant written notice of the Change
in Control as promptly as practicable thereafter.
(c) Termination of Employment for Cause or Voluntary Termination. If the
- --- ------------------------------------------------------------
Participant's employment is terminated for Cause or the Participant
voluntary terminates his employment, all Equity Appreciation Units
granted to that Participant under the Plan, whether or not vested,
shall be forfeited and the Participant shall not be entitled to any
payment with respect to those Units.
Other Terms and Conditions of Equity Appreciation Units.
-------------------------------------------------------
(a) Agreements. Each Equity Appreciation Unit granted under the Plan
- --- ----------
shall be evidenced by a written agreement, in form approved and
executed by the Administrator, which shall be subject to the terms and
conditions of the Plan and to such other terms and conditions
(including covenants by the employee not-to-compete or hire employees
of any member of the T/SF Group) as the Administrator may consider
appropriate.
(b) Adjustments in Event of Change in Units. In the event of any issuance
- --- ---------------------------------------
of new equity, capital raising, recapitalization, reorganization,
merger, consolidation, split-up, or of any similar change affecting
the equity interest in any member of the T/SF Group, the number and
terms of the Equity Appreciation Units (whether or not then
3
<PAGE>
outstanding) and the Base Amount shall be appropriately adjusted
consistent with those changes and in such manner as the Administrator
may determine equitable to prevent dilution or enlargement of the
rights of Participants in the Plan.
(c) Participants Not to Have Rights as Partners. No Participant shall be,
- --- -------------------------------------------
or have any rights as, a shareholder or member of any member of the
T/SF Group by virtue of having been granted Equity Appreciation Units.
(d) Plan and Equity Appreciation Units Not to Confer Certain Rights.
- --- ---------------------------------------------------------------
Neither the Plan nor any action taken under the Plan shall be
construed as giving any employee the right to be retained in the
employ of a member of the T/SF Group or shall interfere in any way
with the Administrator's right to terminate any Participant's
employment at any time with or without Cause, whether or not there are
then pending negotiations with respect to any transaction that would
give rise to a payment to the employee under the Plan. In addition,
nothing in the Plan or any agreement evidencing the grant of Equity
Appreciation Rights shall limit the Administrator's right to determine
in its sole discretion the terms of any such transaction or limit the
Administrator's right to manage the business and affairs of T/SF and
the other members of the T/SF Group or give any Participant any claim
against the T/SF or any such other entity with respect to any good
faith decision relating to the business or affairs of T/SF or any
other member of the T/SF Group (whether or not that decision affects
any payment to which the employee would be entitled under the
agreement).
No Claim or Right Under the Plan. No employee shall at any time have the right
- --------------------------------
to be selected as the Participant in the Plan or, having been selected as the
Participant and granted an Equity Appreciation Unit, to be granted any
additional Equity Appreciation Unit.
Disposition of Equity Appreciation Units. Neither all nor any portion of the
- ----------------------------------------
Equity Appreciation Units granted under the Plan nor any economic interest
therein may be sold, conveyed, transferred, assigned, mortgaged, pledged,
hypothecated or in any way otherwise encumbered or disposed of (each, a
"Disposition") to any Person. Any attempted Disposition shall be null and
void and have no effect.
Taxes. T/SF may make such provisions and take such steps as the Administrator
- -----
may determine necessary or appropriate for the withholding of all federal,
state, local and other taxes required by law to be withheld with respect to
Equity Appreciation Units under the Plan, including, but not limited to,
deduction of the amount of withholding taxes from the amount otherwise payable
to the Participant under the Plan. It is acknowledged that the Participant is
a foreign national for tax purposes.
No Liability. No officer, director or shareholder of the Administrator shall be
- ------------
personally liable to any employee of T/SF or any other member of the T/SF
Group by reason of any action taken on behalf of the Administrator in
connection with the Plan or for any mistake of judgment made in good faith
with respect to the Plan.
4
<PAGE>
General Creditor Status. All payments from the Plan shall be made by the
- -----------------------
shareholders of T/SF (who are also members of the other members of the T/SF
Group) from the amounts received by them on a Change of Control (net of any
withholding taxes referred to in Paragraph 10) and no special or separate fund
shall be established to assure payment with respect to any Equity Appreciation
Units.
Amendment or Termination. The Administrator may, with prospective or
- ------------------------
retroactive effect, amend, suspend or terminate the Plan or any portion of the
Plan at any time, except that no such amendment, suspension or termination
shall deprive any Participant of any right with respect to any Equity
Appreciation Unit granted under the Plan unless the Participant shall consent
in writing to the amendment, suspension or termination.
Captions. The captions preceding the sections of the Plan have been included
- --------
solely as a matter of convenience and shall not in any manner define or limit
the scope or intent of any provision of the Plan.
Governing Law. The Plan and all rights under the Plan shall be governed by and
- -------------
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely within New York.
Effective Date. The Plan shall become effective as of January 1, 1998.
- --------------
5
<PAGE>
EXHIBIT 10.15
T/SF COMMUNICATIONS CORPORATION
SUPPLEMENTAL CHIEF EXECUTIVE OFFICER EQUITY APPRECIATION PLAN
Purpose. The purpose of this Supplemental Chief Executive Officer Equity
- -------
Appreciation Plan is to motivate and retain the Chief Executive Officer of
T/SF to attain the T/SF Group's primary long-term performance goals.
Definitions. As used in the Plan, the following terms shall have the indicated
- -----------
meanings:
"Administrator" means T/SF's board of directors or any committee or
individual appointed by the board of directors as Administrator of the
Plan.
"Base Amount" means $59.6 million.
"Cause" means (a) conviction of a felony; (b) fraud, embezzlement or other
misappropriation by Participant of funds or property of a member of the
T/SF Group; (c) a breach of any of the Participant's fiduciary duties as an
employee of a member of the T/SF Group; (d) any gross misconduct of the
Participant which is injurious in any material respect to any member of the
T/SF Group; or (e) Participant's failure to perform in any material respect
the obligations under his Employment Agreement with T/SF.
"Change-in-Control" means a sale of a common equity interest of 50% or more
in T/SF to persons who are not affiliates of VS&A Communications Partners
II, L.P. ("VS&A"), or a merger of T/SF with, or a sale of all or
substantially all of the assets of the T/SF Group to, any other entity in
which VS&A does not in the aggregate own at least 50% of the equity
interests; provided, however, that a Change-in-Control shall not be deemed
-------- -------
to have occurred if, following a sale of common equity interests of T/SF
pursuant to a public offering, VS&A and its affiliates continue to have a
controlling interest in T/SF, even though such interest may constitute less
than 50% of the equity interests of T/SF.
"Closing Value" means an amount equal to the Fair Market Value as of the
effective date of the Change in Control.
"Equity Appreciation Unit" means a hypothetical unit of interest in the
T/SF Group granted to the Participant.
"Fair Market Value" means, on any day, the fair market value of the equity
of the T/SF Group as determined by the Administrator in its sole
discretion.
"Fiscal Year" means the period beginning on January 1 and ending on
December 31.
"Participant" means Ian L.M. Thomas.
<PAGE>
"Person" means any individual, partnership, firm, trust, corporation,
limited liability company or other similar entity.
"Plan" means this Supplemental Chief Executive Officer Equity Appreciation
Plan.
"T/SF" means T/SF Communications Corporation, a Delaware corporation,
or any successor thereto.
"T/SF Group" means T/SF and any entity in which T/SF and its shareholders
own all of the preferred and common equity interests.
