<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 23, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN MEDIA OPERATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2721 59-2094424
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
600 EAST COAST AVENUE
LANTANA, FL 33464-0002
(561) 540-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
SCOTT PRICE, ESQ.
600 EAST COAST AVENUE
LANTANA, FL 33464-0002
(561) 540-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
GARY L. SELLERS, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act Registration number of the earlier effective
Registration Statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 1/4% Senior Subordinated
Notes due 2009........... $250,000,000 100% $250,000,000 $69,500
- ----------------------------------------------------------------------------------------------------------------------
Guarantee of 10 1/4% Senior
Subordinated Notes due
2009(2).................. $250,000,000 100% $250,000,000 (3)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) See inside facing page for additional registrant guarantors.
(3) Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no
separate fee for the Guarantee is payable.
----------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE 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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANT GUARANTORS
<TABLE>
<CAPTION>
ADDRESS INCLUDING ZIP CODE,
STATE OR OTHER I.R.S. AND TELEPHONE NUMBER
EXACT NAME OF JURISDICTION OF EMPLOYER INCLUDING AREA CODE,
REGISTRANT GUARANTOR INCORPORATION OR IDENTIFICATION OF REGISTRANT GUARANTOR'S
AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBER PRINCIPAL EXECUTIVE OFFICES
- ------------------------------ ---------------- -------------- --------------------------------
<S> <C> <C> <C>
American Media Marketing, Inc. Florida 65-0757297 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Biocide, Inc. Delaware 58-2286482 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Country Weekly, Inc. Delaware 65-0462019 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Distribution Services, Inc. Delaware 59-1641185 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Fairview Printing, Inc. Florida 59-2521785 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Health Xtra, Inc. Florida 65-0886419 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Marketing Services, Inc. Delaware 65-0228937 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
National Enquirer, Inc. Florida 59-2764097 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
NDSI, Inc. Delaware 59-2632066 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Retail Marketing Network, Inc. Delaware 65-0503059 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Star Editorial, Inc. Delaware 59-2719288 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
SOM Publishing, Inc. Florida 59-2429187 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
Weekly World News, Inc. Florida 59-1896614 600 East Coast Avenue
Lantana, FL 33464 (561) 540-1000
</TABLE>
<PAGE> 3
SUBJECT TO COMPLETION, DATED JULY 23, 1999
PROSPECTUS
$250,000,000
AMERICAN MEDIA OPERATIONS, INC.
OFFER TO EXCHANGE ALL OUTSTANDING 10 1/4% SENIOR SUBORDINATED NOTES
DUE 2009 FOR 10 1/4% SENIOR SUBORDINATED NOTES DUE 2009,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
THE EXCHANGE OFFER
- - We will exchange all old notes that are validly tendered and not validly
withdrawn for an equal principal amount of exchange notes that are freely
tradeable.
- - You may withdraw tenders of old notes at any time prior to the expiration of
the exchange offer.
- - The exchange offer expires at 5:00 p.m., New York City time, on
, 1999, unless extended. We do not currently intend to extend
the expiration date.
THE EXCHANGE NOTES
- - The terms of the exchange notes to be issued in the exchange offer are
substantially identical to the old notes, except that the exchange notes will
be freely tradeable.
RESALES OF EXCHANGE NOTES
- - The exchange notes may be sold in the over-the-counter market, in negotiated
transactions or through a combination of such methods. The exchange notes will
be eligible for trading in the PORTAL market.
------------------------
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 14 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THIS EXCHANGE OFFER.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is July , 1999.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE NOTES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE NOTES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE NOTES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 1
Risk Factors.......................... 14
The Transactions...................... 22
Use of Proceeds....................... 23
Capitalization........................ 24
Unaudited Pro Forma Consolidated
Financial Statements................ 25
Selected Historical Consolidated
Financial Information............... 31
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 33
Business.............................. 41
Management............................ 51
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Outstanding Voting Securities......... 54
Certain Relationships and Related
Transactions........................ 55
Description of Other Indebtedness..... 56
The Exchange Offer.................... 58
Description of the Notes.............. 68
U.S. Federal Tax Considerations of the
Exchange Offer...................... 107
Plan of Distribution.................. 108
Legal Matters......................... 108
Experts............................... 109
Where You Can Find More Information... 109
Index to Financial Statements......... F-1
</TABLE>
SPECIAL NOTE REGARDING INDUSTRY DATA AND CIRCULATION INFORMATION
Unless otherwise specifically indicated, all statements presented in this
prospectus regarding
- circulation rankings in the United States and Canada of National Enquirer
and Star relative to other magazines based on weekly single copy
circulation and of Country Weekly in its category based on weekly
circulation,
- rankings in the United States and Canada of National Enquirer and Star
relative to other magazines based on total magazine retail dollars
generated,
- our publications' share of total weekly single copy circulation in the
United States and Canada, and
- the percentage that average weekly single copy circulation of our
publications in the United States, Canada or outside of North America
represents of total average weekly single copy circulation of our
publications
are based upon statistical data obtained from the report of the Audit Bureau of
Circulations for the six months ended December 31, 1998. Unless otherwise
indicated, all average weekly circulation information for our publications is an
average of actual weekly single copy circulation for the six months ended
December 28, 1998. All references to "circulation" are to single copy and
subscription circulation, unless otherwise specified. All information regarding
multiple readers per copy of our publications and the core demographic profile
of our readers is based on National Enquirer and Star magazine audience
estimates prepared at our request for fall 1998 by Mediamark Research Inc. The
information contained in the report of the Audit Bureau of Circulations and the
magazine audience estimate by Mediamark Research Inc. have not been
independently verified by us.
i
<PAGE> 5
FORWARD-LOOKING STATEMENTS
Some of the information presented in this prospectus constitutes
forward-looking statements, including, in particular, the statements about our
plans, strategies and prospects under the headings "Prospectus Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business." We have based these forward-looking statements on
our current assumptions, expectations and projections about future events. We
caution you that a variety of factors could cause business conditions and
results to differ materially from what is contained in the forward-looking
statements. These forward-looking statements are subject to risks, uncertainties
and assumptions about us, including, among other things:
- - our high degree of leverage and significant debt service obligations,
- - our ability to increase circulation and advertising revenues,
- - market conditions for our publications,
- - our ability to develop new publications and services,
- - outcomes of pending and future litigation,
- - increasing competition by domestic and foreign media companies,
- - changes in the costs of paper used by us,
- - any future changes in management,
- - general risks associated with the publishing industry, and
- - the potential effect of year 2000 computer issues.
ii
<PAGE> 6
SUMMARY
This summary highlights information contained elsewhere or incorporated by
reference in this prospectus. It is not complete and may not contain all of the
information that is important to you. Unless the context otherwise requires,
references in this prospectus to "American Media Operations," the "Company" or
"us," "we" or "our" are to American Media Operations, Inc. and its subsidiaries.
All references to a particular fiscal year are to the four fiscal quarters
ended the last Monday in March of the fiscal year specified. All references to
"notes" are to the exchange notes and the old notes.
AMERICAN MEDIA OPERATIONS
OVERVIEW
We are a leading publisher in the field of general interest magazines,
publishing National Enquirer, Star, Weekly World News and Country Weekly, with a
current aggregate weekly circulation of approximately 4.7 million copies.
National Enquirer and Star, our premier titles, have the second and fourth
highest weekly single copy circulation, respectively, of any weekly periodical
in the United States. We are the leader in total weekly single copy circulation
of magazines in the United States and Canada with approximately 34% of total
U.S. and Canadian circulation for weekly publications. We derive approximately
85% of our revenues from circulation, predominantly single copy sales in retail
outlets, and the remainder from advertising and other sources. National Enquirer
and Star are distributed in approximately 165,000 retail outlets in the United
States and Canada, representing, in the opinion of management, substantially
complete coverage of periodical outlets in these countries. Distribution
Services, Inc., or DSI, our subsidiary, arranges for the placement and
merchandising of our publications and third-party publications at retail outlets
throughout the United States and Canada. In addition, DSI provides marketing,
merchandising and information-gathering services for third parties. For the
fiscal year ended March 29, 1999, we had pro forma revenues and pro forma EBITDA
of $272.2 million and $95.8 million, respectively.
Our publications are among the most well-known and widely distributed
titles in the publishing industry. While our publications have a current
aggregate weekly circulation of approximately 4.7 million copies, they enjoy a
weekly readership of over 20 million people due to multiple readers per copy
sold. As a result, we believe our publications enjoy strong consumer brand
awareness with a large and loyal readership base. Our publications include the
following titles:
- National Enquirer is a weekly general interest periodical with an
editorial content devoted to celebrity features, human interest stories
and articles covering lifestyle topics such as health, food and household
affairs. National Enquirer is the second highest selling weekly
periodical in the United States and Canada based on single copy
circulation, selling on average 1,814,000 copies per week. National
Enquirer has a total average weekly circulation of 2,201,000 copies,
including subscriptions, with an average of approximately 7 readers per
copy. National Enquirer has a core demographic profile of women aged
18-49. National Enquirer's cover price is $1.59 in the United States.
- Star is a weekly celebrity news-based periodical with a strong emphasis
on television and movie performers and the lives of the rich and famous.
Star complements this focus with human interest stories about ordinary
people in unusual circumstances. Every issue also includes a variety of
features on topics such as food, fashion, health, fitness and parenting.
Star is the fourth highest selling weekly periodical in the United States
and Canada based on single copy circulation, selling on average 1,487,000
copies per week. Star has a total average weekly circulation of 1,776,000
copies, including subscriptions, with an average of approximately 4
readers per copy. Star has a core demographic profile of women aged
18-49. Star's cover price is $1.59 in the United States.
- Weekly World News is a tabloid devoted to the publication of entertaining
and unusual stories. The editorial content is derived principally from
rewritten stories and photographs purchased from
1
<PAGE> 7
agencies and periodicals around the world. Weekly World News has an
average weekly single copy circulation of 355,000 copies, with a total
average weekly circulation of 379,000 copies, including subscriptions.
Weekly World News' cover price is $1.39 in the United States.
- Country Weekly is a special interest magazine presenting various aspects
of country music, lifestyles, events and personalities, and has the
highest weekly circulation of any such magazine in its category. Country
Weekly has an average weekly single copy circulation of 171,000 copies,
with a total average weekly circulation of 363,000 copies, including
subscriptions. Country Weekly's cover price is $1.99 in the United
States.
COMPETITIVE STRENGTHS
We believe that the following factors have contributed to the leading
market position of our publications:
- Strong, well-established brand names
- Extensive editorial sourcing capabilities
- Broad distribution base
- Experienced management team
BUSINESS STRATEGY
The key elements of our business strategy are to:
- Enhance editorial content to drive single copy circulation
- Aggressively promote our brands
- Increase advertising revenues
- Build on the strength of DSI
- Utilize price flexibility
- Leverage brand equity
- Pursue complementary acquisitions
THE TRANSACTIONS
THE MERGER. On May 7, 1999, EMP Acquisition Corp., a company formed by
Evercore Capital Partners L.P., a private equity firm, entered into a merger
agreement with our parent company, American Media, Inc., pursuant to which (a)
EMP Acquisition Corp. merged into American Media, Inc., (b) the existing
stockholders of American Media, Inc. received aggregate cash consideration of
$299.4 million and (c) Evercore and certain other investors, including David
Pecker, our chairman, acquired 100% of the common stock of American Media, Inc.
FINANCING FOR THE TRANSACTIONS. The investors made an equity investment of
$235.0 million in EMP Acquisition Corp. to fund a portion of the total cost of
the transactions. In addition, we
- entered into, and made initial borrowings under, a new senior secured
bank credit facility with The Chase Manhattan Bank, as agent, and a
syndicate of other financial institutions, providing for a credit
facility of up to $400.0 million consisting of a $60.0 million revolving
credit facility, a $100.0 million tranche A term loan facility and a
$240.0 million tranche B term loan facility,
- issued the notes,
- repaid all outstanding borrowings under, and terminated, our old senior
secured bank credit facility, and
- consummated a debt tender offer for our 11 5/8% Senior Subordinated Notes
due 2004.
2
<PAGE> 8
The following table sets forth sources and uses of funds in connection with
the foregoing transactions, giving effect to the sale of our soap opera
publications (as discussed below):
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
<S> <C>
SOURCES:
New credit facility(1)...................................... $352.0
Notes....................................................... 250.0
Equity investment........................................... 235.0
------
Total sources.......................................... $837.0
======
USES:
Cash consideration.......................................... $299.4
Repayment of old credit facility............................ 267.0
Purchase of our 11 5/8% senior subordinated notes........... 199.3
Payment of accrued interest on old credit facility and
11 5/8% senior subordinated notes......................... 12.7
Transaction fees and expenses(2)............................ 58.6
------
Total uses............................................. $837.0
======
</TABLE>
- ---------------
(1) Represents borrowings under the new credit facility made on the closing date
of the merger, consisting of $100.0 million under the tranche A term loan
facility, $240.0 million under the tranche B term loan facility and $12.0
million under the revolving credit facility.
(2) Transaction fees and expenses include, among other things, the debt tender
offer premium and consent fee, the initial purchaser's discount and other
expenses incurred in the offering of the old notes and fees and expenses
associated with the merger, the existing credit facility and the debt tender
offer.
SALE OF SOAP OPERA PUBLICATIONS. On February 3, 1999, we ceased
publication of Soap Opera News and Soap Opera Magazine and sold certain of the
trademarks and other soap opera publishing assets relating to these magazines to
Primedia, Inc. for $10.0 million in cash. We used the entire cash proceeds to
repay borrowings under our old credit facility. In addition, we may receive
future consideration based upon increased financial performance above certain
levels of Primedia Inc.'s Soap Opera Digest and Soap Opera Weekly publications.
There can be no assurance, however, that we will receive any such future
consideration.
3
<PAGE> 9
SUMMARY OF TERMS OF THE EXCHANGE OFFER
On May 7, 1999, we completed the private offering of our 10 1/4% Senior
Subordinated Notes due 2009. References to "notes" in this prospectus are
references to both the old notes and the exchange notes.
We and our note guarantors entered into an exchange and registration rights
agreement with the initial purchaser in the private offering in which we and our
guarantors agreed to deliver to you this prospectus and we agreed to complete
the exchange offer within 195 days after the date of original issuance of the
old notes. You are entitled to exchange in the exchange offer your old notes for
exchange notes which are identical in all material respects to the old notes
except that:
- the exchange notes have been registered under the Securities Act;
- the exchange notes are not entitled to certain registration rights which
are applicable to the old notes under the exchange and registration
rights agreement; and
- certain contingent interest rate provisions are no longer applicable.
The Exchange Offer............ We are offering to exchange up to $250.0
million aggregate principal amount of 10 1/4%
senior subordinated notes which have been
registered under the Securities Act for up to
$250.0 million aggregate principal amount of
10 1/4% senior subordinated notes which were
issued in May 1999. Old notes may be exchanged
only in integral multiples of $1,000.
Resales....................... Based on an interpretation by the staff of the
Securities and Exchange Commission set forth in
no-action letters issued to third parties, we
believe that the exchange notes issued pursuant
to the exchange offer in exchange for old notes
may be offered for resale, resold and otherwise
transferred by you (unless you are our
"affiliate" 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
you are acquiring the exchange notes in the
ordinary course of your business and that you
have not engaged in, do not intend to engage
in, and have no arrangement or understanding
with any person to participate in, a
distribution of the exchange notes.
Each participating broker-dealer that receives
exchange notes for its own account pursuant to
the exchange offer in exchange for old notes
that were acquired as a result of market-making
or other trading activity must acknowledge that
it will deliver a prospectus in connection with
any resale of the exchange notes. See "Plan of
Distribution."
Any holder of old notes who
- is our affiliate,
- does not acquire exchange notes in the
ordinary course of its business, or
- tenders in the exchange offer with the
intention to participate, or for the purpose
of participating, in a distribution of
exchange notes,
cannot rely on the position of the staff of the
SEC enunciated in Exxon Capital Holdings
Corporation, Morgan Stanley & Co. Incorporated
or similar no-action letters and, in the
absence of
4
<PAGE> 10
an exemption, must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with the resale of
the exchange notes.
Expiration Date; Withdrawal of
Tenders..................... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 1999, or
such later date and time to which we extend it
(the "expiration date"). We do not currently
intend to extend the expiration date. A tender
of old notes pursuant to the exchange offer may
be withdrawn at any time prior to the
expiration date. The expiration date for the
exchange offer will not in any event be
extended to a date later than ,
1999. Any old notes not accepted for exchange
for any reason will be returned without expense
to the tendering holder promptly after the
expiration or termination of the exchange
offer.
Certain Conditions to the
Exchange Offer................ The exchange offer is subject to customary
conditions, which we may waive. Please read the
section captioned "The Exchange
Offer -- Certain Conditions to the Exchange
Offer" of this prospectus for more information
regarding the conditions to the exchange offer.
Procedures for Tendering Old
Notes......................... If you wish to accept the exchange offer, you
must complete, sign and date the accompanying
letter of transmittal, or a facsimile of the
letter of transmittal, according to the
instructions contained in this prospectus and
the letter of transmittal. You must also mail
or otherwise deliver the letter of transmittal,
or a facsimile of the letter of transmittal,
together with the old notes and any other
required documents, to the exchange agent at
the address set forth on the cover page of the
letter of transmittal. If you hold old notes
through The Depository Trust Company and wish
to participate in the exchange offer, you must
comply with the Automated Tender Offer Program
procedures of DTC, by which you will agree to
be bound by the letter of transmittal. By
signing, or agreeing to be bound by, the letter
of transmittal, you will represent to us that,
among other things:
- any exchange notes that you receive will be
acquired in the ordinary course of your
business;
- you have no arrangement or understanding with
any person or entity to participate in a
distribution of the exchange notes;
- if you are a broker-dealer that will receive
exchange notes for your own account in
exchange for old notes that were acquired as
a result of market-making activities, that
you will deliver a prospectus, as required by
law, in connection with any resale of such
exchange notes; and
- you are not our "affiliate," as defined in
Rule 405 of the Securities Act, or, if you
are an affiliate, you will comply with any
applicable registration and prospectus
delivery requirements of the Securities Act.
5
<PAGE> 11
Special Procedures for
Beneficial Owners............. If you are a beneficial owner of old notes
which are registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee, and you wish to tender such old notes
in the exchange offer, you should contact such
registered holder promptly and instruct such
registered holder to tender on your behalf. If
you wish to tender on your own behalf, you
must, prior to completing and executing the
letter of transmittal and delivering your old
notes, either make appropriate arrangements to
register ownership of the old notes in your
name or obtain a properly completed bond power
from the registered holder. The transfer of
registered ownership may take considerable time
and may not be able to be completed prior to
the expiration date.
Guaranteed Delivery
Procedures.................... If you wish to tender your old notes and your
old notes are not immediately available or you
cannot deliver your old notes, the letter of
transmittal or any other documents required by
the letter of transmittal or comply with the
applicable procedures under DTC's Automated
Tender Offer Program prior to the expiration
date, you must tender your old notes according
to the guaranteed delivery procedures set forth
in this prospectus under "The Exchange
Offer -- Guaranteed Delivery Procedures."
Effect on Holders of Old
Notes......................... As a result of the making of, and upon
acceptance for exchange of all validly tendered
old notes pursuant to the terms of the exchange
offer, we will have fulfilled a covenant
contained in the exchange and registration
rights agreement and, accordingly, we will not
be obligated to pay liquidated damages as
described in the exchange and registration
rights agreement. If you are a holder of old
notes and you do not tender your old notes in
the exchange offer, you will continue to hold
such old notes and you will be entitled to all
the rights and limitations applicable to the
old notes in the indenture, except for any
rights under the exchange and registration
rights agreement that by their terms terminate
upon the consummation of the exchange offer.
To the extent that old notes are tendered and
accepted in the exchange offer, the trading
market for old notes could be adversely
affected.
Consequences of Failure to
Exchange...................... All untendered old notes will continue to be
subject to the restrictions on transfer
provided for in the old notes and in the
indenture. In general, the old notes may not be
offered or sold unless registered under the
Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the
Securities Act and applicable state securities
laws. Other than in connection with the
exchange offer, we do not currently anticipate
that we will register the old notes under the
Securities Act.
Certain U.S. Federal Income
Tax Considerations............ The exchange of old notes for exchange notes in
the exchange offer will not be a taxable event
for U.S. federal income tax purposes. See "U.S.
Federal Income Tax Consequences of the Exchange
Offer."
6
<PAGE> 12
Use of Proceeds............... We will not receive any cash proceeds from the
issuance of exchange notes pursuant to the
exchange offer.
Exchange Agent................ ChaseMellon Shareholder Services, L.L.C. is the
exchange agent for the exchange offer. The
address and telephone number of the exchange
agent are set forth in the section captioned
"The Exchange Offer -- Exchange Agent."
7
<PAGE> 13
SUMMARY TERMS OF THE EXCHANGE NOTES
Issuer........................ American Media Operations, Inc.
Notes Offered................. $250,000,000 in aggregate principal amount of
10 1/4% Senior Subordinated Notes due 2009,
which have been registered under the Securities
Act.
Maturity Date................. May 1, 2009.
Interest...................... Annual rate: 10 1/4%.
Payment frequency: every six months on May 1
and November 1.
First payment: November 1, 1999.
Optional Redemption........... On and after May 1, 2004, we may redeem some or
all of the exchange notes at the redemption
prices listed in the section entitled
"Description of the Notes -- Optional
Redemption." Prior to such date, we may not
redeem the exchange notes, except as described
in the following sentence.
At any time prior to May 1, 2002, we may, on
one or more occasions, redeem up to 35% of the
original aggregate principal amount of the
exchange notes with the net cash proceeds of
certain offerings of equity at a redemption
price equal to 110.25% of the principal amount
thereof, plus accrued and unpaid interest and
liquidated damages.
Change of Control............. Upon the occurrence of a change of control, you
will have the right to require us to repurchase
all or a portion of your exchange notes at a
purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and
unpaid interest and liquidated damages thereon,
if any, to the date of repurchase. However, we
will not be obligated to repurchase the
exchange notes pursuant to a change of control
offer in the event that we have exercised our
right to redeem all the exchange notes, as
described under "Optional Redemption" above.
See "Description of the Notes -- Change of
Control."
Note Guarantees............... The exchange notes are fully and
unconditionally guaranteed, on an unsecured
senior subordinated basis, by each of our
subsidiaries existing on May 7, 1998, other
than Frontline Marketing, Inc., our 80%-owned
subsidiary, and by each of our future
wholly-owned domestic restricted subsidiaries.
The note guarantees will be subordinated to the
guarantees of senior indebtedness issued by the
note guarantors under our new credit facility.
See "Description of the Notes -- Note
Guarantees."
Ranking....................... The exchange notes will be unsecured and
subordinated in right of payment to all of our
existing and future senior indebtedness,
including all of our borrowings under the new
credit facility. The exchange notes will rank
equal in right of payment with all of our
existing and future senior subordinated
indebtedness and senior to all of our future
subordinated obligations. We are a holding
company and as such we derive all of our
operating
8
<PAGE> 14
income and cash flow from our subsidiaries. See
"Description of the Notes -- Ranking."
Assuming that the transactions had taken place
on March 29, 1999, as of such date we would
have had outstanding:
- $352.0 million of senior indebtedness all of
which would have been secured indebtedness
(excluding unused commitments under the new
credit facility);
- $250.9 million of senior indebtedness all of
which would have been of senior subordinated
indebtedness (other than the notes) and no
indebtedness that is subordinate or junior in
right of repayment to the notes;
- no senior indebtedness of the note guarantors
(excluding their guarantees of indebtedness
of the Company under the new credit
facility); and
- no senior subordinated indebtedness of the
note guarantors (other than the note
guarantees) and no indebtedness of the note
guarantors that is subordinate or junior in
right of payment to the note guarantees.
Certain Covenants............. We will issue the exchange notes under an
indenture among us, the note guarantors and The
Chase Manhattan Bank, as trustee. The indenture
governs both the old notes and the exchange
notes and will, among other things, restrict
our ability and the ability of our subsidiaries
to:
- borrow money;
- guarantee other indebtedness;
- use assets as security in other transactions;
- pay dividends on stock, redeem stock or
redeem subordinated debt;
- make investments;
- enter into agreements that restrict dividends
from subsidiaries;
- sell assets;
- enter into affiliate transactions;
- sell capital stock of subsidiaries;
- enter into new lines of business; and
- merge or consolidate.
For more details, see "Description of the
Notes -- Certain Covenants."
Use of Proceeds............... There will be no cash proceeds to us from the
exchange offer.
9
<PAGE> 15
RISK FACTORS
You should carefully consider the information under the caption "Risk
Factors" and all other information in this prospectus before tendering your
notes.
------------------------
Our executive offices are located at 600 East Coast Avenue, Lantana,
Florida 33464-0002. Our telephone number is (561) 540-1000.
10
<PAGE> 16
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following summary unaudited pro forma consolidated financial
information has been derived from the unaudited pro forma consolidated financial
statements and the related notes included elsewhere in this prospectus. The
summary unaudited pro forma consolidated balance sheet gives effect to the
transactions as if they had occurred on March 29, 1999. The summary unaudited
pro forma consolidated statement of income information and other financial
information for the fiscal year ended March 29, 1999 give effect to the
transactions and the sale of the soap opera assets as if they had occurred at
the beginning of such period. The summary unaudited pro forma consolidated
financial information is for informational purposes only and does not purport to
be indicative of our financial position or the results of our operations that
would have actually been obtained had the transactions and the sale of the soap
opera assets in fact occurred as of the assumed dates or for the periods
presented, nor are they indicative of, or projections for, our results of
operations or financial position for any future period or date. The pro forma
adjustments, as described in the notes to the unaudited pro forma consolidated
financial statements included elsewhere in this prospectus, are based on
available information and upon certain assumptions which we believe are
reasonable.
The merger was accounted for using the purchase method of accounting. The
purchase price will be allocated to the assets acquired and liabilities assumed,
based on their respective fair values. The allocation of the purchase price
reflected in the summary unaudited pro forma consolidated financial information
is preliminary. The adjustments that have been included in the summary unaudited
pro forma consolidated financial information will change based upon the final
allocation of the purchase price when additional information concerning asset
and liability valuation is obtained. The actual allocation of the purchase price
and the resulting effect on operating income may differ significantly from the
unaudited summary pro forma amounts included herein.
The following summary unaudited pro forma consolidated financial
information should be read in conjunction with "Unaudited Pro Forma Consolidated
Financial Statements," "Selected Historical Consolidated Financial Information,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and the related notes
included elsewhere in this prospectus.
11
<PAGE> 17
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
MARCH 29, 1999
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
STATEMENT OF INCOME INFORMATION:
Operating revenues
Circulation............................................... $228,244
Advertising............................................... 22,582
Other..................................................... 21,358
--------
272,184
Operating expenses
Editorial................................................. 25,144
Production................................................ 65,488
Distribution, circulation and other cost of sales......... 59,188
Selling, general and administrative....................... 26,561
Depreciation and amortization............................. 50,564
--------
226,945
Operating income.......................................... 45,239
Interest expense............................................ (58,749)
Other income, net(1)........................................ 4,105
--------
Loss before income taxes charge........................... (9,405)
Income taxes................................................ 9,505
--------
Net loss.................................................. $(18,910)
========
OTHER FINANCIAL INFORMATION:
EBITDA(2)................................................... $ 95,803
Cash interest expense....................................... 55,909
Capital expenditures........................................ 13,070
Ratio of EBITDA to cash interest expense.................... 1.7x
BALANCE SHEET INFORMATION (END OF PERIOD):
Total debt.................................................. $602,874
Total stockholder's equity.................................. 215,539
</TABLE>
- ---------------
(1) Other income, net is comprised of miscellaneous nonrecurring items and
includes for the fiscal year ended March 29, 1999, a net gain of $4,400 from
the favorable settlement of certain litigation.
(2) EBITDA is defined as net loss before extraordinary charges, interest
expense, income taxes, depreciation and amortization and other income.
EBITDA is not a measure of performance defined by generally accepted
accounting principles. EBITDA should not be considered in isolation or as a
substitute for net income or a statement of cash flows which have been
prepared in accordance with GAAP or as a measure of our operating
performance, profitability or liquidity. We believe EBITDA provides useful
information regarding our ability to service our debt, and we understand
that such information is considered by certain investors to be an additional
basis for evaluating a company's ability to pay interest and repay debt.
EBITDA measures presented herein may not be comparable to similarly titled
measures of other companies due to differences in methods of calculation.
12
<PAGE> 18
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth certain of our summary historical
consolidated financial information and the notes thereto. The summary historical
consolidated financial information as of and for the fiscal years ended March
31, 1997, March 30, 1998 and March 29, 1999 has been derived from, and should be
read in conjunction with, our audited historical consolidated financial
statements and the notes thereto, which have been audited by Arthur Andersen
LLP, independent auditors, and which are included elsewhere in this prospectus.
See also "Selected Historical Consolidated Financial Information," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our consolidated financial statements and the notes thereto included elsewhere
in this prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------
MARCH 31, MARCH 30, MARCH 29,
1997(1) 1998 1999
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF INCOME INFORMATION:
Operating revenues
Circulation............................................... $273,567 $262,249 $248,630
Advertising............................................... 24,280 23,643 23,460
Other..................................................... 18,141 21,792 21,369
-------- -------- --------
315,988 307,684 293,459
Operating expenses
Editorial................................................. 28,369 30,497 28,906
Production................................................ 80,286 82,296 79,691
Distribution, circulation and other cost of sales......... 60,514 66,883 67,640
Selling, general and administrative....................... 30,428 27,101 26,212
Gain on sale of soap opera assets......................... -- -- (6,499)
Depreciation and amortization............................. 29,220 30,327 32,110
-------- -------- --------
228,817 237,104 228,060
Operating income.......................................... 87,171 70,580 65,399
Interest expense............................................ (56,284) (50,486) (46,897)
Other income (expense), net(2).............................. (1,705) (1,641) 2,943
-------- -------- --------
Income before income taxes and extraordinary charge....... 29,182 18,453 21,445
Income taxes................................................ 16,716 12,437 13,559
Income before extraordinary charge........................ 12,466 6,016 7,886
Extraordinary charge(3)..................................... -- -- (2,161)
-------- -------- --------
Net income................................................ $ 12,466 $ 6,016 $ 5,725
======== ======== ========
OTHER FINANCIAL INFORMATION:
EBITDA(4)................................................... $114,593 $ 99,226 $ 96,347
Capital expenditures........................................ 8,526 11,018 15,019
Cash provided from operating activities..................... 46,688 41,810 29,802
Cash used in investing activities........................... (10,762) (11,018) (5,019)
Cash used in financing activities........................... (32,339) (31,617) (28,365)
BALANCE SHEET INFORMATION (END OF PERIOD):
Total debt.................................................. $528,662 $497,535 $471,134
Total stockholder's equity.................................. 48,457 54,473 60,198
</TABLE>
- ---------------
(1) Fiscal 1997 includes 53 weeks as compared to 52 weeks for all other fiscal
years presented.
(2) Other income, net for any period is comprised of the management fee incurred
during such period and miscellaneous nonrecurring items and includes for the
fiscal year ended March 29, 1999, a net gain of $4,400 from the favorable
settlement of certain litigation.
(3) Consists primarily of the write-off of deferred debt issuance costs and
charges relating to refinancing of indebtedness.
(4) EBITDA is defined as net income before extraordinary charges, interest
expense, income taxes, depreciation and amortization and other income
(expense) (other than management fees). The management fees included in
other income (expense) were $1,798, $1,681 and $1,162, respectively, for
fiscal 1997, 1998 and 1999. The pro forma financial information presented
elsewhere herein includes a new monitoring fee of $750 per annum as a
selling, general and administrative operating expense. EBITDA is not a
measure of performance defined by GAAP. EBITDA should not be considered in
isolation or as a substitute for net income or a statement of cash flows
which have been prepared in accordance with GAAP or as a measure of our
operating performance, profitability or liquidity. We believe EBITDA
provides useful information regarding our ability to service our debt, and
we understand that such information is considered by certain investors to be
an additional basis for evaluating a company's ability to pay interest and
repay debt. EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies due to differences in the
methods of calculation.
13
<PAGE> 19
RISK FACTORS
Before you tender your notes in the exchange offer, you should be aware
that there are various risks, including those described below. You should
carefully consider these risk factors, together with the other information in
this prospectus, before tendering your notes. There may be additional risks
which affect our business, financial condition or results of operations in the
future and of which we are not currently aware. The risk factors set forth below
are generally applicable to the old notes as well as the exchange notes.
IF YOU DO NOT PARTICIPATE IN THE EXCHANGE OFFER, YOU WILL CONTINUE TO BE
SUBJECT TO TRANSFER RESTRICTIONS.
If you not exchange your old notes in the exchange offer, you will continue
to be subject to restrictions on transfer on your old notes. We did not register
the old notes under the federal or any state securities laws, and we do not
intend to register them following the exchange offer. As a result, the old notes
may only be transferred in limited circumstances under the securities laws. In
addition, to the extent old notes are tendered and accepted in the exchange
offer, the trading market, if any, for the old notes would be adversely
affected. As a result, after the exchange offer, you may have difficulty selling
your old notes.
YOU MUST FOLLOW THE EXCHANGE OFFER PROCEDURES CAREFULLY IN ORDER TO RECEIVE
THE NEW NOTES.
If you do not follow the procedures described herein, you will not receive
exchange notes. The new notes will be issued to you in exchange for your old
notes only after timely receipt by the exchange agent of:
- your old notes and either:
- a properly completed and executed letter of transmittal and all other
required documentation or
- a book-entry delivery by transmittal of an agent's message through The
Depository Trust Company.
If you want to tender your old notes in exchange for new notes, you should
allow sufficient time to ensure timely delivery. No one is under any duty to
give you notification of defects or irregularities with respect to tenders of
old notes for exchange. For additional information, please refer to "The
Exchange Offer" and "Plan of Distribution" sections of this prospectus.
OUR SIGNIFICANT INDEBTEDNESS COULD IMPAIR OUR ABILITY TO OPERATE AND EXPOSE US
TO CERTAIN RISKS.
As a result of the transactions, we incurred a substantial amount of debt.
Assuming that the transactions had taken place on March 29, 1999, we would have
had as of such date total debt (excluding unused commitments) of $602.9 million
and total stockholder's equity of $215.5 million, giving us a total debt to
equity ratio of 2.8 to 1.0. In addition, subject to restrictions in the new
credit facility and in the indenture, we may borrow more money for working
capital, capital expenditures, acquisitions or for other purposes.
Our high level of debt could have important consequences for you, including
the following:
- we may have difficulty borrowing money in the future for working capital,
capital expenditures, acquisitions or other purposes;
- we will need to use a large portion of the money earned by our
subsidiaries to pay principal and interest on the new credit facility,
the notes and other debt, which will reduce the amount of money available
to us to finance our operations and other business activities;
- some of our debt has a variable rate of interest, which exposes us to the
risk of increased interest rates;
- debt under the new credit facility will be secured and will mature prior
to the notes;
- we may have a much higher level of debt than certain of our competitors,
which may put us at a competitive disadvantage;
14
<PAGE> 20
- our debt level makes us more vulnerable to economic downturns and adverse
developments in our business;
- our debt level reduces our flexibility in responding to changing business
and economic conditions, including increased competition in the
publishing industry; and
- our debt level limits our ability to pursue other business opportunities,
borrow more money for operations or capital in the future and implement
our business strategy.
After giving pro forma effect to the transactions and the sale of the soap
opera assets, our interest expense for the fiscal year ended March 29, 1999
would have been $58.7 million. For the fiscal year ended March 29, 1999, after
giving pro forma effect to the transactions and the sale of the soap opera
assets, our earnings would have been insufficient to cover fixed charges by $9.4
million.
We expect to obtain the money to pay our expenses and to pay the principal
and interest on the notes, the new credit facility and other debt from the
operations of our subsidiaries. Our ability to meet our expenses and debt
service obligations thus depends on the future performance of our subsidiaries,
which will be affected by financial, business, economic and other factors. We
will not be able to control many of these factors, such as economic conditions
and pressure from competitors. We cannot be certain that the money earned by our
subsidiaries will be sufficient to allow us to pay principal and interest on our
debt (including the notes) and meet our other obligations. If we do not have
enough money, we may be required to refinance all or part of our existing debt,
including the notes, sell assets, borrow more money or raise equity. We cannot
guarantee that we will be able to refinance our debt, sell assets, borrow more
money or raise equity on terms acceptable to us. In addition, the terms of
existing or future debt agreements, including the new credit facility and the
indenture, may restrict us from adopting any of these alternatives.
Under the new credit facility, we also must comply with certain specified
financial ratios and tests. If we do not comply with these or other covenants
and restrictions contained in the new credit facility, we could default under
the new credit facility. Such debt, together with accrued interest, could then
be declared immediately due and payable. Our ability to comply with such
provisions may be affected by events beyond our control. See "Description of
Other Indebtedness."