Administration. The Plan shall be administered by the Administrator. Subject
- --------------
to the provisions of the Plan, the Administrator shall have the authority to
establish from time to time regulations for the administration of the Plan,
interpret the Plan, delegate in writing administrative matters to employees or
other persons, and make such other determinations and take such other action
as it deems necessary or advisable for the administration of the Plan. All
decisions, actions and interpretations of the Administrator shall be final,
conclusive and binding upon all parties.
Participation. The Participant in the Plan shall be limited to the Chief
- -------------
Executive Officer of T/SF.
Vesting of Equity Appreciation Units. Except as otherwise provided in the Plan,
- ------------------------------------
100% of the Equity Appreciation Units of the Participant shall vest upon the
effective date of Change of Control provided that the internal rate of return
received by the shareholders of T/SF in connection with such Change of Control
shall exceed 20% per annum; provided, however, that no Equity Appreciation
-------- -------
Units will vest if the internal rate of return in connection with such Change
of Control is equal to or less than 20%.
Entitlement to Payments Under the Plan.
--------------------------------------
(a) Change in Control. If there is a Change in Control, the Participant
--- -----------------
shall be entitled to receive from the shareholders of T/SF, in full
payment of all amounts payable to the Participant under the Plan, an
amount, payable in cash within thirty days after the effective date of
the Change in Control, equal to (i) the excess of the Closing Value
over the Base Amount multiplied by (ii) the quotient obtained by
dividing the number of vested Equity Appreciation Units held by the
Participant as of the effective date of the Change in Control by one
million. T/SF shall give the Participant written notice of the Change
in Control as promptly as practicable thereafter.
(b) Termination of Employment or Voluntary Termination. If the
--- --------------------------------------------------
Participant's employment is terminated (other than in connection with
a Change in Control) or the Participant voluntary terminates his
employment, all Equity Appreciation Units granted to that Participant
under the Plan, whether or not vested, shall be forfeited and the
Participant shall not be entitled to any payment with respect to those
Units.
2
<PAGE>
Other Terms and Conditions of Equity Appreciation Units.
-------------------------------------------------------
(a) Agreements. Each Equity Appreciation Unit granted under the Plan
--- ----------
shall be evidenced by a written agreement, in form approved and
executed by the Administrator, which shall be subject to the terms and
conditions of the Plan and to such other terms and conditions
(including covenants by the employee not-to-compete or hire employees
of any member of the T/SF Group) as the Administrator may consider
appropriate.
(b) Adjustments in Event of Change in Units. In the event of any issuance
--- ---------------------------------------
of new equity, capital raising, recapitalization, reorganization,
merger, consolidation, split-up, or of any similar change affecting
the equity interest in any member of the T/SF Group, the number and
terms of the Equity Appreciation Units (whether or not then
outstanding) and the Base Amount shall be appropriately adjusted
consistent with those changes and in such manner as the Administrator
may determine equitable to prevent dilution or enlargement of the
rights of Participants in the Plan.
(c) Participants Not to Have Rights as Partners. No Participant shall be,
--- -------------------------------------------
or have any rights as, a shareholder or member of any member of the
T/SF Group by virtue of having been granted Equity Appreciation Units.
(d) Plan and Equity Appreciation Units Not to Confer Certain Rights.
--- ---------------------------------------------------------------
Neither the Plan nor any action taken under the Plan shall be
construed as giving any employee the right to be retained in the
employ of a member of the T/SF Group or shall interfere in any way
with the Administrator's right to terminate any Participant's
employment at any time with or without Cause, whether or not there are
then pending negotiations with respect to any transaction that would
give rise to a payment to the employee under the Plan. In addition,
nothing in the Plan or any agreement evidencing the grant of Equity
Appreciation Rights shall limit the Administrator's right to determine
in its sole discretion the terms of any such transaction or limit the
Administrator's right to manage the business and affairs of T/SF and
the other members of the T/SF Group or give any Participant any claim
against the T/SF or any such other entity with respect to any good
faith decision relating to the business or affairs of T/SF or any
other member of the T/SF Group (whether or not that decision affects
any payment to which the employee would be entitled under the
agreement).
No Claim or Right Under the Plan. No employee shall at any time have the right
- --------------------------------
to be selected as the Participant in the Plan or, having been selected as the
Participant and granted an Equity Appreciation Unit, to be granted any
additional Equity Appreciation Unit.
Disposition of Equity Appreciation Units. Neither all nor any portion of the
- ----------------------------------------
Equity Appreciation Units granted under the Plan nor any economic interest
therein may be sold, conveyed, transferred, assigned, mortgaged, pledged,
hypothecated or in any way otherwise encumbered or disposed of (each, a
"Disposition") to any Person. Any attempted Disposition shall be null
3
<PAGE>
and void and have no effect.
Taxes. T/SF may make such provisions and take such steps as the Administrator
- -----
may determine necessary or appropriate for the withholding of all federal,
state, local and other taxes required by law to be withheld with respect to
Equity Appreciation Units under the Plan, including, but not limited to,
deduction of the amount of withholding taxes from the amount otherwise payable
to the Participant under the Plan. It is acknowledged that the Participant is
a foreign national for tax purposes.
No Liability. No officer, director or shareholder of the Administrator shall be
- ------------
personally liable to any employee of T/SF or any other member of the T/SF
Group by reason of any action taken on behalf of the Administrator in
connection with the Plan or for any mistake of judgment made in good faith
with respect to the Plan.
General Creditor Status. All payments from the Plan shall be made by the
- -----------------------
shareholders of T/SF (who are also members of the other members of the T/SF
Group) from the amounts received by them on a Change of Control (net of any
withholding taxes referred to in Paragraph 10) and no special or separate fund
shall be established to assure payment with respect to any Equity Appreciation
Units.
Amendment or Termination. The Administrator may, with prospective or
- ------------------------
retroactive effect, amend, suspend or terminate the Plan or any portion of the
Plan at any time, except that no such amendment, suspension or termination
shall deprive any Participant of any right with respect to any Equity
Appreciation Unit granted under the Plan unless the Participant shall consent
in writing to the amendment, suspension or termination.
Captions. The captions preceding the sections of the Plan have been included
- --------
solely as a matter of convenience and shall not in any manner define or limit
the scope or intent of any provision of the Plan.
Governing Law. The Plan and all rights under the Plan shall be governed by and
- -------------
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely within New York.
Effective Date. The Plan shall become effective as of January 1, 1998.
- --------------
4
<PAGE>
EXHIBIT 10.16
T/SF COMMUNICATIONS CORPORATION
CHIEF FINANCIAL OFFICER/GENERAL COUNSEL EQUITY APPRECIATION PLAN
Purpose. The purpose of this Chief Financial Officer/General Counsel Equity
- -------
Appreciation Plan is to motivate and retain the Chief Financial Officer and
the General Counsel of T/SF to attain the T/SF Group's primary long-term
performance goals.
Definitions. As used in the Plan, the following terms shall have the indicated
- -----------
meanings:
"Administrator" means T/SF's board of directors or any committee or
individual appointed by the board of directors as Administrator of the
Plan.
"Base Amount" means $59.6 million.
"Cause" means (a) conviction of a felony; (b) fraud, embezzlement or other
misappropriation by Participant of funds or property of a member of the
T/SF Group; (c) a breach of any of the Participant's fiduciary duties as an
employee of a member of the T/SF Group; (d) any gross misconduct of the
Participant which is injurious in any material respect to any member of the
T/SF Group; or (e) Participant's failure to perform in any material respect
the obligations under his Employment Agreement with T/SF
"Change-in-Control" means a sale of a common equity interest of 50% or more
in T/SF to persons who are not affiliates of VS&A Communications Partners
II, L.P. ("VS&A"), or a merger of T/SF with, or a sale of all or
substantially all of the assets of the T/SF Group to, any other entity in
which VS&A does not in the aggregate own at least 50% of the equity
interests; provided, however, that a Change-in-Control shall not be deemed
-------- -------
to have occurred if, following a sale of common equity interests of T/SF
pursuant to a public offering, VS&A and its affiliates continue to have a
controlling interest in T/SF, even though such interest may constitute less
than 50% of the equity interests of T/SF.
"Closing Value" means:
(i) in the event a Participant's employment is terminated on
account of death, disability or termination by a member of the
T/SF Group without Cause (each, a "Qualified Termination
Event"), an amount equal to the Fair Market Value as of the date
of such Qualified Termination Event; or
(ii) in the event of a Change in Control prior to a
Qualified Termination Event, an amount equal to the Fair Market
Value as of the effective date of the Change in Control.
"Equity Appreciation Unit" means a hypothetical unit of interest in the
T/SF Group granted
<PAGE>
to a Participant.
"Fair Market Value" means, on any day, the fair market value of the equity
of the T/SF Group as determined by the Administrator in its sole
discretion.
"Fiscal Year" means the period beginning on January 1 and ending on
December 31.
"Participant" means the Chief Financial Officer or the General Counsel of
T/SF.
"Person" means any individual, partnership, firm, trust, corporation,
limited liability company or other similar entity.
"Plan" means this Chief Financial Officer/General Counsel Equity
Appreciation Plan.
"T/SF" means T/SF Communications Corporation, a Delaware corporation,
or any successor thereto.
"T/SF Group" means T/SF and any entity in which T/SF and its shareholders
own all of the preferred and common equity interests.
Administration. The Plan shall be administered by the Administrator. Subject
- --------------
to the provisions of the Plan, the Administrator shall have the authority to
establish from time to time regulations for the administration of the Plan,
interpret the Plan, delegate in writing administrative matters to employees or
other persons, and make such other determinations and take such other action
as it deems necessary or advisable for the administration of the Plan. All
decisions, actions and interpretations of the Administrator shall be final,
conclusive and binding upon all parties.
Participation. The Participants in the Plan shall be limited to the Chief
- -------------
Financial Officer and the General Counsel of T/SF.
Vesting of Equity Appreciation Units. Except as otherwise provided in the
------------------------------------
Plan:
(a) Vesting. 20% of the Equity Appreciation Units granted to a
- --- -------
Participant shall vest on the last day of each Fiscal Year after the
date of the award (in the case of Equity Appreciation Units granted on
January 1, 1998, beginning with December 31, 1998) provided that a
Participant is an employee of a member of the T/SF Group on that date.
(b) Vesting Upon a Change of Control. Notwithstanding the foregoing, all
- --- --------------------------------
of the Equity Appreciation Units of a Participant shall vest upon the
effective date of Change of Control provided that a Participant is an
employee of a member of the T/SF Group on that date.
(c) Vesting Upon Termination in Connection with an IPO. In the event that
- --- --------------------------------------------------
a Participant's employment is terminated by a member of the T/SF Group
in
2
<PAGE>
anticipation of or upon an initial public offering of a member of the
T/SF Group, all of the Equity Appreciation Units of a Participant
shall vest upon the date of such termination.
Entitlement to Payments Under the Plan.
--------------------------------------
(a) Qualified Termination Event. If a Participant's employment is
- --- ---------------------------
terminated on account of a Qualified Termination Event, the
Participant shall be entitled to receive from the shareholders of
T/SF, in full payment of all amounts payable to the Participant under
the Plan, an amount equal to (i) the excess of the Closing Value over
the Base Amount multiplied by (ii) the quotient obtained by dividing
the number of vested Equity Appreciation Units held by the Participant
as of the effective date of termination by one million. Payment of the
amount to which the Participant is entitled shall be deferred until,
and shall be paid (without interest) within thirty business days
after, the occurrence of a Change in Control, unless the
Administrator, in its sole discretion, elects to pay the Participant
earlier. In the event of the death of a Participant after termination
of his employment and prior to payment, the payment shall be made to
such beneficiary as the Participant may have designated in writing
during his or her lifetime or, if none, to his or her estate.
(b) Change in Control. If there is a Change in Control, each Participant
- --- -----------------
shall be entitled to receive from the shareholders of T/SF, in full
payment of all amounts payable to the Participant under the Plan, an
amount, payable in cash within thirty days after the effective date of
the Change in Control, equal to (i) the excess of the Closing Value
over the Base Amount multiplied by (ii) the quotient obtained by
dividing the number of vested Equity Appreciation Units held by the
Participant as of the effective date of the Change in Control by one
million. T/SF shall give each Participant written notice of the
Change in Control as promptly as practicable thereafter.
(c) Termination of Employment for Cause or Voluntary Termination. If a
- --- ------------------------------------------------------------
Participant's employment is terminated for Cause or a Participant
voluntary terminates his employment, all Equity Appreciation Units
granted to that Participant under the Plan, whether or not vested,
shall be forfeited and the Participant shall not be entitled to any
payment with respect to those Units.
Other Terms and Conditions of Equity Appreciation Units.
-------------------------------------------------------
(a) Agreements. Each Equity Appreciation Unit granted under the Plan
- --- ----------
shall be evidenced by a written agreement, in form approved and
executed by the Administrator, which shall be subject to the terms and
conditions of the Plan and to such other terms and conditions
(including covenants by the employee not-to-compete or hire employees
of any member of the T/SF Group) as the Administrator may consider
appropriate.
3
<PAGE>
(b) Adjustments in Event of Change in Units. In the event of any issuance
- --- ---------------------------------------
of new equity, capital raising, recapitalization, reorganization,
merger, consolidation, split-up, or of any similar change affecting
the equity interest in any member of the T/SF Group, the number and
terms of the Equity Appreciation Units (whether or not then
outstanding) and the Base Amount shall be appropriately adjusted
consistent with those changes and in such manner as the Administrator
may determine equitable to prevent dilution or enlargement of the
rights of Participants in the Plan.
(c) Participants Not to Have Rights as Partners. No Participant shall be,
- --- -------------------------------------------
or have any rights as, a shareholder or member of any member of the
T/SF Group by virtue of having been granted Equity Appreciation Units.
(d) Plan and Equity Appreciation Units Not to Confer Certain Rights.
- --- ---------------------------------------------------------------
Neither the Plan nor any action taken under the Plan shall be
construed as giving any employee the right to be retained in the
employ of a member of the T/SF Group or shall interfere in any way
with the Administrator's right to terminate any Participant's
employment at any time with or without Cause, whether or not there are
then pending negotiations with respect to any transaction that would
give rise to a payment to the employee under the Plan. In addition,
nothing in the Plan or any agreement evidencing the grant of Equity
Appreciation Rights shall limit the Administrator's right to determine
in its sole discretion the terms of any such transaction or limit the
Administrator's right to manage the business and affairs of T/SF and
the other members of the T/SF Group or give any Participant any claim
against the T/SF or any such other entity with respect to any good
faith decision relating to the business or affairs of T/SF or any
other member of the T/SF Group (whether or not that decision affects
any payment to which the employee would be entitled under the
agreement).
No Claim or Right Under the Plan. No employee shall at any time have the right
- --------------------------------
to be selected as a Participant in the Plan or, having been selected as a
Participant and granted an Equity Appreciation Unit, to be granted any
additional Equity Appreciation Unit.
Disposition of Equity Appreciation Units. Neither all nor any portion of the
- ----------------------------------------
Equity Appreciation Units granted under the Plan nor any economic interest
therein may be sold, conveyed, transferred, assigned, mortgaged, pledged,
hypothecated or in any way otherwise encumbered or disposed of (each, a
"Disposition") to any Person. Any attempted Disposition shall be null and
void and have no effect.