OUR PUBLICATIONS HAVE EXPERIENCED DECLINES IN SINGLE COPY CIRCULATION.
Single copy circulation of each of National Enquirer and Star has
experienced declines. For example, in fiscal 1994, National Enquirer and Star
had average weekly single copy circulation of approximately 2.8 million copies
and 2.5 million copies, respectively, which declined in fiscal 1999 to
approximately 1.8 million and 1.4 million copies, respectively. Our other
publications also have experienced declines in single copy circulation. See
"Business -- Circulation."
We believe that a significant portion of the decline in circulation since
fiscal 1994 is primarily due to two factors. First, the death of Princess Diana
in August 1997 resulted in a significant amount of adverse publicity against
celebrity news-based magazines. While single copy circulation of National
Enquirer and Star have improved from the low levels experienced in the months
immediately after Princess Diana's death, they have not returned to their prior
levels. We believe the second principal factor contributing to lower circulation
since fiscal 1994 has been a significant reduction in advertising expenditures
by us to promote our publications. Total advertising expenditures for National
Enquirer and Star decreased from $16.1 million in fiscal 1994 to $0.6 million in
fiscal 1999. We believe that this reduction in advertising was a significant
factor in the decrease in average weekly single copy circulation of National
Enquirer and Star from approximately 2.8 million copies and 2.5 million copies,
respectively, in fiscal 1994 to approximately 1.8 million copies and 1.4 million
copies, respectively, in fiscal 1999. In addition, single copy circulation
declines of our publications can be attributed to (a) increased competition from
other publications and forms of media, such as certain newspapers, television
and radio programs concentrating on celebrity news and (b) a general
industry-wide decline in single copy circulation of individual publications due
to an
15
<PAGE> 21
increasing number of publications in the industry. See "-- We operate in a very
competitive business environment" and "Business -- Circulation."
Historically, we have offset declines in single copy circulation, in part,
through increases in cover prices. There can be no assurance we will be able to
continue to increase cover prices without decreasing circulation, or be able to
take other measures, such as increasing advertising and promotion of our titles
to offset such circulation declines or that the single copy circulation declines
described above will be reversed. Continued declines in circulation could have a
material adverse effect on our business or financial performance. See "-- There
are risks associated with the implementation of our business strategy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
THERE ARE RISKS ASSOCIATED WITH THE IMPLEMENTATION OF OUR BUSINESS STRATEGY.
Our future financial performance and success are dependent in large part
upon our ability to successfully implement our business strategy. There can be
no assurance that implementation of the business strategy we have described in
this prospectus will be successful or will improve operating results. In
particular, there can be no assurance that we will be able to increase
circulation of our publications, obtain new sources of advertising revenues,
generate additional revenues by building on the brand names of our publications,
attract new clients for DSI or raise the cover prices of our publications
without causing a decline in circulation. Furthermore, any growth through
acquisitions and investments will be dependent upon identifying suitable
acquisition or investment candidates and successfully consummating such
transactions at reasonable costs. Such acquisitions and investments may require
additional funding which may be provided in the form of additional debt, equity
financing or a combination thereof. There can be no assurance that any such
additional financing will be available to us on acceptable terms or that we will
be permitted under the terms of the new credit facility (or any replacement
credit facility) or under the terms of the indenture to obtain such financing
for such purpose. See "-- We operate in a very competitive business
environment," "-- Our publications have experienced declines in single copy
circulation," "Business -- Business Strategy," "Description of Other
Indebtedness" and "Description of the Notes -- Certain Covenants."
Implementation of our business strategy could be affected by a number of
factors beyond our control, such as increased competition, legal developments,
general economic conditions or increased operating costs or expenses. In
particular, there has been a recent trend of increased consolidation among both
retailers and wholesalers of magazines. This consolidation has caused an
increase in margin pressure on publishers. Because National Enquirer and Star
have been consistently among the highest revenue-producing magazines to both
retailers and wholesalers, we do not believe the increased consolidation among
retailers and wholesalers will have a material adverse effect on us.
Nevertheless, there can be no assurance that such consolidation will not have a
material adverse effect on us in the future.
Any failure to successfully implement our business strategy may adversely
affect our ability to service our indebtedness, including our ability to make
principal and interest payments on the notes. We may, in addition, decide to
alter or discontinue certain aspects of our business strategy at any time.
THE EXCHANGE NOTES AND THE NOTE GUARANTEES ARE EFFECTIVELY SUBORDINATED TO ALL
SENIOR DEBT OF OUR SUBSIDIARIES.
The exchange notes will be contractually subordinated in right of payment
to all of our senior indebtedness, and the note guarantees will be contractually
subordinated in right of payment to all senior indebtedness of the note
guarantors. Assuming the transactions had occurred on March 29, 1999, we would
have had approximately $352.0 million of senior indebtedness (excluding unused
commitments) as of such date, all of which would have been secured, and the note
guarantors would have had no senior indebtedness (excluding their guarantees of
the new credit facility). The indenture will permit us and our note guarantors
to borrow certain additional debt, which may be senior indebtedness.
We may not pay principal, premium (if any), interest or other amounts on
account of the exchange notes or the note guarantees in the event of a payment
default or certain other defaults in respect of
16
<PAGE> 22
certain senior indebtedness (including debt under the new credit facility)
unless such indebtedness has been paid in full or the default has been cured or
waived. In addition, in the event of certain other defaults with respect to such
senior indebtedness, we may not be permitted to pay any amount on account of the
exchange notes or the note guarantees for a designated period of time. If we or
the note guarantors are declared bankrupt or insolvent, or if there is a payment
default under, or an acceleration of, any senior indebtedness, we are required
to pay the lenders under the new credit facility and any other creditors who are
holders of senior indebtedness in full before we apply any of our assets to pay
you. Accordingly, we may not have enough assets remaining after payments to
holders of such senior indebtedness to pay you.
Further, the new credit facility does, and our future senior indebtedness
may, prohibit us from repurchasing any exchange notes prior to maturity, even
though the indenture requires us to offer to repurchase exchange notes in
certain circumstances. If we or the note guarantors make certain asset sales or
if a change of control occurs when we are prohibited from repurchasing exchange
notes we could ask our lenders under the new credit facility (or such future
senior indebtedness) for permission to repurchase the exchange notes or we could
attempt to refinance the borrowings that contain such prohibitions. If we do not
obtain such a consent to repay such borrowings or are unable to refinance such
borrowings, we would be unable to repurchase the exchange notes. Our failure to
repurchase tendered exchange notes at a time when such repurchase is required by
the indenture would constitute an event of default under the indenture, which,
in turn, would constitute a default under the new credit facility and may
constitute an event of default under such future senior indebtedness. In such
circumstances, the subordination provisions in the indenture would restrict
payments to you. See "Description of Other Indebtedness," "Description of the
Notes -- Ranking," "Description of the Notes -- Change of Control" and
"Description of the Notes -- Certain Covenants."
OUR SUBSIDIARIES MAY BE PROHIBITED FROM PAYING DIVIDENDS OR MAKING OTHER
PAYMENTS TO US, WHICH PAYMENTS ARE OUR SOLE SOURCE OF OPERATING FUNDS TO PAY
AMOUNTS DUE UNDER THE NOTES.
We are a holding company and as such we conduct substantially all our
operations through our subsidiaries. As a holding company, we are dependent upon
dividends or other intercompany transfers of funds from our subsidiaries to meet
our debt service and other obligations. Generally, creditors of a subsidiary
will have a superior claim to the assets and earnings of such subsidiary than
the claims of creditors of its parent company, except to the extent the claims
of the parent's creditors are guaranteed by the subsidiary.
Assuming that the transactions had taken place on March 29, 1999, the note
guarantors would have had total liabilities of $45.3 million (excluding their
$352.0 million of guarantees under the new credit facility). Although the
indenture will limit the ability of the note guarantors and Frontline to incur
indebtedness and issue preferred stock, there are certain significant
qualifications and exceptions. The indenture will not limit such subsidiaries
from incurring liabilities that are excluded from the definitions of
indebtedness, disqualified stock or preferred stock under the indenture. See
"Description of the Notes -- Certain Covenants -- Limitations on Indebtedness."
In addition, our ability and the ability of our note guarantors'
subsidiaries to pay dividends and make other payments to us may be restricted
by, among other things, applicable corporate and other laws and regulations and
agreements of the subsidiaries. Although the indenture will limit the ability of
such subsidiaries to enter into consensual restrictions on their ability to pay
dividends and make other payments, such limitations are subject to a number of
significant qualifications and exceptions. See "Description of the
Notes -- Certain Covenants -- Limitations on Restrictions on Distributions from
Restricted Subsidiaries."
COVENANTS IN OUR DEBT AGREEMENTS RESTRICT OUR BUSINESS IN MANY WAYS.
The indenture governing the old notes and the exchange notes will contain
covenants with respect to us that will restrict, among other things,
- the incurrence of additional indebtedness and the issuance of
disqualified stock and preferred stock,
17
<PAGE> 23
- the payment of dividends on and redemptions of, capital stock and the
redemption of indebtedness that is subordinated in right of payment to
the notes,
- certain other restricted payments including, without limitation,
investments,
- certain sales of assets,
- certain transactions with affiliates, and
- consolidations, mergers and transfers of all or substantially all of our
assets.
In addition, the new credit facility contains other and more restrictive
covenants and prohibit us from prepaying our other indebtedness (including the
notes) while indebtedness under the new credit facility is outstanding. The new
credit facility also requires us to maintain specified financial ratios and
satisfy financial condition tests. Our ability to meet those financial ratios
and tests can be affected by events beyond our control and there can be no
assurance that we will meet those ratios and tests. A breach of any of these
covenants, ratios, tests or restrictions could result in an event of default
under the new credit facility and/or the indenture. Upon the occurrence of an
event of default under the new credit facility, the lenders could elect to
declare all amounts outstanding under the new credit facility, together with
accrued interest, to be immediately due and payable. If we were unable to repay
those amounts, the lenders could proceed against the collateral granted to them
to secure such indebtedness. If the lenders under the new credit facility
accelerate the payment of the indebtedness, there can be no assurance that our
assets would be sufficient to repay in full such indebtedness and our other
indebtedness, including the notes. See "Description of Other Indebtedness,"
"-- The exchange notes and the note guarantees are effectively subordinated to
all senior debt of our subsidiaries," "-- If our debt obligations are
accelerated as a result of a failure to comply with our new credit facility, we
may not be able to repay the exchange notes" and "Description of the
Notes -- Certain Covenants."
IF OUR DEBT OBLIGATIONS ARE ACCELERATED AS A RESULT OF A FAILURE TO COMPLY WITH
OUR NEW CREDIT FACILITY, WE MAY NOT BE ABLE TO REPAY THE EXCHANGE NOTES.
In addition to being contractually subordinated to all existing and future
senior indebtedness, our obligations under the exchange notes will be unsecured
while our obligations under the new credit facility will be secured by a
security interest in substantially all the assets of our parent company, us and
each of our existing and subsequently acquired or organized U.S. and, subject to
certain limitations, non-U.S. subsidiaries, including a pledge of all of the
issued and outstanding shares of, or other equity interests in, our existing or
subsequently acquired or organized U.S. subsidiaries and 65% of the capital
stock of, or other equity interests in, each of our subsequently acquired or
organized non-U.S. subsidiaries. If we or one of our restricted subsidiaries are
declared bankrupt or insolvent or if we default under the new credit facility,
the lenders could declare all of the funds borrowed thereunder, together with
accrued interest, immediately due and payable. If we were unable to repay such
indebtedness, the lenders could foreclose on the pledged stock of our
subsidiaries and on the assets in which they have been granted a security
interest, in each case to your exclusion, even if an event of default exists
under the indenture at such time. Furthermore, under the note guarantees, if all
shares of any note guarantor are sold to persons pursuant to an enforcement of
the pledge of shares in such note guarantor for the benefit of the senior
lenders, then the applicable note guarantor will be released from its note
guarantee automatically and immediately upon such sale. See "Description of
Other Indebtedness."
OUR BUSINESS MAY BE ADVERSELY AFFECTED IF THE PRICE OF PAPER INCREASES.
Our operating income may be significantly affected by the price of paper
used in our publications. For example, the price of paper rose dramatically in
1995 and significantly affected operating income. In mid-1996 paper prices began
to fall, then increased moderately in 1997 and 1998. If paper prices increase in
the future and we cannot pass these costs on to our customers, such increases
may have a material adverse effect on us. Currently, we do not hedge against
increases in paper costs.
18
<PAGE> 24
WE OPERATE IN A VERY COMPETITIVE BUSINESS ENVIRONMENT.
National Enquirer, Star, Weekly World News and Country Weekly compete in
varying degrees with other publications sold at retailers' checkout counters, as
well as with other forms of media concentrating on celebrity news, such as
certain newspapers, magazines and television and radio programs. We believe that
historical declines in single copy circulation of National Enquirer and Star
have resulted in part from increased competition from these publications and
forms of media. Competition for circulation is largely based upon the content of
the publication, its placement in retail outlets and, to a lesser extent, its
price. Competition for advertising revenues is largely based upon circulation
levels, readership, demographics, price and advertising results. Many of our
competitors have substantially larger operating staffs, greater capital
resources and greater revenues from their publications. In this respect, we may
be at a competitive disadvantage with such entities. We believe that currently
our most significant direct competitors in the print media are Time Warner Inc.
(which publishes People, In Style and Entertainment Weekly), Wenner Media, Inc.
(which publishes US Magazine), TV Guide, Inc. (which publishes TV Guide) and
Globe Communications Corp. (which publishes Globe, Sun and National Examiner).
As use of the Internet and new on-line ventures focusing on celebrity news
increase, we may face new sources of competition.
DSI competes with many other companies providing marketing and distribution
services, such as full-service national distributors, wholesalers and publishers
with their own marketing organizations. Certain of DSI's competitors have
substantially larger operating staffs and greater capital resources. In this
respect, DSI may be at a competitive disadvantage with such entities.
OUR PERFORMANCE COULD BE ADVERSELY AFFECTED IF WE LOSE OUR KEY PERSONNEL.
We believe that our success is largely dependent on the abilities and
experience of David J. Pecker and our senior management team. The loss of the
services of Mr. Pecker or one or more of these senior executives could adversely
affect our ability to effectively manage our overall operations or successfully
execute current or future business strategies. We have entered into a five-year
employment contract with Mr. Pecker. See "Management -- Compensation of
Executive Officers." In addition, we believe that our success will depend upon
our ongoing ability to attract and retain qualified management and other
employees.
YOUR INVESTMENT MAY BE ADVERSELY AFFECTED DUE TO POTENTIAL CONFLICTS OF INTEREST
BETWEEN NOTEHOLDERS AND OUR CONTROLLING SHAREHOLDER.
Evercore has effective control of EMP Group L.L.C., our ultimate parent
company and us by virtue of its rights under a LLC agreement which governs EMP
Group L.L.C. Pursuant to the LLC agreement, Evercore has the right to appoint a
majority of the Board of Managers of EMP Group and a majority of the Board of
Directors of our parent company. As a result, Evercore will control our policies
and operations and will have the power to appoint new management and approve any
action requiring stockholder approval (including adopting amendments to our
certificate of incorporation and approving mergers or sales of substantially all
of our assets). There can be no assurance that the interests of Evercore will
not conflict with your interests. See "Management," "Outstanding Voting
Securities" and "Certain Relationships and Related Transactions."
PENDING AND FUTURE LITIGATION COULD MATERIALLY AFFECT OUR OPERATIONS.
We are involved in a number of litigation matters which have arisen in the
ordinary course of business. Because the focus of our publications often
involves controversial celebrities or subjects, the risk of defamation or
invasion of privacy litigation arises in the ordinary course of our business.
Our experience suggests that the claims for damages made in such lawsuits are
heavily inflated and, in any event, any reasonably foreseeable liability or
settlement would be covered by insurance. During the five fiscal years ended
March 29, 1999, we paid approximately $20 million in the aggregate for legal
fees (including prepublication review and litigation), litigation related
insurance premiums and, to a lesser extent, litigation settlements, including
amounts covered by insurance payments. We have not experienced any difficulty
19
<PAGE> 25
obtaining such insurance and do not expect to experience any material difficulty
in the future. There are currently no claims pending that we believe would have
a material adverse effect on our operations.
IF A CHANGE OF CONTROL OCCURS, THERE MAY NOT BE SUFFICIENT ASSETS TO PURCHASE
THE EXCHANGE NOTES OF ALL NOTEHOLDERS WISHING TO HAVE THEIR EXCHANGE NOTES
PURCHASED.
Upon a change of control under the indenture, we will be required to offer
to purchase all of the exchange notes then outstanding at 101% of their
principal amount, plus accrued and unpaid interest and liquidated damages, if
any, to the date of repurchase. If a change of control were to occur, we can
provide no assurance that we would have sufficient funds to pay the purchase
price for the exchange notes, and we expect that we would require third-party
financing; however, we can provide no assurance that we would be able to obtain
such financing on favorable terms, if at all. In addition, the new credit
facility restricts our ability to repurchase the exchange notes, including
pursuant to an offer in connection with a change of control. A change of control
under the indenture may result in an event of default under the new credit
facility and may cause the acceleration of other senior indebtedness, if any, in
which case the subordination provisions of the exchange notes would require
payment in full of the new credit facility and any other senior indebtedness
before repurchase of the exchange notes. Our future indebtedness may also
contain restrictions on repayment requirements with respect to certain events or
transactions that could constitute a change of control under the indenture. See
"Description of Other Indebtedness" and "Description of the Notes -- Change of
Control." The inability to repay senior indebtedness, if accelerated, and to
purchase all of the tendered exchange notes, would each constitute an event of
default under the indenture.
THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES.
While the old notes are presently eligible for trading in the PORTAL market
of the National Association of Securities Dealers, Inc. by qualified
institutional buyers, there is no existing market for the exchange notes.
Although the initial purchaser of the old notes has informed us that it
currently intends to make a market in the exchange notes following the exchange
offer, it is not obligated to do so and any such market making may be
discontinued at any time without notice. We do not intend to apply for listing
of the exchange notes on any securities exchange or on any automated dealer
quotation system.
The liquidity of, and trading market for, the exchange notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of our prospects or financial performance.
FAILURE OF OUR YEAR 2000 EFFORTS COULD ADVERSELY AFFECT US.
The year 2000 issue is the result of computer programs that were written
using only two digits, rather than four, to represent a year. Date-sensitive
software or hardware may not be able to distinguish between the years 1900 and
2000 and programs that perform arithmetic operations, comparisons or sorting of
date fields may begin yielding incorrect results. This could potentially cause a
system failure or miscalculations that could disrupt operations. To address the
impact of the year 2000 issue on our computer programs, embedded chips and
significant third-party suppliers of goods and services we have formed a task
force led by our information services department. This task force has taken an
inventory of the potential year 2000 issues that may exist and is in the process
of completing its assessment of their impact. Certain of our key systems, such
as financial applications, have already been identified as year 2000 compliant;
in addition, because of the recent replacement of a majority of our computer
hardware, we believe there is little likelihood that this equipment is not year
2000 compliant. We believe the largest areas of internal risk for year 2000
noncompliance are internally developed software applications and the handheld
communications devices used in merchandising by DSI. We have purchased
specialized software that will allow us to identify and correct year 2000
problems within our software applications and expect to have key applications
modified and tested by July 1999. Our information services department, working
with the handheld communication devices, has determined that remediation of the
existing handhelds is the appropriate course of action. We expect to complete
this remediation work by August 1999.
20
<PAGE> 26
At the present time, the year 2000 project is estimated to cost
approximately $500,000 and will be funded through cash flows from operations.
Approximately $290,000 of the estimated year 2000 costs will relate to hardware
and software purchases and will be capitalized with the remainder being expensed
as incurred.
At present, we believe our technology systems will be year 2000 compliant
and that the year 2000 issue will not present a materially adverse risk to our
future results of operations, financial position or cash flow. However, there
can be no assurance that our systems will be year 2000 compliant prior to
December 31, 1999 or that the costs incurred will not materially exceed the
amounts budgeted. If there are incidences of noncompliance, we plan to allocate
internal resources and retain dedicated consultants to address such incidences.
In the event that our computers are not year 2000 compliant by December 31,
1999, and as a result of that noncompliance business interruptions occur, we
could incur significant losses in revenues due to such business interruptions,
which could have a material adverse effect on our future results of operations,
financial position or cash flow.
In addition, there is a risk that a significant supplier of goods or
services may not be year 2000 compliant. We are communicating with our
significant suppliers of goods and services to obtain reasonable assurance that
their products and business systems will be year 2000 compliant. We rely on
certain suppliers to deliver a broad range of goods and services, including
prepress operations, printing services, paper, wholesale distribution, mailings
and banking services. Although we have taken, and will continue to take,
reasonable efforts to gather information to determine and verify the readiness
of products and dependencies, there can be no assurance that reliable
information will be offered or otherwise available. In order to mitigate the
effects of a significant supplier's potential failure to remediate the year 2000
issue in a timely manner, we would take appropriate actions including arranging
for alternate suppliers, re-running processes if errors occur and using manual
intervention to ensure the continuation of operations where necessary. Should
this happen, it may result in significant delays in business operations
including, but not limited to, delays in delivery of products resulting in loss
of revenues, increased operating costs, loss of customers or suppliers, or other
significant disruptions to our business which could have a material adverse
effect on our future results of operations, financial position or cash flow.
21
<PAGE> 27
THE TRANSACTIONS
THE MERGER. On May 7, 1999, EMP Acquisition Corp., a company formed by
Evercore Capital Partners L.P., a private equity firm, entered into a merger
agreement with our parent company, American Media, Inc., pursuant to which (a)
EMP Acquisition Corp. merged into American Media, Inc., (b) the existing
stockholders of American Media, Inc. received aggregate cash consideration of
$299.4 million and (c) Evercore and certain other investors, including David
Pecker, our chairman, acquired 100% of the common stock of American Media, Inc.
FINANCING FOR THE TRANSACTIONS. The investors made an equity investment of
$235.0 million in EMP Acquisition Corp. to fund a portion of the total cost of
the transactions. In addition, we
- entered into, and made initial borrowings under, a new senior secured
bank credit facility with The Chase Manhattan Bank, as agent, and a
syndicate of other financial institutions, providing for a credit
facility of up to $400.0 million consisting of a $60.0 million revolving
credit facility, a $100.0 million tranche A term loan facility and a
$240.0 million tranche B term loan facility,
- issued the notes,
- repaid all outstanding borrowings under, and terminated, our old senior
secured bank credit facility, and
- consummated a debt tender offer for our 11 5/8% Senior Subordinated Notes
due 2004.
The following table sets forth sources and uses of funds in connection with
the foregoing transactions, giving effect to the sale of our soap opera
publications (as discussed below):
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
---------------------
<S> <C>
SOURCES:
New credit facility(1)...................................... $352.0
Notes....................................................... 250.0
Equity investment........................................... 235.0
------
Total sources.......................................... $837.0
======
USES:
Cash consideration.......................................... $299.4
Repayment of old credit facility............................ 267.0
Purchase of our 11 5/8% senior subordinated notes........... 199.3
Payment of accrued interest on old credit facility and
11 5/8% senior subordinated notes......................... 12.7
Transaction fees and expenses(2)............................ 58.6
------
Total uses............................................. $837.0
======
</TABLE>
- ---------------
(1) Represents borrowings under the new credit facility made on the closing date
of the merger, consisting of $100.0 million under the tranche A term loan
facility, $240.0 million under the tranche B term loan facility and $12.0
million under the revolving credit facility.
(2) Transaction fees and expenses include, among other things, the debt tender
offer premium and consent fee, the initial purchaser's discount and other
expenses incurred in the offering of the old notes and fees and expenses
associated with the merger, the existing credit facility and the debt tender
offer.
SALE OF SOAP OPERA PUBLICATIONS. On February 3, 1999, we ceased
publication of Soap Opera News and Soap Opera Magazine and sold certain of the
trademarks and other soap opera publishing assets relating to these magazines to
Primedia, Inc. for $10.0 million in cash. We used the entire cash proceeds to
repay borrowings under our old credit facility. In addition, we may receive
future consideration based upon increased financial performance above certain
levels of Primedia Inc.'s Soap Opera Digest and Soap Opera Weekly publications.
There can be no assurance, however, that we will receive any such future
consideration.
22
<PAGE> 28
USE OF PROCEEDS
We will receive no proceeds from the exchange of old notes pursuant to this
exchange offer.
The net proceeds from the issuance and sale of the old notes were
approximately $241.2 million after deduction of the initial purchaser's discount
and other expenses related to that offering. The net proceeds from that offering
were applied, together with the equity investment and proceeds from borrowings
under the new credit facility, to fund the merger, the debt tender offer, the
repayment of indebtedness under the old credit facility and the payment of fees
and expenses in connection with the transactions. For a further discussion of
the estimated sources and uses of funds relating to the transactions, see "The
Transactions."
23
<PAGE> 29
CAPITALIZATION
The following table sets forth our capitalization as of March 29, 1999 on
an actual basis and on a pro forma basis after giving effect to the transactions
as if they had been consummated on such date. The table should be read in
conjunction with "The Transactions," "Use of Proceeds," "Unaudited Pro Forma
Consolidated Financial Statements," "Selected Historical Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our consolidated financial statements and the notes
thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
MARCH 29, 1999
-----------------------
ACTUAL PRO FORMA
--------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt (including current maturities):
11 5/8% senior subordinated notes......................... $200,000 $ 740
Old credit facility....................................... 271,000 --
Notes..................................................... -- 250,000
New credit facility....................................... -- 352,000
Other debt................................................ 134 134
-------- --------
Total debt................................................ 471,134 602,874
Total stockholder's equity.................................. 60,198 215,539
-------- --------
Total capitalization........................................ $531,332 $818,413
======== ========
</TABLE>
24
<PAGE> 30
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements have
been prepared by applying pro forma adjustments to our historical consolidated
financial statements included elsewhere in this prospectus. The pro forma
adjustments give effect to the transactions and the sale of the soap opera
assets. The unaudited pro forma consolidated statement of income for the fiscal
year ended March 29, 1999 gives effect to the transactions and the sale of the
soap opera assets as if they had occurred at the beginning of such period. The
unaudited pro forma consolidated balance sheet as of March 29, 1999 gives effect
to the transactions as if they had occurred on such date. The unaudited pro
forma consolidated financial statements are for informational purposes only and
do not purport to be indicative of our financial position or the results of our
operations that would have actually been obtained had the transactions and the
sale of the soap opera assets in fact occurred as of the assumed date or for the
period presented, nor are they indicative of, or projections for, our results of
operations or financial position for any future period or date. The pro forma
adjustments, as described in the accompanying notes, are based on available
information and upon certain assumptions which we believe are reasonable.
The merger will be accounted for using the purchase method of accounting.
The purchase price will be allocated to the assets acquired and liabilities
assumed, based on their respective fair values. The allocation of the purchase
price reflected in the unaudited pro forma consolidated financial statements is
preliminary. The adjustments that have been included in the unaudited pro forma
consolidated financial statements will change based upon the final allocation of
the purchase price when additional information concerning asset and liability
valuation is obtained. The actual allocation of the purchase price and the
resulting effect on operating income may differ significantly from the unaudited
pro forma amounts included herein.
The following unaudited pro forma consolidated financial statements should
be read in conjunction with "Selected Historical Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our consolidated financial statements and the notes
thereto included elsewhere in this prospectus.
25
<PAGE> 31
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 29, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR TRANSACTIONS
HISTORICAL (NOTE 1) PRO FORMA
---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash
equivalents............. $ 3,823 $ (260)(a) $ 3,563
Receivables, net........... 7,977 -- 7,977
Inventories................ 9,830 -- 9,830
Prepaid expenses and
other................... 2,650 -- 2,650
-------- -------- --------
Total current assets.... 24,280 (260) 24,020
Property and equipment,
net........................ 26,860 (2,685)(b) 24,175
Deferred debt costs, net..... 5,728 15,599(c) 21,327
Goodwill and other
intangibles, net........... 559,970 259,391(d) 819,361
-------- -------- --------
$616,838 $272,045 $888,883
======== ======== ========
LIABILITIES AND STOCKHOLDER'S
EQUITY
Current liabilities
Current portion of old
credit facility......... $ 25,000 $(25,000)(e) $ --
Accrued expenses........... 46,419 (11,632)(f) 34,787
Deferred revenues.......... 27,987 -- 27,987
-------- -------- --------
Total current
liabilities........... 99,406 (36,632) 62,774
Payable to American Media,
Inc........................ 3,404 (3,404)(g) --
Long-term debt............... 446,134 156,740(h) 602,874
Deferred income taxes........ 7,696 7,696
Total stockholder's equity... 60,198 155,341(i) 215,539
-------- -------- --------
$616,838 $272,045 $888,883
======== ======== ========
</TABLE>
See accompanying notes to the unaudited pro forma consolidated balance sheet.
26
<PAGE> 32
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 29, 1999
(DOLLARS IN THOUSANDS)
NOTE 1: The following unaudited pro forma adjustments relate to the
transactions as if they had occurred as of March 29, 1999:
(a) Represents net change in cash and cash equivalents, calculated as
follows:
<TABLE>
<S> <C>
Issuance of new debt:
New credit facility....................................... $ 352,000
Notes..................................................... 250,000
---------
Total new debt issued.................................. 602,000
Repayment of existing debt:
Old credit facility....................................... (271,000)
11 5/8% senior subordinated notes......................... (199,260)
Debt tender offer premium and consent fee................. (14,962)
Accrued interest on existing debt......................... (11,067)
---------
Total existing debt repaid............................. (496,289)
---------
Net change in total debt.................................... 105,711
Cash payment to American Media, Inc. to fund a portion of
the cash consideration in connection with the merger...... (64,398)
Estimated fees and expenses associated with the transactions
other than accrued expense................................ (41,573)
---------
Net change in cash and cash equivalents..................... $ (260)
=========
</TABLE>
(b) Represents reduction in valuation of certain fixed assets.
(c) Represents the net change in deferred debt issuance costs for the new
credit facility and the notes of $15,599, which are recorded as an
adjustment net of the write-off of the existing debt issuance costs.
(d) Represents the following adjustments to goodwill and other intangibles,
net:
<TABLE>
<S> <C>
Elimination of historical goodwill and other intangible
assets.................................................... $(559,970)
New goodwill and other intangible assets.................... 826,962
Recording of the income tax benefit related to the debt
tender offer premium and consent fee for our 11 5/8%
senior subordinated notes and the write-off of the
existing debt issuance costs.............................. (7,601)
---------
$ 259,391
=========
</TABLE>
(e) Represents the repayment of the current portion of the old credit
facility.
(f) Represents primarily the payment of accrued interest on the old credit
facility and our 11 5/8% senior subordinated notes of $11,067.
(g) Represents the elimination of the payable to American Media, Inc. as a
result of our cash payment to American Media, Inc. described in Note
1(a) above.
27
<PAGE> 33
(h) Represents net long-term indebtedness incurred in connection with the
transactions. This amount has been calculated as follows:
<TABLE>
<S> <C>
Issuance of new debt:
New credit facility....................................... $ 352,000
Notes..................................................... 250,000
---------
Total new debt issued.................................. 602,000
Repayment of existing long-term debt:
Old credit facility....................................... (246,000)
11 5/8% senior subordinated notes......................... (199,260)
---------
Total existing long-term debt repaid................... (445,260)
---------
Net......................................................... $ 156,740
=========
</TABLE>
(i) Represents the elimination of the historical equity balances and
recording of the equity investment less estimated fees and expenses in
connection with the transactions.
28
<PAGE> 34
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED MARCH 29, 1999
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
SALE OF PRO FORMA ADJUSTMENTS
SOAP OPERA BEFORE FOR
HISTORICAL ASSETS TRANSACTIONS TRANSACTIONS PRO FORMA
---------- --------------- ------------ ------------ ---------
(NOTE 1) (NOTE 2)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating revenues
Circulation................. $248,631 $(20,387)(a) $288,244 $ -- $228,244
Advertising................. 23,459 (877)(a) 22,582 -- 22,582
Other....................... 21,369 (11)(a) 21,358 -- 21,358
-------- -------- -------- -------- --------
293,459 (21,275)(a) 272,184 272,184
Operating expenses
Editorial................... 28,906 (3,762)(a) 25,144 -- 25,144
Production.................. 79,691 (14,203)(a) 65,488 -- 65,488
Distribution, circulation
and other cost of
sales.................... 67,640 (8,452)(a) 59,188 -- 59,188
Selling, general and
administrative
expenses................. 26,212 (401)(a) 25,811 750(a) 26,561
Gain on sale of soap opera
assets................... (6,499) 6,499(a) -- -- --
Depreciation and
amortization............. 32,110 (1,439)(a) 30,671 19,893(b) 50,564
-------- -------- -------- -------- --------
228,060 (21,758) 206,302 20,643 226,945
Operating income............ 65,399 483 65,882 (20,643) 45,239
Interest expense.............. (46,897) 780(b) (46,117) (12,632)(c) (58,749)
Other income (expense), net
(Note 3).................... 2,943 -- 2,943 1,162(a) 4,105
-------- -------- -------- -------- --------
Income (loss) before
provision for income
taxes.................... 21,445 1,263 22,708 (32,113) (9,405)
Provision for income
taxes.................... 13,559 467(c) 14,026 (4,521)(d) 9,505
-------- -------- -------- -------- --------
Net income (loss) (Note
4)....................... $ 7,886 $ 796 $ 8,682 $(27,592) $(18,910)
======== ======== ======== ======== ========
</TABLE>
See the accompanying notes to the unaudited pro forma consolidated statement of
income.
29
<PAGE> 35
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
NOTE 1: The following unaudited pro forma adjustments relate to the sale of the
soap opera assets and the application of the proceeds therefrom and are included
as of the beginning of the period:
(a) Represents the elimination of the results of operations of the soap
opera assets.
(b) Represents the reduction of interest expense resulting from the
application of the cash proceeds of $10,000 from the sale of the soap
opera assets to repay borrowings under the old credit facility.
(c) Represents an increase in the provision for income taxes as a result of
the pro forma increase in income before taxes, computed at an effective
tax rate of 37%.
NOTE 2: The following unaudited pro forma adjustments relate to the
transactions and are included as of the beginning of the period:
(a) Represents the recording of the new annual monitoring fee as a selling,
general and administrative expense and the elimination of the
historical annual management fee from other income (expense), net.
(b) Represents the amortization of goodwill and other intangible assets
totaling $40,968 recorded in connection with the transactions on a
straight line basis over 20 years, net of the elimination of historical
amortization of goodwill and other intangible assets totaling $21,075,
which had amortizable lives of 25-40 years.
(c) Represents adjustments necessary to reflect pro forma interest expense
and amortization of deferred debt issuance costs based on pro forma
debt levels and applicable interest rates, net of the elimination of
historical interest expense.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
MARCH 29, 1999
-----------------
<S> <C>
Interest on the new credit facility (assumes a weighted
average interest rate of 8.3%)............................ $ 29,600
Interest on the notes....................................... 25,625
Amortization of deferred debt issuance costs................ 2,926
Elimination of historical interest expense.................. (45,519)
--------
$ 12,632
========
</TABLE>
Represents interest expense on $352,000 principal amount of the new
credit facility and $250,000 principal amount of the notes that were
outstanding after the consummation of the transactions. The average
annual effect on income before income taxes of a 1/8 percent variance
in the weighted average interest rate is approximately $440. Debt
issuance costs related to the new credit facility are amortized over
the life of the loans using the effective interest method while debt
issuance costs related to the notes are amortized on a straight-line
basis over 10 years.
(d) Represents a reduction in the provision for income taxes as a result of
the pro forma decrease in income before income taxes, computed at an
effective tax rate of 37%. No pro forma tax benefit has been recorded
as a result of the increase in intangibles amortization as it is not
deductible for income tax reporting purposes.
NOTE 3: Other income, net for the financial information presented, is comprised
of the management fee accrued during such period and miscellaneous nonrecurring
items and includes for the fiscal year ended March 29, 1999, a net gain of
$4,400 from the favorable settlement of certain litigation.
NOTE 4: Represents net income (loss) before an extraordinary charge of $3,430
($2,161 net of income taxes of $1,269).