Taxes. T/SF may make such provisions and take such steps as the Administrator
- -----
may determine necessary or appropriate for the withholding of all federal,
state, local and other taxes required by law to be withheld with respect to
Equity Appreciation Units under the Plan, including, but not limited to,
deduction of the amount of withholding taxes from the amount otherwise payable
to a Participant under the Plan.
No Liability. No officer, director or shareholder of the Administrator shall be
- ------------
personally liable to any employee of T/SF or any other member of the T/SF
Group by reason of any action taken on
4
<PAGE>
behalf of the Administrator in connection with the Plan or for any mistake of
judgment made in good faith with respect to the Plan.
General Creditor Status. All payments from the Plan shall be made by the
- -----------------------
shareholders of T/SF (who are also members of the other members of the T/SF
Group) from the amounts received by them on a Change of Control (net of any
withholding taxes referred to in Paragraph 10) and no special or separate fund
shall be established to assure payment with respect to any Equity Appreciation
Units.
Amendment or Termination. The Administrator may, with prospective or
- ------------------------
retroactive effect, amend, suspend or terminate the Plan or any portion of the
Plan at any time, except that no such amendment, suspension or termination
shall deprive any Participant of any right with respect to any Equity
Appreciation Unit granted under the Plan unless a Participant shall consent in
writing to the amendment, suspension or termination.
Captions. The captions preceding the sections of the Plan have been included
- --------
solely as a matter of convenience and shall not in any manner define or limit
the scope or intent of any provision of the Plan.
Governing Law. The Plan and all rights under the Plan shall be governed by and
- -------------
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely within New York.
Effective Date. The Plan shall become effective as of January 1, 1998.
- --------------
5
<PAGE>
EXHIBIT 10.17
T/SF COMMUNICATIONS CORPORATION
KEY EXECUTIVE EQUITY APPRECIATION PLAN
Purpose. The purpose of this Key Executive Equity Appreciation Plan is to
- -------
motivate and retain key employees who are responsible for the attainment of
the T/SF Group's primary long-term performance goals.
Definitions. As used in the Plan, the following terms shall have the indicated
- -----------
meanings:
"Administrator" means T/SF's board of directors or any committee or
individual appointed by the board of directors as Administrator of the
Plan.
"Annual EBITDA Budget" means the budgeted EBITDA prepared by management and
approved by the Administrator for each Fiscal Year, as it may be adjusted
by the Administrator to reflect special factors (including material changes
in accounting policies or practices, material acquisitions or dispositions
or other unusual or unplanned items) which, in the Administrator's sole
judgment, should or should not be taken into account, in whole or part, in
furtherance of the equitable administration of the Plan.
"Base Amount" means $59.6 million with respect to Equity Appreciation Units
awarded on January 1, 1998; with respect to Equity Appreciation Units
awarded after that date, "Base Amount" means an amount determined by the
Administrator at the time of the award.
"Cause" means (a) conviction of a felony; (b) fraud, embezzlement or other
misappropriation by Participant of funds or property of a member of the
T/SF Group; (c) a breach of any of the Participant's fiduciary duties as an
employee of a member of the T/SF Group; (d) any gross misconduct of the
Participant which is injurious in any material respect to any member of the
T/SF Group; or (e) Participant's failure or refusal in any material respect
to perform the duties of employment or to follow the lawful or proper
directives of the Administrator or the President and Chief Executive
Officer of T/SF (or of any superior officer of a member of the T/SF Group
having supervisory authority over the Participant).
"Change-in-Control" means a sale of a common equity interest of 50% or more
in T/SF to persons who are not affiliates of VS&A Communications Partners
II, L.P. ("VS&A"), or a merger of T/SF with, or a sale of all or
substantially all of the assets of the T/SF Group to, any other entity in
which VS&A does not in the aggregate own at least 50% of the equity
interests; provided, however, that a Change-in-Control shall not be deemed
-------- -------
to have occurred if, following a sale of common equity interests of T/SF
pursuant to a public offering, VS&A and its affiliates continue to have a
controlling interest in T/SF, even though such interest may constitute less
than 50% of the equity interests of T/SF.
"Closing Value" means:
<PAGE>
(i) in the event a Participant's employment is terminated on
account of death, disability or termination by a member of the
T/SF Group without Cause (each, a "Qualified Termination
Event"), an amount equal to the Fair Market Value as of the date
of such Qualified Termination Event; or
(ii) in the event of a Change in Control prior to a
Qualified Termination Event, an amount equal to the Fair Market
Value as of the effective date of the Change in Control.
"EBITDA" means the consolidated earnings of the members of the T/SF Group
before all interest, taxes, depreciation and amortization, excluding
deductions attributable to the Plan and extraordinary or unusual
nonrecurring items of income and expenses, as determined in accordance with
generally accepted accounting principles; provided that such earnings shall
be appropriately adjusted to reflect any acquisitions or dispositions or
other fundamental changes referred to in Section 8(b).
"Equity Appreciation Unit" means a hypothetical unit of interest in the
T/SF Group granted to a Participant.
"Fair Market Value" means, on any day, the fair market value of the equity
of the T/SF Group as determined by the Administrator in its sole
discretion.
"Fiscal Year" means the period beginning on January 1 and ending on
December 31.
"Participant" means any senior management employee of a member of the T/SF
Group who is selected to participate in the Plan in accordance with Section
4.
"Person" means any individual, partnership, firm, trust, corporation,
limited liability company or other similar entity.
"Plan" means this Key Executive Equity Appreciation Plan.
"T/SF" means T/SF Communications Corporation, a Delaware corporation,
or any successor thereto.
"T/SF Group" means T/SF and any entity in which T/SF and its shareholders
own all of the preferred and common equity interests.
Administration. The Plan shall be administered by the Administrator. Subject
- --------------
to the provisions of the Plan, the Administrator shall have the authority to
(a) select the Participants; (b) determine the number of Equity Appreciation
Units to be granted to each Participant; and (c) establish from time to time
regulations for the administration of the Plan, interpret the Plan, delegate
in writing administrative matters to employees or other persons, and make such
other determinations and take such other action as it deems necessary or
advisable for the administration of the Plan. All
2
<PAGE>
decisions, actions and interpretations of the Administrator shall be final,
conclusive and binding upon all parties.
Participation. The Participants in the Plan shall be limited to senior
- -------------
management employees of the members of the T/SF Group who have been notified
in writing by the Administrator that they have been selected to participate in
the Plan.
Equity Appreciation Units Subject to the Plan. Equity Appreciation Units may be
- ---------------------------------------------
granted by the Administrator to a Participant from time to time, provided that
not more than an aggregate of 25,000 Equity Appreciation Units may be granted
under the Plan.
Vesting of Equity Appreciation Units. Except as otherwise provided in the
------------------------------------
Plan:
(a) Vesting. 20% of the Equity Appreciation Units granted to a
- --- -------
Participant shall vest on the last day of each Fiscal Year after the
date of the award (but, in the case of Equity Appreciation Units
granted on January 1, 1998, beginning with December 31, 1998) provided
that (i) a Participant is an employee of a member of the T/SF Group on
that date and (ii) the Annual EBITDA Budget for that year has been
achieved.
(b) Carryover. If any Equity Appreciation Unit does not vest on the last
- --- ---------
day of any Fiscal Year because the Annual EBITDA Budget has not been
achieved, that Equity Appreciation Unit shall vest on the last day of
the next Fiscal Year if (i) the Participant is an employee of a member
of the T/SF Group on that date and (ii) 110% of the Annual EBITDA
Budget for that Fiscal Year has been achieved. This carryover
provision shall not cumulatively be carried forward.