30
<PAGE> 36
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth our selected historical consolidated
financial information and the notes thereto. The selected historical
consolidated financial information as of and for the fiscal year ended March 27,
1995 and March 25, 1996 has been derived from our consolidated financial
statements and the notes thereto, which have been audited by Arthur Andersen
LLP, independent certified public accountants, but which are not included in
this prospectus. The historical financial information as of and for the fiscal
year ended March 31, 1997, March 30, 1998 and March 29, 1999 has been derived
from our audited historical consolidated financial statements and the related
notes thereto, which have been audited by Arthur Andersen LLP, and which are
included elsewhere in this prospectus. In our opinion, all adjustments (which
consist only of normal recurring entries) considered necessary for a fair
presentation have been included in our unaudited consolidated financial
statements. The following selected historical consolidated financial information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial
statements and the notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------
MARCH 27, MARCH 25, MARCH 31, MARCH 30, MARCH 29,
1995 1996 1997(1) 1998 1999
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME INFORMATION:
Operating revenues
Circulation................................. $273,056 $257,405 $273,567 $262,249 $248,630
Advertising................................. 27,033 23,305 24,280 23,643 23,460
Other....................................... 15,210 14,340 18,141 21,792 21,369
-------- -------- -------- -------- --------
315,299 295,050 315,988 307,684 293,459
Operating expenses
Editorial................................... 30,128 27,851 28,369 30,497 28,906
Production.................................. 74,947 84,830 80,286 82,296 79,691
Distribution, circulation and other cost of
sales.................................... 56,438 53,601 60,514 66,883 67,640
Selling, general and administrative......... 33,838 32,054 30,428 27,101 26,212
Gain on sale of soap opera assets........... -- -- -- -- (6,499)
Depreciation and amortization............... 35,050 30,378 29,220 30,327 32,110
-------- -------- -------- -------- --------
230,401 228,714 228,817 237,104 228,060
Operating income............................ 84,898 66,336 87,171 70,580 65,399
Interest expense.............................. (35,885) (56,715) (56,284) (50,486) (46,897)
Other income (expense), net(2)................ (1,409) (1,195) (1,705) (1,641) 2,943
-------- -------- -------- -------- --------
Income before income taxes and extraordinary
charge................................... 47,604 8,426 29,182 18,453 21,445
Income taxes.................................. 23,755 8,985 16,716 12,437 13,559
-------- -------- -------- -------- --------
Income (loss) before extraordinary charge... 23,849 (559) 12,466 6,016 7,886
Extraordinary charge(3)....................... (11,635) -- -- -- (2,161)
-------- -------- -------- -------- --------
Net income (loss)........................... $ 12,214 $ (559) $ 12,466 $ 6,016 $ 5,725
======== ======== ======== ======== ========
</TABLE>
31
<PAGE> 37
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------
MARCH 27, MARCH 25, MARCH 31, MARCH 30, MARCH 29,
1995 1996 1997(1) 1998 1999
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OTHER FINANCIAL INFORMATION:
EBITDA(4)..................................... $117,972 $ 95,315 $114,593 $ 99,226 $ 96,347
Capital expenditures.......................... 8,307 9,072 8,526 11,018 15,019
Ratio of earnings to fixed charges(5)......... 2.3x 1.1x 1.5x 1.4x 1.4x
Cash provided from operating activities....... 80,907 29,024 46,688 41,810 29,802
Cash used in investing activities............. (7,888) (7,580) (10,762) (11,018) (5,019)
Cash used in financing activities............. (74,318) (23,098) (32,339) (31,617) (28,365)
BALANCE SHEET INFORMATION (END OF PERIOD):
Total debt.................................... $579,844 $558,906 $528,662 $497,535 $471,134
Total stockholder's equity.................... 36,801 36,242 48,457 54,473 60,198
</TABLE>
- ---------------
(1) Fiscal 1997 includes 53 weeks as compared to 52 weeks for all other fiscal
years presented.
(2) Other income, net for any period is comprised of the management fee incurred
during such period and miscellaneous nonrecurring items and includes for the
fiscal year ended March 29, 1999, a net gain of $4,400 from the favorable
settlement of certain litigation.
(3) Consists primarily of the write-off of deferred debt issuance costs and
charges relating to refinancing of indebtedness.
(4) EBITDA is defined as net income (loss) before extraordinary charges,
interest expense, income taxes, depreciation and amortization and other
income (expense) (other than management fees). The management fees included
in other income (expense) were $1,976, $1,399, $1,798, $1,681 and $1,162,
respectively, for fiscal 1995, 1996, 1997, 1998 and 1999. The pro forma
financial information presented elsewhere herein includes a new monitoring
fee of $750 per annum as a selling, general and administrative operating
expense. EBITDA is not a measure of performance defined by GAAP. EBITDA
should not be considered in isolation or as a substitute for net income or a
statement of cash flows which have been prepared in accordance with GAAP or
as a measure of our operating performance, profitability or liquidity. We
believe EBITDA provides useful information regarding our ability to service
our debt, and we understand that such information is considered by certain
investors to be an additional basis for evaluating a company's ability to
pay interest and repay debt. EBITDA measures presented herein may not be
comparable to similarly titled measures of other companies due to
differences in methods of calculation.
(5) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (income (loss) before income taxes and
extraordinary items plus fixed charges) by fixed charges (interest expense
plus that portion of rental expense deemed to represent interest and
amortization of deferred debt issuance costs).
32
<PAGE> 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of our financial condition and results of
operations for the three fiscal years ended March 29, 1999. This discussion
should be read in conjunction with our consolidated financial statements and the
related notes thereto included elsewhere in this prospectus. The following
discussion and analysis of our financial condition and results of operations
cover periods prior to the consummation of the transactions and the sale of the
soap opera assets on February 3, 1999. Accordingly, management's discussion and
analysis of historical periods does not reflect the impact on us of these events
or of the business strategy to be implemented after consummation of the
transactions. See "Risk Factors," "Unaudited Pro Forma Consolidated Financial
Statements," "-- Liquidity and Capital Resources" and "Business -- Business
Strategy."
OVERVIEW
We are a leading publisher in the field of general interest magazines,
publishing National Enquirer, Star, Weekly World News and Country Weekly. We
generate revenues from circulation, predominantly single copy sales in
supermarkets and other retail outlets, and from advertising and other sources.
In fiscal 1998 and 1999, approximately 85% of our total operating revenues
were from circulation. Single copy sales accounted for approximately 84% of such
circulation revenues in such periods and the remainder were from subscription
sales. Over the past five years, circulation revenues have been generally stable
as circulation declines have been offset in part by increases in the cover
prices of our publications.
We believe that circulation has been affected by a number of factors over
the last several years. Most recently, we believe the adverse publicity against
celebrity news-based magazines after the death of Princess Diana in August 1997
was the principal factor for National Enquirer and Star average weekly single
copy circulation declines by 8.6% and 10.7%, respectively, from the prior fiscal
year. While single copy circulation has improved for these two publications from
the low levels experienced in the months immediately after Princess Diana's
death, they have not returned to their prior levels. See "Business --
Circulation."
We also believe that a significant portion of the declines in single copy
circulation of National Enquirer and Star since fiscal 1994 is attributable to a
significant reduction in advertising expenditures for these publications. Total
advertising expenditures for National Enquirer and Star decreased from $16.1
million in fiscal 1994 to $0.6 million in fiscal 1999. We believe that this
reduction in advertising was a significant factor in the decrease in average
weekly single copy circulation of National Enquirer and Star from approximately
2.8 million copies and 2.5 million copies, respectively, in fiscal 1994 to
approximately 1.9 million copies and 1.6 million copies, respectively, in fiscal
1998, and to approximately 1.8 million and 1.4 million copies, respectively in
fiscal 1999. In addition, single copy circulation declines of all our
publications can be attributed to (a) increased competition from other
publications and forms of media, such as certain newspapers, television and
radio programs concentrating on celebrity news and (b) a general industry-wide
decline in single copy circulation of individual publications due to an
increasing number of publications in the industry. See "Risk Factors -- Our
publications have experienced declines in single copy circulation."
Historically, we have offset declines in single copy circulation, in part,
through increases in cover prices. We believe that we will be able to continue
to implement prudent increases in our cover prices over time without causing a
decline in circulation. Since May 1993, we have instituted ten cover price
increases in the United States for National Enquirer and Star, consisting of
five cover price increases for each publication, ranging from $0.04 to $0.26 per
copy. The average weekly single copy circulation of National Enquirer and Star
for the three-month periods following seven of the eight cover price increases
for which circulation data are available was approximately equal to or greater
than the average weekly single copy circulation for the applicable three-month
periods prior to such increases. After the July 7, 1998 cover price increase of
$0.10 for each of National Enquirer and Star (i.e., the most recent cover price
increase for which circulation data are available), average weekly single copy
circulation increased approximately
33
<PAGE> 39
12% and 8%, respectively, for the three-month period following such increases
over the average weekly single copy circulation for each publication for the
three-month period prior to such increases. Effective July 27, 1999, the cover
price for each of National Enquirer and Star was increased $0.10 to $1.59. See
"Business -- Circulation."
In addition to circulation, approximately 8% and 7%, respectively, of our
total operating revenues in fiscal 1998 and fiscal 1999 were from advertising
and other revenues (consisting primarily of DSI and Frontline revenues),
respectively.
Our primary operating costs and expenses are comprised of editorial,
production, distribution, circulation and other costs of sales and selling,
general and administrative expenses. The largest components of our costs are
related to production, which includes printing and paper expenses, and to
distribution, circulation and other costs of sales. Distribution, circulation
and other costs of sales primarily include the costs associated with operating
DSI, rack display payments made to retailers for our publications and
subscription postage.
In connection with the transactions and the merger, which will be accounted
for under the purchase method of accounting, as of May 7, 1999 we will reflect a
new basis of accounting that will result in a substantial increase in the amount
of intangible assets. We are currently in the process of appraising the value of
our assets and liabilities, therefore the allocation of the actual purchase
price may differ significantly from this estimate.
On February 3, 1999, we ceased publication of Soap Opera News and Soap
Opera Magazine and sold certain of the trademarks and other soap opera
publishing assets relating to these magazines to Primedia, Inc. for $10.0
million in cash. In addition, we may receive future consideration based upon
increased financial performance above certain levels of Primedia Inc.'s Soap
Opera Digest and Soap Opera Weekly publications. There can be no assurance,
however, that we will receive any such consideration.
RESULTS OF OPERATIONS
Comparison of Fiscal Year Ended March 29, 1999 to Fiscal Year Ended March 30,
1998
Total operating revenues were $293,459,000 for fiscal 1999, a decrease of
$14,225,000, or 4.6%, from total operating revenues of $307,684,000 for the
prior fiscal year. This decline in total operating revenues was primarily a
result of a decline in circulation revenues from single copy sales of our
publications and, to a lesser extent, the decrease in total revenues due to the
sale of the soap opera assets.
Circulation revenues (which include all single copy and subscription sales)
of $248,630,000 decreased $13,619,000, or 5.2%, for fiscal 1999 compared to the
prior fiscal year. Substantially all of the decrease in circulation revenues for
fiscal 1999 was related to declines in single copy circulation of National
Enquirer and Star, which was partially offset by a $0.10 increase in the cover
prices of these publications on July 7, 1998 in the United States and a
corresponding increase in Canada. For fiscal 1999 average weekly single copy
circulation for both National Enquirer and Star decreased by 8.6% and 10.7%,
respectively, as compared to the prior fiscal year. We believe that the
principal factor causing such declines was the adverse publicity against
celebrity news-based magazines after the death of Princess Diana in August 1997.
While single copy circulation for these two publications have improved from the
low levels experienced in the months immediately after Princess Diana's death,
they have not returned to their prior levels.
Country Weekly's average weekly circulation decreased 12.3% for fiscal 1999
as compared to the prior fiscal year, reflecting an overall weakness in its
category which has resulted in the recent folding of a competitive publication.
The decline in circulation revenues caused by such decreases in circulation was
partially offset by $0.10 and $.20 increases in the cover price of Country
Weekly on April 7, 1998 and March 2, 1999, respectively.
Subscription revenues of $41,802,000 decreased $638,000, or 1.5%, for
fiscal 1999 compared to the prior fiscal year. One method of increasing the
subscription bases of our publications has been to offer discounted
subscriptions through an agent. We believe that subscription revenues for the
fiscal year
34
<PAGE> 40
remained relatively flat, at least in part, because of recent adverse publicity
from litigation initiated by several states against certain agents, which we
believe has resulted in weaker responses than we typically expect from
discounted subscription offers. However, because discounted subscriptions are
not profitable until they are renewed at full price, a lower response rate
should have no immediate adverse effect on our results of operations. It is
unknown what the potential long-term impact will be on subscription levels and
profitability should response rates remain weak.
For the fiscal year 1999, advertising revenues of $23,460,000 remained
relatively flat as compared to the advertising revenues of $23,643,000 for the
prior fiscal year. Declines in mail order and classified advertising were
primarily offset by an increase in national advertising in National Enquirer and
Star.
Other revenues of $21,369,000 for fiscal 1999 decreased by $423,000, or
1.9%, as compared to the prior fiscal year primarily due to declines in
ancillary sales (primarily licensing and syndication sales) and DSI revenues,
which were not completely offset by increases in Frontline revenues.
Total operating expenses (excluding the gain on the sale of the soap opera
assets) for fiscal 1999 decreased by $2,545,000 when compared to the prior
fiscal year. Editorial costs for fiscal 1999 decreased by $1,591,000 when
compared to the prior fiscal year, reflecting cost control efforts of the
editorial department at National Enquirer and Star. Production costs decreased
by $2,605,000 for fiscal 1999 as compared to fiscal 1998 resulting primarily
from reduced press runs of Soap Opera News and the impact of five fewer issues
of both Soap Opera Magazine and Soap Opera News in the current fiscal year. This
decrease partially offset an increase in distribution, circulation and other
cost of sales of $757,000 related to higher in-store display expenses, of which
Soap Opera News represented a majority of the increase. Depreciation and
amortization expense increased for fiscal 1999 by $1,783,000 compared to the
prior fiscal year, reflecting depreciation related to additional Soap Opera News
display pockets and replacement and upgrades of our information systems.
Interest expense decreased for fiscal 1999 by $3,569,000 compared to the
prior fiscal year. This decrease was the result of reduced average balances of
outstanding indebtedness and lower amounts of amortization of deferred debt
issuance costs as a result of refinancing of indebtedness.
Other income was $2,943,000 for fiscal 1999 compared to expenses of
$1,641,000 for the prior fiscal year because of a net gain of $4.4 million from
the favorable settlement of certain litigation which was recorded in the first
fiscal quarter.
Our effective income tax rates were 63.2% and 67.4% for fiscal years 1999
and 1998, respectively, as compared to the federal statutory income tax rate of
35%. The higher effective tax rates when compared to the federal statutory
income tax rate result primarily from goodwill amortization which is not
deductible for income tax reporting purposes. The lower effective income tax
rate in fiscal 1999 over fiscal 1998 resulted primarily from changes in the
ratio of nondeductible goodwill as a percentage of income before income taxes.
During the fiscal quarter ended June 29, 1998, we recorded an extraordinary
charge totaling approximately $3.4 million ($2.2 million net of income taxes)
for the write-off of deferred debt issuance costs and other charges relating to
the refinancing of indebtedness.
Comparison of Fiscal Year Ended March 30, 1998 to Fiscal Year Ended March 31,
1997
Total operating revenues were $307,684,000 for fiscal 1998 (which includes
52 weeks as compared to 53 weeks in fiscal 1997), a decrease of $8,304,000 or
2.6% from total operating revenues of $315,988,000 in the prior fiscal year. On
an equivalent number of weeks basis, fiscal 1998 total operating revenues
decreased by approximately $2,342,000 or 0.8% from the prior fiscal year. This
decline in total operating revenues was primarily a result of a decline in
circulation revenues from single copy sales of our publications other than Soap
Opera News (which published only one issue in fiscal 1997) and, to a lesser
extent, a decline in advertising revenues. These declines in single copy
circulation revenues and advertising revenues were partially offset by increases
in subscription revenues and other revenues.
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<PAGE> 41
Circulation revenues (which include all single copy and subscription sales)
of $262,249,000 in fiscal 1998 decreased $11,318,000 or 4.1% from the prior
fiscal year. On an equivalent number of weeks basis, fiscal 1998 single copy
circulation revenues fell by approximately $6,156,000 or 2.3% from the prior
fiscal year as revenues generated by Soap Opera News, which published only one
issue in the prior fiscal year, were unable to offset single copy circulation
revenue declines for National Enquirer and Star.
In fiscal 1998, primarily as a result of adverse publicity resulting from
the August 1997 death of Princess Diana, National Enquirer and Star average
weekly single copy circulation declined by 8.2% and 12.9%, respectively, when
compared to the prior fiscal year. We believe that Star, which is more celebrity
focused than National Enquirer, and, to a lesser extent, National Enquirer, also
were impacted by competition from other forms of media covering celebrity news.
Revenues from per copy cover price increases of $0.10 on July 23, 1996 helped to
offset a portion of the circulation declines for these publications. Soap Opera
Magazine's average weekly single copy circulation in fiscal 1998 declined 18.8%,
reflecting the impact of increased competition in the soap opera category. As
compared to fiscal 1997, Country Weekly's average weekly circulation increased
6.9% as higher subscription levels more than offset a decline in average weekly
single copy circulation of 7.5%. A Weekly World News cover price increase of
$0.16 in April 1997 helped to reduce the impact on circulation revenues of a
13.0% decline in average weekly single copy circulation.
Subscription revenues of $42,440,000 in fiscal 1998 increased $2,570,000 or
6.4% over fiscal 1997. Expressed on an equivalent number of weeks basis,
subscription revenues increased by approximately $3,322,000 or 8.5% due largely
to increases in average weekly subscription circulation of 25.8%, 4.7% and 38.9%
for Country Weekly, National Enquirer and Soap Opera Magazine, respectively, as
well as subscriptions generated by the launch of Soap Opera News.
Advertising revenues of $23,643,000 in fiscal 1998 declined $637,000 or
2.6% compared to fiscal 1997; on an equivalent number of weeks basis,
advertising revenues were approximately flat. During fiscal 1998 lower levels of
national advertising in National Enquirer and Star were offset by higher
national advertising revenues generated by Country Weekly. National advertising,
particularly in National Enquirer and Star, has been adversely affected by the
loss of tobacco-related product advertising. We believe that the tobacco
industry, as a whole, has curtailed its print media based advertising because of
a lack of clear legislative guidelines that will address the future of tobacco
products advertising in the United States. Until this issue is resolved, our
tobacco related advertising revenues may continue to be adversely affected.
Advertising revenues in fiscal 1998 were also negatively impacted by reductions
in the average revenues per page generated by direct mail order and classified
advertising.
Other revenues of $21,792,000 in fiscal 1998 increased $3,651,000 or 20.1%
over fiscal 1997 reflecting revenues generated by Frontline, acquired in
September 1996, which sells in-store advertising to various product
manufacturers and service providers and, to a lesser extent, DSI, due to
expansion of its marketing, merchandising and information-gathering services for
various third-party clients.
Operating expenses of $237,104,000 in fiscal 1998 increased $8,287,000 or
3.6% over fiscal 1997; on an equivalent number of weeks basis (excluding
depreciation and amortization) increased by $10,946,000 or 5.6% over fiscal 1997
primarily reflecting the editorial, production and distribution expenses
associated with Soap Opera News and expenses related to Frontline, each of which
were included for only a portion of the prior year. Distribution related
expenses were higher due to increased subscription fulfillment and DSI's
expanded marketing, merchandising and information-gathering services as well as
Soap Opera News. Excluding production costs associated with Soap Opera News, on
an equivalent number of issues basis overall production costs declined
reflecting the benefit of lower paper and ink costs.
Interest expense declined $5,798,000 in fiscal 1998 over fiscal 1997 to
$50,486,000 reflecting one less week of interest and decreases in the average
balance of outstanding indebtedness.
Our effective income tax rates were 67.4% and 57.3% for fiscal years 1998
and 1997, respectively, as compared to the statutory federal income tax rate of
35%. The higher effective tax rates when compared to the federal income tax rate
result primarily from goodwill amortization which is not deductible for income
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<PAGE> 42
tax reporting purposes. The higher effective tax rate in fiscal 1998 over fiscal
1997 resulted primarily from changes in the ratio of nondeductible goodwill as a
percentage of income before taxes.
Comparison of Fiscal Year Ended March 31, 1997 to Fiscal Year Ended March 25,
1996
Total operating revenues were $315,988,000 for fiscal 1997 (which includes
53 weeks as compared to 52 weeks in fiscal 1996), an increase of $20,938,000 or
7.1% from total operating revenues of $295,050,000 in the prior fiscal year. On
an equivalent number of weeks basis, fiscal 1997 total operating revenues
increased by $14,976,000 or 5.1% from the prior fiscal year.
Circulation revenues (which include all single copy and subscription sales)
of $273,567,000 increased $16,162,000 or 6.3% from the prior fiscal year. On an
equivalent number of weeks basis, fiscal 1997 single copy circulation revenues
increased by approximately $9,307,000 or 4.2% as a result of higher revenues
generated by National Enquirer and Soap Opera Magazine. Increases in revenues
generated by a $0.10 per copy increase in cover price for National Enquirer,
effective with the July 23, 1996 issue, more than offset a decline in National
Enquirer's average weekly single copy circulation from fiscal 1996 of 2.1%; a
similar price increase for Star largely offset an average weekly single copy
circulation decline of 8.2%. We believe the declines in single copy circulation
of National Enquirer and Star were due in part to the increasingly competitive
print and electronic media coverage of celebrity news. In addition, we believe
that such declines in single copy circulation were also attributable to
decreases in advertising spending in recent fiscal years and a lack of
promotional activities. Soap Opera Magazine's single copy circulation revenue in
fiscal 1997 was higher as average weekly single copy circulation increased by
approximately 11.7% when compared to the prior fiscal year. Revenues were also
favorably impacted by cover price increases for Country Weekly and Weekly World
News of $0.20 on September 26, 1995 and $0.10 on November 7, 1995, respectively.
Average weekly single copy circulation for Country Weekly and Weekly World News
increased 1.9% and decreased 6.6%, respectively, when compared to fiscal 1996.
Subscription revenues of $39,870,000 in fiscal 1997 increased $2,445,000 or
6.5% over fiscal 1996. Expressed on an equivalent number of weeks basis,
subscription revenues increased by approximately $1,693,000 or 4.5% due largely
to increases in average weekly subscription circulation of 43.4% and 41.2% for
Country Weekly and Soap Opera Magazine, respectively.
Advertising revenues of $24,280,000 in fiscal 1997 increased $975,000 or
4.2% compared to fiscal 1996. On an equivalent number of issues basis,
advertising revenues increased by approximately $517,000 or 2.2% reflecting
higher levels of national advertising in both National Enquirer and Country
Weekly.
Operating expenses of $228,817,000 for fiscal 1997 were approximately flat
from the prior fiscal year; on an equivalent number of weeks basis (excluding
television advertising and depreciation and amortization) increased by
$2,597,000 or 1.4% from the prior fiscal year. Distribution, circulation and
other cost of sales together with selling, general and administrative expenses
(excluding television advertising) increased by a combined total of $8,673,000
on an equivalent number of weeks basis primarily reflecting costs associated
with the expansion of DSI's in-store marketing, merchandising and information-
gathering services and higher subscription expenses. Production expense was
lower by $6,059,000 on an equivalent number of weeks basis as a result of
reduced average paper costs in fiscal 1997 as compared to the prior fiscal year.
Television advertising expense was lower by $5,079,000 because we did not repeat
the fiscal 1996 national advertising campaigns for National Enquirer and Star.
Depreciation and amortization expense decreased as the amortization of an
intangible asset with a 5-year life was completed in June 1995.
Interest expense decreased $431,000 in fiscal 1997 to $56,284,000 from
$56,715,000 in the prior fiscal year. Decreases in the average outstanding
indebtedness more than offset one additional week's interest in fiscal 1997.
Our effective income tax rates were 57.3% and 106.6% for fiscal years 1997
and 1996, respectively, as compared to the federal statutory income tax rate of
35%. The higher effective tax rates result primarily from goodwill amortization
which is not deductible for income tax reporting purposes. The lower effective
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<PAGE> 43
tax rate in fiscal 1997 over fiscal 1996 resulted primarily from changes in the
ratio of nondeductible goodwill as a percentage of income before taxes.
LIQUIDITY AND CAPITAL RESOURCES
At March 29, 1999, we had cash and cash equivalents of $3.8 million and a
working capital deficit of $75.1 million compared to cash and cash equivalents
of $7.4 million and a working capital deficit of $52.1 million as of March 30,
1998. Our working capital deficit increased in fiscal 1999 because of the
reclassification of $25.0 million in long-term debt under our old credit
facility to current debt. We do not consider our working capital deficit as a
true measure of our liquidity position as our working capital needs typically
are met by cash generated by our business. Our working capital deficits result
principally from:
- our policy of using available cash to reduce borrowings which are
recorded as noncurrent liabilities, thereby reducing current assets
without a corresponding reduction in current liabilities;
- our minimal accounts receivable level relative to revenues, as most of
our sales revenues are received from national distributors as advances
based on estimated single copy circulation; and
- accounting for deferred revenues as a current liability. Deferred
revenues are comprised of deferred subscriptions, advertising and single
copy revenues and represent payments received in advance of the period in
which the related revenues will be recognized.
Historically, our primary sources of liquidity have been cash generated
from operations and amounts available under the old credit facility which have
been used to fund shortfalls in available cash. For the fiscal years ended March
29, 1999 and March 30, 1998, we generated net cash from operating activities
totaling $29.8 million and $41.8 million, respectively, that was used primarily
to fund capital expenditures and to make payments of principal on our
outstanding indebtedness.
We made capital expenditures totaling $15.0 million and $11.0 million in
fiscal 1999 and fiscal 1998, respectively. We plan to invest $14.0 million in
fiscal 2000. Our capital expenditures are made principally to purchase display
pockets for our publications and computer equipment for our businesses. See
"-- Year 2000 Risk" for an estimate of additional potential capital
expenditures.
At March 29, 1999 and March 30, 1998, our outstanding indebtedness totaled
$471.1 million and $497.5 million, respectively, of which $271.0 million and
$297.4 million, respectively, represented borrowings under the old credit
facility. The old credit facility charged variable rates of interest which
averaged 7.7% and 7.8%, respectively, for the fiscal years ended March 29, 1999
and March 30, 1998. In order to reduce our exposure to interest rate risk, we
have entered into a $100.0 million interest rate swap agreement expiring in
November 2000 under which we pay a fixed rate of 5.95%.
The new credit facility provides senior secured financing of up to $400.0
million, consisting of a $340.0 million term loan facility and a $60.0 million
revolving credit facility. The $250.0 million in notes bear interest at 10 1/4%
per annum payable semi-annually and mature in May 2009.
We have substantially increased our indebtedness in connection with the
transactions. If the transactions had been completed on March 29, 1999, our pro
forma outstanding indebtedness would have totaled $602.9 million as compared to
our actual historical outstanding indebtedness at such date of $471.1 million.
As a result of the new credit facility and the notes, our liquidity requirements
will be significantly increased, primarily due to increased interest expense
obligations and principal payment obligations under the new credit facility
which, other than certain excess cash flow payment obligations, will commence in
2002. See "Risk Factors -- Our significant indebtedness could impair our ability
to operate and expose us to certain risks." In addition, the business strategy
to be implemented upon consummation of the transactions will result in increased
operating expenses. We believe that the net cash generated from operating
activities and amounts available under the $60.0 million revolving credit
facility will be sufficient to fund our debt service requirements under the new
credit facility and the notes, to make capital expenditures, to cover working
capital requirements and to fund the implementation of our business strategy to
be implemented upon consummation of the transactions. We believe, however, that
based upon
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<PAGE> 44
our current level of operations and anticipated growth, it will be necessary to
refinance the notes upon their maturity. To the extent we make future
acquisitions, we may require new sources of funding, including additional debt,
or equity financing or some combination thereof. There can be no assurances that
such additional sources of funding will be available to us on acceptable terms.
Our ability to make scheduled payments of principal and interest under the
new credit facility and the notes, as well as our other obligations and
liabilities, is subject to our future operating performance which is dependent
upon general economic, financial, competitive, legislative, regulatory, business
and other factors beyond our control. See "Risk Factors."
We and each of our note guarantors are co-registrants of our registration
statement on Form S-4 (File No. 333- ), of which this prospectus forms
a part. As a result, we and each of our note guarantors will become subject to
the informational requirements of the Securities Exchange Act of 1934 upon the
effectiveness of the registration statement. We are a holding company with no
material assets or operations other than our investments in our subsidiaries.
The notes are unconditionally guaranteed, on a senior subordinated basis, by
substantially all of our existing subsidiaries. Each subsidiary that will be
organized in the future by us, unless such subsidiary is designated as an
unrestricted subsidiary, will jointly, severally, fully and unconditionally
guarantee the notes on a senior subordinated basis. Note guarantees are joint
and several, full and unconditional and general unsecured obligations of the
note guarantors. The note guarantors are our wholly-owned subsidiaries. At
present, the note guarantors comprise all of our direct and indirect
subsidiaries, other than one inconsequential subsidiary. Note guarantees are
subordinated in right of payment to all existing and future senior debt of the
note guarantors, including the new credit facility, and are also effectively
subordinated to all secured obligations of note guarantors to the extent of the
assets securing such obligations, including the new credit facility.
Furthermore, the indenture permits note guarantors to incur additional
indebtedness, including senior debt, subject to certain limitations. We have not
presented separate financial statements and other disclosures concerning each of
the note guarantors because management has determined that such information is
not material to investors.
So long as the factors set forth in the paragraph immediately above remain
true and correct, under applicable SEC rules and regulations, we believe that
the note guarantors will not need to individually comply with the reporting
requirements of the Exchange Act, nor will we have to include separate financial
statements and other disclosures concerning each of the note guarantors in our
Exchange Act reports. In that regard, we will request a no-action letter from
the SEC concurring with our position on this issue. While there can be no
assurance, we expect to receive a favorable response to our no-action letter
request.
YEAR 2000 RISK
The year 2000 issue is the result of computer programs that were written
using only two digits, rather than four, to represent a year. Date-sensitive
software or hardware may not be able to distinguish between the years 1900 and
2000 and programs that perform arithmetic operations, comparisons or sorting of
date fields may begin yielding incorrect results. This could potentially cause a
system failure or miscalculations that could disrupt operations. To address the
impact of the year 2000 issue on our computer programs, embedded chips and
significant third-party suppliers of goods and services we have formed a task
force led by our information services department. This task force has taken an
inventory of the potential year 2000 issues that may exist and is in the process
of completing its assessment of their impact. Certain of our key systems, such
as financial applications, have already been identified as year 2000 compliant;
in addition, because of the recent replacement of a majority of our computer
hardware, we believe there is little likelihood that this equipment is not Year
2000 compliant. We believe the largest areas of internal risk for year 2000
noncompliance are internally developed software applications and the handheld
communications devices used in merchandising by DSI. We have purchased
specialized software that will allow us to identify and correct year 2000
problems within our software applications and expect to have key applications
modified and tested by July 1999. Our information services department, working
with
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<PAGE> 45
handheld communication devices, has determined that remediation of the existing
handhelds is the appropriate course of action. We expect to complete this
remediation work by August 1999.
At the present time, the year 2000 project is estimated to cost
approximately $500,000 and will be funded through cash flows from operations.
Approximately $290,000 of the estimated year 2000 costs will relate to hardware
and software purchases and will be capitalized with the remainder being expensed
as incurred.
At present, we believe our technology systems will be year 2000 compliant
and that the year 2000 issue will not present a materially adverse risk to our
future results of operations, financial position or cash flow. However, there
can be no assurance that our systems will be year 2000 compliant prior to
December 31, 1999 or that the costs incurred will not materially exceed the
amounts budgeted. If there are incidences of noncompliance, we plan to allocate
internal resources and retain dedicated consultants to address such incidences.
In the event that our computers are not year 2000 compliant by December 31,
1999, and as a result of that noncompliance business interruptions occur, we
could incur significant losses in revenues due to such business interruptions,
which could have a material adverse effect on our future results of operations,
financial position or cash flow.
In addition, there is a risk that a significant supplier of goods or
services may not be year 2000 compliant. We are communicating with our
significant suppliers of goods and services to obtain reasonable assurance that
their products and business systems will be year 2000 compliant. We rely on
certain suppliers to deliver a broad range of goods and services, including
prepress operations, printing services, paper, wholesale distribution, mailings
and banking services. Although we have taken, and will continue to take,
reasonable efforts to gather information to determine and verify the readiness
of products and dependencies, there can be no assurance that reliable
information will be offered or otherwise available. In order to mitigate the
effects of a significant supplier's potential failure to remediate the year 2000
issue in a timely manner, we would take appropriate actions including arranging
for alternate suppliers, re-running processes if errors occur and using manual
intervention to ensure the continuation of operations where necessary. Should
this happen, it may result in significant delays in business operations
including, but not limited to, delays in delivery of products resulting in loss
of revenues, increased operating costs, loss of customers or suppliers, or other
significant disruptions to our business which could have a material adverse
effect on our future results of operations, financial position or cash flow.
NEW ACCOUNTING PRONOUNCEMENTS
We have adopted the Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income," effective fiscal 1999. SFAS No. 130
defines comprehensive income as a measure of all changes in equity of an
enterprise during a period that result from transactions and other economic
events during the period other than transactions with owners. For all periods
presented comprehensive income is the same as net income.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." This
statement establishes standards for the way that public enterprises report
information about operating segments in annual financial statements and interim
financial stockholders' reports. The statement requires information to be
reported by operating segment on the same basis which we use to evaluate
performance internally. We have determined that we have only one operating
segment.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
standardizes the accounting for derivatives, requiring recognition as either
assets or liabilities on the balance sheet and measurement at fair value. We
plan to adopt SFAS No. 133 in fiscal 2002. We have not yet determined the effect
adoption of SFAS No. 133 will have on our consolidated financial statements.
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BUSINESS
OVERVIEW
We are a leading publisher in the field of general interest magazines,
publishing National Enquirer, Star, Weekly World News and Country Weekly, with a
current aggregate weekly circulation of approximately 4.7 million copies.
National Enquirer and Star, our premier titles, have the second and fourth
highest weekly single copy circulation, respectively, of any weekly periodical
in the United States. We are the leader in total weekly single copy circulation
of magazines in the United States and Canada with approximately 34% of total
U.S. and Canadian circulation for weekly publications. We derive approximately
85% of our revenues from circulation, predominantly single copy sales in retail
outlets, and the remainder from advertising and other sources. National Enquirer
and Star are distributed in approximately 165,000 retail outlets in the United
States and Canada, representing, in the opinion of management, substantially
complete coverage of periodical outlets in these countries. DSI, our subsidiary,
arranges for the placement and merchandising of our publications and third-party
publications at retail outlets throughout the United States and Canada. In
addition, DSI provides marketing, merchandising and information-gathering
services for third parties. For the fiscal year ended March 29, 1999, we had pro
forma revenues and pro forma EBITDA of $272.2 million and $95.8 million,
respectively.
Our publications are among the most well-known and widely distributed
titles in the publishing industry. While our publications have a current
aggregate weekly circulation of approximately 4.7 million copies, they enjoy a
weekly readership of 20 million people due to multiple readers per copy sold. As
a result, we believe our publications enjoy strong consumer brand awareness with
a large and loyal readership base. Our publications include the following
titles:
- National Enquirer is a weekly general interest periodical with an
editorial content devoted to celebrity features, human interest stories
and articles covering lifestyle topics such as health, food and household
affairs. National Enquirer is the second highest selling weekly
periodical in the United States and Canada based on single copy
circulation, selling on average 1,814,000 copies per week. National
Enquirer has a total average weekly circulation of 2,201,000 copies,
including subscriptions, with an average of approximately 7 readers per
copy. National Enquirer has a core demographic profile of women aged
18-49. Issue length is 48 pages, 30 of which are in color. Approximately
70% of the pages are devoted to editorial content with the balance
devoted to advertising. National Enquirer's cover price is $1.59 in the
United States. The per issue price of annual subscriptions is $0.92 in
the United States.
- Star is a weekly celebrity news-based periodical with a strong emphasis
on television and movie performers and the lives of the rich and famous.
Star complements this focus with human interest stories about ordinary
people in unusual circumstances. Every issue also includes a variety of
features on topics such as food, fashion, health, fitness and parenting.
Star is the fourth highest selling weekly periodical in the United States
and Canada based on single copy circulation, selling on average 1,487,000
copies per week. Star has a total average weekly circulation of 1,776,000
copies, including subscriptions, with an average of approximately 4
readers per copy. Star has a core demographic profile of women aged
18-49. Issue length is 48 pages, 30 of which typically are in color.
Approximately 80% of the pages are devoted to editorial content with the
balance devoted to advertising. Star's cover price is $1.59 in the United
States. The per issue price of annual subscriptions is $0.92 in the
United States.
- Weekly World News is a tabloid devoted to the publication of entertaining
and unusual stories. The editorial content of Weekly World News is
derived principally from rewritten stories and photographs purchased from
agencies and periodicals around the world. Weekly World News has an
average weekly single copy circulation of 355,000 copies with a total
average weekly circulation of 379,000 copies, including subscriptions.
Each regular issue consists of 48 black and white pages. Weekly World
News' cover price is $1.39 in the United States. The per issue price of
annual subscriptions is $0.67 in the United States.