Entitlement to Payments Under the Plan.
--------------------------------------
(a) Qualified Termination Event. If a Participant's employment is
- --- ---------------------------
terminated on account of a Qualified Termination Event, the
Participant shall be entitled to receive from the shareholders of
T/SF, following a Change in Control, in full payment of all amounts
payable to the Participant under the Plan, an amount, payable in cash
within thirty days after the effective date of the Change in Control,
equal to (i) the excess of the Closing Value over the Base Amount
multiplied by (ii) the quotient obtained by dividing the number of
vested Equity Appreciation Units held by the Participant as of the
effective date of termination by one million. In the event of the
death of a Participant after termination of his employment and prior
to payment, the payment shall be made to such beneficiary as the
Participant may have designated in writing during his or her lifetime
or, if none, to his or her estate.
(b) Change in Control. If there is a Change in Control, each Participant
- --- -----------------
(other than a Participant referred to in paragraph (a) or (c) of this
Section 7) shall be entitled to receive from the shareholders of T/SF,
in full payment of all amounts payable to the Participant under the
Plan, an amount, payable in cash within thirty days after the
effective date of the Change in Control, equal to (i) the excess of
the Closing Value
3
<PAGE>
over the Base Amount multiplied by (ii) the quotient obtained by
dividing the number of vested Equity Appreciation Units held by the
Participant as of the effective date of the Change in Control by one
million. T/SF shall give each Participant written notice of the Change
in Control as promptly as practicable thereafter.
(c) Termination of Employment for Cause or Voluntary Termination. If a
- --- ------------------------------------------------------------
Participant's employment is terminated for Cause or a Participant
voluntary terminates his employment, all Equity Appreciation Units
granted to that Participant under the Plan, whether or not vested,
shall be forfeited and the Participant shall not be entitled to any
payment with respect to those Units.
Other Terms and Conditions of Equity Appreciation Units.
-------------------------------------------------------
(a) Agreements. Each Equity Appreciation Unit granted under the Plan
- --- ----------
shall be evidenced by a written agreement, in form approved and
executed by the Administrator, which shall be subject to the terms and
conditions of the Plan and to such other terms and conditions
(including covenants by the employee not-to-compete or hire employees
of any member of the T/SF Group) as the Administrator may consider
appropriate.
(b) Adjustments in Event of Change in Units. In the event of any issuance
- --- ---------------------------------------
of new equity, capital raising, recapitalization, reorganization,
merger, consolidation, split-up, or of any similar change affecting
the equity interest in any member of the T/SF Group, the number and
terms of the Equity Appreciation Units (whether or not then
outstanding) and the Base Amount shall be appropriately adjusted
consistent with those changes and in such manner as the Administrator
may determine equitable to prevent dilution or enlargement of the
rights of Participants in the Plan.
(c) Participants Not to Have Rights as Partners. No Participant shall be,
- --- -------------------------------------------
or have any rights as, a shareholder or member of any member of the
T/SF Group by virtue of having been granted Equity Appreciation Units.
(d) Plan and Equity Appreciation Units Not to Confer Certain Rights.
- --- ---------------------------------------------------------------
Neither the Plan nor any action taken under the Plan shall be
construed as giving any employee the right to be retained in the
employ of a member of the T/SF Group or shall interfere in any way
with the Administrator's right to terminate any Participant's
employment at any time with or without Cause, whether or not there are
then pending negotiations with respect to any transaction that would
give rise to a payment to the employee under the Plan. In addition,
nothing in the Plan or any agreement evidencing the grant of Equity
Appreciation Rights shall limit the Administrator's right to determine
in its sole discretion the terms of any such transaction or limit the
Administrator's right to manage the business and affairs of T/SF and
the other members of the T/SF Group or give any Participant any claim
against the T/SF or any such other entity with respect to any good
faith decision relating to the business or affairs of T/SF or
4
<PAGE>
any other member of the T/SF Group (whether or not that decision
affects any payment to which the employee would be entitled under the
agreement).
No Claim or Right Under the Plan. No employee shall at any time have the right
- --------------------------------
to be selected as a Participant in the Plan or, having been selected as a
Participant and granted an Equity Appreciation Unit, to be granted any
additional Equity Appreciation Unit.
Disposition of Equity Appreciation Units. Neither all nor any portion of the
- ----------------------------------------
Equity Appreciation Units granted under the Plan nor any economic interest
therein may be sold, conveyed, transferred, assigned, mortgaged, pledged,
hypothecated or in any way otherwise encumbered or disposed of (each, a
"Disposition") to any Person. Any attempted Disposition shall be null and
void and have no effect.
Taxes. T/SF may make such provisions and take such steps as the Administrator
- -----
may determine necessary or appropriate for the withholding of all federal,
state, local and other taxes required by law to be withheld with respect to
Equity Appreciation Units under the Plan, including, but not limited to,
deduction of the amount of withholding taxes from the amount otherwise payable
to a Participant under the Plan.
No Liability. No officer, director or shareholder of the Administrator shall be
- ------------
personally liable to any employee of T/SF or any other member of the T/SF
Group by reason of any action taken on behalf of the Administrator in
connection with the Plan or for any mistake of judgment made in good faith
with respect to the Plan.
General Creditor Status. All payments from the Plan shall be made by the
- -----------------------
shareholders of T/SF (who are also members of the other members of the T/SF
Group) from the amounts received by them on a Change of Control (net of any
withholding taxes referred to in Paragraph 11) and no special or separate fund
shall be established to assure payment with respect to any Equity Appreciation
Units.
Amendment or Termination. The Administrator may, with prospective or
- ------------------------
retroactive effect, amend, suspend or terminate the Plan or any portion of the
Plan at any time, except that no such amendment, suspension or termination
shall deprive any Participant of any right with respect to any Equity
Appreciation Unit granted under the Plan unless a Participant shall consent in
writing to the amendment, suspension or termination.
Captions. The captions preceding the sections of the Plan have been included
- --------
solely as a matter of convenience and shall not in any manner define or limit
the scope or intent of any provision of the Plan.
Governing Law. The Plan and all rights under the Plan shall be governed by and
- -------------
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely within New York.
Effective Date. The Plan shall become effective as of January 1, 1998.
- --------------
5
<PAGE>
EXHIBIT 10.18
STOCKHOLDERS AGREEMENT
Stockholders Agreement dated as of October 9, 1997 among (i) T/SF
COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company"), (ii) VS&A
COMMUNICATIONS PARTNERS II, L.P., a Delaware limited partnership ("VSA"), and
(iii) FIR TREE VALUE FUND, L.P., FIR TREE INSTITUTIONAL VALUE FUND, L.P. and FIR
TREE VALUE PARTNERS LDC (collectively, "Fir Tree"). VSA and Fir Tree
collectively own a majority of the Company's outstanding Common Stock and are
referred to herein as the "STOCKHOLDERS".
The parties hereby agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement, the following
terms have the indicated meanings:
"AFFILIATE" of a person means any other person controlling, controlled
by or under common control with such person, whether by ownership of voting
securities, by contract or otherwise, and in the case of any Stockholder shall
include any partner of such Stockholder and in the case of the Company shall
include any officer or director of the Company.
"COMMON STOCK" means the Company's Common Stock, $.10 par value per
share.
"INDEPENDENT THIRD PARTY" means any person who does not own in excess of
5% of the Common Stock on a fully-diluted basis, who is not controlling,
controlled by or under common control with any such 5% owner of Common Stock
and who is not the spouse, ancestor or descendant (by birth or adoption) of any
such 5% owner of Common Stock.