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- Country Weekly is a special interest magazine presenting various aspects
of country music, lifestyles, events and personalities, and has the
highest weekly circulation of any such magazine in its category. Country
Weekly has an average weekly single copy circulation of 171,000 copies
with a total average weekly circulation of 363,000 copies, including
subscriptions. Each regular issue consists of 60 pages, all of which are
in color. Country Weekly's cover price is $1.99 in the United States. The
per issue price of annual subscriptions is $0.89 in the United States.
COMPETITIVE STRENGTHS
We believe that the following factors have contributed to the leading
market positions of our publications:
- STRONG, WELL-ESTABLISHED BRAND NAMES. National Enquirer, whose
predecessors date back to 1926, and Star, which commenced publication in
1974, have been two of the leading general interest magazines for over 25
years. These two titles currently have an average weekly circulation of
approximately 2.2 million copies and 1.8 million copies, respectively,
and are read by over 20 million people each week. They have the second
and fourth highest weekly single copy circulation, respectively of all
weekly periodicals in the United States and Canada. We believe their
brand names are among the most familiar magazine titles to consumers and
are synonymous with the celebrity genre. Weekly World News, which
commenced publication in 1979, has established itself as a leader in the
field of entertaining and unusual stories. Country Weekly, which
commenced publication in 1994, is the leader in the category of country
music publications. We believe that the long history and strong brand
identity of our publications have allowed us to establish a large and
loyal readership base.
- EXTENSIVE EDITORIAL SOURCING CAPABILITIES. We have long-established
editorial departments that source the stories, features and news items
that appear in our publications. Because a significant amount of our
editorial content is based on investigative reporting, our publications
are "first source" or "breaking story" magazines for our readers. We also
have an extensive and reliable sourcing network, consisting of many
sources that have a long history with us.
- BROAD DISTRIBUTION BASE. Our publications are sold in all 50 states in
the United States as well as Canada and, to a lesser extent, the United
Kingdom and continental Europe. Our distribution in the United States
includes virtually all of the leading supermarket chains, such as
Safeway, Winn Dixie, Kroger and Albertsons, major convenience store
chains, such as 7-Eleven and Circle-K, leading mass merchandisers, such
as Wal-Mart, Kmart and Target, as well as a broad base of regional and
local newsstand outlets, including outlets at airports, bus terminals and
train stations. In the United States and Canada, National Enquirer and
Star are displayed for sale in approximately 165,000 retail outlets. We
believe that National Enquirer and Star enjoy broad distribution because
they are consistently among the highest revenue-producing magazines to
retailers. Among magazines sold by retailers in the United States and
Canada, National Enquirer and Star are currently ranked third and fourth,
respectively, in terms of total magazine retail dollars generated. In
addition, DSI, our subsidiary that works with retailers to design their
front-end racks and position magazines for increased sales, provides a
highly value-added service to the retailers and helps to further
strengthen our retailer relationships and distribution.
- EXPERIENCED MANAGEMENT TEAM. David J. Pecker, a well-known publishing
executive with over 20 years of industry experience, is our Chairman, CEO
and President. Mr. Pecker most recently served as CEO and President of
Hachette Filipacchi Magazines, Inc., the third largest magazine publisher
in the United States. Mr. Pecker oversaw 29 magazines, including
publications such as Elle, Woman's Day, Car and Driver, Road & Track,
Mirabella, Premiere and George. While serving as Hachette's President
from September 1991 to March 1999, he was credited with overseeing the
significant growth in size and performance of Hachette's business. During
his tenure as President, Hachette launched or acquired nine titles. In
addition to Mr. Pecker, our highly experienced senior management team
has, on average, over 20 years of experience in the publishing industry.
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BUSINESS STRATEGY
The key elements of our business strategy are to:
- ENHANCE EDITORIAL CONTENT TO DRIVE SINGLE COPY CIRCULATION. We believe
that National Enquirer and Star need more clear editorial
differentiation. The current level of duplication, both in covers and
content, often results in an either/or purchase decision by consumers at
checkout counters. As part of our editorial differentiation program, we
intend to enhance each publication's network of sources for exclusive
stories. Our strategy will be supported by focused consumer research to
better understand our core readership as well as potential new consumers.
This will enable us to implement cover strategies to encourage impulse
purchases and content strategies to generate more repeat purchases. In
addition, we intend to increase the use of value-oriented promotions,
such as consumer product coupons and contests.
- AGGRESSIVELY PROMOTE OUR BRANDS. We intend to increase our single copy
circulation by aggressively advertising our brands on television, radio,
outdoor advertising and in print. In addition, we plan to heighten
consumer awareness and build brand equity through an intensive public
relations program, including appearances by our editors and reporters as
guests on television shows, content placement in mainstream media and the
use of celebrities as guest editors. We believe that circulation of our
publications has been adversely affected by years of no consistent
advertising and promotional strategy and spending. For example,
advertising spending on National Enquirer and Star fell from $16.1
million in fiscal 1994 to $0.6 million in fiscal 1999. We plan to appoint
separate advertising agencies for National Enquirer and Star to develop
an integrated national advertising campaign for each publication,
emphasizing each publication's strong journalistic content and
investigative nature.
- INCREASE ADVERTISING REVENUES. We intend to market more effectively the
appeal and competitive advantages of advertising in our publications to
existing and potential advertisers. We believe that historically we have
not effectively positioned our publications to advertisers. Consequently,
our advertising revenues have declined in recent years, a time during
which industry-wide magazine advertising revenues have increased. In
order to increase our revenues, we intend to focus on
- better educating advertisers about the cost effectiveness of
advertising in our publications and on the content of our titles,
which we believe is similar to that of titles which have higher levels
of advertising revenues,
- developing our own customized research to market the demographics of
our newsstand purchasers and subscribers,
- promoting the cost efficiency and reach of a combined National
Enquirer and Star advertising purchase,
- emphasizing other advertising opportunities, such as inserts,
cross-marketing promotions and the services of DSI for in-store
merchandising and
- supporting advertising sales efforts with a trade advertising campaign
and appearances by editors at key industry functions. Mr. Pecker, our
Chairman, CEO and President, has extensive experience in selling
magazine advertising and has key senior level relationships at many
companies whose target consumers fit the demographic profile of our
readers.
- BUILD ON THE STRENGTH OF DSI. DSI is a marketing organization whose
primary function is to coordinate the placement and merchandising of our
publications and other third-party publications at retail outlets
throughout the United States and Canada. In addition, DSI is selected by
retailers to coordinate the rack design, installation and positioning of
magazines for approximately 40% (based on our estimates) of all new
front-end racking programs initiated annually in the United States. As a
result of its broad market presence, we believe DSI is a strong platform
to more favorably display titles we may develop or acquire. DSI also
intends to expand its third-party client base of publishers which require
marketing and merchandising of their publications. DSI's third-
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party clients currently include Hachette, which publishes Woman's Day,
Elle and Mirabella; Gruner & Jahr USA/ Publishing, which publishes Family
Circle, McCall's, Fitness, Parents and YM; Wenner Media, Inc., which
publishes US Magazine, Rolling Stone and Men's Journal; and Newsweek,
Inc., which publishes Newsweek. In addition, because DSI's over 1,500
field representatives are regularly in stores stocking, monitoring and
checking sales, DSI is beginning to expand its client base to include
consumer product companies outside the publishing industry that require
in-store verification of promotions and stock levels.
- UTILIZE PRICE FLEXIBILITY. Historically, single copy circulation of our
publications has not been materially sensitive to moderate, periodic
cover price changes. Since May 1993, we have instituted ten cover price
increases in the United States for National Enquirer and Star, consisting
of five cover price increases for each publication ranging from $0.04 to
$0.26 per copy. The average weekly single copy circulation of National
Enquirer and Star for the three month periods following seven of the
eight cover price increases for which circulation data are available was
approximately equal to or greater than the average weekly single copy
circulation for the applicable three month periods prior to such
increases. After the July 7, 1998 cover price increase of $0.10 for each
of National Enquirer and Star (i.e., the most recent cover price increase
for which circulation data are available), average weekly single copy
circulation increased approximately 12% and 8%, respectively, for the
three-month period following such increases over the average weekly
single copy circulation for each publication for the three-month period
prior to such increases. Therefore, we believe we have the flexibility to
prudently increase cover prices over time.
- LEVERAGE BRAND EQUITY. We intend to utilize the brand equity and content
of our publications to broaden our revenue base. In this regard, we are
investigating several opportunities, including using our archives and
library to create additional special issues, increasing international
distribution, creating Spanish language and teenage versions of certain
titles and sponsoring television programming incorporating the content of
our publications. In addition, we intend to more actively pursue on-line
ventures and use the Internet to drive awareness among new and younger
readers to generate incremental revenue opportunities.
- PURSUE COMPLEMENTARY ACQUISITIONS. During his tenure at Hachette, Mr.
Pecker had a track record of overseeing successful acquisitions of
magazines and increasing their revenue and profitability. We intend to
selectively pursue additional titles whose circulation can be increased
through our strong distribution network. We believe the ability to
cross-sell additional titles to advertisers will also enhance advertising
revenues.
CIRCULATION
Our publications have an aggregate weekly circulation of approximately 4.7
million copies and a weekly readership of over 20 million people due to multiple
readers per copy sold. We derive approximately 85% of our revenues from
circulation and the remainder from advertising and other sources. Approximately
84% of our circulation revenues are generated by single copy circulation at
retail outlets and the remainder by subscriptions. The United States, Canada and
areas outside of North America represented approximately 86%, 10% and 4% of
average weekly single copy circulation, respectively.
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SINGLE COPY CIRCULATION. The following tables set forth average weekly
single copy circulation and U.S. cover prices for our publications for the three
fiscal years 1997, 1998 and 1999.
AVERAGE WEEKLY SINGLE COPY CIRCULATION AND U.S. COVER PRICE
<TABLE>
<CAPTION>
FOR FISCAL YEAR ENDED
-----------------------------------
MARCH 31, MARCH 30, MARCH 29,
1997 1998 1999
--------- --------- ---------
(CIRCULATION DATA IN THOUSANDS)
<S> <C> <C> <C>
National Enquirer
Single Copy Circulation................................ 2,104 1,932(2) 1,766
Cover Price............................................ $ 1.39(1) $ 1.39 $ 1.49(1)
Star
Single Copy Circulation................................ 1,858 1,618(2) 1,445
Cover Price............................................ $ 1.39(1) $ 1.39(1) $ 1.49
Weekly World News
Single Copy Circulation................................ 409 356 350
Cover Price............................................ $ 1.09 $ 1.25(1) $ 1.39(1)
Country Weekly
Single Copy Circulation................................ 219 202 169
Cover Price............................................ $ 1.69 $ 1.69 $ 1.99(1)
</TABLE>
- ---------------
(1) We increased the U.S. cover price on each of National Enquirer and Star on
July 23, 1996 from $1.29 to $1.39 and then to $1.49 on July 7, 1998. We
increased the U.S. cover price on Weekly World News on April 15, 1997 from
$1.09 to $1.25 and to $1.39 on September 1, 1998. We increased the U.S.
cover price on Country Weekly on April 7, 1998 from $1.69 to $1.79 and then
to $1.99 on March 2, 1999.
(2) We believe that the principal factor in the decline in circulation in fiscal
1998 from fiscal 1997 was adverse publicity against celebrity news-based
magazines following the death of Princess Diana in August 1997.
Single copy circulation of each of our publications has experienced
declines. We believe that a significant portion of the decline in circulation
since fiscal 1994 is primarily due to two factors. First, the death of Princess
Diana in August 1997 resulted in a significant amount of adverse publicity
against celebrity news-based magazines. While single copy circulation of
National Enquirer and Star have improved from the low levels experienced in the
months immediately after Princess Diana's death, they have not returned to their
prior levels. We believe the second principal factor contributing to lower
circulation since fiscal 1994 has been a significant reduction in advertising
expenditures by us to promote our publications. Total advertising expenditures
for National Enquirer and Star decreased from $16.1 million in fiscal 1994 to
$0.6 million in fiscal 1999. We believe that this reduction in advertising was a
significant factor in the decrease in average weekly single copy circulation of
National Enquirer and Star from approximately 2.8 million copies and 2.5 million
copies, respectively, in fiscal 1994 to approximately 1.8 million and 1.4
million copies, respectively, in fiscal 1999. In addition, single copy
circulation declines of our publications can be attributed to (a) increased
competition from other publications and forms of media, such as certain
newspapers, television and radio programs concentrating on celebrity news and
(b) a general industry-wide decline in single copy circulation of individual
publications due to an increasing number of publications in the industry.
Historically, we have offset declines in single copy circulation, in part,
through increases in cover prices. We believe that we will be able to continue
to implement prudent increases in our cover prices over time without causing a
decline in circulation. Since May 1993, we have instituted ten cover price
increases in the United States for National Enquirer and Star, consisting of
five cover price increases for each publication, ranging from $0.04 to $0.26 per
copy. The average weekly single copy circulation of National
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Enquirer and Star for the three-month periods following seven of the eight cover
price increases for which circulation data are available was approximately equal
to or greater than the average weekly single copy circulation for the applicable
three-month periods prior to such increases. After the July 7, 1998 cover price
increase of $0.10 for each of National Enquirer and Star (i.e., the most recent
cover price increase for which circulation data are available), average weekly
single copy circulation increased approximately 12% and 8%, respectively, for
the three-month period following such increases over the average weekly single
copy circulation for each publication for the three-month period prior to such
increases. Effective July 27, 1999, the cover price for each of National
Enquirer and Star was increased $0.10 to $1.59.
We intend to increase our single copy circulation by aggressively
advertising our brands on television, radio, outdoor advertising and in print.
We believe that aggressive and consistent advertising support for our brands
will drive consumer awareness and single copy circulation. For example, we plan
to launch a national television advertising campaign, the first such significant
campaign since 1994. In addition, we plan to heighten consumer awareness and
build brand equity through an intensive public relations program, including
appearances by our editors and reporters as guests on television shows, content
placement in mainstream media and the use of celebrities as guest editors. We
believe our new advertising and promotional activities will build brand equity
for National Enquirer and Star by emphasizing their strong journalistic content
and investigative nature, which we believe in turn will enhance their appeal to
a broader general readership. See "-- Business Strategy."
Subscription Sales. Our strategy with respect to subscriptions seeks to
optimize subscription revenues and profitability as opposed to subscription
circulation. We accomplish this strategy by focusing on direct sales of our
titles by us through inserts and direct mailings. From time to time, however, we
utilize agents, such as Publishers Clearing House, to maintain and expand our
subscriber base subscription circulation. In fiscal 1998, approximately 16% (or
$42.4 million) of our total revenues from circulation were from subscription
sales. Average weekly subscription circulation for fiscal 1999 were 452,000
copies for National Enquirer, 347,000 copies for Star, 23,000 copies for Weekly
World News and 196,000 copies for Country Weekly.
Subscription renewal rates for our publications (exclusive of subscriptions
sold by direct mail agents) were 82% for National Enquirer, 80% for Star, 77%
for Weekly World News and 71% for Country Weekly for subscriptions which expired
during the 1998 calendar year. In calendar 1998, approximately two-thirds of our
subscribers purchased their subscriptions directly from us. We believe that our
core subscribers are those who do not purchase through direct mail agents due to
the fact that renewals by people who subscribe through direct mail agents are
low.
ADVERTISING REVENUES
We had approximately $22.6 million in advertising revenues in fiscal 1999,
excluding advertising generated by the soap opera assets. National Enquirer,
Star, Weekly World News and Country Weekly generated approximately $12.3
million, $6.9 million, $1.1 million and $2.3 million, respectively, in
advertising revenues during fiscal 1999.
Our advertising revenues are generated by national advertisers, including
consumer product and broadcasting companies, mail order advertisers and
classified advertisers. Excluding advertising revenues for the soap opera
assets, in fiscal 1999, national advertising, mail order advertising and
classified advertising represented 45%, 47% and 8%, respectively, of total
advertising revenues.
We intend to market more effectively the appeal and competitive advantages
of advertising in our titles to existing and potential advertisers. We believe
that historically we have not effectively positioned publications to
advertisers. Consequently, our advertising revenues have declined in recent
years, a time during which industry-wide magazine advertising revenues have
increased. In order to increase our revenues, we intend to focus on (a) better
educating advertisers about the cost effectiveness of advertising in our
publications and on the content of our titles, which we believe is similar to
that of titles which have higher levels of advertising revenues, (b) developing
our own customized research to market the demographics of our newsstand
purchasers and subscribers, (c) promoting the cost efficiency and reach of
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a combined National Enquirer and Star advertising purchase, (d) emphasizing
other advertising opportunities, such as inserts, cross-marketing promotions and
the services of DSI for in-store merchandising and (e) supporting advertising
sales efforts with a trade advertising campaign and appearances by editors at
key industry functions. Mr. Pecker, our Chairman, CEO and President, has
extensive experience in selling magazine advertising and has key senior level
relationships at many companies whose target consumers fit the demographic
profile of our readers.
We employ 20 advertising sales people and maintain advertising sales
offices in New York City, Chicago, Los Angeles, Nashville and Lantana.
EDITORIAL
The editorial departments of our publications operate independently. The
editorial headquarters for National Enquirer, Weekly World News and Country
Weekly are in Lantana, Florida. National Enquirer also has a Los Angeles,
California bureau and Country Weekly has a bureau in Nashville, Tennessee. Star
has its editorial headquarters in Tarrytown, New York and also has a bureau in
Los Angeles, California.
National Enquirer's editorial operation consists of approximately 80
full-time employees. The editorial news gathering operation of National Enquirer
is directed by the editor-in-chief and executive editor who supervise eight
article editors, including the Los Angeles bureau chief. The article editors are
responsible for developing and gathering news stories and story ideas. The
article editors have 21 staff reporters. The article editors work with four
photo editors, under the direction of a head photo editor. Stories brought in
for publication are processed through a skilled team of writers and a design
layout department. Each story is checked during the process by a research
department before actual publication.
Star's total editorial staff consists of approximately 70 full-time
employees and six part-time employees. Star's editorial news gathering operation
is similar to National Enquirer's. There is an editor-in-chief, an executive
editor, eight story editors and 20 reporters. Their photo department has seven
staff persons under the direction of a chief photo editor. Star has a library
staff that assists in both story researching and fact checking.
In addition to their editorial staffs, National Enquirer and Star pay
outside news sources for story ideas, for information regarding breaking stories
and for exclusive stories regarding celebrities. They also pay freelance
photographers and freelance reporters for their investigative journalism.
National Enquirer and Star have networks of approximately 300 and 150 freelance
reporters, respectively, to whom they can assign stories. Because a significant
amount of our editorial content is based on investigative reporting, our
publications are "first source" or "breaking story" magazines for our readers.
The editorial staffs of Weekly World News and Country Weekly are comprised
of 14 and 25 people, respectively, and are each managed by an editor.
Due to their high level of investigative reporting, both National Enquirer
and Star employ precautionary measures during the editorial process to protect
themselves from lawsuits. Each publication has a long-standing practice of
having outside legal counsel review the articles, photographs and headlines
under consideration for each issue. Such legal counsel identify and evaluate the
risk exposure presented by each article and photograph and make recommendations
so that the publications can make a business judgment concerning publication of
the articles and photographs. The management and editorial teams at National
Enquirer and Star consistently follow the recommendations of legal counsel. We
believe that this pre-publication "vetting" has been important in mitigating the
risk and occurrence of libel-based suits against the publications. There are
currently no claims pending that we believe would have a material adverse effect
on our operations. See "-- Legal Proceedings."
PRODUCTION AND DISTRIBUTION
An unrelated third-party performs most of the pre-press operations for our
publications and is responsible for transmitting them electronically to printing
plants. We have a long-term printing agreement with an unrelated domestic
printer to print National Enquirer and Star through December 2010 for sales
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in the United States, Canada and, to the extent applicable, outside of North
America (except for the United Kingdom). This same printer also prints all of
our other publications. National Enquirer has a special United Kingdom edition
which is printed by another unrelated printer. Once printed, the copies are
distributed primarily by five regional wholesalers in the United States and
Canada who deliver the requisite number of copies to approximately 165,000
retail sales locations. We believe our relationships with our printing companies
are favorable and that there are printing facilities available elsewhere, should
the need arise.
The principal raw materials utilized by our publications are paper and ink.
Paper is purchased directly by us from several suppliers based upon pricing and,
to a lesser extent, availability. Ink utilized by our publications is purchased
by the printers from at least two different ink suppliers. Both paper and ink
are commodity products with pricing affected by demand, capacity and economic
conditions. We believe that adequate sources of supply are, and will continue to
be, available to fulfill our requirements.
Our operating income may be significantly affected by the price of paper
used in our publications. For example, the price of paper rose dramatically in
1995 and significantly affected operating income. In mid-1996 paper prices began
to fall, then increased moderately in 1997 and 1998. If paper prices increase in
the future and we cannot pass these costs on to our customers, such increases
may have a material adverse effect on us. Currently, we do not hedge against
increases in paper costs.
MARKETING AND MERCHANDISING
We have established, through DSI, our own marketing organization whose
primary function is to coordinate the placement and merchandising of our
publications and third-party publications in retail outlets throughout the
United States and Canada. In addition to the services DSI provides for our
publications, DSI acts as a "quarterback" for approximately 40% (based on our
estimates) of new front-end racking programs initiated annually in the United
States and Canada by supermarkets and other retailers. Recently, DSI has begun
to leverage its network of field representatives, which are regularly in retail
outlets performing its services, by expanding its services to provide
merchandising and other information services to consumer product companies
outside the publishing industry. DSI's field representatives visit approximately
16,000 locations weekly, comprising of the highest volume retailers.
Approximately every three years, supermarkets and other retailers typically
redesign their front-end racks, generally as part of store renovations or new
store openings. As a "quarterback," DSI is selected by retailers to coordinate
the design and installation of the front-end racks and the positioning of
magazines for increased sales. Publishers, including the Company, which are
allocated space on a rack enter into contracts directly with the retailer for
the payment of fees (rack display payments) or other charges with respect to
that space. DSI uses its role as quarterback for approximately 40% (based on our
estimates) of new front-end rack programs initiated annually by retailers in the
United States to achieve better placement of our publications and of the
publications of DSI's third-party publishing clients. DSI is not paid by the
retailers for the services it renders as quarterback.
DSI provides marketing services for the Company and third-party publishing
clients to achieve favorable placement of their respective publications at
supermarkets and other retail outlets. DSI also provides merchandising and other
information services such as checking retail stock displays and repositioning
and restocking in-store inventories for the Company and its other clients. DSI's
staff consists of approximately 180 full-time employees and more than 1,500
part-time field representatives, who are equipped with handheld computers in
order to enhance the timeliness and accuracy of its information-gathering
services.
DSI's third-party clients include Hachette, which publishes Woman's Day,
Woman's Day Specials, Elle and Mirabella; Gruner & Jahr USA/Publishing, which
publishes Family Circle, Family Circle Specials, McCall's, Fitness, Parents and
YM; Wenner Media, Inc., which publishes US Magazine, Rolling Stone Magazine and
Men's Journal; Newsweek, Inc., which publishes Newsweek; and Rodale Press, Inc.,
which publishes Prevention and Prevention Guides.
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DSI's third-party contracts to provide marketing and merchandising services
to third-party clients in the publishing industry generated approximately $13.6
million in revenues in fiscal 1999, as compared to $14.5 million and $12.5
million in fiscal 1998 and fiscal 1997, respectively. We believe DSI has
significant potential for further expansion. In addition to potential expansion
in the publishing industry, DSI is beginning to expand its client base for its
merchandising and information-gathering services. For example, DSI is exploring
opportunities for its field representatives to monitor a consumer product
company's promotions or stock levels with their handheld computers.
OTHER BUSINESSES
Through Frontline, we sell in-store advertising space to various product
manufacturers and other national advertisers. Frontline owns signage consisting
of elevated light displays at checkout counters in about 5,100 supermarkets and
considers itself a premier advertising vehicle for new products and front-end
brands. Frontline is responsible for maintaining the signage and pays retailers
commissions on advertising sales. We believe there may be additional benefits
from offering Frontline's in-store advertising in combination with advertising
in our publications. In fiscal 1999, revenues from Frontline were $6.3 million
or approximately 2.1% of total operating revenues.
We also publish pocket-sized books under the name Micro Mags covering such
topics as diets, horoscopes, health and psychic phenomena. Twelve releases are
published annually, each with 4 titles, at a current cover price of $1.49. In
fiscal 1999, revenues from Micro Mags were approximately $3.7 million, which
amount was included in circulation revenues. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
We also had ancillary sales (primarily licensing and syndication sales) of
$1.4 million in fiscal 1999.
COMPETITION
National Enquirer, Star, Weekly World News and Country Weekly compete in
varying degrees with other publications sold at retailers' checkout counters, as
well as forms of media concentrating on celebrity news, such as certain
newspapers, magazines and television and radio programs. We believe that
historical declines in single copy circulation of National Enquirer and Star
have resulted in part from increased competition from these publications and
forms of media. Competition for circulation is largely based upon the content of
the publication, its placement in retail outlets and, to a lesser extent, its
price. Competition for advertising revenues is largely based upon circulation
levels, readership, demographics, price and advertising results. Many of our
competitors have substantially larger operating staffs and greater capital
resources. In this respect, we may be at a competitive disadvantage with such
entities. We believe that currently our most significant direct competitors in
the print media are Time Warner Inc. (which publishes People, In Style and
Entertainment Weekly), Wenner Media, Inc. (which publishes US Magazine), TV
Guide, Inc. (which publishes TV Guide) and Globe Communications Corp. (which
publishes Globe, Sun and National Examiner). As use of the Internet and new
on-line ventures focusing on celebrity news increase, we may face new sources of
competition.
DSI competes with many other companies providing marketing and distribution
services, such as full-service national distributors, wholesalers and publishers
with their own marketing organizations. Certain of DSI's competitors have
substantially larger operating staffs and greater capital resources. In this
respect, DSI may be at a competitive disadvantage with such entities.
EMPLOYEE RELATIONS
We employ approximately 500 full-time employees and 1,550 part-time
employees. Approximately 1,680 of our employees, including almost all of our
part-time employees, work for DSI. None of our employees are represented by any
union or other labor organization. We have had no strikes or work stoppages
during the last five years. We believe that our relations with our employees are
good.
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PROPERTIES
We own our headquarters buildings which are located in Lantana, Florida.
The premises, which also houses the editorial staffs of National Enquirer,
Weekly World News and Country Weekly, consist of three one-story buildings with
an aggregate of 33,700 square feet located on approximately 7.6 acres.
We also lease 18,800 square feet in Tarrytown, New York for the editorial
staffs of Star, 8,200 square feet in New York, New York for advertising
personnel and 12,500 square feet in West Palm Beach, Florida for DSI. Various
other smaller properties are leased primarily in New York and California for
certain of our other operations. We believe that all of our properties are in
generally good condition and are adequate for current operations.
LEGAL PROCEEDINGS
We are involved in a number of litigation matters which have arisen in the
ordinary course of business. Because the focus of our publications often
involves controversial celebrities or subjects, the risk of defamation or
invasion of privacy litigation arises in the ordinary course of our business.
Our experience suggests that the claims for damages made in such lawsuits are
heavily inflated and, in any event, any reasonably foreseeable liability or
settlement would be covered by insurance. During the five fiscal years ended
March 29, 1999, we paid approximately $20 million in the aggregate for legal
fees (including prepublication review and litigation), litigation related
insurance premiums and, to a lesser extent, litigation settlements, including
amounts covered by insurance payments. We have not experienced any difficulty
obtaining such insurance and do not expect to experience any material difficulty
in the future. There are currently no claims pending that we believe would have
a material adverse effect on our operations.
Multiple sources as well as documentation are sought for all stories that
are potentially controversial or subject to dispute. In addition, because of
their high level of investigative reporting, we retain special libel counsel for
National Enquirer and Star to review, prior to publication, all sensitive
stories and celebrity news and photos. Before publishing book excerpts, we
generally obtain indemnification from the publisher, author and/or agent
concerning publication rights and defamation.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Upon consummation of the transactions, the following individuals became the
directors and executive officers of our parent company, American Media, Inc.,
and the Company. All officers serve at the pleasure of the applicable Board of
Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
David J. Pecker...................... 47 Chairman, Chief Executive Officer, President and
Director of American Media, Inc. and the Company
Austin M. Beutner.................... 39 Director of American Media, Inc. and the Company
Neeraj Mital......................... 33 Director of American Media, Inc. and the Company
Saul D. Goodman...................... 31 Director of American Media, Inc. and the Company
Robert V. Seminara................... 27 Director of American Media, Inc. and the Company
Paul G. Yovovich..................... 45 Director of American Media, Inc. and the Company
Helene Belanger...................... 44 Director of American Media, Inc. and the Company
Brian J. Richmand.................... 45 Director of American Media, Inc. and the Company
J. William Grimes.................... 58 Director of American Media, Inc. and the Company
Peter A. Nelson...................... 43 Executive Vice President and Chief Financial Officer
of American Media, Inc. and the Company
Michael R. Roscoe.................... 52 Chief Executive Officer and President of DSI
</TABLE>
David J. Pecker became Chairman, Chief Executive Officer, President and a
Director of both American Media, Inc. and the Company upon consummation of the
transactions on May 7, 1999. Prior to that time, Mr. Pecker had been the Chief
Executive Officer since 1992, and President since 1991, of Hachette Filipacchi
Magazines, Inc. Prior to 1991, he was Executive Vice President/Publishing and
Chief Operating and Chief Financial Officer of Hachette. Mr. Pecker has over 20
years of publishing industry experience having worked as the Director of
Financial Reporting at CBS, Inc. Magazine Group and as the Vice President and
Controller of Diamandis Communications Inc.
Austin M. Beutner is a founding partner of Evercore. From 1994 to 1996, Mr.
Beutner was Chief Executive Officer and President of the U.S. Russia Investment
Fund, and in January 1997, Mr. Beutner was named Vice Chairman of its Board of
Directors. Before his affiliation with the U.S. Russia Investment Fund, he was a
General Partner of The Blackstone Group.
Neeraj Mital is a Managing Director of Evercore. Prior to joining Evercore,
Mr. Mital was at The Blackstone Group from 1992 to 1998, most recently as a
Managing Director. Prior to joining The Blackstone Group, he was at Salomon
Brothers Inc.
Saul D. Goodman is a Vice President of Evercore. Prior to joining Evercore,
Mr. Goodman was an investment banker at Lehman Brothers, Inc. from 1994 to 1998,
most recently as a Vice President. Prior to that, Mr. Goodman was at Ark Asset
Management.
Robert V. Seminara is an Associate of Evercore. Prior to joining Evercore,
Mr. Seminara was a Financial Analyst at Lazard Freres & Co. LLC from 1994 to
1996.
Paul G. Yovovich is a private investor and an Operating Executive at
Evercore. From 1993 to 1996 he was President of Advance Ross Corporation, whose
primary business was international transactions services. Prior to 1993, Mr.
Yovovich held a variety of executive positions at Centel Corporation, most
recently as President of its Central Telephone Company unit. Mr. Yovovich is
currently a Director of 3Com Corporation, Comarco, Inc., APAC TeleServices,
Inc., the Van Kampen open end funds and several other private companies.
Helene Belanger is a Vice-President in the Private Investments Group of
Capital Communications CDPQ ("Capital Communications"). Ms. Belanger has been
affiliated with Capital Communications since
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1990 holding various positions including the position of Director. Prior to her
affiliation with Capital Communications, Ms. Belanger was with the Royal Bank of
Canada, occupying various positions in the commercial loans sector, and at the
Federal Business Development Bank. Ms. Belanger is a corporate director sitting
on the Board of Directors of NetStar Communications, CFCF-12 and Groupe
Coscient.
Brian J. Richmand is a General Partner at Chase Capital Partners ("Chase
Capital"). Prior to joining Chase Capital, Mr. Richmand was a Partner at the law
firm of Kirkland & Ellis from 1985 to 1993 where he primarily represented
leveraged buyout and venture capital funds. Mr. Richmand currently serves on the
boards of Riverwood International Corp., La Petite Academy, Transtar Metals and
Reiman Publishing.
J. William Grimes is a Member of BG Media Investors, LLC. Prior to joining
BG Media Investors, Mr. Grimes served from 1994 to 1997 as a media and
communications consultant to several high-tech new media companies and is a
principal of Incontext, Inc., a Washington, D.C.-based information database
company. From 1994 to September 1996, Mr. Grimes was Chief Executive Officer and
President of Zenith Media, USA. Before 1994, Mr. Grimes served in senior
positions at several media companies, including Chief Executive Officer and
President of Multimedia, Inc., Chief Executive Officer and President of
Univision American Media, Inc. and Chief Executive Officer and President of
ESPN.
Peter A. Nelson joined the Company in 1989 and was promoted to his current
position as Executive Vice President and Chief Financial Officer in January
1999. Prior to his promotion, Mr. Nelson held the position of Vice President,
Controller and Chief Accounting Officer.
Michael R. Roscoe joined the Company in 1984 and was promoted to President
of DSI in 1986. In December 1995, Mr. Roscoe was promoted to his current
position as President and Chief Executive Officer of DSI.
COMPENSATION OF EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------- OTHER ANNUAL SHARES ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) COMPENSATION ($)
- ------------------ ------ ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Peter J. Callahan(1)................ 1999 350,000(2) -0-(2) -0- -- 690,630(2)(3)
Chairman, President, Chief 1998 350,000(2) 198,500(2) -0- -- 659,271
Executive Officer 1997 350,000(2) 341,000(2) -0- -- 657,967
Michael Boylan(1)................... 1999 300,000(2) -0-(2) -0- -- 279,970(2)(3)
Vice Chairman, Publishing 1998 300,000(2) 99,250(2) -0- -- 283,011
Operations 1997 300,000(2) 170,500(2) -0- -- 282,679
Maynard Rabinowitz(1)............... 1999 300,000(2) -0-(2) -0- -- 312,817(2)(3)
Vice Chairman, Finance, 1998 300,000(2) 99,250(2) -0- -- 283,821
Administration and Legal Affairs, 1997 300,000(2) 170,500(2) -0- -- 290,154
and Secretary
Anthony S. Hoyt(1).................. 1999 500,000 -0- -0- -- 40,444(3)
Senior Vice President and 1998 500,000 -0- -0- -- 29,721
Publisher, National Enquirer and
Star 1997 500,000 -0- -0- 25,000(4) 21,389
Michael R. Roscoe................... 1999 296,193 37,000 -0- 50,000(4) 18,472(3)
Chief Executive Officer and 1998 250,000 -0- -0- 25,000(4) 58,095
President of DSI 1997 230,289 46,000 -0- 25,000(4) 10,413
</TABLE>
- ---------------
(1) Upon consummation of the transactions on May 7, 1999, Messrs, Callahan,
Boylan and Rabinowitz resigned from their respective executive positions
with us and American Media, Inc. Mr. Hoyt resigned from his executive
position as of May 17, 1999.
(2) Includes management fees as a component of compensation for serving as
executive officers of the Company and American Media, Inc. Under the terms
of a former compensation plan, Messrs. Callahan, Boylan and Rabinowitz
received a base salary and the management fee. The base salaries were
$350,000, $300,000 and $300,000, respectively, for Messrs. Callahan, Boylan
and Rabinowitz. The management fees, which were in addition to the base
salary, were divided into two
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components. The first component consisted of cash payments of $650,000 to
Mr. Callahan and $275,000 to each of Messrs. Boylan and Rabinowitz. The
second component was based upon the Company's operating results and was
distributed 50% to Mr. Callahan and 25% to each of Messrs. Boylan and
Rabinowitz.
(3) Includes for fiscal 1999 the following: profit sharing contributions
allocated under our employee profit sharing plan of $3,530 for each of
Messrs. Callahan, Boylan, Rabinowitz, Hoyt and Roscoe; payments for life
insurance of $2,700 for Mr. Callahan, $1,440 for Mr. Boylan, $2,250 for Mr.
Rabinowitz, $4,915 for Mr. Hoyt and $1,246 for Mr. Roscoe; reimbursements of
country club memberships in the amount of $34,400 and $20,000, respectively,
for Messrs. Callahan and Rabinowitz; and proceeds form the exercise of
common stock options totaling $11,937 by Mr. Roscoe.
(4) Upon consummation of the transactions on May 7, 1999, Messrs. Hoyt and
Roscoe received $7 for each underlying share of common stock represented by
their options. After deducting the exercise price of the underlying stock
options, Messrs. Hoyt and Roscoe received net proceeds of $106,250 and
$167,709, respectively.
Compensation for our executive officers after consummation of the
transactions is not materially different from its historical compensation
levels, other than Mr. Pecker's compensation, which is described below.
All of our common stock is owned by American Media, Inc. and all of
American Media, Inc.'s common stock is owned by EMP Group L.L.C. Equity
interests in EMP Group L.L.C. are held by investors, including Mr. Pecker. For a
discussion of the distributions Mr. Pecker may receive as the owners of certain
units in EMP Group L.L.C. as compensation for their employment, see "Certain
Relationships and Related Transactions."
Our executive officers are elected by our Board of Directors and serve at
the discretion of our Board of Directors or pursuant to an employment agreement.
American Media, Inc. is a party to an employment agreement with Mr. Pecker which
has a five-year term expiring May 6, 2004, and, after the initial term, will be
automatically extended each year for successive one-year periods, unless either
party provides 60 days' prior written notice before the next extension date. The
employment agreement also provides that, upon termination of Mr. Pecker's
employment with Hachette, EMP Group L.L.C. is obligated to make payments related
to compensation forfeited upon such termination (the "Make-Whole Payments"). The
Make-Whole Payments, in the aggregate, equal approximately $4.0 million, a
portion of which was paid upon Mr. Pecker's termination of employment with
Hachette on March 31, 1999, and the remaining portion of which shall be payable
on April 15, 2000. During his term of employment, Mr. Pecker shall be entitled
to a base salary equal to $1,500,000 per annum and certain other customary
employee benefits.
Upon termination of employment by American Media, Inc. without cause or by
Mr. Pecker for good reason, Mr. Pecker shall be entitled to the following
subject to certain restrictions: (a) continued payment of base salary and
continued health, life insurance and disability benefits; (b) immediate vesting
of plan benefits; (c) outplacement services for twelve months following such
termination; (d) a golden parachute excise tax gross-up payment, if applicable,
in connection with a "change of control" (as defined in the employment
agreement); (e) any unpaid portion of the Make-Whole Payments; and (f) such
employee benefits as to which Mr. Pecker may be entitled under the employee
benefit plans and arrangements of American Media, Inc.
During fiscal 1999, the Company's outside directors received an annual
retainer of $25,000, plus $2,500 for each Board meeting and committee meeting
(held other than on the date of a Board meeting) attended. In addition, the
Company reimbursed all directors for travel and out-of-pocket expenses incurred
in connection with Board or committee meetings and otherwise with respect to
their duties as directors.
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OUTSTANDING VOTING SECURITIES
All of our common stock is owned by American Media, Inc. and all of
American Media, Inc.'s common stock is owned by EMP Group L.L.C. Equity
interests in EMP are owned by Evercore and certain other investors. Other
members of management are expected to acquire equity interests in American
Media, Inc. Pursuant to a LLC agreement, Evercore has control over EMP, American
Media, Inc. and the Company by virtue of its right to appoint a majority of the
Board of Managers of EMP and a majority of the Board of Directors of American
Media, Inc., irrespective of the amount of Evercore's equity interests in EMP.
See "Certain Relationships and Related Transactions." Certain other investors
each have the right to appoint one member of the Board of Managers of EMP and
the Board of Directors of American Media, Inc. subject to certain conditions
such as ownership of units in EMP.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As part of their investment in EMP Group L.L.C., Evercore and certain other
investors have entered into a LLC agreement. Interests in EMP are represented by
units of various classes. Evercore and the other investors, including Mr.
Pecker, own Class A units. Class A units are the only units with voting power.
Other classes of units, one class of which has been issued to Mr. Pecker and
other members of management, are eligible to share in the profits of EMP, pro
rata, after all the holders of the Class A units have received the return of
their aggregate investment in the Class A units. Mr. Pecker also has been issued
units which will vest and share in the profits of EMP, pro rata, only in certain
circumstances.
The units of EMP are exchangeable for the common stock of American Media,
Inc. under certain circumstances, including pursuant to demand and piggyback
registration rights granted to Evercore and the other investors under the LLC
agreement. The LLC agreement grants each investor certain demand registration
rights with respect to common stock of American Media, Inc., the exercise of
which, in general, is controlled by Evercore and grants unlimited piggyback
registration rights.
The LLC agreement provides that EMP will be managed by a Board of Managers,
a majority of which will be appointed by Evercore, irrespective of Evercore's
ownership interest. All actions by such Board of Managers are made by majority
vote except for transactions involving the transfer of EMP's assets to Evercore
or its affiliates and certain other specified corporate transactions. In
addition, Evercore has the right to appoint a majority of the Board of Directors
of American Media, Inc.
In general, the investors may not transfer their interests in EMP without
the consent of Evercore. Below a certain ownership percentage, if Evercore
transfers its units, all the other investors are required to transfer a pro rata
number of securities on the same terms as the Evercore transfer.
Pursuant to a Management Agreement, dated as of May 7, 1999, among Evercore
Advisors Inc., an affiliate of Evercore, and American Media, Inc., Evercore
Advisors will be paid an annual monitoring fee of $750,000 if the financial
performance of American Media, Inc. meets certain pre-determined targets. In
addition, pursuant to the Management Agreement, Evercore Advisors received, upon
the consummation of the merger, a financial advisory fee in an amount equal to
1% of the aggregate funds required to consummate the transactions. Pursuant to
the LLC agreement, we have reimbursed Evercore for all costs and expenses
incurred by Evercore and its affiliates in connection with the transactions,
which costs and expenses totaled $413,000.
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DESCRIPTION OF OTHER INDEBTEDNESS
NEW CREDIT FACILITY
The description set forth below does not purport to be complete and is
qualified in its entirety by reference to certain agreements setting forth the
principal terms and conditions of the new credit facility. Capitalized terms
used but not otherwise defined in this "Description of Other Indebtedness" shall
have the meaning to be ascribed to them in the new credit facility.
The new credit facility is provided by a syndicate of banks and other
financial institutions led by Chase, as administrative agent and collateral
agent, and Chase Securities Inc., as arranger. The new credit facility provides
senior secured financing of up to $400.0 million, consisting of a $100.0 million
seven-year tranche A term loan facility, a $240.0 million eight-year tranche B
term loan facility and a $60.0 million revolving credit facility.
The seven-year term loan facility and the eight-year term loan facility
amortize in quarterly amounts commencing July 1, 2001 based upon the annual
amounts shown below:
<TABLE>
<CAPTION>
TRANCHE A TRANCHE B
TERM LOAN TERM LOAN
FACILITY FACILITY
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Fiscal Year 2002............................................ $ 7.5 $ 1.8
Fiscal Year 2003............................................ 13.7 2.4
Fiscal Year 2004............................................ 18.8 2.4
Fiscal Year 2005............................................ 23.7 2.4
Fiscal Year 2006............................................ 28.8 2.4
Fiscal Year 2007............................................ 7.5 171.6
Fiscal Year 2008............................................ -- 57.0
------ ------
Total....................................................... $100.0 $240.0
====== ======
</TABLE>
Principal amounts outstanding under the revolving credit facility will be due
and payable in full at maturity, approximately seven years after the
consummation of the transactions.
Our obligations under the new credit facility are unconditionally and
irrevocably guaranteed by American Media, Inc. and each of our domestic (and, to
the extent no adverse tax consequences would result, foreign) subsidiaries. In
addition, the new credit facility is secured by first priority or equivalent
security interests in substantially all tangible and intangible assets of
American Media, Inc., the Company and each of our existing and subsequently
acquired or organized domestic (and, to the extent no adverse tax consequences
would result, foreign) subsidiaries, including all the capital stock of, or
other equity interests in, the Company, each of our direct or indirect
subsidiaries and each of our subsequently acquired or organized direct or
indirect subsidiaries (which, in the case of a foreign subsidiary, shall in each
case be limited to 65% of such capital stock or equity interests, as the case
may be).
The new credit facility is subject to mandatory prepayment with, in
general, (a) 100% of the proceeds of asset sales, (b) 50% of the Company's
excess cash flow (as defined in the new credit facility), (c) 50% the proceeds
of equity offerings and (d) 100% of the proceeds from the issuance of debt
obligations.
The new credit facility will contain a number of covenants that, among
other things, restrict the ability of American Media, Inc., the Company and our
subsidiaries to dispose of assets, incur additional indebtedness, incur
guarantee obligations, repay other indebtedness, pay certain restricted payments
and dividends, create liens on assets, make investments, loans or advances, make
certain acquisitions, engage in mergers or consolidations, make capital
expenditures, enter into sale and leaseback transactions, or engage in certain
transactions with subsidiaries and affiliates and otherwise restrict corporate
activities. In addition, under the new credit facility, we are required to
comply with specified financial ratios and tests, including
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minimum fixed charge coverage and interest coverage ratios and maximum leverage
ratios. The new credit facility also contains certain customary events of
default.
11 5/8% SENIOR SUBORDINATED NOTES
In connection with the merger, we commenced on March 1, 1999, a debt tender
offer for our 11 5/8% Senior Subordinated Notes due 2004.
The 11 5/8% senior subordinated notes were issued under an indenture, dated
as of November 21, 1994, between the Company and United States Trust Company of
New York, as trustee. The 11 5/8% senior subordinated notes are unsecured senior
subordinated obligations of the Company, are limited to $200.0 million aggregate
principal amount, will mature on November 15, 2004, and bear interest at the
rate of 11 5/8% per annum, payable semi-annually on May 15 and November 15 of
each year. The 11 5/8% senior subordinated notes are redeemable, in whole or in
part, at our option, at any time on and after November 15, 1999, at redemption
prices (expressed as percentages of the principal amount redeemed), plus accrued
interest to the redemption date, if redeemed during the twelve-month period
commencing on November 15 in the years set forth below:
<TABLE>
<S> <C>
1999....................................................... 104.359%
2000....................................................... 102.906%
2001....................................................... 101.453%
2002 and thereafter........................................ 100.000%
</TABLE>
An aggregate principal amount of $740,000 of our 11 5/8% senior
subordinated notes were not tendered in the debt tender offer and remain
outstanding and are general unsecured obligations of the Company.
57
<PAGE> 63
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We have entered into an exchange and registration rights agreement with the
initial purchaser of the old notes in which we agreed, under certain
circumstances, to file a registration statement relating to an offer to exchange
the old notes for exchange notes. We also agreed to use our reasonable best
efforts to cause such offer to be consummated within 195 days following the
original issue of the old notes. The exchange notes will have terms
substantially identical to the old notes except that the exchange notes will not
contain terms with respect to transfer restrictions, registration rights and
liquidated damages for failure to observe certain obligations in the exchange
and registration rights agreement. The old notes were issued on May 7, 1999.
Under the circumstances set forth below, we will use our reasonable best
efforts to cause the SEC to declare effective a shelf registration statement
with respect to the resale of the old notes and keep the statement effective for
up to two years after the effective date of the shelf registration statement.
These circumstances include:
- if pursuant to any changes in law, SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC do not permit us to
effect the exchange offer as contemplated by the exchange and
registration rights agreement;
- if any old notes validly tendered in the exchange offer are not exchanged
for exchange notes within 195 days after the original issue of the old
notes;
- if the initial purchaser of the old notes so requests (but only with
respect to any old notes not eligible to be exchanged for exchange notes
in the exchange offer); or
- if any holder of the old notes notifies the Issuer that it is not
permitted to participate in the exchange offer or would not receive fully
tradable exchange notes pursuant to the exchange offer.
If we fail to comply with certain obligations under the exchange and
registration rights agreement, we will be required to pay liquidated damages to
holders of the old notes.
Each holder of old notes that wishes to exchange such old notes for
transferable exchange notes in the exchange offer will be required to make the
following representations:
- any exchange notes will be acquired in the ordinary course of its
business;
- such holder has no arrangement with any person to participate in the
distribution of the exchange notes; and
- such holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Company or if it is an affiliate, that it will
comply with applicable registration and prospectus delivery requirements
of the Securities Act.
RESALE OF EXCHANGE NOTES
Based on interpretations of the SEC staff set forth in no action letters
issued to unrelated third parties, we believe that exchange notes issued under
the exchange offer in exchange for old notes may be offered for resale, resold
and otherwise transferred by any exchange note holder without compliance with
the registration and prospectus delivery provisions of the Securities Act, if:
- such holder is not an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act;
- such exchange notes are acquired in the ordinary course of the holder's
business; and
- the holder does not intend to participate in the distribution of such
exchange notes.
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<PAGE> 64
Any holder who tenders in the exchange offer with the intention of
participating in any manner in a distribution of the exchange notes:
- cannot rely on the position of the staff of the SEC enunciated in "Exxon
Capital Holdings Corporation" or similar interpretive letters; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
This prospectus may be used for an offer to resell, for the resale or for
other retransfer of exchange notes only as specifically set forth in this
prospectus. With regard to broker-dealers, only broker-dealers that acquired the
old notes as a result of market-making activities or other trading activities
may participate in the exchange offer. Each broker-dealer that receives exchange
notes for its own account in exchange for old notes, where such old notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes. Please read the section
captioned "Plan of Distribution" for more details regarding the transfer of
exchange notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, the Company will accept for exchange any old
notes properly tendered and not withdrawn prior to the expiration date. The
Company will issue $1,000 principal amount of exchange notes in exchange for
each $1,000 principal amount of old notes surrendered under the exchange offer.
Old notes may be tendered only in integral multiples of $1,000.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the old notes except the exchange notes will be registered
under the Securities Act, will not bear legends restricting their transfer and
will not provide for any liquidated damages upon failure of the Company to
fulfill its obligations under the exchange and registration rights agreement to
file, and cause to be effective, a registration statement. The exchange notes
will evidence the same debt as the old notes. The exchange notes will be issued
under and entitled to the benefits of the same indenture that authorized the
issuance of the old notes. Consequently, both series will be treated as a single
class of debt securities under that indenture.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of old notes being tendered for exchange.
As of the date of this prospectus, $250.0 million aggregate principal
amount of the old notes are outstanding. This prospectus and the letter of
transmittal are being sent to all registered holders of old notes. There will be
no fixed record date for determining registered holders of old notes entitled to
participate in the exchange offer.
The Company intends to conduct the exchange offer in accordance with the
provisions of the exchange and registration rights agreement, the applicable
requirements of the Securities Act and the Securities Exchange Act of 1934 and
the rules and regulations of the SEC. Old notes that are not tendered for
exchange in the exchange offer will remain outstanding and continue to accrue
interest and will be entitled to the rights and benefits such holders have under
the indenture relating to the old notes.
The Company will be deemed to have accepted for exchange properly tendered
old notes when it has given oral or written notice of the acceptance to the
exchange agent. The exchange agent will act as agent for the tendering holders
for the purposes of receiving the exchange notes from the Company and delivering
exchange notes to such holders. Subject to the terms of the exchange and
registration rights agreement, the Company expressly reserves the right to amend
or terminate the exchange offer, and not to accept for exchange any old notes
not previously accepted for exchange, upon the occurrence of any of the
conditions specified below under the caption "-- Certain Conditions to the
Exchange Offer."
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<PAGE> 65
Holders who tender old notes 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. The
Company will pay all charges and expenses, other than certain applicable taxes
described below, in connection with the exchange offer. It is important that you
read the section labeled "-- Fees and Expenses" below for more details regarding
fees and expenses incurred in the exchange offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time on
, 1999, unless in its sole discretion, the Company extends it.
In order to extend the exchange offer, the Company will notify the exchange
agent orally or in writing of any extension. The Company will notify the
registered holders of old notes of the extension no later than 9:00 a.m., New
York City time, on the business day after the previously scheduled expiration
date.
The Company reserves the right, in its sole discretion:
- to delay accepting for exchange 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 below under "-- Certain Conditions to the Exchange
Offer" have not been satisfied, by giving oral or written notice of such
deal, extension or termination to the exchange agent; or
- subject to the terms of the exchange and registration rights agreement,
to amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of old notes. If the Company amends the exchange offer in a
manner that it determines to constitute a material change, it will promptly
disclose such amendment in a manner reasonably calculated to inform the holders
of old notes of such amendment.
Without limiting the manner in which it may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, the Company shall have no obligation to publish, advertise,
or otherwise communicate any such public announcement, other than by making a
timely release to a financial news service.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Despite any other term of the exchange offer, the Company will not be
required to accept for exchange, or exchange any exchange notes for, any old
notes, and it may terminate the exchange offer as provided in this prospectus
before accepting any old notes for exchange if in its reasonable judgment:
- the exchange notes to be received will not be tradable by the holder,
without restriction under the Securities Act, the Securities Exchange Act
of 1934 and without material restrictions under the blue sky or
securities laws of substantially all of the states of the United States;
- the exchange offer, or the making of any exchange by a holder of old
notes, would violate applicable law or any applicable interpretation of
the staff of the SEC; or
- any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer that, in the Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with the exchange offer.
In addition, the Company will not be obligated to accept for exchange the
old notes of any holder that has not made to the Company:
- the representations described under "-- Purpose and Effect of the
Exchange Offer," "-- Procedures for Tendering" and "Plan of
Distribution"; and
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<PAGE> 66
- such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available to
it an appropriate form for registration of the exchange notes under the
Securities Act.
The Company expressly reserves the right, at any time or at various times,
to extend the period of time during which the exchange offer is open.
Consequently, the Company may delay acceptance of any old notes by giving oral
or written notice of such extension to their holders. During any such
extensions, all old notes previously tendered will remain subject to the
exchange offer, and the Company may accept them for exchange. The Company will
return any old notes that it does not accept for exchange for any reason without
expense to their tendering holder as promptly as practicable after the
expiration or termination of the exchange offer.
The Company expressly reserves the right to amend or terminate the exchange
offer, and to reject for exchange any old notes not previously accepted for
exchange, upon the occurrence of any of the conditions of the exchange offer
specified above. The Company will give oral or written notice of any extension,
amendment, non-acceptance or termination to the holders of the old notes as
promptly as practicable. In the case of any extension, such notice will be
issued no later than 9:00 a.m., New York City time, on the business day after
the previously scheduled expiration date.
These conditions are for the sole benefit of the Company and the Company
may assert them regardless of the circumstances that may give rise to them or
waive them in whole or in part at any or at various times in its sole
discretion. If the Company fails at any time to exercise any of the foregoing
rights, this failure will not constitute a waiver of such right. Each such right
will be deemed an ongoing right that the Company may assert at any time or at
various times.
In addition, the Company will not accept for exchange any old notes
tendered, and will not issue exchange notes in exchange for any such old notes,
if at such time any stop order will be threatened or in effect with respect to
the registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act of 1939.
PROCEDURES FOR TENDERING
Only a holder of old notes may tender such old notes in the exchange offer.
To tender in the exchange offer, a holder must:
- complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and mail or deliver
such letter of transmittal or facsimile to the exchange agent prior to
the expiration date; or
- comply with DTC's Automated Tender Offer Program procedures described
below.
In addition, either:
- the exchange agent must receive old notes along with the letter of
transmittal; or
- the exchange agent must receive, prior to the expiration date, a timely
confirmation of book-entry transfer of such old notes into the exchange
agent's account at DTC according to the procedures for book-entry
transfer described below or a properly transmitted agent's message; or
- the holder must comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under "-- Exchange Agent" prior to the expiration date.
The tender by a holder that is not withdrawn prior to the expiration date
will constitute an agreement between such holder and us in accordance with the
terms and subject to the conditions set forth in this prospectus and in the
letter of transmittal.
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<PAGE> 67
The method of delivery of old notes, the letter of transmittal and all
other required documents to the exchange agent is at the holder's election and
risk. Rather than mail these items, the Company recommends that holders use an
overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. Holders should not send the letter of transmittal or old notes to the
Company. Holders may request their respective brokers, dealers, commercial
banks, trust companies or other nominees to effect the above transactions for
them.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct it to
tender on the owners' behalf. If such beneficial owner wishes to tender on its
own behalf, it must, prior to completing and executing the letter of transmittal
and delivering its old notes; either:
- make appropriate arrangements to register ownership of the old notes in
such owner's name; or
- obtain a properly completed bond power from the registered holder of old
notes.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
Signatures on a letter of transmittal or a notice of withdrawal described
below 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 another "eligible institution" within the meaning of Rule 17Ad-15
under the Exchange Act, unless the old note tendered pursuant thereto are
tendered:
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal; or
- 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 on the old notes, such old notes must
be endorsed or accompanied by a properly completed bond power. The bond power
must be signed by the registered holder as the registered holder's name appears
on the old notes and an eligible institution must guarantee the signature on the
bond power.
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. Unless waived by the Company, they
should also submit evidence satisfactory to the Company of their authority to
deliver the letter of transmittal.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's Automated Tender Offer
program to tender. Participant in the program may, instead of physically
completing and signing the letter of transmittal and delivering it to the
exchange agent, transmit their acceptance of the exchange offer electronically.
They may do so by causing DTC to transfer the old notes to the exchange agent in
accordance with its procedures for transfer. DTC will then send an agent's
message to the exchange agent. The term "agent's message" means a message
transmitted by DTC, received by the exchange agent and forming part of the
book-entry confirmation, to the effect that:
- DTC has received an express acknowledgment from a participant in its
Automated Tender Offer Program that is tendering old notes that are the
subject of such book-entry confirmation;
- such participant has received and agrees to be bound by the terms of the
letter of transmittal (or, in the case of an agent's message relating to
guaranteed delivery, that such participant has received and agrees to be
bound by the applicable notice of guaranteed delivery); and
- the agreement may be enforced against such participant.
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<PAGE> 68
The Company will determine in its sole discretion all questions as to the
validity, form, eligibility (including time of receipt), acceptance of tendered
old notes and withdrawal of tendered old notes. The Company's determination will
be final and binding. The Company reserves the absolute right to reject any old
notes not properly tendered or any old notes the acceptance of which would, in
the opinion of the Company's counsel, be unlawful. The Company also reserves the
right to waive any defects, 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 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 Company shall determine. Although the Company intends to notify
holders of defects or irregularities with respect to tenders of old notes,
neither the Company, the exchange agent nor any other person will incur any
liability for failure to give such notification. Tenders of old notes will not
be deemed 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 to the exchange agent without cost to the tendering holder, unless
otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.
In all cases, the Company will issue exchange notes for old notes that it
has accepted for exchange under the exchange offer only after the exchange agent
timely receives:
- old notes or a timely book-entry confirmation of such old notes into the
exchange agent's account at DTC; and
- a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
By signing the letter of transmittal, each tendering holder of old notes
will represent to the Company that, among other things:
- any exchange notes that the holder receives will be acquired in the
ordinary course of its business;
- the holder has no arrangement or understanding with any person or entity
to participate in the distribution of the exchange notes;
- if the holder is not a broker-dealer, that it is not engaged in and does
not intend to engage in the distribution of the exchange notes;
- if the holder is a broker-dealer that will receive exchange notes for its
own account in exchange for old notes that were acquired as a result of
market-making activities, that it will deliver a prospectus, as required
by law, in connection with any resale of such exchange notes; and
- the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Company or, if the holder is an affiliate, it will
comply with any applicable registration and prospectus delivery
requirements of the Securities Act.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer promptly after the
date of this prospectus; and any financial institution participation in DTC's
system may make book-entry delivery of old notes by causing DTC to transfer such
old notes into the exchange agent's account at DTC in accordance with DTC's
procedures for transfer. Holders of old notes who are unable to deliver
confirmation of the book-entry tender of their old notes into the exchange
agent's account at DTC or all other documents of transmittal to the exchange
agent on or prior to the expiration date must tender their old notes according
to the guaranteed delivery procedures described below.
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<PAGE> 69
GUARANTEED DELIVERY PROCEDURES
Holders wishing to tender their old notes but whose old notes are not
immediately available or who cannot deliver their old notes, the letter of
transmittal or any other required documents to the exchange agent or comply with
the applicable procedures under DTC's Automated Tender Offer Program prior to
the expiration date may tender if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from such
eligible institution either a properly completed and duly executed notice
of guaranteed delivery (by facsimile transmission, mail or hand delivery)
or a properly transmitted agent's message and notice of guaranteed
delivery:
- setting forth the name and address of the holder, the registered
number(s) of such old notes and the principal amount of old notes
tendered;
- stating that the tender is being made thereby; and
- guaranteeing that, within three (3) New York Stock Exchange trading
days after the expiration date, the letter of transmittal (or
facsimile thereof) together with the old notes or a book-entry
confirmation, and any other documents required by the letter of
transmittal will be deposited by the eligible institution with the
exchange agent; and
- the exchange agent receives such properly completed and executed letter
of transmittal (or facsimile thereof), as well as all tendered old notes
in proper form for transfer or a book-entry confirmation, and all other
documents required by the letter of transmittal, within three (3) New
York State Exchange trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, holders of old notes may
withdraw their tenders at any time prior to the expiration date.
For a withdrawal to be effective:
- the exchange agent must receive a written notice (which may be by
telegram, telex, facsimile transmission or letter) of withdrawal at one
of the addresses set forth below under "-- Exchange Agent", or
- holders must comply with the appropriate procedures of DTC's Automated
Tender Offer Program system.
Any such notice of withdrawal must:
- specify the name of the person who tendered the old notes to be
withdrawn;
- identify the old notes to be withdrawn (including the principal amount of
such old notes); and
- where certificates for old notes have been transmitted, specify the name
in which such old notes were registered, if different from that of the
withdrawing holder.
If certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of such certificates, the
withdrawing holder must also submit:
- the serial numbers of the particular certificates to be withdrawn; and
- a signed notice of withdrawal with signatures guaranteed by an eligible
institution unless such holder is an eligible institution.
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<PAGE> 70
If old notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old notes and
otherwise comply with the procedures of such facility. The Company will
determine all questions as to the validity, form and eligibility (including time
of receipt) of such notices, and our determination shall be final and binding on
all parties. The Company will deem any old notes so withdrawn not to have
validity tendered for exchange for purposes of the exchange offer. Any old notes
that have been tendered for exchange but that are not exchanged for any reason
will be returned to their holder without cost to the holder (or, in the case of
old notes tendered by book-entry transfer into the exchange agent's account at
DTC according to the procedures described above, such old notes will be credited
to an account maintained with DTC for old notes) 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 under "-- Procedures for Tendering" above at any time on or prior to
the expiration date.
EXCHANGE AGENT
ChaseMellon Shareholder Services, L.L.C. has been appointed as exchange
agent for the exchange offer. You should direct questions and requests for
assistance, requests for additional copies of this prospectus or of the letter
of transmittal and requests for the notice of guaranteed delivery to the
exchange agent addressed as follows:
<TABLE>
<S> <C>
For Delivery by Registered or Certified Mail: For Overnight Delivery Only:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
P.O. Box 3301 85 Challenger Road
South Hackensack, NJ 07606 Mail Stop -- Reorg
Ridgefield Park, NJ 07660
By Hand: By Facsimile Transmission
(for eligible institutions only):
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department (201) 296-4293
120 Broadway, 13th Floor Confirm facsimile by telephone only:
New York, NY 10271
(201) 296-4860
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, the Company may make additional
solicitations by telegraph, telephone or in person by its officers and regular
employees and those of our affiliates.
The Company has not retained any dealer-manager in connection with the
exchange offer and will not make any payments to broker-dealers or others
soliciting acceptances of the exchange offer. The Company will, however, pay the
exchange agent reasonable and customary fees for its services and reimburse it
for its related reasonable out-of-pocket expenses.
The Company will pay the cash expenses to be incurred in connection with
the exchange offer. The expenses are estimated in the aggregate to be
approximately $ . They include:
- SEC registration fees;
- fees and expenses of the exchange agent and trustee;
- accounting and legal fees and printing costs; and
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<PAGE> 71
- related fees and expenses.
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the exchange
of old notes under the exchange offer. The tendering holder, however, will be
required to pay any transfer taxes (whether imposed on the registered holder or
any other person) if:
- certificates representing old notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of old notes
tendered;
- tendered old notes are registered in the name of any person other than
the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of old
notes under the exchange offer.
If satisfactory evidence of payment of such taxes is not submitted with the
letter of transmittal, the amount of such transfer taxes will be billed to that
tendering holder.
Holders who tender their old notes for exchange will not be required to pay
any transfer taxes. However, holders who instruct the Company to register
exchange notes in the name of, or request that old notes not tendered or not
accepted in the exchange offer be returned to, a person other than the
registered tendering holder will be required to pay any applicable transfer tax.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of old notes who do not exchange their old notes for exchange notes
under the exchange offer will remain subject to the restrictions on transfer of
such old notes:
- as set forth in the legend printed on the notes as a consequence of the
issuance of the old notes pursuant to the exemptions from, or in
transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws; and
- otherwise as set forth in the offering memorandum distributed in
connection with the private offering of the old notes.
In general, you may not offer or sell the old notes unless they are
registered under the Securities Act, or if the offer or sale is exempt from
registration under the Securities Act and applicable state securities laws.
Except as required by the exchange and registration rights agreement, the
Company does not intend to register resales of the old notes under the
Securities Act. Based on interpretations of the SEC staff, exchange notes issued
pursuant to the exchange offer may be offered for resale, resold or otherwise
transferred by their holders (other than any such holder that is our "affiliate"
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 the holders acquired the exchange notes in the ordinary course of
the holders' business and the holders have no arrangement or understanding with
respect to the distribution of the exchange notes to be acquired in the exchange
offer. Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the exchange notes:
- could not rely on the applicable interpretations of the SEC; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
ACCOUNTING TREATMENT
The Company will record the exchange notes in its accounting records at the
same carrying value as the old notes, which is the aggregate principal amount,
as reflected in our accounting records on the date
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of exchange. Accordingly, the Company will not recognize any gain or loss for
accounting purposes in connection with the exchange offer. The Company will
record the expenses of the exchange offer as incurred.
OTHER
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your own decision on what action to take.
The Company may in the future seek to acquire untendered old notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. The Company has no present plans to acquire any old notes that are
not tendered in the exchange offer or to file a registration statement to permit
resales of any untendered old notes.
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DESCRIPTION OF THE NOTES
GENERAL
The Company issued the old notes and will issue the exchange notes under an
indenture dated as of May 7, 1999, among the Company, the Note Guarantors and
The Chase Manhattan Bank, as trustee (the "Trustee"), a copy of which is
available upon request to the Company.
The indenture contains provisions which define your rights under the
exchange notes. In addition, the indenture governs the obligations of the
Company and of each Note Guarantor under the exchange notes. The terms of the
exchange notes include those stated in the indenture and those made part of the
indenture by reference to the Trust Indenture Act of 1939, as amended.
On May 7, 1999, the Company issued $250.0 million aggregate principal
amount of old notes under the indenture. The terms of the exchange notes are
identical in all material respects to the old notes, except for certain transfer
restrictions and registration and other rights relating to the exchange of the
old notes for the exchange notes. The Trustee will authenticate and deliver
exchange notes for original issue only in exchange for a like principal amount
of old notes. Any old notes that remain outstanding after the consummation of
the exchange offer, together with the exchange notes, will be treated as a
single class of securities under the indenture. Accordingly, all references in
this section to specified percentages in aggregate principal amount of the
outstanding exchange notes shall be deemed to mean, at any time after the
exchange offer is consummated, such percentage in aggregate principal amount of
the old notes and exchanges then outstanding.
Certain of the Company's Subsidiaries will guarantee the exchange notes and
therefore will be subject to many of the provisions contained in this
"Description of the Notes." Each Subsidiary which guarantees the exchange notes
is referred to in this section as a "Note Guarantor." Each such guarantee is
termed a "Note Guarantee."
Definitions of certain terms used in this section may be found under the
heading "Certain Definitions." For purposes of this section, the term "Company"
refers only to American Media Operations, Inc. and not any of its Subsidiaries.
The following description is meant to be only a summary of certain provisions of
the indenture. It does not restate the terms of the indenture in their entirety.
We urge that you carefully read the indenture as it, and not this description,
governs your rights as Holders.
OVERVIEW OF THE NOTES AND THE NOTE GUARANTEES
The Notes
These notes:
- are general unsecured obligations of the Company;
- will rank equal in right of payment with all existing and future Senior
Subordinated Indebtedness of the Company;
- are subordinated in right of payment to all future Senior Indebtedness of
the Company;
- are senior in right of payment to any future Subordinated Obligations of
the Company; and
- will be effectively subordinated to any Secured Indebtedness of the
Company and its Subsidiaries to the extent of the value of the assets
securing such Indebtedness.
The Note Guarantees
These notes are guaranteed by each of the following subsidiaries of the
Company:
National Enquirer, Inc.
Star Editorial, Inc.
SOM Publishing Inc.
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Weekly World News, Inc.
Country Weekly, Inc.
Distribution Services, Inc.
Fairview Printing, Inc.
NDSI, Inc.
Biocide, Inc.
Health Xtra, Inc.
Retail Marketing Network, Inc.
American Media Marketing, Inc.
Marketing Services, Inc.
The Note Guarantees:
- are general unsecured obligations of each Note Guarantor;
- are subordinated in right of payment to all existing and future Senior
Indebtedness of each Note Guarantor;
- are senior in right of payment to any future Subordinated Obligations of
each Note Guarantor; and
- will be effectively subordinated to any Secured Indebtedness of each Note
Guarantor to the extent of the value of the assets securing such
Indebtedness.
These notes will not be guaranteed by Frontline Marketing Inc., a Delaware
corporation ("Frontline"), an 80% owned subsidiary of the Company. On a pro
forma basis, as of and for the fiscal year ended March 29, 1999, Frontline would
have had total liabilities, including trade payables, of $1.4 million (excluding
liabilities owed to the Company), would have accounted for 0.5% of the Company's
assets and would have generated 2.3% of the Company's operating revenues and
1.1% of its EBITDA.
PRINCIPAL, MATURITY AND INTEREST
We issued the old notes in an aggregate principal amount of $250.0 million
on May 7, 1999. The notes will mature on May 1, 2009. The notes are in fully
registered form, without coupons, in denominations of $1,000 and any integral
multiple of $1,000.
Each note bears interest at a rate of 10 1/4% beginning on May 7, 1999, or
from the most recent date to which interest has been paid or provided for. We
pay interest semi-annually to Holders at the close of business on the April 15
or October 15 immediately preceding the interest payment date on May 1 and
November 1 of each year.
We also will pay liquidated damages to Holders of the notes if we fail to
file a registration statement relating to the exchange notes or if the
registration statement is not declared effective on a timely basis or if certain
other conditions are not satisfied.
PAYING AGENT AND REGISTRAR
The payment of principal, premium, if any, and interest on the notes is
payable at any office of ours or any agency designated by us. We have initially
designated the corporate trust office of the Trustee to act as our agent in such
matters. The location of the corporate trust office is 1201 Main Street, 18th
Floor, Dallas, Texas 75202. We, however, reserve the right to pay interest to
Holders by check mailed directly to Holders at their registered addresses.
Holders may exchange or transfer their notes at the same location given in
the preceding paragraph. No service charge will be made for any registration of
transfer or exchange of exchange notes. We, however, may require Holders to pay
any transfer tax or other similar governmental charge payable in connection with
any such transfer or exchange.
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OPTIONAL REDEMPTION
Except as set forth in the following paragraph, we may not redeem the notes
prior to May 1, 2004. After this date, we may redeem the notes, in whole or in
part, on not less than 30 nor more than 60 days' prior notice, at the following
redemption prices (expressed as percentages of principal amount), plus accrued
and unpaid interest and liquidated damages thereon, if any, to the redemption
date (subject to the right of Holders on the relevant record date to receive
interest due on the relevant interest payment date), if redeemed during the
twelve-month period commencing on May 1 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2004...................................................... 105.125%
2005...................................................... 103.417%
2006...................................................... 101.708%
2007 and thereafter....................................... 100.000%
</TABLE>
Prior to May 1, 2002, we may, on one or more occasions, also redeem up to a
maximum of 35% of the original aggregate principal amount of the notes with the
Net Cash Proceeds of one or more Equity Offerings (a) by the Company or (b) by
American Media, Inc. to the extent the Net Cash Proceeds thereof are contributed
to the Company or used to purchase Capital Stock (other than Disqualified Stock)
of the Company from the Company, at a redemption price equal to 110.25% of the
principal amount thereof, plus accrued and unpaid interest and liquidated
damages thereon, if any, to the redemption date (subject to the right of Holders
on the relevant record date to receive interest due on the relevant interest
payment date); provided, however, that after giving effect to any such
redemption:
(a) at least 65% of the original aggregate principal amount of the
notes remains outstanding; and
(b) any such redemption by the Company must be made within 60 days of
such Equity Offering and must be made in accordance with certain procedures
set forth in the indenture.
SELECTION
If we partially redeem notes, the Trustee will select the notes to be
redeemed on a pro rata basis, by lot or by such other method as the Trustee in
its sole discretion shall deem to be fair and appropriate, although no note of
$1,000 in original principal amount or less will be redeemed in part. If we
redeem any note in part only, the notice of redemption relating to such note
shall state the portion of the principal amount thereof to be redeemed. A new
note in principal amount equal to the unredeemed portion thereof will be issued
in the name of the Holder thereof upon cancelation of the original note. On and
after the redemption date, interest will cease to accrue on notes or portions
thereof called for redemption so long as we have deposited with the Paying Agent
funds sufficient to pay the principal of, plus accrued and unpaid interest and
liquidated damages thereon, if any, the notes to be redeemed.
RANKING
The notes will be unsecured Senior Subordinated Indebtedness of the
Company, will be subordinated in right of payment to all existing and future
Senior Indebtedness of the Company, will rank equal in right of payment with all
existing and future Senior Subordinated Indebtedness of the Company and will be
senior in right of payment to all existing and future Subordinated Obligations
of the Company. The notes also will be effectively subordinated to any Secured
Indebtedness of the Company and its Subsidiaries to the extent of the value of
the assets securing such Indebtedness and to all liabilities of Frontline, the
Company's existing Subsidiary which will not be a Note Guarantor, as well as to
all liabilities of any future Subsidiaries which will not be Note Guarantors.