"INVESTOR STOCK" means Shares held by Fir Tree and its Affiliates.
"SALE OF THE COMPANY" means (i) the sale of beneficial ownership of a
majority or more of the outstanding Common Stock to any person or "group" (as
that term is used in Regulation 13D under the Securities Exchange Act of 1934)
other than the Stockholders and their respective Affiliates, (ii) a merger or
consolidation of the Company with or into another entity, or (iii) the sale of
all or substantially all of the assets of the Company.
"SHARES" means (i) all shares of Common Stock now held or hereafter
acquired by the Stockholders, and (ii) all other securities issued or issuable
directly or indirectly with respect to such shares of Common Stock by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"SPONSOR STOCK" means Shares held by VSA and its Affiliates.
<PAGE>
SECTION 2. TAG-ALONG RIGHTS. Not less than 30 days prior to any proposed
transfer of Sponsor Stock, the transferring Stockholder shall deliver to the
other Stockholders a written notice (the "SALE NOTICE") specifying in reasonable
detail the identity of the proposed transferee(s) and the terms and conditions
of the proposed transfer. Each other Stockholder may elect to participate in the
proposed transfer by delivering to the transferring Stockholder a written notice
of such election within the 20-day period following delivery of the Sale Notice.
If any other Stockholders elect to participate in such transfer, the
transferring Stockholder and each such participating Stockholder will be
entitled to sell in such proposed transfer, at the same price and on the same
terms, a number of shares of Common Stock equal to the product of (i) the
quotient determined by dividing the percentage of the then-outstanding Common
Stock held by the transferring Stockholder or such participating Stockholder, as
the case may be, by the aggregate percentage of the then-outstanding Common
Stock held by the transferring Stockholder and all participating Stockholders,
multiplied by (ii) the number of shares of Common Stock to be sold in such
proposed transfer. This Section 2 shall not apply to transfers of Sponsor Stock
to Affiliates of VSA (provided that such Affiliates shall continue to be bound
by the terms hereof).
SECTION 3. DRAG-ALONG RIGHTS. If the holders of a majority of the
outstanding Sponsor Stock approve the Sale of the Company to an Independent
Third Party involving the sale of 100% of the outstanding Common Stock or the
sale of all or substantially all of its assets, whether by merger,
consolidation, sale of all of the outstanding Common Stock or otherwise (an
"APPROVED SALE"), the Stockholders shall consent to and raise no objections
against such Approved Sale (including exercising any rights of appraisal) and
shall take all necessary and desirable actions in their capacities as
stockholders in connection with the consummation of such Approved Sale. If the
Approved Sale is structured as a sale of stock, the Stockholders shall agree to
sell all of their shares of Common Stock and rights to acquire shares of Common
Stock on the terms and conditions approved by the holders of Sponsor Stock. The
obligations of the Stockholders with respect to any Approved Sale are subject to
the condition that, upon the consummation of such Approved Sale, all of the
holders of Common Stock will receive the same form and amount of consideration
per share of Common Stock or, if any holders are given an option as to the form
and amount of consideration to be received, all holders will be given the same
option. The obligation of Fir Tree to participate in such Approved Sale shall be
subject to the further conditions that (x) the consideration receivable by the
Stockholders in such Approved Sale shall consist entirely of cash and/or
securities of an issuer with a market capitalization of $250,000,000 or more
that are either listed on a national securities exchange or traded on the Nasdaq
National Market System, (y) the securities received in such transaction (if any)
by the Stockholders shall not exceed 20% of the total trading volume of such
securities during the 45-day period prior to such receipt and shall otherwise be
freely tradeable (except to the extent they are subject to Rule 145 under the
Securities Act of 1933, as amended), and (z) the Company shall have received a
favorable fairness opinion with respect to the Approved Sale from an independent
investment banking firm of national standing that is mutually acceptable to VSA
and Fir Tree.
SECTION 4. PREEMPTIVE RIGHTS. If the Company proposes to issue any
shares of Common Stock or other securities exercisable for or convertible into
Common Stock (other than issuances for non-cash consideration in connection with
business or asset acquisition transactions,
-2-
<PAGE>
compensatory issuances to directors, officers, employees and consultants of the
Company, issuances to lenders in connection with financing transactions and
issuances pursuant to registered public offerings), each Stockholder shall have
the right of first refusal to purchase a portion of such securities equal to
such Stockholder's percentage interest in the Common Stock on a fully-diluted
basis immediately prior to such issuance. The Company shall give each
Stockholder at least 20 days' prior written notice of any such proposed issuance
setting forth in reasonable detail the proposed terms and conditions thereof and
shall offer to each Stockholder the opportunity to purchase such securities at
the same price, on the same terms, and at the same time as the securities are
proposed to be issued by the Company. A Stockholder may exercise its right of
first refusal by delivery of an irrevocable written notice to the Company not
more than 10 days after delivery of the Company's notice. The obligation of the
Stockholders exercising their rights pursuant to this Section 4 to purchase and
pay for securities shall be conditioned upon the consummation of the proposed
issuance by the Company.
SECTION 5. CORPORATE GOVERNANCE.
(a) BOARD OF DIRECTORS. Each Stockholder agrees to vote all securities
of the Company over which such Stockholder has voting control and to take all
other necessary or desirable actions within its control (whether as a
stockholder, director or officer of the Company or otherwise, and including
without limitation attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary and desirable actions within its control
(including, without limitation, calling special board and stockholder meetings),
so that: (i) designees of VSA shall be elected to the Company's Board of
Directors and shall constitute a simple majority of the Board, and (ii)
designess of Fir Tree (the "FIR TREE DIRECTORS") shall be elected to the
Company's Board of Directors such that Fir Tree's representation on the Board
shall be in proportion to its percentage interest in the Common Stock (rounded
up to the next whole number of directors). In the event that any director for
any reason ceases to serve as a member of the Board during his term of office,
the resulting vacancy on the Board shall be filled by the Stockholders entitled
to designate such director as provided in this Section 5 and not by a vote of
the Stockholders generally and, if the Stockholders fail to designate a
representative to fill a directorship pursuant to the terms of this Section 5,
such directorship shall remain vacant until filled by the Stockholders entitled
to designate such director.
(b) CONCURRENCE RIGHTS. The Company and the Stockholders agree that the
approval of a majority of the Fir Tree Directors shall be necessary for the
Company to undertake any of the following actions:
(i) any amendment to the Company's Certificate of Incorporation or
by-laws;
(ii) any contract or transaction between the Company or any
subsidiary of the Company and VSA or any Affiliate of VSA;
(iii) the Sale of the Company (other than an Approved Sale) or the
liquidation or dissolution of the Company;
-3-
<PAGE>
(iv) any borrowing or transaction that would result in the Company's
pro forma ratio of indebtedness for borrowed money to the Company's trailing 12-
month pro forma EBITDA (in each case determined on a consolidated basis in
accordance with GAAP consistently applied) to exceed 6.5:1.0;
(v) any change in the corporate structure of the Company or of its
subsidiaries; or
(vi) any management equity interests or performance compensation that
would result in management of the Company receiving greater than 10% of proceeds
from the Sale of the Company.
(C) TERMINATION. The provisions of this Section 5 shall terminate and be
of no further force and effect as of the date on which the Stockholders cease to
collectively own a majority of the then-outstanding Common Stock.