However, payment from the money or the proceeds of U.S. Government Obligations
held in any defeasance trust described below under the caption "-- Defeasance"
will not be subordinated to any Senior Indebtedness or subject to the
restrictions described herein.
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<PAGE> 76
We currently conduct all of our operations through our Subsidiaries. The
Note Guarantees will be unsecured Senior Subordinated Indebtedness of the
applicable Note Guarantor, will be subordinated in right of payment to all
existing and future Senior Indebtedness of such Note Guarantor, will rank equal
in right of payment with all existing and future Senior Subordinated
Indebtedness of such Note Guarantor and will be senior in right of payment to
all existing and future Subordinated Obligations of such Note Guarantor. The
Note Guarantees also will be effectively subordinated to any Secured
Indebtedness of the applicable Note Guarantor to the extent of the value of the
assets securing such Secured Indebtedness.
Although the indenture will limit the Incurrence of Indebtedness by and the
issuance of preferred stock of certain of our subsidiaries, such limitation is
subject to a number of significant qualifications.
Assuming that the transactions had taken place on March 29, 1999, as of
such date we would have had outstanding:
(a) $352.0 million of Senior Indebtedness of the Company, all of which
would have been Secured Indebtedness (excluding unused commitments under
the Credit Agreement);
(b) $250.9 million of Senior Subordinated Indebtedness of the Company
(other than the notes) and no indebtedness of the Company that is
subordinate or junior in right of repayment to the notes;
(c) no Senior Indebtedness of the Note Guarantors (excluding their
Guarantees of Indebtedness of the Company under the Credit Agreement); and
(d) no Senior Subordinated Indebtedness of the Note Guarantors (other
than the Note Guarantees) and no Indebtedness of the Note Guarantors that
is subordinate or junior in right of payment to the Note Guarantees.
Although the amount of additional indebtedness we can incur is limited, we
may be able to incur substantial amounts of additional Indebtedness in certain
circumstances. Such Indebtedness may be Senior Indebtedness. See "-- Certain
Covenants -- Limitation on Indebtedness" below.
"Senior Indebtedness" of the Company or any Note Guarantor means the
principal of, premium (if any) and accrued and unpaid interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization of the Company or any Note Guarantor, regardless of whether or
not a claim for post-filing interest is allowed in such proceedings), and fees
and other amounts owing in respect of, Bank Indebtedness and all other
Indebtedness of the Company or any Note Guarantor, whether outstanding on the
Closing Date or thereafter Incurred, unless in the instrument creating or
evidencing the same or pursuant to which the same is outstanding it is provided
that such obligations are not superior, or are subordinated, in right of payment
to the notes or such Note Guarantor's Note Guarantee; provided, however, that
Senior Indebtedness shall not include:
(a) any obligation of the Company to any Subsidiary of the Company or
of such Note Guarantor to the Company or any other Subsidiary of the
Company;
(b) any liability for Federal, state, local or other taxes owed or
owing by the Company or such Note Guarantor;
(c) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities);
(d) any Indebtedness or obligation of the Company or such Note
Guarantor (and any accrued and unpaid interest in respect thereof) that by
its terms is subordinate or junior in any respect to any other Indebtedness
or obligation of the Company or such Note Guarantor, including any Senior
Subordinated Indebtedness and any Subordinated Obligations;
(e) any obligations with respect to any Capital Stock; or
(f) any Indebtedness Incurred in violation of the indenture.
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<PAGE> 77
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the notes. The notes will rank equal in all respects with all other
Senior Subordinated Indebtedness of the Company. The Company will not Incur,
directly or indirectly, any Indebtedness which is subordinate or junior in
ranking in any respect to Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be
subordinate or junior to Secured Indebtedness merely because it is unsecured.
We may not pay principal of, premium (if any) or interest on the notes, or
make any deposit pursuant to the provisions described under "-- Defeasance"
below, and may not otherwise repurchase, redeem or otherwise retire any notes
(except that Holders may receive and retain (a) Permitted Junior Securities and
(b) payments made from the trust described under "-- Defeasance" below)
(collectively, "pay the notes") if:
(a) any Designated Senior Indebtedness is not paid when due, or
(b) any other default on Designated Senior Indebtedness occurs and the
maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms
unless, in either case,
(i) the default has been cured or waived and any such acceleration has
been rescinded, or
(ii) such Designated Senior Indebtedness has been paid in full;
provided, however, that we may pay the notes without regard to the foregoing if
the Company and the Trustee receive written notice approving such payment from
the Representative of the Designated Senior Indebtedness with respect to which
either of the events set forth in clause (a) or (b) above has occurred and is
continuing.
During the continuance of any default (other than a default described in
clause (a) or (b) above) with respect to any Designated Senior Indebtedness of
the Company pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, we
may not pay the notes for a period (a "Payment Blockage Period") commencing upon
the receipt by the Trustee (with a copy to us) of written notice (a "Blockage
Notice") of such default from the Representative of such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated:
(a) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice,
(b) by repayment in full of such Designated Senior Indebtedness, or
(c) because no defaults are continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the second preceding sentence),
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders have accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the notes after the end of such
Payment Blockage Period.
Not more than one Blockage Notice may be given in any consecutive 360-day
period, irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period. However, if any Blockage Notice within such
360-day period is given by or on behalf of any holders of Designated Senior
Indebtedness other than the Bank Indebtedness, the Representative of the Bank
Indebtedness may give another Blockage Notice within such period. In no event,
however, may the total number of days during which any Payment Blockage Period
or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period. For purposes of this paragraph, no default or event of
default that existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the
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Designated Senior Indebtedness initiating such Payment Blockage Period shall be,
or be made, the basis of the commencement of a subsequent Payment Blockage
Period by the Representative of such Designated Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
Upon any payment or distribution of the assets of the Company to creditors
upon a total or partial liquidation or a total or partial dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property:
(a) the holders of Senior Indebtedness of the Company will be entitled
to receive payment in full of such Senior Indebtedness before the Holders
are entitled to receive any payment of principal of or interest on the
notes; and
(b) until such Senior Indebtedness is paid in full any payment or
distribution to which Holders would be entitled but for the subordination
provisions of the indenture will be made to holders of such Senior
Indebtedness as their interests may appear (except that Holders may receive
and retain (i) Permitted Junior Securities and (ii) payments made from the
trust as described under "-- Defeasance" so long as, on the date or dates
the respective amounts were paid into the trust, such payments were made
with respect to the notes without violating the subordination provisions
described herein); if a distribution is made to Holders that due to the
subordination provisions of the indenture should not have been made to
them, such Holders will be required to hold it in trust for the holders of
Senior Indebtedness of the Company and pay it over to them as their
interests may appear.
If payment of the notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness of the Company (or their Representative) of the
acceleration. If any Designated Senior Indebtedness of the Company is
outstanding, the Company may not pay the notes until five Business Days after
such holders or the Representative of such Designated Senior Indebtedness
receive notice of such acceleration and, thereafter, may pay the notes only if
the subordination provisions of the indenture otherwise permit payment at that
time.
By reason of the subordination provisions of the indenture, in the event of
insolvency, creditors of the Company who are holders of Senior Indebtedness of
the Company may recover more, ratably, than the Holders, and creditors of the
Company who are not holders of Senior Indebtedness of the Company or of Senior
Subordinated Indebtedness of the Company (including the notes) may recover less,
ratably, than holders of Senior Indebtedness of the Company and Senior
Subordinated Indebtedness of the Company.
NOTE GUARANTEES
All of the Company's existing subsidiaries other than Frontline and certain
future subsidiaries of the Company (as described below), as primary obligors and
not merely as sureties, will jointly and severally irrevocably and
unconditionally Guarantee on an unsecured senior subordinated basis the
performance and full and punctual payment when due, whether at Stated Maturity,
by acceleration, by redemption or otherwise, of all obligations of the Company
under the indenture (including obligations to the Trustee) and the notes,
whether for payment of principal of or interest on or liquidated damages in
respect of the notes, expenses, indemnification or otherwise (all such
obligations guaranteed by such Note Guarantors being herein called the
"Guaranteed Obligations"). Such Note Guarantors will agree to pay, in addition
to the amount stated above, any and all costs and expenses (including reasonable
counsel fees and expenses) incurred by the Trustee or the Holders in enforcing
any rights under the Note Guarantees. Each Note Guarantee will be limited in
amount to an amount not to exceed the maximum amount that can be Guaranteed by
the applicable Note Guarantor without rendering the Note Guarantee, as it
relates to such Note Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally. After the Closing Date, the Company will cause
each future Restricted Subsidiary organized under the laws of the United States
or any state or territory thereof to execute and deliver to the Trustee a
supplemental indenture pursuant to which such Restricted Subsidiary will
Guarantee payment of the notes. See "-- Certain Covenants -- Future Note
Guarantors" below.
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The obligations of a Note Guarantor under its Note Guarantee are senior
subordinated obligations. As such, the rights of Holders to receive payment by a
Note Guarantor pursuant to its Note Guarantee will be subordinated in right of
payment to the rights of holders of Senior Indebtedness of such Note Guarantor.
The terms of the subordination provisions described above with respect to the
Company's obligations under the notes apply equally to a Note Guarantor and the
obligations of such Note Guarantor under its Note Guarantee.
Each Note Guarantee is a continuing guarantee and shall (a) remain in full
force and effect until payment in full of all the Guaranteed Obligations, (b) be
binding upon each Note Guarantor and its successors and (c) inure to the benefit
of, and be enforceable by, the Trustee, the Holders and their successors,
transferees and assigns.
A Note Guarantor shall be released from all obligations under its Note
Guarantee and under the indenture upon (a) the merger or consolidation of such
Note Guarantor with or into any Person other than the Company or a Subsidiary or
Affiliate of the Company where such Note Guarantor is not the surviving entity
of such consolidation or merger or (b) the sale or transfer by the Company or
any Subsidiary of the Company of the Capital Stock of such Note Guarantor (or by
any other Person as a result of a foreclosure of any Lien on such Capital Stock
securing Senior Indebtedness), where, after such sale or transfer, such Note
Guarantor is no longer a Subsidiary of the Company; provided, however, that each
such merger, consolidation, sale or transfer by the Company or such Subsidiary
or Affiliate (i) shall comply with the terms of the indenture, including the
covenant described under "-- Certain Covenants -- Limitation on Sales of Assets
and Subsidiary Stock" or (ii) in the case of a sale or transfer as a result of a
foreclosure of any Lien securing Senior Indebtedness by the holder of such Lien,
the net proceeds therefrom shall be applied in compliance with the terms of the
indenture that would apply to a sale thereof by the Company.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's notes at a purchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest and liquidated
damages thereon, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that notwithstanding the
occurrence of a Change of Control, the Company shall not be obligated to
repurchase the notes pursuant to this section in the event that it has exercised
its right to redeem all the notes under the terms of the section titled
"-- Optional Redemption":
(a) prior to the earlier to occur of (i) the first public offering of
common stock of American Media, Inc. or (ii) the first public offering of
common stock of the Company, the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of a majority in the aggregate of the total
voting power of the Voting Stock of the Company or American Media, Inc.,
whether as a result of issuance of securities of American Media, Inc. or
the Company, any merger, consolidation, liquidation or dissolution of
American Media, Inc. or the Company, any direct or indirect transfer of
securities by any Permitted Holder or otherwise (for purposes of this
clause (a) and clause (b) below, the Permitted Holders shall be deemed to
beneficially own any Voting Stock of an entity (the "specified entity")
held by any other entity (the "parent entity") so long as the Permitted
Holders beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the parent
entity);
(b) (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (a) above, except that
for purposes of this clause (b) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of
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<PAGE> 80
the total voting power of the Voting Stock of the Company or American
Media, Inc. and (ii) the Permitted Holders "beneficially own" (as defined
in clause (a) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company or
American Media, Inc. than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of the Company or American
Media, Inc., as the case may be (for the purposes of this clause (b), such
other person shall be deemed to beneficially own any Voting Stock of a
specified entity held by a parent entity, if such other person is the
beneficial owner (as defined in this clause (b)), directly or indirectly,
of more than 35% of the voting power of the Voting Stock of such parent
entity and the Permitted Holders "beneficially own" (as defined in clause
(a) above), directly or indirectly, in the aggregate a lesser percentage of
the voting power of the Voting Stock of such parent entity and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such parent
entity);
(c) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of the Company
or American Media, Inc., as the case may be (together with any new
directors whose election by such board of directors of the Company or
American Media, Inc., as the case may be, or whose nomination for election
by the shareholders of the Company or American Media, Inc., as the case may
be, was approved by a vote of 66 2/3% of the directors of the Company or
American Media, Inc., as the case may be, then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the board of directors of the Company or American
Media, Inc., as the case may be, then in office;
(d) the adoption of a plan relating to the liquidation or dissolution
of the Company or American Media, Inc.;
(e) the merger or consolidation of the Company or American Media, Inc.
with or into another Person or the merger of another Person with or into
the Company or American Media, Inc., or the sale of all or substantially
all the assets of the Company or American Media, Inc. to another Person
(other than a Person that is controlled by the Permitted Holders), and, in
the case of any such merger or consolidation, the securities of the Company
or American Media, Inc. that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting power of the
Voting Stock of the Company or American Media, Inc. are changed into or
exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in addition
to any other consideration, securities of the surviving Person or
transferee that represent immediately after such transaction, at least a
majority of the aggregate voting power of the Voting Stock of the surviving
Person or transferee; or
(f) Evercore no longer has the direct or indirect power to appoint or
to approve the appointment of a majority of the managers of (or other
individuals comprising) the board of managers or other governing body of
EMP Group L.L.C.
In the event that at the time of such Change of Control the terms of the
Bank Indebtedness restrict or prohibit the repurchase of notes pursuant to this
covenant, then prior to the mailing of the notice to Holders provided for in the
immediately following paragraph but in any event within 30 days following any
Change of Control, the Company shall:
(a) repay in full all Bank Indebtedness or offer to repay in full all
Bank Indebtedness and repay the Bank Indebtedness of each lender who has
accepted such offer, or
(b) obtain the requisite consent under the agreements governing the
Bank Indebtedness to permit the repurchase of the notes as provided for in
the immediately following paragraph.
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Within 30 days following any Change of Control (unless the Company has
exercised its right to redeem the notes as described under "-- Optional
Redemption"), the Company shall mail a notice to each Holder with a copy to the
Trustee (the "Change of Control Offer") stating:
(a) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's notes at a purchase
price in cash equal to 101% of the principal amount thereof, plus accrued
and unpaid interest and liquidated damages, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date);
(b) the circumstances and relevant facts and financial information
regarding such Change of Control;
(c) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(d) the instructions determined by the Company, consistent with this
covenant, that a Holder must follow in order to have its notes purchased.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture applicable to a Change of Control Offer made by the Company and
purchases all notes validly tendered and not withdrawn under such Change of
Control Offer.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this covenant by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchaser. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the indenture, but that
could increase the amount of Indebtedness outstanding at such time or otherwise
affect the Company's capital structure or credit ratings. Restrictions on the
ability of the Company to incur additional Indebtedness are contained in the
covenants described under "-- Certain Covenants -- Limitation on Indebtedness."
Such restrictions can only be waived with the consent of the Holders of a
majority in principal amount of the notes then outstanding.
The occurrence of certain of the events which would constitute a Change of
Control would constitute a default under the Credit Agreement. Future Senior
Indebtedness of the Company may contain prohibitions of certain events which
would constitute a Change of Control or require such Senior Indebtedness to be
repurchased upon a Change of Control. Moreover, the exercise by the Holders of
their right to require the Company to repurchase the notes could cause a default
under such Senior Indebtedness, even if the Change of Control itself does not,
due to the financial effect of such repurchase on the Company. Finally, the
Company's ability to pay cash to the Holders upon a repurchase may be limited by
the Company's then existing financial resources. There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases. The provisions under the indenture relative to the Company's
obligation to make an offer to repurchase the notes as a result of a Change of
Control may be waived or modified with the written consent of the Holders of a
majority in principal amount of the notes.
With respect to the disposition of property or assets, the phrase "all or
substantially all" as used in the indenture varies according to the facts and
circumstances of the subject transaction, has no clearly established meaning
under New York law (which is the choice of law under the indenture) and is
subject
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to judicial interpretation. Accordingly, in certain circumstances there may be a
degree of uncertainty in ascertaining whether a particular transaction would
involve a disposition of "all or substantially all" of the property or assets of
a Person, and therefore it may be unclear as to whether a Change of Control has
occurred and whether the Company is required to make an offer to repurchase the
notes as described above.
CERTAIN COVENANTS
The indenture will contain covenants including, among others, the
following:
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness;
provided, however, that the Company or any Note Guarantor may Incur Indebtedness
if on the date of such Incurrence and after giving effect thereto the Leverage
Ratio would be less than (a) 6.5:1 if Incurred on or prior to June 30, 2001 and
(b) 6.25:1 if Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Bank Indebtedness Incurred in an aggregate principal amount not to
exceed $400.0 million at any one time outstanding less the aggregate amount
of all mandatory prepayments, repayments, redemptions or purchases of
principal of such Indebtedness pursuant to the covenant described under
"-- Limitation on Sales of Assets and Subsidiary Stock";
(ii) Indebtedness of the Company owed to and held by any Restricted
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by
the Company or any Restricted Subsidiary; provided, however, that (1) any
subsequent issuance or transfer of any Capital Stock or any other event
that results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of any such Indebtedness (except to
the Company or a Restricted Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof, (2)
if the Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
obligations with respect to the notes, (3) if a Restricted Subsidiary is
the obligor, any such Indebtedness is made pursuant to an intercompany
note; and (4) if a Note Guarantor is the obligor, such Indebtedness is
subordinated in right of payment to the Note Guarantee of such Note
Guarantor;
(iii) Indebtedness (1) represented by the notes and the Note
Guarantees, (2) outstanding on the Closing Date (other than the
Indebtedness described in clauses (i) and (ii) above), (3) consisting of
Refinancing Indebtedness Incurred in respect of any Indebtedness described
in this clause (iii) (including Refinancing Indebtedness) or the foregoing
paragraph (a) and (4) consisting of Guarantees by the Company or any Note
Guarantor of any Indebtedness permitted hereunder; provided that if such
Indebtedness is by its express terms subordinated in right of payment to
the notes or a Note Guarantee of a Note Guarantor, as applicable, any such
Guarantee with respect to such Indebtedness shall be subordinated in right
of payment to the notes or such Note Guarantor's Note Guarantee
substantially to the same extent as such Indebtedness is subordinated to
the notes or the Note Guarantee, as applicable;
(iv) (1) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary was
acquired by the Company (other than Indebtedness Incurred as consideration
in, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Subsidiary of or was
otherwise acquired by the Company); provided, however, that on the date
that such Restricted Subsidiary is acquired by the Company, the Company
would have been able to Incur $1.00 of additional Indebtedness pursuant to
the foregoing paragraph (a) after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (iv) and
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(2) Refinancing Indebtedness Incurred by a Restricted Subsidiary in respect
of Indebtedness Incurred by such Restricted Subsidiary pursuant to this
clause (iv);
(v) Indebtedness (including Capitalized Lease Obligations) incurred by
the Company or any Note Guarantor, to finance the purchase, lease or
improvement of property (real or personal) or equipment (whether through
the direct purchase of assets or the Capital Stock of any Person owning
such assets) in an aggregate principal amount which, when aggregated with
the principal amount of all other Indebtedness then outstanding and
incurred pursuant to this clause (v) and including all Refinancing
Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (v) does not exceed 2% of
Total Assets;
(vi) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including without
limitation letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; provided, however, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;
(vii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or a Subsidiary of
the Company in accordance with the terms of the indenture, other than
Guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary of the Company for the
purpose of financing such acquisition; provided, however, that (1) such
Indebtedness is not reflected on the balance sheet of the Company or any
Restricted Subsidiary (contingent obligations referred to in a footnote to
financial statements and not otherwise reflected on the balance sheet will
not be deemed to be reflected on such balance sheet for purposes of this
clause (1)) and (2) the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including the Fair
Market Value of noncash proceeds (such Fair Market Value of such noncash
proceeds being measured at the time received and without giving effect to
any subsequent changes in value) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(viii) Hedging Obligations that are incurred in the ordinary course of
business (but in any event excluding Hedging Obligations entered into for
speculative purposes); provided, however, that such Hedging Obligations do
not increase the Indebtedness of the Company outstanding at any time other
than as a result of fluctuations in interest rates or currency exchange
rates or by reason of fees, indemnities and compensation payable
thereunder;
(ix) Obligations in respect of performance and surety bonds and
completion guarantees that are incurred by the Company or any Restricted
Subsidiary in the ordinary course of business;
(x) Indebtedness arising from honoring by a bank or other financial
institution of a check, draft or similar instrument (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 five business days; and
(xi) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to the foregoing paragraph (a) or any other clause of this
paragraph (b)) in an aggregate principal amount on the date of Incurrence
that, when added to all other Indebtedness Incurred pursuant to this clause
(xi) and then outstanding, shall not exceed $25.0 million (it being
understood that any Indebtedness incurred pursuant to this clause (xi)
shall cease to be deemed to be Incurred or outstanding for purposes hereof
but shall be deemed Incurred for purposes of paragraph (a) from and after
the first date on which the Company could have incurred such Indebtedness
under paragraph (a) without reliance on this clause (xi)).
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(c) Notwithstanding the foregoing, the Company may not Incur any
Indebtedness pursuant to paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Indebtedness will be
subordinated to the notes to at least the same extent as such Subordinated
Obligations. The Company may not Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness. In
addition, the Company may not Incur any Secured Indebtedness which is not Senior
Indebtedness unless contemporaneously therewith effective provision is made to
secure the notes equally and ratably with (or on a senior basis to, in the case
of Indebtedness subordinated in right of payment to the notes) such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien. A
Note Guarantor may not Incur any Indebtedness if such Indebtedness is by its
terms expressly subordinate or junior in ranking in any respect to any Senior
Indebtedness of such Note Guarantor unless such Indebtedness is Senior
Subordinated Indebtedness of such Note Guarantor or is expressly subordinated in
right of payment to Senior Subordinated Indebtedness of such Note Guarantor. In
addition, a Note Guarantor may not Incur any Secured Indebtedness that is not
Senior Indebtedness of such Note Guarantor unless contemporaneously therewith
effective provision is made to secure the Note Guarantee of such Note Guarantor
equally and ratably with (or on a senior basis to, in the case of Indebtedness
subordinated in right of payment to such Note Guarantee) such Secured
Indebtedness for as long as such Secured Indebtedness is secured by a Lien.
(d) Notwithstanding any other provision of this covenant, the maximum
amount of Indebtedness that the Company or any Restricted Subsidiary may Incur
pursuant to this covenant shall not be deemed to be exceeded solely as a result
of fluctuations in the exchange rates of currencies. For purposes of determining
the outstanding principal amount of any particular Indebtedness Incurred
pursuant to this covenant, (i) Indebtedness Incurred pursuant to the Credit
Agreement prior to or on the Closing Date shall be treated as Incurred pursuant
to clause (i) of paragraph (b) above, (ii) Indebtedness permitted by this
covenant need not be permitted solely by reference to one provision permitting
such Indebtedness but may be permitted in part by one such provision and in part
by one or more other provisions of this covenant permitting such Indebtedness
and (iii) in the event that Indebtedness meets the criteria of more than one of
the types of Indebtedness described in this covenant, the Company, in its sole
discretion, shall classify such Indebtedness and only be required to include the
amount of such Indebtedness in one of such clauses.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary, directly or indirectly, to:
(i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or similar payment to the
direct or indirect holders of its Capital Stock except dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and except dividends or distributions payable to the Company or
another Restricted Subsidiary (and, if such Restricted Subsidiary has
shareholders other than the Company or other Restricted Subsidiaries, to
its other shareholders on a pro rata basis),
(ii) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of American Media, Inc., the Company or any Restricted
Subsidiary held by Persons other than the Company or another Restricted
Subsidiary,
(iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations (other than
the purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year
of the date of acquisition and other than Indebtedness described in clause
(ii) of paragraph (b) of the covenants described under "-- Limitation on
Indebtedness") or
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(iv) make any Investment (other than a Permitted Investment) in any
Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein
referred to as a "Restricted Payment") if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default will have occurred and be continuing (or would result
therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under paragraph (a) of the covenant described under
"-- Limitation on Indebtedness"; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (including, if the amount so expended is other than
in cash, the Fair Market Value of such Restricted Payments) declared or
made subsequent to the Closing Date would exceed the sum of, without
duplication:
(A) (i) 100% of EBITDA accrued during the period (treated as one
accounting period) from the beginning of the fiscal quarter
immediately following the fiscal quarter during which the Closing
Date occurs to the end of the most recent fiscal quarter ending prior
to the date of such Restricted Payment for which financial statements
are available (or, in case such EBITDA during such period is a
deficit minus 100% of such deficit), minus (ii) 150% of Consolidated
Interest Expense accrued during the period (treated as one accounting
period) from the beginning of the fiscal quarter immediately
following the fiscal quarter during which the Closing Date occurs to
the end of the most recent fiscal quarter ending prior to the date of
such Restricted Payment for which financial statements are available;
(B) the aggregate Net Cash Proceeds and the Fair Market Value of
property or assets used or useful in a Permitted Business, in each
case received by the Company from capital contributions or the issue
or sale of its Capital Stock (other than Disqualified Stock)
subsequent to the Closing Date (other than an issuance or sale to (i)
a Subsidiary of the Company or (ii) an employee stock ownership plan
or other trust established by the Company or any of its Subsidiaries
to the extent such sale is financed by loans from or from
Indebtedness guaranteed by the Company unless such loans or
Indebtedness have been repaid with cash on or prior to the date of
determination);
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Closing Date of any Indebtedness of the
Company or its Restricted Subsidiaries issued after the Closing Date
which is convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash or
the Fair Market Value of other property distributed by the Company or
any Restricted Subsidiary upon such conversion or exchange);
(D) 100% of the aggregate amount received in cash from (i) the
sale or other disposition (other than to the Company or a Restricted
Subsidiary) of Investments (other than Permitted Investments)
("Restricted Investments") made by the Company and its Restricted
Subsidiaries after the Closing Date and from repurchases and
redemptions of such Restricted Investments from the Company and its
Restricted Subsidiaries by any Person (other than the Company or any
of its Subsidiaries or Affiliates) and from repayments of loans or
advances which constituted Restricted Investments or (ii) the sale
(other than to the Company or a Subsidiary or an Affiliate) of the
Capital Stock of an Unrestricted Subsidiary, in an amount not to
exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included
in the calculation of the amount of Restricted Payments; provided,
however, that no amount will be included in this clause (D) to the
extent it is already included in Consolidated Net Income; and
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(E) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (i) payments of dividends,
repayments of the principal of loans or advances or other transfers
of assets to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries or (ii) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investment") not to exceed, in the
case of any Unrestricted Subsidiary, the amount of Investments
previously made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary, which amount was included in the calculation
of the amount of Restricted Payments; provided, however, that no
amount will be included in this clause (E) to the extent it is
already included in Consolidated Net Income.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(i) any purchase, repurchase, retirement or other acquisition or
retirement for value of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified
Stock and other than Capital Stock issued or sold to a Subsidiary of the
Company or an employee stock ownership plan or other trust established by
the Company or any of its Subsidiaries to the extent such sale is financed
by loans from or from Indebtedness guaranteed by the Company unless such
loans or Indebtedness have been repaid with cash on or prior to the date of
determination); provided, however, that
(1) such Restricted Payment will be excluded in subsequent
calculations of the amount of Restricted Payments and
(2) the Net Cash Proceeds from such sale applied in the manner set
forth in this clause (i) will be excluded from the calculation of
amounts under clause (iv)(3)(B) of paragraph (a) above;
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Indebtedness of the Company that is permitted to be
Incurred pursuant to the covenant described under "-- Limitation on
Indebtedness"; provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value will be
excluded in subsequent calculations of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by the covenant described under
"-- Limitation on Sales of Assets and Subsidiary Stock"; provided, however,
that such purchase or redemption will be excluded in subsequent
calculations of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that such dividend will be included
in subsequent calculations of the amount of Restricted Payments;
(v) the repurchase or other acquisition of shares of, or options to
purchase shares of, Capital Stock of the Company or any of its Subsidiaries
from employees, former employees, directors or former directors of the
Company or any of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former directors), pursuant to
the terms of agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to purchase or sell,
shares of such common stock; provided, however, that the aggregate amount
of such repurchases or acquisitions in any fiscal year of the Company shall
not exceed, together with the aggregate amount of all payments made under
clause (vi)(3) of this paragraph (b) below in such fiscal year, in the
aggregate $5.0 million, up to a maximum aggregate amount, together with the
aggregate amount of all payments made under clause (vi)(3) of this
paragraph (b) below, of $10.0 million during the term of
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the indenture; provided further, however, that such repurchases and other
acquisitions shall be included in subsequent calculations of the amount of
Restricted Payments;
(vi) the payment of dividends, other distributions or other amounts by
the Company for the purposes set forth in clauses (1) through (4) below;
provided, however, that such dividend, distribution or amount set forth in
clauses (1) through (4) shall be included in subsequent calculations of the
amount of Restricted Payments for the purposes of paragraph (a) above:
(1) to American Media, Inc. in amounts equal to the amounts
required for American Media, Inc. to pay franchise taxes and other fees
required to maintain its corporate existence and provide for other
operating costs of up to $2.0 million per fiscal year;
(2) to American Media, Inc. in amounts equal to amounts required
for American Media, Inc. to pay Federal, state and local income taxes to
the extent such income taxes are attributable to the income of the
Company and its Restricted Subsidiaries (and, to the extent of amounts
actually received from its Unrestricted Subsidiaries, in amounts
required to pay such taxes to the extent attributable to the income of
such Unrestricted Subsidiaries);
(3) to American Media, Inc. in amounts equal to amounts expended by
American Media, Inc. to repurchase Capital Stock of American Media, Inc.
owned by former employees of the Company or its Subsidiaries or their
assigns, estates and heirs; provided, however, that the aggregate amount
paid, loaned or advanced to American Media, Inc. pursuant to this clause
(3) in any fiscal year of the Company shall not exceed, together with
the aggregate amount of all payments made under clause (v) of this
paragraph (b) above during such fiscal year, in the aggregate, $5.0
million, up to a maximum aggregate amount, together with the aggregate
amount of all payments made under clause (v) of this paragraph (b)
above, of $10.0 million during the term of the indenture, plus any
amounts contributed by American Media, Inc. to the Company as a result
of resales of such repurchased shares of Capital Stock; and
(4) to American Media, Inc. in amounts required to pay the annual
monitoring fee to Evercore; provided, however, that the aggregate amount
paid, loaned or delivered to American Media, Inc. pursuant to this
clause (4) shall not, in the aggregate, exceed $750,000 per fiscal year;
(vii) the payment of dividends on the Company's common stock (or the
payment of dividends to American Media, Inc. to fund the payment by
American Media, Inc. of dividends on American Media, Inc.'s common stock)
following the first public offering of common stock of the Company or
American Media, Inc., as the case may be, after the Closing Date, of up to
6% per annum of the net proceeds received by the Company or contributed to
the Company by American Media, Inc. from such public offering; provided,
however, that (1) the aggregate amount of all such dividends shall not
exceed the aggregate amount of net proceeds received by the Company or
contributed to the Company by American Media, Inc. from such public
offering, (2) at the time of, and after giving effect to, any payment
permitted under this clause (vii), no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof and
(3) any such payment shall be included in subsequent calculations of the
amount of Restricted Payments;
(viii) the declaration and payment of dividends or distributions to
holders of any class or series of Disqualified Stock of the Company or any
of its Restricted Subsidiaries issued or Incurred in accordance with the
covenant described under "-- Limitation on Indebtedness"; provided,
however, that such payments shall be excluded in subsequent calculations of
the amount of Restricted Payments; or
(ix) other Restricted Payments in an aggregate amount not to exceed
$20.0 million; provided, however, that at the time of, and after giving
effect to, any payment permitted under this clause (ix), no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof; and provided further that any such payment shall be
included in subsequent calculations of the amount of Restricted Payments.
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Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(a) pay dividends or make any other distributions on its Capital Stock
or pay any Indebtedness or other obligations owed to the Company or any of
its Restricted Subsidiaries,
(b) make any loans or advances to the Company or any of the Restricted
Subsidiaries or
(c) transfer any of its property or assets to the Company or any of
its Restricted Subsidiaries, except:
(i) any encumbrance or restriction pursuant to applicable law or an
agreement in effect at or entered into on the Closing Date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by such Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Company (other than
Indebtedness Incurred as consideration in, in contemplation of, or to
provide all or any portion of the funds or credit support utilized to
consummate the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted Subsidiary or was
otherwise acquired by the Company) and outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (i) or (ii) of this covenant or this
clause (iii) or contained in any amendment to an agreement referred to
in clause (i) or (ii) of this covenant or this clause (iii); provided,
however, that the encumbrances and restrictions contained in any such
Refinancing agreement or amendment are no less favorable, in the
aggregate, to the Holders than the encumbrances and restrictions
contained in such predecessor agreements;
(iv) in the case of clause (c), any encumbrance or restriction
(1) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a
lease, license or similar contract, or
(2) contained in security agreements securing Indebtedness of a
Restricted Subsidiary to the extent such encumbrance or restriction
restricts the transfer of the property subject to such security
agreements;
(v) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition; and
(vi) in the case of clause (c), any encumbrance or restriction
pursuant to any agreement relating to Purchase Money Indebtedness that
is Incurred subsequent to the Closing Date in compliance with the
covenant described under "-- Limitation on Indebtedness."
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless:
(i) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming sole
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the Fair Market Value of the
shares and assets subject to such Asset Disposition,
(ii) at least 80% of the consideration thereof received by the Company
or such Restricted Subsidiary is in the form of cash or Temporary Cash
Investments; provided that the amount of (1) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or
in the notes thereto) of the Company or any Restricted Subsidiary (other
than liabilities that
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are by their terms subordinated to the notes), that are assumed by the
transferee of any such assets (provided that the Company or such Restricted
Subsidiary is released from all liability with respect thereto), (2) any
securities received by the Company or such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary
into cash (to the extent of the cash received) within 90 days following the
closing of such Asset Disposition and (3) any Designated Noncash
Consideration received by the Company or any of its Restricted Subsidiaries
in such Asset Disposition having an aggregate Fair Market Value, taken
together with all other Designated Noncash Consideration received pursuant
to this clause (3) that is at that time outstanding, not to exceed the
greater of (A) $25.0 million or (B) 3% of Total Assets at time of receipt
of such Designated Noncash Consideration (with the Fair Market Value of
each item of Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in value), shall
be deemed to be cash for purposes of this provision and for no other
purpose; and
(iii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be)
(1) first, (A) to the extent the Company elects (or is required by
the terms of any Indebtedness), to prepay, repay, redeem or purchase
Senior Indebtedness of the Company or Indebtedness (other than any
Disqualified Stock) of a Restricted Subsidiary (in each case other than
Indebtedness owed to the Company or an Affiliate of the Company and
other than Preferred Stock) or (B) to the extent the Company or such
Restricted Subsidiary elects, to acquire Additional Assets (including by
means of an Investment in Additional Assets by a Restricted Subsidiary
with Net Available Cash received by the Company or another Restricted
Subsidiary), in each case within one year from the later of such Asset
Disposition or the receipt of such Net Available Cash;
(2) second, to the extent of the balance of such Net Available Cash
after application in accordance with clause (1), to make an Offer (as
defined below) to purchase notes pursuant to and subject to the
conditions set forth in section (b) of this covenant; provided, however,
that if the Company elects (or is required by the terms of any other
Senior Subordinated Indebtedness), such Offer may be made ratably to
purchase the notes and other Senior Subordinated Indebtedness of the
Company; and
(3) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (1) and (2), for any
general corporate purpose permitted pursuant to the terms of the
indenture;
provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (1)(A) or (2) above, the Company or such
Restricted Subsidiary will retire such Indebtedness and will cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this covenant, the Company and
the Restricted Subsidiaries will not be required to apply any Net Available Cash
in accordance with this covenant except to the extent that the aggregate Net
Available Cash from all Asset Dispositions that is not applied in accordance
with this covenant exceeds $5.0 million.
(b) In the event of an Asset Disposition that requires the purchase of
notes (and other Senior Subordinated Indebtedness) pursuant to clause
(a)(iii)(2) of this covenant, the Company will be required to purchase notes
(and other Senior Subordinated Indebtedness) tendered pursuant to an offer by
the Company for the notes (and other Senior Subordinated Indebtedness) (the
"Offer") at a purchase price of 100% of their principal amount plus accrued and
unpaid interest and liquidated damages, if any, to the date of purchase (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date) in accordance with the
procedures (including prorating in the event of oversubscription), set forth in
the indenture. If the aggregate purchase price of notes (and other
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Senior Subordinated Indebtedness) tendered pursuant to the Offer is less than
the Net Available Cash allotted to the purchase of the notes (and other Senior
Subordinated Indebtedness), the Company may apply the remaining Net Available
Cash for any general corporate purpose permitted pursuant to the terms of the
indenture. The Company will not be required to make an Offer for notes (and
other Senior Subordinated Indebtedness) pursuant to this covenant if the Net
Available Cash available therefor (after application of the proceeds as provided
in clauses (a)(iii)(1)) is less than $10.0 million for any particular Asset
Disposition (which lesser amount will be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
Limitation on Transactions with Affiliates. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter into
or conduct any transaction or series of related transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") unless
such Affiliate Transaction is on terms:
(i) that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate,
(ii) that, in the event such Affiliate Transaction involves an
aggregate amount in excess of $2.0 million,
(1) are set forth in writing and
(2) have been approved by a majority of the members of the Board of
Directors having no personal stake in such Affiliate Transaction and
(iii) that, in the event such Affiliate Transaction involves an amount
in excess of $10.0 million, have been determined in writing by a nationally
recognized appraisal or investment banking firm to be fair, from a
financial standpoint, to the Company and its Restricted Subsidiaries or not
materially less favorable than those that might reasonably have been
obtained in an arm's-length transaction.
(b) The provisions of the foregoing paragraph (a) will not prohibit
(i) any Restricted Payment permitted to be paid pursuant to the
covenant described under "-- Limitation on Restricted Payments,"
(ii) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors,
(iii) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the Board of
Directors,
(iv) loans or advances to employees of the Company or any of its
Restricted Subsidiaries in the ordinary course of business not in excess of
$5.0 million in the aggregate outstanding at any one time,
(v) the payment of reasonable fees to directors of the Company and its
Subsidiaries who are not employees of the Company or its Subsidiaries, or
(vi) any transaction between the Company and a Restricted Subsidiary
or between Restricted Subsidiaries.
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Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. The Company will not sell or otherwise dispose of any shares of
Capital Stock of a Restricted Subsidiary, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
shares of its Capital Stock except:
(a) to the Company or a Restricted Subsidiary; or
(b) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would continue to be a Restricted Subsidiary or if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer be a Restricted Subsidiary and the Investment of
the Company in such Person after giving effect to such issuance or sale
would have been permitted to be made under the covenant described under
"-- Limitation on Restricted Payments" as if made on the date of such
issuance or sale (and such Investment shall be deemed to be an Investment
made for the purposes of such covenant). The proceeds of any sale of such
Capital Stock permitted hereby will be treated as Net Available Cash from
an Asset Disposition and must be applied in accordance with the terms of
the covenant described under "-- Limitation of Sales of Assets and
Subsidiary Stock."
Limitation on Lines of Business. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any business, other than a Permitted
Business.
SEC Reports. 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 SEC and provide the Trustee and Holders and prospective
Holders (upon request) within 15 days after it files them with the SEC, copies
of its annual report and the information, documents and other reports that are
specified in Sections 13 and 15(d) of the Exchange Act; provided, however, the
Company shall not be so obligated to file such reports with the SEC if the SEC
does not permit such filing, in which event the Company will make available such
information to the Trustee, Holders and prospective Holders (upon request)
within 15 days after the time the Company would be required to file such
information with the SEC if it were subject to Section 13 or 15(d) of the
Exchange Act. Notwithstanding the foregoing, such requirements shall be deemed
satisfied prior to the commencement of the Exchange Offer (as defined) or the
effectiveness of the Shelf Registration Statement (as defined) by the filing
with the SEC of the Exchange Offer Registration Statement (as defined) and/or
Shelf Registration Statement, and any amendments thereto, with such financial
information that satisfies Regulation S-X of the Securities Act. The Company
also will comply with the other provisions of Section 314(a) of the TIA.
Future Note Guarantors. The Company will cause each domestic Restricted
Subsidiary organized or acquired after the date hereof to become a Note
Guarantor, and execute and deliver to the Trustee a supplemental indenture in
the form set forth in the indenture pursuant to which such Restricted Subsidiary
will Guarantee payment of the notes. Each Note Guarantee will be limited to an
amount not to exceed the maximum amount that can be Guaranteed by that
Restricted Subsidiary without rendering the Note Guarantee, as it relates to
such Restricted Subsidiary, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
MERGER AND CONSOLIDATION
(a) The indenture will provide that the Company will not consolidate with
or merge with or into, or convey, transfer or lease all or substantially all its
assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") will be a corporation organized and existing under the laws of
the United States, any State thereof or the District of Columbia and the
Successor Company (if not the Company) will expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
notes and the indenture;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Restricted Subsidiary as a result of such
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transaction as having been Incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), no Default shall
have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness under paragraph (a) of the covenant described under
"-- Certain Covenants -- Limitation on Indebtedness"; and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets will not be released from the obligation to pay the
principal of and interest on the notes.
(b) In addition, the Company will not permit any Note Guarantor to
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all of its assets to, any Person unless:
(i) the resulting, surviving or transferee Person will be a
corporation organized and existing under the laws of the United States, any
State thereof or the District of Columbia, and such Person (if not such
Note Guarantor) will expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of such Note Guarantor under its Note Guarantee;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the resulting, surviving or
transferee Person as a result of such transaction as having been Incurred
by such Person at the time of such transaction), no Default shall have
occurred and be continuing; and
(iii) the Company will have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the indenture;
provided, however, that the foregoing shall not apply to any such consolidation
or merger with or into, or conveyance, transfer or lease to, any Person if the
resulting, surviving or transferee Person will not be a Subsidiary of the
Company and the other terms of the indenture, including the covenant described
under "-- Limitations on Sales of Assets and Subsidiary Stock," are complied
with.
(c) Notwithstanding the foregoing:
(i) any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company and
(ii) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction to
realize tax or other benefits.
DEFAULTS
Each of the following is an Event of Default:
(a) a default in any payment of interest on any Note when due and
payable, whether or not prohibited by the provisions described under
"-- Ranking" above, continued for 30 days,
(b) a default in the payment of principal of any Note when due and
payable at its Stated Maturity, upon required redemption or repurchase,
upon declaration or otherwise, whether or not such payment is prohibited by
the provisions described under "-- Ranking" above,
(c) the failure by the Company to comply with its obligations under
the covenant described under "-- Merger and Consolidation" above,
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(d) the failure by the Company to comply for 30 days after notice with
any of its obligations under the covenants described under "-- Change of
Control" or "-- Certain Covenants" above (in each case, other than a
failure to purchase notes),
(e) the failure by the Company to comply for 60 days after notice with
its other agreements contained in the notes or the indenture,
(f) the failure by the Company or any Restricted Subsidiary to pay any
Indebtedness within any applicable grace period after final maturity or the
acceleration of any such Indebtedness by the holders thereof because of a
default if the total amount of such Indebtedness unpaid or accelerated
exceeds $10.0 million or its foreign currency equivalent (the "cross
acceleration provision") and such failure continues for 10 days after
receipt of the notice specified in the indenture,
(g) certain events of bankruptcy, insolvency or reorganization of the
Company or a Significant Subsidiary (the "bankruptcy provisions"),
(h) the rendering of any judgment or decree for the payment of money
in excess of $10.0 million (net of any amounts with respect to which a
reputable and creditworthy insurance company has acknowledged liability in
writing) or its foreign currency equivalent against the Company or a
Restricted Subsidiary if:
(i) an enforcement proceeding thereon is commenced by any creditor,
or
(ii) such judgment or decree remains outstanding for a period of 60
days following such judgment and is not discharged, waived or stayed
(the "judgment default provision") or
(iii) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms thereof) or any Note Guarantor or
Person acting by or on behalf of such Note Guarantor denies or
disaffirms such Note Guarantor's obligations under the indenture or any
Note Guarantee and such Default continues for 10 days after receipt of
the notice specified in the indenture.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
However, a default under clauses (d), (e), (f) or (j) will not constitute
an Event of Default until the Trustee notifies the Company or the Holders of at
least 25% in principal amount of the notes notify the Company of the default and
the Company or the Note Guarantor, as applicable, does not cure such default
within the time specified after receipt of such notice.
If an Event of Default (other than an Event of Default relating to certain
events of bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the notes by notice to the Company and the Trustee may declare the principal of
and accrued but unpaid interest on all the notes to be due and payable. Upon
such a declaration, such principal and interest will be due and payable
immediately. If an Event of Default relating to certain events of bankruptcy,
insolvency or reorganization of the Company occurs, the principal of and
interest on all the notes will become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. Under
certain circumstances, the Holders of a majority in principal amount of the
notes may rescind any such acceleration with respect to the notes and its
consequences.
Subject to the provisions of the indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to
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enforce the right to receive payment of principal, premium (if any) or interest
when due, no Holder may pursue any remedy with respect to the indenture or the
notes unless:
(a) such Holder has previously given the Trustee notice that an Event
of Default is continuing,
(b) Holders of at least 25% in principal amount of the notes have
requested the Trustee in writing to pursue the remedy,
(c) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense,
(d) the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or indemnity,
and
(e) the Holders of a majority in principal amount of the notes have
not given the Trustee a direction inconsistent with such request within
such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal
amount of the notes will be given the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the indenture, the Trustee will be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
The indenture will provide that if a Default occurs and is continuing and
is known to the Trustee, the Trustee must mail to each Holder notice of the
Default within the earlier of 90 days after it occurs or 30 days after it is
known to a Trust Officer or written notice of it is received by the Trustee.
Except in the case of a Default in the payment of principal of, premium (if any)
or interest on any Note (including payments pursuant to the redemption
provisions of such Note), the Trustee may withhold notice if and so long as a
committee of its Trust Officers in good faith determines that withholding notice
is in the interests of the Holders. In addition, the Company will be required to
deliver to the Trustee, within 120 days after the end of each fiscal year, a
certificate indicating whether the signers thereof know of any Default that
occurred during the previous year. The Company will also be required to deliver
to the Trustee, within 30 days after the occurrence thereof, written notice of
any event which with the giving of notice or the lapse of time would become an
Event of Default, their status and what action the Company is taking or proposes
to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the indenture or the exchange notes may be
amended with the written consent of the Holders of a majority in principal
amount of the exchange notes then outstanding and any past default or compliance
with any provisions may be waived with the consent of the Holders of a majority
in principal amount of the exchange notes then outstanding. However, without the
consent of each Holder of an old note affected, no amendment may, among other
things:
(a) reduce the amount of exchange notes whose Holders must consent to
an amendment,
(b) reduce the rate of or extend the time for payment of interest or
any liquidated damages on any Note,
(c) reduce the principal of or extend the Stated Maturity of any Note,
(d) reduce the premium payable upon the redemption of any Note or
change the time at which any Note may be redeemed as described under
"-- Optional Redemption" above,
(e) make any Note payable in money other than that stated in the Note,
(f) make any change to the subordination provisions of the indenture
that adversely affects the rights of any Holder,
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(g) impair the right of any Holder to receive payment of principal of,
and interest or any liquidated damages on, such Holder's exchange notes on
or after the due dates therefor or to institute suit for the enforcement of
any payment on or with respect to such Holder's exchange notes,
(h) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions or
(i) modify the Note Guarantees in any manner adverse to the Holders.
Without the consent of any Holder, the Company and the Trustee may amend
the indenture to:
- cure any ambiguity, omission, defect or inconsistency,
- provide for the assumption by a successor corporation of the obligations
of the Company under the indenture,
- provide for uncertificated exchange notes in addition to or in place of
certificated exchange notes (provided that the uncertificated exchange
notes are issued in registered form for purposes of Section 163(f) of the
Code, or in a manner such that the uncertificated exchange notes are
described in Section 163(f)(2)(B) of the Code),
- make any change in the subordination provisions of the indenture that
would limit or terminate the benefits available to any holder of Senior
Indebtedness of the Company (or any representative thereof) under such
subordination provisions, or to add additional Note Guarantees with
respect to the exchange notes,
- secure the exchange notes,
- add to the covenants of the Company for the benefit of the Holders or to
surrender any right or power conferred upon the Company,
- make any change that does not adversely affect the rights of any Holder,
subject to the provisions of the indenture,
- provide for the issuance of the exchange notes or
- comply with any requirement of the SEC in connection with the
qualification of the indenture under the TIA.
However, no amendment may be made to the subordination provisions of the
indenture that adversely affects the rights of any holder of Senior Indebtedness
of the Company then outstanding unless the holders of such Senior Indebtedness
(or any group or representative thereof authorized to give a consent) consent to
such change.
The consent of the Holders will not be necessary under the indenture to
approve the particular form of any proposed amendment. It will be sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the indenture becomes effective, the Company will
be required to mail to Holders a notice briefly describing such amendment.
However, the failure to give such notice to all Holders, or any defect therein,
will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A Holder will be able to transfer or exchange notes in accordance with the
indenture. Upon any transfer or exchange, the registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes
required by law or permitted by the indenture. The Company will not be required
to transfer or exchange any Note selected for redemption or to transfer or
exchange any Note for a period of 15 days prior to a selection of exchange notes
to be redeemed. The exchange notes will be issued in registered form and the
registered Holder will be treated as the owner of such Note for all purposes.
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DEFEASANCE
The Company may at any time terminate all its obligations under the
exchange notes and the indenture ("legal defeasance"), except for certain
obligations, including those respecting the defeasance trust and obligations to
register the transfer or exchange of the exchange notes, to replace mutilated,
destroyed, lost or stolen exchange notes and to maintain a registrar and paying
agent in respect of the exchange notes. In addition, the indenture will provide
that the Company at any time may terminate:
(a) its obligations under the covenants described under "-- Certain
Covenants," and
(b) the operation of the cross-acceleration provision, the bankruptcy
provisions with respect to Significant Subsidiaries and the judgment
default provision described under "-- Defaults" above and the limitations
contained in clause (iii) under paragraph (a) of "-- Merger and
Consolidation" above ("covenant defeasance").
In the event that the Company exercises its legal defeasance option or its
covenant defeasance option, each Note Guarantor will be released from all of its
obligations with respect to its Note Guarantee.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the exchange notes may not be accelerated
because of an Event of Default with respect thereto. If the Company exercises
its covenant defeasance option, payment of the exchange notes may not be
accelerated because of an Event of Default specified in clause (d), (f) or (g)
(with respect only to Significant Subsidiaries), (h) (with respect only to
Significant Subsidiaries) under "-- Defaults" above or because of the failure of
the Company to comply with clause (iii) under paragraph (a) of "-- Merger and
Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money in an amount
sufficient or U.S. Government Obligations, the principal of, and interest on
which, will be sufficient, or a combination thereof sufficient, to pay the
principal, premium (if any) and interest on the exchange notes when due at
redemption or maturity, as the case may be, including interest thereon to
maturity or such redemption date, and must comply with certain other conditions,
including delivery to the Trustee of an Opinion of Counsel to the effect that
Holders will not recognize income, gain or loss for Federal income tax purposes
as a result of such deposit and defeasance and will be subject to Federal income
tax on the same amounts and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred (and, in the
case of legal defeasance only, such Opinion of Counsel must be based on a ruling
of the Internal Revenue Service or other change in applicable Federal income tax
law).
CONCERNING THE TRUSTEE
The Chase Manhattan Bank is to be the Trustee under the indenture and has
been appointed by the Company as Registrar and Paying Agent with regard to the
exchange notes.
GOVERNING LAW
The indenture will provide that it and the exchange notes will be governed
by, and construed in accordance with, the laws of the State of New York 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.
CERTAIN DEFINITIONS
"Additional Assets" means:
(a) any property or assets (other than Indebtedness and Capital Stock)
to be used by the Company or a Restricted Subsidiary in a Permitted
Business;
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(b) the Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by the Company or
another Restricted Subsidiary; or
(c) Capital Stock constituting a minority interest in any Person that
at such time is a Restricted Subsidiary; provided, however, that any such
Restricted Subsidiary described in clauses (b) or (c) above is primarily
engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under "-- Certain Covenants -- Limitation
on Transactions with Affiliates" and "-- Certain Covenants -- Limitation on
Sales of Assets and Subsidiary Stock" only, "Affiliate" shall also mean any
beneficial owner of shares representing 10% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company or American Media,
Inc. or of rights or warrants to purchase such Voting Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation, or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of:
(a) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary),
(b) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary or
(c) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such
Restricted Subsidiary;
other than, in the case of (a), (b) and (c) above:
(i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Note Guarantor,
(ii) any sale of Capital Stock in, or Indebtedness or other securities
of, an Unrestricted Subsidiary,
(iii) transactions permitted under paragraph (a) under "-- Certain
Covenants -- Merger and Consolidation,"
(iv) an issuance of Capital Stock by a Restricted Subsidiary of the
Company to the Company or to a Restricted Subsidiary,
(v) for purposes of the provisions described under "-- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition subject to the covenant described under "-- Certain
Covenants -- Limitation on Restricted Payments,"
(vi) any Permitted Asset Swap and
(vii) any disposition of assets with a Fair Market Value of not more
than $500,000.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the exchange notes, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease
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included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing:
(a) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment
of such Indebtedness or scheduled redemption or similar payment with
respect to such Preferred Stock multiplied by the amount of such payment,
by
(b) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in respect
of the Credit Agreement and any Refinancing Indebtedness with respect thereto,
as amended from time to time, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board of Directors of
the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be prepaid by the lessee without payment of a
penalty.
"Closing Date" means the date of the indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Consolidated Restricted Subsidiaries, plus, to
the extent Incurred by the Company and its Restricted Subsidiaries in such
period but not included in such interest expense:
(a) interest expense attributable to Capitalized Lease Obligations and
the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction,
(b) amortization of debt discount and debt issuance costs,
(c) capitalized interest,
(d) noncash interest expense,
(e) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing,
(f) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is Guaranteed by the Company or any Restricted
Subsidiary,
(g) net costs associated with Hedging Obligations,
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(h) dividends in respect of all Disqualified Stock of the Company and
all Preferred Stock of any of the Restricted Subsidiaries of the Company,
to the extent held by Persons other than the Company or a Wholly Owned
Subsidiary,
(i) interest Incurred in connection with investments in discontinued
operations and
(j) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust.
Notwithstanding anything to the contrary contained herein, commissions,
discounts, yield and other fees and charges Incurred in connection with any
transaction pursuant to which the Company or any Subsidiary of the Company may
sell, convey or otherwise transfer or grant a security interest in any accounts
receivable or related assets shall be included in Consolidated Interest Expense.
"Consolidated Net Income" means, for any period, the net income of the
Company and its Consolidated Subsidiaries for such period; provided, however,
that there shall not be included in such Consolidated Net Income:
(a) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that
(i) subject to the limitations contained in clause (d) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period to
the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
made to a Restricted Subsidiary, to the limitations contained in clause
(c) below) and
(ii) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net Income to
the extent such loss has been funded with cash from the Company or a
Restricted Subsidiary;
(b) any net income (or loss) of any person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(c) any net income (or loss) of any Restricted Subsidiary (other than
any Note Guarantor) if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that
(i) subject to the limitations contained in clause (d) below, the
Company's equity in the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Restricted
Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of
a dividend or other distribution made to another Restricted Subsidiary,
to the limitation contained in this clause) and
(ii) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(d) any gain (loss) realized upon the sale or other disposition of any
asset of the Company or its Consolidated Subsidiaries (including pursuant
to any Sale/Leaseback Transaction) that is not sold or otherwise disposed
of in the ordinary course of business and any gain (loss) realized upon the
sale or other disposition of any Capital Stock of any Person;
(e) any extraordinary gain or loss; and
(f) the cumulative effect of a change in accounting principles.
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"Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of May 7, 1999, as
amended, restated, supplemented, waived, replaced (whether or not upon
termination), restructured, repaid, refunded, refinanced or otherwise modified
from time to time including any agreement extending the maturity thereof or
otherwise restructuring all or any portion of the Indebtedness under such
agreement or increasing the amount loaned thereunder or altering the maturity
thereof, initially among American Media, Inc., the Company, the lenders
thereunder and The Chase Manhattan Bank, as administrative agent for such
lenders.
"Currency Agreement" means with respect to any Person any foreign exchange
contract, currency swap agreements or other similar agreement or arrangement to
which such Person is a party or of which it is a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Noncash Consideration" means the Fair Market Value of noncash
consideration received by the Company or one of its Restricted Subsidiaries in
connection with an Asset Disposition that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, less the amount of Temporary Cash Investments received in
connection with a subsequent sale of such Designated Noncash Consideration.
"Designated Senior Indebtedness" of the Company means:
(a) the Bank Indebtedness and
(b) any other Senior Indebtedness of the Company that, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to
lend up to at least $10.0 million and is specifically designated by the
Company in the instrument evidencing or governing such Senior Indebtedness
as "Designated Senior Indebtedness" for purposes of the indenture.
"Designated Senior Indebtedness" of a Note Guarantor has a correlative
meaning.
"Disqualified Stock" means, with respect to any Person, 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 exercisable) or upon the happening of any
event:
(a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise,
(b) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding Capital Stock convertible or exchangeable solely at the
option of the Company or a Restricted Subsidiary; provided that any such
conversion or exchange shall be deemed an Incurrence of Indebtedness or an
issuance of Disqualified Stock, as applicable) or
(c) is redeemable at the option of the holder thereof, in whole or in
part,
in each case on or prior to 91 days after the Stated Maturity of the exchange
notes, provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to 91 days
after the Stated Maturity of the exchange notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions of the covenants described under "-- Change of
Control" and "-- Certain Covenants -- Limitation on Sale of Assets and
Subsidiary Stock"; provided, however, that only the portion
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of Capital Stock which so matures or is mandatorily redeemable, is so
convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such date shall be deemed to be Disqualified Stock; provided
further, however, that if such Capital Stock is issued to any employee or to any
plan for the benefit of employees of the Company or its Subsidiaries or by any
such plan to such employees, such Capital Stock shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Company in order to satisfy applicable statutory or regulatory obligations or as
a result of such employee's termination, death or disability.
"EBITDA" for any period means the Consolidated Net Income for such period,
plus, without duplication, the following to the extent deducted in calculating
such Consolidated Net Income:
(a) Consolidated income tax expense,
(b) Consolidated Interest Expense,
(c) Consolidated depreciation expense,
(d) Consolidated amortization expense (excluding amortization expense
attributable to a prepaid cash item that was paid in a prior period),
(e) any nonrecurring expenses or charges related to any Equity
Offering, Permitted Investment, acquisition or Indebtedness permitted to be
incurred by the indenture (whether or not successful) (including fees,
expenses or charges related to the Transactions, including the Make-Whole
Payments), in each case deducted in such period in computing Consolidated
Net Income,
(f) the amount of any annual monitoring fees paid to Evercore in an
amount not to exceed $750,000 during any fiscal year,
(g) any severance expenses related to the Transactions or make-whole
or similar payments or any corporate relocation expenses arising from the
relocation of the Company or such Restricted Subsidiary from any of the
facilities in which they are located on the Closing Date, in each case
Incurred or made within eighteen months after the Closing Date in an
amount, taken together with all other amounts under this clause (g), not to
exceed $3.0 million in the aggregate, and
(h) any other noncash charges reducing Consolidated Net Income for
such period (excluding any such charge which consists of or requires an
accrual of, or cash reserve for, any anticipated cash charges for any prior
or in any future period).
Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization and noncash charges of, a
Restricted Subsidiary of the Company shall be added to Consolidated Net Income
to compute EBITDA only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income; provided, however, that with respect to any Restricted Subsidiary
other than a Note Guarantor, such amount shall be added to Consolidated Net
Income to compute EBITDA only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Equity Offering" means any public or private sale of common stock or
Preferred Stock of the Company or American Media, Inc. (other than Disqualified
Stock), other than public offerings with respect to the Company's or American
Media Inc.'s common stock registered on Form S-8 or other issuances upon
exercise of options by employees of the Company or any of its Restricted
Subsidiaries.
"Evercore" means Evercore Capital Partners L.P., a Delaware limited
partnership, and its Affiliates.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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
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able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction. For purposes of clause (iv)(3)(B) under paragraph (a) of the
covenant described under "-- Certain Covenants -- Limitation on Restricted
Payments," the definition of "Permitted Asset Swap" and calculating the Fair
Market Value of Designated Noncash Consideration, the Fair Market Value of
property or assets other than cash which involves (a) an aggregate amount in
excess of $2.0 million, shall be set forth in a resolution approved by at least
a majority of the Board of Directors and (b) an aggregate amount in excess of
$10.0 million, shall have been determined in writing by a nationally recognized
appraisal or investment banking firm. For all other purposes of the indenture,
Fair Market Value will be determined in good faith by the Board of Directors,
whose determination will be conclusive and evidenced by a resolution of the
Board of Directors.
"GAAP" means generally accepted accounting principles in the United States
as in effect as of the Closing Date, including those set forth in:
(a) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants,
(b) statements and pronouncements of the Financial Accounting
Standards Board,
(c) such other statements by such other entities as approved by a
significant segment of the accounting profession and
(d) unless otherwise indicated, all ratios and computations based on
GAAP contained in the indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person:
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-
or-pay, or to maintain financial statement conditions or otherwise) or
(b) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" means the Person in whose name a Note is registered on the
Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Subsidiary. The term "Incurrence" when used as a
noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(a) the principal of and premium (if any) in respect of indebtedness
of such Person for borrowed money;
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(b) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, exchange notes or other similar
instruments;
(c) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto);
(d) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion
of such services;
(e) all Capitalized Lease Obligations and all Attributable Debt of
such Person;
(f) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(g) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of Indebtedness of such Person shall be
the lesser of
(i) the Fair Market Value of such asset at such date of
determination and
(ii) the amount of such Indebtedness of such other Persons;
(h) to the extent not otherwise included in this definition, Hedging
Obligations of such Person;
(i) to the extent not otherwise included, the amount then outstanding
(i.e., advanced, and received by, and available for use by, such Person)
under any receivables financing (as set forth in the books and records of
such Person and confirmed by the agent, trustee or other representative of
the institution or group providing such receivables financing); and
(j) all obligations of the type referred to in clauses (a) through (i)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person; provided that (a) Hedging Obligations
entered into in the ordinary course of business and in compliance with the
indenture, (b) endorsements of negotiable instruments and documents in the
ordinary course of business and (c) an acquisition of assets, Capital Stock or
other securities by the Company for consideration consisting exclusively of
Capital Stock (other than Disqualified Stock) of the Company shall not be deemed
to be an Investment. For purposes of the definition of "Unrestricted Subsidiary"
and the covenant described under "-- Certain Covenants -- Limitation on
Restricted Payments":
(a) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the Fair Market Value of
the net assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a
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redesignation of such Subsidiary as a Restricted Subsidiary, the Company
shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to
(i) the Company's "Investment" in such Subsidiary at the time of
such redesignation less
(ii) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time of such redesignation; and
(b) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its Fair Market Value at the time of such transfer.
"Legal Holiday" means a Saturday, Sunday or other day on which banking
institutions in New York State are not required by law or regulation to be open.
"Leverage Ratio" as of any date of determination means the ratio of:
(a) Total Consolidated Indebtedness as of the date of determination to
(b) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at the end of the most recent
fiscal quarter for which financial statements are available,
provided, however, that
(i) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Leverage Ratio is an Incurrence of Indebtedness, EBITDA and,
for the purpose of calculating EBITDA, Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to
such Indebtedness as if such Indebtedness had been Incurred on the first
day of such period and the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such
period,
(ii) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the
date of the transaction giving rise to the need to calculate the Leverage
Ratio, EBITDA and, for the purpose of calculating EBITDA, Consolidated
Interest Expense for such period shall be calculated on a pro forma basis
as if such discharge had occurred on the first day of such period and as if
the Company or such Restricted Subsidiary has not earned the interest
income actually earned during such period in respect of cash or Temporary
Cash Investments used to repay, repurchase, defease or otherwise discharge
such Indebtedness,
(iii) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, EBITDA for
such period shall be reduced by an amount equal to EBITDA (if positive)
directly attributable to the assets that are the subject of such Asset
Disposition for such period or increased by an amount equal to EBITDA (if
negative) directly attributable thereto for such period and, for the
purpose of calculating EBITDA, Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged
with respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital
Stock of any Restricted Subsidiary is sold, the Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after
such sale),
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(iv) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially
all of an operating unit of a business, EBITDA and, for the purpose of
calculating EBITDA, Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the Incurrence
of any Indebtedness) as if such Investment or acquisition occurred on the
first day of such period, and
(v) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period)
shall have made any Asset Disposition or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (iii) or
(iv) above if made by the Company or a Restricted Subsidiary during such
period, EBITDA and, for the purpose of calculating EBITDA, Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition, Investment or acquisition of
assets occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
Any such pro forma calculations may include operating expense reductions for
such period resulting from the acquisition which is being given pro forma effect
that (a) would be permitted pursuant to Article XI of Regulation S-X under the
Securities Act or (b) have been realized or for which the steps necessary for
realization have been taken or are reasonably expected to be taken within six
months following any such acquisition, including, but not limited to, the
execution or termination of any contracts, the termination of any personnel or
the closing (or approval by the Board of Directors of any closing) of any
facility, as applicable, provided that, in either case, such adjustments are set
forth in an Officers' Certificate signed by the Company's chief financial
officer and another Officer which states (i) the amount of such adjustment or
adjustments, (ii) that such adjustment or adjustments are based on the
reasonable good faith beliefs of the officers executing such Officers'
Certificate at the time of such execution and (iii) that any related Incurrence
of Indebtedness is permitted pursuant to the indenture. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term as at the date
of determination in excess of twelve months).
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Make-Whole Payments" means payments in the aggregate of approximately $4.0
million that David J. Pecker, under his employment agreement with EMP, as in
effect on the Closing Date (which agreement will be assumed by American Media,
Inc. in the merger), is entitled to in connection with the compensation he
forfeited upon termination of his employment with Hachette, a portion of which
became payable upon Mr. Pecker's termination of employment on March 31, 1999 and
the remaining portion of which shall be payable on April 15, 2000.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and proceeds from the
sale or other disposition of any securities received as consideration, but only
as and when received, but excluding any other consideration received in the form
of assumption by
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the acquiring Person of Indebtedness or other obligations relating to the
properties or assets that are the subject of such Asset Disposition or received
in any other noncash form) therefrom, in each case net of:
(a) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition,
(b) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law be repaid out of
the proceeds from such Asset Disposition,
(c) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition and
(d) appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property
or other assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Note Guarantee" means each Guarantee of the obligations with respect to
the exchange notes issued by any Person pursuant to the terms of the indenture.
Each such Note Guarantee will have subordination provisions equivalent to those
contained in the indenture and will be substantially in the form prescribed in
the indenture.
"Note Guarantor" means any Person that has issued a Note Guarantee.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company. An "Officer" of a Note Guarantor has a correlative
meeting.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or a Note Guarantor, as applicable, or the Trustee.
"Permitted Asset Swap" means any one or more transactions in which the
Company or any Restricted Subsidiary exchanges assets (other than the trademarks
or other assets related to National Enquirer or Star) for consideration
consisting of (a) assets used or useful in a Permitted Business and (b) any cash
or Temporary Cash Investments (provided that such cash or Temporary Cash
Investments will be considered Net Available Cash from an Asset Disposition);
provided, however, that the Fair Market Value of the assets received by the
Company or such Restricted Subsidiary in such exchange, together with the amount
of any cash or Temporary Cash Investments also received in such exchange, shall
be at least equal to the Fair Market Value of the assets exchanged by the
Company or such Restricted Subsidiary.
"Permitted Business" means any business engaged in by the Company or any
Restricted Subsidiary on the Closing Date and any Related Business.
"Permitted Holders" means EMP Group L.L.C. and any Person acting in the
capacity of an underwriter in connection with a public or private offering of
the Company's or American Media Inc.'s Capital Stock.
"Permitted Investment" means
101
<PAGE> 107
(a) an Investment by the Company or any Restricted Subsidiary in the
Company, a Restricted Subsidiary or a Person that will, upon the making of
such Investment, become a Restricted Subsidiary; provided, however, that
the primary business of such Restricted Subsidiary is a Permitted Business;
(b) an Investment by the Company or any Restricted Subsidiary in
another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Permitted
Business;
(c) an Investment by the Company or any Restricted Subsidiary in
Temporary Cash Investments;
(d) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(e) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(f) loans or advances to employees of the Company or such Restricted
Subsidiary made in the ordinary course of business not exceeding $5 million
in the aggregate outstanding at any time;
(g) an Investment by the Company or any Restricted Subsidiary in
stock, obligations or securities received in settlement of debts created in
the ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments;
(h) an Investment by the Company or any Restricted Subsidiary in any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition that was made pursuant to
and in compliance with the covenant described under "-- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock";
(i) any Investment existing on the Closing Date;
(j) guarantees (including Guarantees) of Indebtedness permitted under
the indenture; and
(k) without duplication, any Investment in any Person, the amount of
which, together with all other Investments in other Persons made pursuant
to this clause (k), does not exceed $25.0 million in the aggregate at any
time outstanding.
"Permitted Junior Securities" shall mean debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
or readjustment of the Company that are subordinated to the payment of all
then-outstanding Senior Indebtedness of the Company at least to the same extent
that the exchange notes are subordinated to the payment of all Senior
Indebtedness of the Company on the Closing Date, so long as to the extent that
any Senior Indebtedness of the Company outstanding on the date of consummation
of any such plan of reorganization or readjustment is not paid in full in cash
or Cash Equivalents on such date, the holders of any such Senior Indebtedness
not so paid in full in cash have consented to the terms of such plan or
reorganization or readjustment.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
102
<PAGE> 108
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Purchase Money Indebtedness" means Indebtedness:
(a) consisting of the deferred purchase price of an asset, conditional
sale obligations, obligations under any title retention agreement and other
purchase money obligations, in each case where the maturity of such
Indebtedness does not exceed the anticipated useful life of the asset being
financed, and
(b) incurred to finance the acquisition by the Company or a Restricted
Subsidiary of such asset, including additions and improvements; provided,
however, that such Indebtedness is incurred within 180 days after the
acquisition by the Company or such Restricted Subsidiary of such asset.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) any Indebtedness of the Company or any Restricted
Subsidiary existing on the Closing Date or Incurred in compliance with the
indenture (including Indebtedness of the Company that Refinances Refinancing
Indebtedness); provided, however, that:
(a) the Refinancing Indebtedness has a Stated Maturity no earlier than
the Stated Maturity of the Indebtedness being Refinanced,
(b) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
remaining Average Life of the Indebtedness being refinanced,
(c) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate
issue price), plus costs related to the issuance of such Refinancing
Indebtedness, that is equal to or less than the aggregate principal amount
(or if issued with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being Refinanced and
(d) if the Indebtedness being Refinanced is subordinated in right of
payment to the exchange notes, such Refinancing Indebtedness is
subordinated in right of payment to the exchange notes at least to the same
extent as the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include:
(i) Indebtedness of a Restricted Subsidiary other than a Note
Guarantor that Refinances Indebtedness of the Company or
(ii) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or complementary
to the businesses of the Company and the Restricted Subsidiaries on the Closing
Date.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness of the Company.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or a Restricted Subsidiary transfers such property to a Person and
the Company or such Restricted Subsidiary leases it from such
103
<PAGE> 109
Person, other than leases between the Company and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien. "Secured Indebtedness" of a Note Guarantor has a correlative meaning.
"Senior Subordinated Indebtedness" of the Company means the exchange notes
and any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank equal with the exchange notes in right of payment and is
not subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness. "Senior Subordinated
Indebtedness" of a Note Guarantor has a correlative meaning.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Closing Date or thereafter Incurred) that is subordinate or
junior in right of payment to the exchange notes pursuant to a written
agreement. "Subordinated Obligation" of a Note Guarantor has a correlative
meaning.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by:
(a) such Person,
(b) such Person and one or more Subsidiaries of such Person or
(c) one or more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following:
(a) any investment in direct obligations of the United States or any
agency thereof or obligations Guaranteed by the United States or any agency
thereof,
(b) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is organized under the laws
of the United States, any state thereof or any foreign country recognized
by the United States having capital, surplus and undivided profits
aggregating in excess of $250,000,000 (or the foreign currency equivalent
thereof) and whose long-term debt is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act),
(c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) above entered
into with a bank meeting the qualifications described in clause (b) above,
(d) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States or any foreign country recognized by the United States
104
<PAGE> 110
with a rating at the time as of which any investment therein is made of
"P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc. ("S&P"), and
(e) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or
"A" by Moody's Investors Service, Inc.
"TIA" means the Trust indenture Act of 1939 (15 U.S.C. Sections
77aaa -- 77bbbb) as in effect on the Closing Date.