SECTION 6. FORCED SALE RIGHTS. At any time on or after the fifth
anniversary of the date of this Agreement, Fir Tree shall have the right,
exercisable by written notice to the Company, to require that the Company
proceed with a Sale of the Company in accordance with the procedures set forth
in this Section 6. Upon receipt of such notice, the Company shall promptly
engage Veronis, Suhler & Associates, Inc. or an investment banking firm of
national standing that is mutually acceptable to VSA and Fir Tree to conduct an
orderly Sale of the Company as a going concern. The Company shall exercise best
efforts to assist such investment banking firm in conducting such sale,
including the preparation of an offering memorandum and/or other descriptive
materials and financial information regarding the Company to be provided to
interested parties and making management of the Company available to meet with
and make presentations to interested parties. The Company shall not place any
limitations on the scope of the sales efforts of such investment banking firm.
All Stockholders shall be obligated to participate in a Sale of the Company
effected pursuant to this Section 6 that has been approved by the Company's
Board of Directors. Any such sale shall take place within five days after the
date on which all governmental approvals, if any, required in connection with
such sale have been obtained and all other conditions to closing have been
satisfied. Notwithstanding the provisions of Section 5 above, in the event that
a definitive agreement for the Sale of the Company is not concluded within 18
months after the date of the notice initiating the sale process, the
Stockholders agree to vote their Shares so that a simple majority of the members
of the Company's Board of Directors are designees of Fir Tree.
SECTION 7. RESTRICTIONS ON TRANSFER.
(a) STOCK LEGEND. The certificates representing Shares shall bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON______________, 19__, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS
AND MAY
-4-
<PAGE>
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO A VOTING AGREEMENT AND CERTAIN OTHER
RESTRICTIONS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF
AUGUST___, 1997 AMONG T/SF COMMUNICATIONS CORPORATION AND CERTAIN
STOCKHOLDERS THEREOF, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY
THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS.
(b) OPINION OF COUNSEL. No holder of Shares may sell, transfer or
dispose of any such stock (other than pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company upon
its request an opinion of counsel reasonably acceptable in form and substance to
the Company that registration under the Securities Act is not required in
connection with such transfer.
SECTION 8. TRANSFERS IN VIOLATION OF AGREEMENT. Any transfer or
attempted transfer of any Shares in violation of this Agreement shall be void,
and the Company shall not be obligated to record such transfer on its books or
treat any purported transferee of such Shares as the owner of such shares for
any purpose.
SECTION 9. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
amendment or waiver of any provision of this Agreement shall be effective unless
such amendment or waiver is approved in writing by the Company, the holders of
at least a majority of the then-outstanding Sponsor Stock and the holders of at
least a majority of the then-outstanding Investor Stock; provided, however, that
any amendment or waiver that by its terms affects all Stockholders equally and
does not discriminate against the holders of Investor Stock may be approved by
the holders of a majority of the Shares. Any amendment or waiver that is
approved in accordance with this Section 9 shall be binding upon all existing
and future holders of Shares. The failure of any party to enforce any provision
of this Agreement shall not be construed as a waiver of such provision and shall
not affect the right of such party thereafter to enforce each provision of this
Agreement in accordance with its terms.
SECTION 10. SEVERABILITY. If any provision of this Agreement is held to
be invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
SECTION 11. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understanding agreements or representations by or among the
parties, written or oral, which may have to the subject matter hereof in any
way.
-5-
<PAGE>
SECTION 12. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of and be enforceable by the Company and its successors and by
the Stockholders and their respective successors and transferees, in each case
so long as such persons hold Shares. In the event that the stock of any
subsidiary of the Company is distributed to the holders of Common Stock pursuant
to a spin-off or split-off transaction, the provisions of this Agreement shall
apply to and be binding upon such subsidiary and its stockholders.
SECTION 13. COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
SECTION 14. Remedies. The Company and the Stockholders shall be entitled
to enforce their rights under this Agreement specifically to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company or any Stockholder may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement. In the event of any legal proceedings seeking to enforce any
rights or obligations under this Agreement, the prevailing party shall be
entitled to recover its attorneys fees and costs in connection with such
proceeding from the non-prevailing party.
SECTION 15. NOTICES. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, or sent by telecopy
(confirmed in writing) or sent by reputable overnight courier service for next-
day delivery (charges prepaid) to the Company or the Stockholders at their
respective addresses set forth below and to any subsequent holder of Shares
subject to this Agreement at such address as indicated by the Company's records,
or at such address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when delivered personally, on the date of
transmission if sent by confirmed telecopy (or on the next business day if
transmission is not made on a business day) or on the next business day after
deposit with a reputable overnight courier service.
The Company's address is:
T/SF Communications Corporation
2407 East Skelly Drive
Tulsa, Oklahoma 74105
Attention: President
Telecopy No.: (918) 743-1291
-6-
<PAGE>
VSA's address is:
Veronis, Suhler & Associates
350 Park Avenue
New York, New York 10022
Attention: Jeff Stevenson
Telecopy No.: (212) 935-0877
Fir Tree's address is:
Fir Tree Partners
1211 Avenue of the Americas
29th Floor
New York, New York 10036
Attention: Jeff Tannenbaum
Telecopy No.: (212) 575-5576
SECTION 16. GOVERNING LAW. The corporate law of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity and interpretation of
this Agreement shall be governed by the internal law, and not the law of
conflicts, of New York.
SECTION 17. CERTAIN FEES. The Stockholders hereby agree as follows with
respect to certain fees:
(a) Any fees payable to VSA or any of its Affiliates in connection with
the acquisition of control of the Company by VSA (not to exceed 1.0% of the
value of the transaction) shall be shared by VSA and Fir Tree in the ratio that
VSA and Fir Tree, respectively, own shares of Common Stock following the
transaction.
(b) Fir Tree shall be entitled to 50% of its pro rata share (based on
the ratio that VSA and Fir Tree, respectively, own shares of Common Stock
following the acquisition of control by VSA) of any monitoring fees (not to
exceed $90,000 per year) and any advisory fees in connection with future
acquisitions and dispositions of assets from or to unaffiliated third parties
(not to exceed 1.0% of transaction value) payable to VSA or its Affiliates by
the Company or its subsidiaries subsequent to the acquisition of control of the
Company by VSA.
(c) VSA agrees that neither VSA nor any of its Affiliates may charge any
fees to the Company or its subsidiaries without Fir Tree's consent except as set
forth above.
SECTION 18. TERMINATION; SURVIVAL. This Agreement (other than Section 2
hereof) shall terminate and be of no further force and effect upon consummation
of an underwritten public offering of Common Stock under the Securities Act.
This Agreement shall terminate in its entirety on the tenth anniversary of the
date hereof.
*****
-7-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
T/SF COMMUNICATIONS CORP.
By: /s/
--------------------------
Name:
Title:
VS&A COMMUNICATIONS PARTNERS
II, L.P.
By: /s/
--------------------------
Name:
Title:
FIR TREE VALUE FUND, L.P.
FIR TREE INSTITUTIONAL VALUE
FUND, L.P.
FIR TREE VALUE PARTNERS LDC
By: /s/ Jeffrey Tannenbaum
--------------------------
Name: Jeffrey Tannenbaum
Title: General Partner, Fir Tree Value
Fund, L.P.
Member, Fir Tree Institutional
Value Fund, L.P.
Investment Advisor, Fir Tree Value
Partners LDC
-8-
<PAGE>
EXHIBIT 10.29
T/SF COMMUNICATIONS CORPORATION
T/SF HOLDINGS, LLC
KEY EMPLOYEE BONUS PLAN
Purpose. The purpose of this Key Employee Bonus Plan is to motivate and retain
- -------
key employees who are responsible for the attainment of the T/SF Group's
primary long-term performance goals.
Definitions. As used in the Plan, the following terms shall have the indicated
- -----------
meanings:
"Administrator" means T/SF's President and Chief Executive Officer or any
committee or individual appointed by the board of directors of T/SF as
Administrator of the Plan.
"Annual EBITDA Budget" means the budgeted EBITDA for the specified Business
Units prepared by management and approved by the Administrator for each
Fiscal Year, as it may be adjusted by the Administrator to reflect special
factors (including material changes in accounting policies or practices,
material acquisitions or dispositions or other unusual or unplanned items)
which, in the Administrator's sole judgment, should or should not be taken
into account, in whole or part, in furtherance of the equitable
administration of the Plan.
"EBITDA" means the consolidated earnings of the specified Business Units of
the T/SF Group before all interest, taxes, depreciation and amortization,
excluding deductions attributable to the Plan and extraordinary or unusual
nonrecurring items of income and expenses, as determined in accordance with
generally accepted accounting principles. EBITDA for each Fiscal Year shall
be calculated after taking into account the payment of any Bonuses with
respect to that Fiscal Year.
"Fiscal Year" means the period beginning on January 1 and ending on December
31.
"LLC" means T/SF Holdings, LLC.
"Participant" means any senior management employee of a member of the T/SF
Group who is selected to participate in the Plan in accordance with Section
4.
"Person" means any individual, partnership, firm, trust, corporation,
limited liability company or other similar entity.
"Plan" means this Key Employee Bonus Plan.
"T/SF" means T/SF Communications Corporation, a Delaware corporation.
"T/SF Group" means T/SF and any entity in which T/SF and its shareholders
own all of the preferred and common equity interests.
<PAGE>
Administration. The Plan shall be administered by the Administrator. Subject to
- --------------
the provisions of the Plan, the Administrator shall have the authority to (a)
select the Participants; (b) determine the target amounts for each
Participant; and (c) establish from time to time regulations for the
administration of the Plan, interpret the Plan, delegate in writing
administrative matters to employees or other persons, and make such other
determinations and take such other action as it deems necessary or advisable
for the administration of the Plan. All decisions, actions and interpretations
of the Administrator shall be final, conclusive and binding upon all parties.
Participation. Participants in the Plan shall be limited to senior management
- -------------
employees of the members of the T/SF Group who have been notified in writing
by the Administrator that they have been selected to participate in the Plan.
Bonus Calculation. Participants in the Plan shall be eligible to receive a bonus
- -----------------
(the "Bonus") in an amount equal to a specified percentage (not to exceed 2%)
of the Participant's base salary ("Base Salary") as of the end of that year
for each 1% (rounded to the nearest whole percentage) by which EBITDA for that
year exceeds ninety percent (90%) of the Annual EBITDA Budget for that year,
provided that the maximum Bonus the Participant shall be entitled to receive
with respect to any year shall be 50% of his or her Base Salary as of the end
of that year. The Bonus for any year shall be paid not later than 30 days
after delivery of the T/SF Group's audited financial statements for that year.
The Bonus shall be payable to only those Participants who are employed by a
member of the T/SF Group at the time for such payment.
No Claim or Right Under the Plan. No employee shall at any time have the right
- --------------------------------
to be selected as a Participant in the Plan or, having been selected as a
Participant and granted a Bonus (unless earned as provided herein).
Taxes. T/SF or the LLC may make such provisions and take such steps as the
- -----
Administrator may determine necessary or appropriate for the withholding of
all federal, state, local and other taxes required by law to be withheld with
respect to any Bonus payment under the Plan, including, but not limited to,
deduction of the amount of withholding taxes from the amount otherwise
payable to a Participant under the Plan.
No Liability. No officer, director or shareholder of the Administrator shall be
- ------------
personally liable to any employee of T/SF or any other member of the T/SF
Group by reason of any action taken on behalf of the Administrator in
connection with the Plan or for any mistake of judgment made in good faith
with respect to the Plan.
Amendment or Termination. The Administrator may, with prospective or retroactive
- ------------------------
effect, amend, suspend or terminate the Plan or any portion of the Plan at any
time.
Captions. The captions preceding the sections of the Plan have been included
- ---------
solely as a matter of convenience and shall not in any manner define or limit
the scope or intent of any provision of the Plan.
2
<PAGE>
Governing Law. The Plan and all rights under the Plan shall be governed by and
- -------------
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely within New York.
Effective Date. The Plan shall become effective as of January 1, 1998.
- ---------------
3
<PAGE>
EXHIBIT 21
T/SF COMMUNICATIONS CORPORATION
-------------------------------
SUBSIDIARIES
<TABLE>
<CAPTION>
ENTITY PERCENT OWNED JURISDICTION OF ORGANIZATION
------ ------------- ----------------------------
<S> <C>
Atwood Convention 100% /2/ Missouri - convention publications
Publishing, Inc.
Atwood Publishing, LLC 99% /10/ Delaware
Casino Publishing Co. 100% /3/ Minnesota - trade publications
Casino Executive, LLC 99% /10/ Nevada
Convention News Source, 100% /4/ Missouri - inactive
Inc.
CORSEARCH, Inc. 100% /1/ Delaware - trademark/tradename
research
Crimesearch, Inc. 100% /5/ Oklahoma - criminal record reports
(formerly DecNet, Inc.)
EXPO Magazine, Inc. 100% /2/ Kansas - trade publications
EXPO Magazine, LLC 100% /12/ Delaware
Galaxy Design & Printing, 100% /6/ Maryland - commercial printing
Inc.
Galaxy Registration, Inc. 100% /2/ Maryland - convention registration
Galaxy Registration, LLC 99% /10/ Delaware
G.E.M. Communications, Inc. 100% /2/ Oklahoma - gaming media services
G.E.M. Gaming, LLC 99% /10/ Delaware
G.E.M. Nevada, LLC 99% /10/ Nevada
M-B Creative, Inc. 100% /7/ New York - inactive
National Employment 100% /2/ Oklahoma - employment screening
Screening Services, Inc.
New York Community 100% /3/ New York - inactive
Newspapers, Inc.
South Jersey Shopper, Inc. 100% /9/ New Jersey - inactive
Transportation 100% /5/ Oklahoma - information services
Communications Services,
Inc.
T/SF Europe, Inc. 100% /8/ Oklahoma - inactive
T/SF Holdings, LLC 99% /11/ Delaware
T/SF Investment Co. 100% /3/ Delaware - holding company
T/SF New Jersey, Inc. 100% /3/ New Jersey - inactive
T/SF New York, Inc. 100% /3/ New York - inactive
T?SF of Nevada, Inc. 100% /2/ Nevada - gaming conference and
trade show
T/SF Operating, LLC 99% /10/ Delaware
Transportation Information 100% /2/ Oklahoma - motor vehicle reports,
Services, Inc. truck driver employment
information and pre-employment
screening
Tulsa Tribune Company 100% /2/ Delaware - inactive
</TABLE>
- ------------------------------
/1/ Owned by G.E.M. Communications, Inc.
/2/ Owned by T/SF Investment Co.
/3/ Owned by T/SF Communications Corporation.
/4/ Owned by Atwood Convention Publishing, Inc.
/5/ Owned by Transportation Information Services, Inc.
/6/ Owned by Galaxy Registration, Inc.
/7/ Owned by T/SF New York, Inc.
/8/ Owned by T/SF of Nevada, Inc.
/9/ Owned by T/SF of New Jersey, Inc.
/10/ Owned by T/SF Holdings, LLC
/11/ Owned indirectly through various subsidiaries
/12/ Owned by Atwood Publishing, LLC
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 21,
1997 included in T/SF Communications Corporation's form 10-K for the year
ended December 31, 1996 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
February 6, 1998