"Total Assets" means the total Consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"Total Consolidated Indebtedness" means the aggregate amount of all
Indebtedness of the Company and its Restricted Subsidiaries, outstanding as of
such date of determination, determined on a Consolidated basis, after giving
effect to any Incurrence of Indebtedness and the application of the proceeds
therefrom giving rise to such determination.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Trustee" means the party named as such in the indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Unrestricted Subsidiary" means:
(a) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors in
the manner provided below and
(b) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary of the Company) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any
Capital Stock or Indebtedness 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, however, that
either:
(i) the Subsidiary to be so designated has total Consolidated
assets of $1,000 or less or
(ii) if such Subsidiary has Consolidated assets greater than
$1,000, then such designation would be permitted under the covenant
entitled "Limitation on Restricted Payments." The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided, however, that immediately after giving effect to such
designation:
(1) the Company could Incur $1.00 of additional Indebtedness
under paragraph (a) of the covenant described under "-- Certain
Covenants -- Limitation on Indebtedness" and
(2) no Default shall have occurred and be continuing. Any such
designation of a Subsidiary as a Restricted Subsidiary or
Unrestricted Subsidiary by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States
(including any agency or instrumentality thereof) for the
105
<PAGE> 111
payment of which the full faith and credit of the United States is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company and/or one or more Wholly Owned Subsidiaries.
106
<PAGE> 112
U.S. FEDERAL TAX CONSIDERATIONS OF THE EXCHANGE OFFER
The exchange of old notes for exchange notes will not constitute a
recognition event for U.S. federal income tax purposes. Consequently, no gain or
loss will be recognized by holders upon receipt of the exchange notes. For
purposes of determining gain or loss upon the subsequent sale or exchange of
exchange notes, a holder's basis in exchange notes will be the same as such
holder's basis in the old notes exchanged therefor. Holders will be considered
to have held the exchange notes from the time of their original acquisition of
the old notes. PERSONS CONSIDERING THE EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
107
<PAGE> 113
PLAN OF DISTRIBUTION
Until , 1999 (90 days after the date of this prospectus), all
dealers effecting transactions in the exchange notes, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for old notes where such old notes were acquired as a result of
market-making activities or other trading activities. We have agreed that we
will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale for a period of 180
days from the date on which the exchange offer is consummated, or such shorter
period as will terminate when all old notes acquired by broker-dealers for their
own accounts as a result of market-making activities or other trading activities
have been exchanged for exchange notes and such exchange notes have been resold
by such broker-dealers.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale, at prevailing market prices at the time of resale, at prices related to
such prevailing market prices or at 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 or the purchasers or any such exchange notes. Any broker-dealer
that resells exchange notes that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of such exchange notes may be deemed to be an "underwriter" within
the meaning of the Securities Act, and any profit on any such resale of exchange
notes and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
By its acceptance of the exchange offer, any broker-dealer that receives
exchange notes pursuant to the exchange offer hereby agrees to notify us prior
to using the prospectus in connection with the sale or transfer of exchange
notes, and acknowledges and agrees that, upon receipt of notice from us of the
happening of any event which makes any statement in this prospectus untrue in
any material respect or which requires the making of any changes in this
prospectus in order to make the statements therein not misleading or which may
impose upon us disclosure obligations that may have a material adverse effect on
us (which notice we agree to deliver promptly to such broker-dealer), such
broker-dealer will suspend use of this prospectus until we have notified such
broker-dealer that delivery of this prospectus may resume and has furnished
copies of any amendment or supplement to the to such broker-dealer. We have
agreed to pay all expenses incident to the exchange offer, other than
commissions and concessions of any broker-dealers and the fees of any counsel or
other advisors or experts retained by the holders of old notes, except as
expressly set forth in the exchange and registration rights agreement, and will
indemnify the holders of old notes (including any broker-dealers) against
certain liabilities, including certain liabilities that may arise under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the exchange notes are being passed
upon on behalf of the Company by Simpson Thacher & Bartlett, New York, New York.
108
<PAGE> 114
EXPERTS
The financial statements included in this prospectus for the fiscal years
ended March 31, 1997, March 30, 1998 and March 29, 1999 have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-4 under the Securities Act of 1933 with respect to the
exchange notes. This prospectus, which is a part of that registration statement,
does not contain all of the information set forth in the registration statement.
For further information about us and the exchange notes, you should refer to the
registration statement. This prospectus summarizes material provisions of
contracts and other documents to which we refer you. Since this prospectus may
not contain all of the information that you may find important, you should
review the full text of these documents. We have included copies of these
documents as exhibits to our registration statement.
We are not currently subject to the information requirements of the
Securities Exchange Act of 1934. As a result of this offering, we will become
subject to the information requirements of the Exchange Act. Accordingly, we
will file reports and other information with the SEC unless and until we obtain
an exemption from the requirement to do so. Our registration statement and other
SEC filings can be inspected and copied at the Public Reference Section of the
SEC located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington
D.C. 20549 and at regional public reference facilities maintained by the SEC
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such materials can be obtained from the Public Reference
Section of the SEC at prescribed rates. Such materials may also be accessed
electronically by means of the SEC's home page on the Internet at
http://www.sec.gov.
For so long as any exchange notes remain outstanding we will furnish to you
the information that would be required to be furnished by us under Section 13 of
the Exchange Act.
109
<PAGE> 115
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheets as of March 30, 1998 and March
29, 1999.................................................. F-3
Consolidated Statements of Income for the Three Fiscal Years
Ended March 29, 1999...................................... F-4
Consolidated Statements of Stockholder's Equity for the
Three Fiscal Years Ended March 29, 1999................... F-5
Consolidated Statements of Cash Flows for the Three Fiscal
Years Ended March 29, 1999................................ F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 116
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholder of
American Media Operations, Inc.:
We have audited the accompanying consolidated balance sheets of American
Media Operations, Inc. (a Delaware corporation) and subsidiaries as of March 30,
1998 and March 29, 1999, and the related consolidated statements of income,
stockholder's equity and cash flows for each of the three fiscal years in the
period ended March 29, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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 American Media Operations,
Inc. and subsidiaries as of March 30, 1998 and March 29, 1999, and the results
of their operations and their cash flows for each of the three fiscal years in
the period ended March 29, 1999, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
West Palm Beach, Florida,
May 7, 1999.
F-2
<PAGE> 117
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 30, 1998 AND MARCH 29, 1999
<TABLE>
<CAPTION>
1998 1999
------------ ------------
(IN 000'S, EXCEPT PER SHARE
INFORMATION)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 7,405 $ 3,823
Receivables, net.......................................... 7,852 7,977
Inventories............................................... 10,390 9,830
Prepaid income taxes...................................... 2,612 --
Prepaid expenses and other................................ 3,939 2,650
-------- --------
Total current assets.............................. 32,198 24,280
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Land and buildings........................................ 4,039 4,039
Machinery, fixtures and equipment......................... 18,447 22,040
Display racks............................................. 21,662 19,543
-------- --------
44,148 45,622
Less -- accumulated depreciation.......................... (18,149) (18,762)
-------- --------
25,999 26,860
-------- --------
DEFERRED DEBT COSTS, net.................................... 8,688 5,728
-------- --------
GOODWILL, net of accumulated amortization of $126,440 and
$141,595.................................................. 478,811 463,656
-------- --------
OTHER INTANGIBLES, net of accumulated amortization of
$45,766 and $51,686....................................... 102,234 96,314
-------- --------
$647,930 $616,838
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of term loan.............................. $ -- $ 25,000
Accounts payable.......................................... 15,587 11,618
Accrued expenses.......................................... 14,915 13,755
Accrued interest.......................................... 12,249 11,251
Accrued and current deferred income taxes................. 9,775 9,795
Deferred revenues......................................... 31,749 27,987
-------- --------
Total current liabilities......................... 84,275 99,406
-------- --------
PAYABLE TO PARENT COMPANY................................... 3,728 3,404
-------- --------
TERM LOAN AND REVOLVING CREDIT COMMITMENT, net of current
portion................................................... 297,401 246,000
-------- --------
SUBORDINATED INDEBTEDNESS:
11.63% Senior Subordinated Notes Due 2004................. 200,000 200,000
10.38% Senior Subordinated Notes Due 2002................. 134 134
-------- --------
200,134 200,134
-------- --------
DEFERRED INCOME TAXES....................................... 7,919 7,696
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 2 and 9)
STOCKHOLDERS' EQUITY:
Common stock, $.20 par value; 10,000 shares authorized,
7,507.6 shares issued and outstanding shares issued and
outstanding............................................ 2 2
Additional paid-in capital................................ 26,039 26,039
Retained earnings......................................... 28,432 34,157
-------- --------
TOTAL STOCKHOLDERS' EQUITY.................................. 54,473 60,198
======== ========
$647,930 $616,838
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
F-3
<PAGE> 118
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE FISCAL YEARS ENDED MARCH 29, 1999
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------
MARCH 31, MARCH 30, MARCH 29,
1997 1998 1999
--------- --------- ---------
(IN 000'S)
<S> <C> <C> <C>
OPERATING REVENUES:
Circulation.............................................. $273,567 $262,249 $248,630
Advertising.............................................. 24,280 23,643 23,460
Other.................................................... 18,141 21,792 21,369
-------- -------- --------
315,988 307,684 293,459
-------- -------- --------
OPERATING EXPENSES:
Editorial................................................ 28,369 30,497 28,906
Production............................................... 80,286 82,296 79,691
Distribution, circulation and other cost of sales........ 60,514 66,883 67,640
Selling, general and administrative expenses............. 30,428 27,101 26,212
Gain on sale of Soap Opera Assets........................ -- -- (6,499)
Depreciation and amortization............................ 29,220 30,327 32,110
-------- -------- --------
228,817 237,104 228,060
-------- -------- --------
Operating income......................................... 87,171 70,580 65,399
INTEREST EXPENSE........................................... (56,284) (50,486) (46,897)
OTHER INCOME (EXPENSE), net................................ (1,705) (1,641) 2,943
-------- -------- --------
Income before provision for income taxes and
extraordinary charge.................................. 29,182 18,453 21,445
PROVISION FOR INCOME TAXES................................. 16,716 12,437 13,559
-------- -------- --------
Income before extraordinary charge....................... 12,466 6,016 7,886
EXTRAORDINARY CHARGE, net of income taxes of $1,269,
related to early extinguishment of debt (Note 8)......... -- -- (2,161)
-------- -------- --------
Net income....................................... $ 12,466 $ 6,016 $ 5,725
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-4
<PAGE> 119
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE THREE FISCAL YEARS ENDED MARCH 29, 1999
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
------- ------ ---------- --------
(IN 000'S, EXCEPT SHARE INFORMATION)
<S> <C> <C> <C> <C>
Balance, March 25, 1996.............................. 7,507.6 $2 $26,290 $ 9,950
Other................................................ -- -- (251) --
Net income........................................... -- -- -- 12,466
------- -- ------- -------
Balance, March 31, 1997.............................. 7,507.6 2 26,039 22,416
Net income........................................... -- -- -- 6,016
------- -- ------- -------
Balance, March 30, 1998.............................. 7,507.6 2 26,039 28,432
Net income........................................... -- -- -- 5,725
------- -- ------- -------
Balance, March 29, 1999.............................. 7,507.6 $2 $26,039 $34,157
======= == ======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-5
<PAGE> 120
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE FISCAL YEARS ENDED MARCH 29, 1999
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------
MARCH 31, MARCH 30, MARCH 29,
1997 1998 1999
--------- --------- ---------
(IN 000'S)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income................................................ $12,466 $ 6,016 $ 5,725
------- --------- ---------
Adjustments to reconcile net income to net cash provided
from operating activities --
Gain on sale of Soap Opera Assets......................... -- -- (6,499)
Extraordinary charge, net of income taxes................. -- -- 2,161
Depreciation and amortization............................. 29,220 30,327 32,110
Deferred debt cost amortization........................... 3,144 2,623 1,506
Senior subordinated discount note accretion............... 1,500 190 --
Deferred income tax provision (credit).................... 1,180 186 (3,592)
Decrease (increase) in --
Receivables, net....................................... (2,540) 339 (125)
Due from Parent Company................................ (431) 1,048 --
Inventories............................................ 1,135 3,001 560
Prepaid income taxes................................... 1,184 (2,612) 2,612
Prepaid expenses and other............................. 283 (1,313) 1,289
Increase (decrease) in --
Accounts payable....................................... (3,912) 1,420 (5,203)
Accrued expenses....................................... 2,894 (3,204) (1,486)
Payable to Parent Company.............................. -- 3,728 (324)
Accrued interest....................................... (2,141) 2,212 (1,010)
Accrued and current deferred income taxes.............. 864 (1,552) 4,658
Deferred revenues...................................... 1,842 (599) (2,580)
------- --------- ---------
Total adjustments................................. 34,222 35,794 24,077
------- --------- ---------
Net cash provided from operating activities............ 46,688 41,810 29,802
------- --------- ---------
Cash Flows from Investing Activities:
Capital expenditures...................................... (8,526) (11,018) (15,019)
Acquisition of business................................... (2,236) -- --
Cash proceeds from sale of Soap Opera Assets.............. -- -- 10,000
------- --------- ---------
Net cash used in investing activities.................. (10,762) (11,018) (5,019)
------- --------- ---------
Cash Flows from Financing Activities:
Term loan and revolving credit commitment principal
repayments............................................. (85,744) (133,855) (382,401)
Proceeds from term loan and revolving credit commitment... 54,000 118,500 356,000
Repayment of senior subordinated indebtedness............. -- (15,962) --
Payment of deferred debt costs............................ (344) (300) (1,964)
Other..................................................... (251) -- --
------- --------- ---------
Net cash used in financing activities.................. (32,339) (31,617) (28,365)
------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents........ 3,587 (825) (3,582)
Cash and Cash Equivalents at Beginning of Year.............. 4,643 8,230 7,405
------- --------- ---------
Cash and Cash Equivalents at End of Year.................... $ 8,230 $ 7,405 $ 3,823
======= ========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for --
Income taxes........................................... $13,203 $ 15,422 $ 9,570
Interest............................................... 53,763 45,462 46,389
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-6
<PAGE> 121
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS IN ALL TABLES)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Consolidation --
The consolidated financial statements include the accounts of the Company
("Operations", a wholly-owned subsidiary of American Media, Inc., "Media") and
its subsidiaries (National Enquirer, Inc., Star Editorial, Inc., Weekly World
News, Inc., Country Weekly, Inc., DSI and Frontline, among others). We publish
four weekly publications: National Enquirer, Star, Weekly World News and Country
Weekly. All significant intercompany transactions and balances have been
eliminated in consolidation. Our fiscal year, which ends on the last Monday in
March, includes 52 weeks for the fiscal years 1998 and 1999 compared to 53 weeks
for the fiscal year 1997.
Revenue Recognition --
Substantially all publication sales, except subscriptions, are made through
unrelated distributors. Issues, other than special topic issues, are placed on
sale approximately one week prior to the issue date; however, circulation
revenues and related expenses are recognized for financial statement purposes on
an issue date basis (i.e., off sale date). Special topic issue revenues and
related expenses are recognized at the on sale date. On the date each issue is
placed on sale, we receive a percentage of the issue's estimated sales proceeds
for our publications as an advance from the distributors. All of our
publications are sold with full return privileges.
Revenues from copy sales are net of reserves provided for expected sales
returns which are established in accordance with generally accepted accounting
principles after considering such factors as sales history and available market
information. We continually monitor the adequacy of the reserves and make
adjustments when necessary.
Subscriptions received in advance of the issue date are recognized as
income over the term of the subscription on a straight-line basis. Advertising
revenues are recognized in the period in which the related advertising appears
in the publications.
Deferred revenues were comprised of the following:
<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Single Copy................................................. $ 6,887 $ 5,367
Subscriptions............................................... 24,578 22,334
Advertising................................................. 284 286
------- -------
$31,749 $27,987
======= =======
</TABLE>
Other revenues, primarily from marketing services performed for third
parties by DSI and Frontline, are recognized when the service is performed.
Property and Equipment --
We use straight-line and accelerated depreciation methods for financial
reporting and Federal income tax purposes, respectively. The estimated lives
used in computing depreciation for financial reporting purposes are 22 years for
buildings, 3 years for display racks and 5 to 10 years for all other depreciable
fixed assets.
F-7
<PAGE> 122
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS IN ALL TABLES)
Inventories --
Inventories are generally stated at the lower of cost or market. We use the
last-in, first-out (LIFO) cost method of valuing our inventories. If the
first-in, first-out (FIFO) cost method of valuation, which approximates market
value, had been used, inventories would have been approximately $170,000 and
$430,000 higher than the amounts reported in the accompanying consolidated
balance sheets for 1998 and 1999, respectively. Inventories are comprised of the
following:
<TABLE>
<CAPTION>
1998 1999
------- ------
<S> <C> <C>
Raw materials -- paper...................................... $ 6,573 $6,931
Finished product -- paper, production and distribution
costs of future issues.................................... 3,817 2,899
------- ------
$10,390 $9,830
======= ======
</TABLE>
Use of Estimates --
The preparation of financial statements in conformity with generally
accepted accounting principles requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
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.
Consolidated Statements of Cash Flows --
For purposes of the accompanying consolidated statements of cash flows, we
consider cash and cash equivalents to be cash on hand or deposited in demand
deposit accounts with financial institutions and highly liquid investments
purchased with an original maturity of three months or less.
New Accounting Pronouncements --
We have adopted the Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income" effective fiscal 1999. SFAS No. 130
defines comprehensive income as a measure of all changes in equity of an
enterprise during a period that result from transactions and other economic
events during the period other than transactions with owners. For all periods
presented comprehensive income is the same as net income.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." This
statement establishes standards for the way that public enterprises report
information about operating segments in annual financial statements and interim
financial stockholders' reports. The statement requires information to be
reported by operating segment on the same basis which we use to evaluate
performance internally. We have determined that we have only one operating
segment.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
standardizes the accounting for derivatives, requiring recognition as either
assets or liabilities on the balance sheet and measurement at fair value. We
plan to adopt SFAS No. 133 in fiscal 2002. We have not yet determined the effect
adoption of SFAS No. 133 will have on our consolidated financial statements.
F-8
<PAGE> 123
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS IN ALL TABLES)
(2) SALE OF ASSETS, CERTAIN TRANSACTIONS AND MERGER:
In February 1999, we ceased publication of Soap Opera News and Soap Opera
Magazine and sold certain of the trademarks and other soap opera publishing
assets relating to these magazines (collectively, the "Soap Opera Assets") to
Primedia, Inc. for $10 million in cash. In addition, we may receive future
consideration based upon increased financial performance above certain levels of
Primedia, Inc.'s Soap Opera Digest and Soap Opera Weekly publications. There can
be no assurance however that we will receive any such future consideration.
On May 7, 1999 all of the common stock of Media was purchased by EMP
Acquisition Corp. ("EMP") a company controlled by Evercore Capital Partners
L.P., a private equity firm ("Evercore"). Proceeds to finance the acquisition
included (a) a cash equity investment of $235 million by Evercore and certain
other investors, (b) borrowings of approximately $350 million under a new $400
million senior bank facility (the "New Credit Agreement") and (c) borrowings of
$250 million in the form of senior subordinated notes (the "New Subordinated
Notes"). These proceeds were used to (d) acquire all of the outstanding common
stock of Media for $299.4 million, (e) repay $267 million then outstanding under
the existing credit agreement (the "Credit Agreement") with our banks, (f)
retire approximately $199 million of our $200 million Senior Subordinated Notes
due 2004 and (g) pay transaction costs, including a financial advisory fee of 1%
of the aggregate funds required to finance the acquisition paid to an affiliate
of Evercore, (all such transactions in (a) through (g) are collectively referred
to as the "Transactions"). Upon consummation of the Transactions, EMP was merged
with and into Media (the "Merger") resulting in a change in ownership control of
both Media and the Company. As a result of this change in control, as of the
Merger date we will reflect a new basis of accounting that will include the
elimination of historical amounts of certain assets and liabilities and the
revaluation of certain of our tangible and intangible assets.
The following pro forma financial information reflects the sale of the Soap
Opera Assets, the Transactions and the Merger as if each had occurred as of the
beginning of fiscal 1999 (unaudited):
<TABLE>
<S> <C>
Operating revenues $272,184
========
Operating expenses $226,688
========
Depreciation and amortization $(50,307)
========
Operating income $ 45,496
========
Interest expense ($58,241)
========
Net loss ($18,332)
========
</TABLE>
The above pro forma financial information excludes certain non-recurring
items including bridge loan commitment and ticking fees related to the New
Credit Agreement and the New Subordinated Notes totaling approximately $4.1
million which will be recorded in fiscal 2000. Additional items excluded from
the above pro forma financial information includes the pretax gain recorded in
connection with the sale of the Soap Opera Assets in the amount of $6.5 million
and an extraordinary charge, net of income taxes, totaling approximately $2.2
million, related to the early extinguishment of debt, which were recorded in
fiscal 1999.
(3) INTANGIBLE ASSETS:
Purchase price allocations for acquisitions have been made in accordance
with Accounting Principles Board Opinion No. 16. The excess of the purchase
price, including liabilities assumed, over tangible net assets acquired has been
allocated to either specifically identified intangibles or goodwill.
F-9
<PAGE> 124
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS IN ALL TABLES)
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. SFAS No. 121 also
requires that long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of carrying amount or fair value less cost
to sell. We consider certain events and circumstances including, among others,
the historical and projected operating results of acquired businesses, industry
trends and general economic conditions to assess whether the remaining estimated
useful life of intangible assets may warrant revision or that the remaining
balance of intangible assets may not be recoverable. When such assessment
indicates that an intangible asset should be evaluated for possible impairment,
we use an estimate of undiscounted cash flow over the remaining life of the
intangible asset in measuring the recoverability. No such event has occurred to
our knowledge and we have determined there to be no impairment.
Goodwill is amortized on a straight-line basis over 40 years. For each of
the fiscal years 1997, 1998 and 1999, amortization of goodwill charged to
depreciation and amortization in the accompanying consolidated statements of
income totaled approximately $15.2 million.
An intangible asset recorded in connection with the acquisition of Star is
amortized on a straight-line basis over its estimated useful life of 25 years.
Amortization expense relating to this intangible asset for each of the fiscal
years 1997, 1998 and 1999, totaling approximately $5.9 million, is included in
depreciation and amortization in the accompanying consolidated statements of
income.
In connection with the Transactions and Merger, which will be accounted for
under the purchase method of accounting, as of May 7, 1999 we will reflect a new
basis of accounting that will result in a substantial increase in the amount of
intangible assets. It is estimated that intangible assets will total
approximately $814.2 million with annual amortization expense of $40.7 million
based upon amortizable lives of 20 years. We are currently in the process of
appraising the value of our assets and liabilities, therefore the allocation of
the actual purchase price may differ significantly from this estimate.
(4) FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair value of our financial instruments as of year end is as
follows:
<TABLE>
<CAPTION>
1998 1999
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Term loan and revolving credit facility,
including current portion................... $297,401 $297,401 $271,000 $271,000
Subordinated indebtedness..................... 200,134 217,134 200,134 215,152
Interest rate swap agreement liability........ 122 299 147 1,193
</TABLE>
The fair value of our financial instruments is estimated based on the
quoted market prices for the same or similar issues or on the current rate
offered to us for financial instruments of the same remaining maturities. The
carrying amount for cash equivalents approximates fair value because of the
short maturity of those instruments.
On occasion we enter into interest rate swap agreements to reduce the
interest rate exposure associated with a portion of our variable rate
indebtedness. Interest rate swap agreements modify the interest characteristics
of our variable rate indebtedness by synthetically converting a portion of the
indebtedness to fixed rate. Interest earned (payable) under the interest rate
swap is credited (charged) to interest expense using the accrual method. The
related accrued receivable or payable is included in accounts receivable or
accrued interest payable. The fair market value of the interest rate swap
agreement
F-10
<PAGE> 125
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS IN ALL TABLES)
is not reflected in the accompanying consolidated financial statements. We do
not utilize derivative financial instruments for trading or other speculative
purposes.
Derivative financial instruments terminated at a gain (loss) prior to
maturity are credited (charged) to interest expense over the remaining original
life of the derivative financial instrument.
We have entered into a three-year $100 million notional amount interest
rate swap agreement which effectively converts a portion of our variable-rate
debt to fixed-rate debt. The interest rate swap agreement which expires in
November 2000 has a fixed interest rate of 5.95%. The carrying amounts for the
interest rate swap agreement represents net interest payable as of period end.
Net interest expense related to the interest rate swap agreement and another
swap agreement which expired in May 1998, totaled $793,000, $655,000 and
$584,000 for the fiscal years 1997, 1998 and 1999, respectively.
(5) INCOME TAXES:
We file a consolidated Federal income tax return with Media and calculate
our income on a separate return basis. The provision for income taxes consists
of the following:
<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................................. $13,824 $11,232 $15,693
State............................................... 1,712 1,019 1,458
------- ------- -------
Total current.................................... 15,536 12,251 17,151
------- ------- -------
Deferred:
Federal............................................. 1,050 169 (3,287)
State............................................... 130 17 (305)
------- ------- -------
Total deferred................................... 1,180 186 (3,592)
------- ------- -------
$16,716 $12,437 $13,559
======= ======= =======
</TABLE>
A reconciliation of the expected income tax provision at the statutory
Federal income tax rate of 35% to the reported income tax provision is as
follows:
<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Expected income tax provision at statutory rate....... $10,214 $ 6,459 $ 7,506
Nondeductible goodwill................................ 5,304 5,304 5,304
State income taxes, net of Federal benefit............ 1,198 652 749
Other, net............................................ -- 22 --
------- ------- -------
$16,716 $12,437 $13,559
======= ======= =======
</TABLE>
F-11
<PAGE> 126
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS IN ALL TABLES)
Deferred taxes reflect the impact of temporary differences between the
amount of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws and regulations. The net deferred tax liability
is comprised of the following:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Gross deferred tax assets................................... $ 444 $ 451
-------- --------
Intangibles amortization.................................... (5,674) (5,345)
Expense recognition differences............................. (3,719) (1,425)
Subscription acquisition costs.............................. (1,861) (909)
Accelerated depreciation.................................... (1,806) (1,912)
Book over tax basis of non-depreciable assets............... (439) (439)
Inventory capitalization.................................... (670) (554)
-------- --------
Gross deferred tax liabilities......................... (14,169) (10,584)
-------- --------
Net deferred tax liabilities........................... $(13,725) $(10,133)
======== ========
</TABLE>
Included in accrued and current deferred income taxes in the accompanying
consolidated balance sheets for fiscal years 1998 and 1999 are net current
deferred taxes payable of $5.8 million and $2.4 million, respectively.
(6) CREDIT AGREEMENTS:
On June 5, 1998, we entered into our Credit Agreement with a bank syndicate
whose agent bank is The Chase Manhattan Corporation ( the "Agent Bank" and,
collectively, the "Banks" ) The Credit Agreement is comprised of a $250 million
term loan commitment and a $120 million revolving credit commitment.
(a) Term Loan Commitment -- Amounts borrowed under the Credit
Agreement's term loan commitment bear interest at rates based upon either
the Alternate Base Rate (as defined) plus 0% to .75% or the LIBO Rate (as
defined) plus .75% to 1.75%, predicated upon satisfaction of certain
covenants related to our operating cash flow levels. Amounts due under the
term loan commitment are payable in varying quarterly installments through
March 2004. As of March 29, 1999, $250 million was outstanding under the
term loan commitment.
(b) Revolving Credit Commitment -- The Credit Agreement also provides
for additional borrowings up to a maximum of $120 million, bearing interest
at the term loan commitment rates described above. This commitment, which
expires in March 2004, allows funds to be borrowed and repaid from time to
time with permanent reductions in the revolving credit commitment permitted
at the Company's option. As of March 29, 1999, borrowings of $21 million
were outstanding under the Prior Credit Agreement's revolving credit
commitment.
(c) Commitment Fees -- The Company is required to pay a commitment fee
ranging from .25% to .50% of the unused portion of the Credit Agreement's
revolving credit commitment. Commitment fees under the Prior Credit
Agreement totaled approximately $330,000, $246,000 and $338,000 for fiscal
years 1997, 1998 and 1999, respectively.
(d) Guarantee, Collateral and Financial Covenants -- The Company's
obligations under the Credit Agreement are guaranteed by all of its
subsidiaries and Media. The obligations and such guarantees are secured by
(i) a pledge by the Company of all of the capital stock of its
subsidiaries,
F-12
<PAGE> 127
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS IN ALL TABLES)
(ii) a pledge of all of the capital stock of the Company and (iii) a
security interest in substantially all of the assets of the Company's
subsidiaries.
In addition to the above, the Credit Agreement also contains certain
covenants that, among others, restrict paying cash dividends, incurring
additional indebtedness, entering into certain mergers or consolidations, making
capital expenditures and selling or otherwise disposing of assets. We are also
required to satisfy certain financial tests relating to operating cash flow and
debt coverage ratios. We plan to pay no cash dividends on our common stock in
the foreseeable future, instead using cash generated from operating results
principally to make principal and interest payments on its indebtedness.
As permitted under the covenants of the prior credit agreement, management
fees to affiliates totaling $1.8 million, $1.7 million and $1.2 million are
included in other expense, net in the accompanying consolidated statements of
income for the fiscal years 1997, 1998 and 1999, respectively.
The effective interest rates under the Credit Agreement and prior credit
agreements, including amounts borrowed under the term loan commitments and
revolving credit commitment, as of March 29, 1999, and for the fiscal years
1997, 1998 and 1999 were 6.9%, 7.9%, 7.8% and 7.7%, respectively.
In connection with the Transactions and Merger, on May 7, 1999 we repaid
all amounts outstanding under the Credit Agreement and borrowed approximately
$350 million under the New Credit Agreement. Our New Credit Agreement, which
consists of $340 million in term loan commitments and a $60 million revolving
credit commitment, includes the following:
(a) Term Loan Commitments -- The term loans consist of a $100 million
(original amount) commitment (the "Tranche A" loans) and a $240 million
(original amount) commitment (the "Tranche B" loans). Amounts borrowed
under the Tranche A commitment bear interest at rates based upon either the
Alternate Base Rate plus 3/4% to 2% or the LIBO Rate plus 1 3/4% to 3%,
predicated upon satisfaction of certain Credit Agreement covenants related
to operating results. Tranche B loans bear interest at either the Alternate
Base Rate plus 2 1/2% or the LIBO Rate plus 3 1/2%.
Borrowings under the term loan commitments are payable in varying
quarterly installments from July 2001 through April 2007. Beginning as of
the fiscal year ending March 2001 and for each fiscal year thereafter we
will be required to make Excess Cash Flow payments (as defined) which will
be applied ratably to the then outstanding term loans.
(b) Revolving Credit Commitment -- The New Credit Agreement also
provides for additional borrowings up to a maximum of $60 million, bearing
interest at the Tranche A rates described above. This commitment, which
expires in April 2006, allows funds to be borrowed and repaid from time to
time with permanent reductions in the revolving credit commitment permitted
at our option.
(c) Commitment Fees -- We are required to pay a commitment fee ranging
from 3/8% to 1/2% of the unused portion of the revolving commitment.
(d) Guarantees, Collateral and Financial Covenants -- The New Credit
Agreement contains certain guarantees, collateral pledges and financial
covenant requirements similar to those required under the Credit Agreement
as described above.
As of May 7, 1999 the effective interest rate under the New Credit
Agreement, including amounts borrowed under the term loan commitments and
revolving credit commitment, was 8.5%.
F-13
<PAGE> 128
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS IN ALL TABLES)
(7) SUBORDINATED INDEBTEDNESS:
Our 11.63% Senior Subordinated Notes due 2004 (the "Senior Subordinated
Notes due 2004"), which mature on November 15, 2004, pay interest semi-annually
on May 15 and November 15 and are redeemable at our option after November 14,
1999 at prices ranging from 104.4% to 100.0% of their face amount.
In connection with the Transactions and Merger, on May 7, 1999 we repaid
approximately $199 million in face amount of the Senior Subordinated Notes due
2004; including the tender premium and consent fee the total amount paid was
approximately $214.2 million. Our New Subordinated Notes, which mature on May 1,
2009, bear interest at 10 1/4% per annum payable in semi-annual installments on
May 1st and November 1st of each year. These notes are redeemable at our option
at prices ranging from 105.1% to 100% of their face amount after April 2004. The
indenture under which the notes were issued includes certain restrictive
covenants that limit, among other things, our ability to incur indebtedness,
give guarantees, pay dividends, make investments, sell assets and merge or
consolidate.
Payments of principal due under the New Credit Agreement (excluding any
amounts that may be borrowed under the credit commitment or required to be
prepaid under the excess cash flow provision), the New Subordinated Notes and
other long-term indebtedness follows:
<TABLE>
<CAPTION>
FISCAL YEAR
- -----------
<S> <C>
2002...................................................... $ 9,300
2003...................................................... 16,284
2004...................................................... 21,150
Thereafter................................................ 544,140
--------
$590,874
========
</TABLE>
(8) DEFERRED DEBT COSTS:
Certain costs incurred in connection with the issuance of our long-term
debt have been deferred and are amortized as part of interest expense over
periods from 8 to 10 years. For fiscal years 1997, 1998 and 1999, amortization
of deferred debt costs which is included in interest expense in the accompanying
consolidated statements of income totaled approximately $3.1 million, $2.6
million, and $1.5 million, respectively. In connection with the amendment and
restatement of our senior bank indebtedness (see Note 6) certain unamortized
deferred debt costs related to the prior credit agreement totaling approximately
$3.4 million were charged to extraordinary loss in fiscal 1999. Costs related to
the Credit Agreement are being amortized to interest expense through March 2004.
In connection with the Transactions and Merger, we repaid all amounts
outstanding under the Credit Agreement and approximately $199 million in face
amount of the Senior Subordinated Notes due 2004. Net unamortized deferred debt
costs related to the Credit Agreement and Senior Subordinated Notes Due 2004
totaling approximately $5.6 million will be written off in connection with the
Transactions and Merger.
(9) COMMITMENTS AND CONTINGENCIES:
Litigation --
Various suits and claims arising in the ordinary course of business have
been instituted against us. We have insurance policies available to recover
potential legal costs. We periodically evaluate and assess the risks and
uncertainties associated with litigation independent from those associated with
our potential claim
F-14
<PAGE> 129
AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS IN ALL TABLES)
for recovery from third party insurance carriers. At present, in the opinion of
management, after consultation with legal counsel, the liability resulting from
litigation, if any, will not have a material effect on our consolidated
financial statements.
Printing Agreement --
We have entered into a 15 year printing agreement expiring in fiscal 2011
with an unrelated printer to print National Enquirer and Star. Based on current
pricing and production levels this contract, which requires pricing adjustments
based on changes in the Consumer Price Index, is estimated to cost approximately
$172 million over its remaining life as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
- -----------
<S> <C>
2000...................................................... $ 14,965
2001...................................................... 14,929
2002...................................................... 14,929
2003...................................................... 15,216
2004...................................................... 14,929
Thereafter................................................ 97,024
--------
$171,992
========
</TABLE>
F-15
<PAGE> 130
$250,000,000[AMERICAN MEDIA, INC. LOGO]
AMERICAN MEDIA OPERATIONS, INC.
OFFER TO EXCHANGE ALL OUTSTANDING 10 1/4% SENIOR SUBORDINATED NOTES DUE 2009 FOR
10 1/4% SENIOR SUBORDINATED NOTES DUE 2009, WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
<PAGE> 131
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") permits
the company's board of directors to indemnify any person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with any
threatened, pending or completed action (except settlements or judgments in
derivative suits), suit or proceeding in which such person is made a party by
reason of his or her being or having been a director, officer, employee or agent
of the company, in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). The statute provides that indemnification pursuant to its provisions is
not exclusive of other rights of indemnification to which a person may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise.
The company's by-laws provide for the mandatory indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by the DGCL, and the company has entered into agreements with its officers,
directors and certain key employees implementing such indemnification.
As permitted by sections 102 and 145 of the DGCL the company's certificate
of incorporation eliminates a director's personal liability for monetary damages
to the company and its stockholders arising from a breach or alleged breach of a
director's fiduciary duty except for liability under section 174 of the DGCL,
for liability for any breach of the director's duty of loyalty to the company or
its stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction
which the director derived an improper personal benefit.
The directors and officers of the company are covered by insurance policies
indemnifying against certain liabilities, including certain liabilities arising
under the Securities Act which might be incurred by them in such capabilities
and against which they cannot be indemnified by the company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
*1 -- Purchase Agreement, dated as of April 30, 1999, among
American Media Operations, Inc., National Enquirer, Inc.,
Star Editorial, Inc., SOM Publishing, Inc. Weekly World
News, Inc., Country Weekly, Inc., Distribution Services,
Inc., Fairview Printing, Inc., NDSI, Inc., Biocide, Inc.,
American Media Marketing, Inc., Health Xtra, Inc., Retail
Marketing Network and Marketing Services, Inc. and Chase
Securities Inc.
*2.1 -- Agreement and Plan of Merger, dated as of February 16, 1999,
by and between EMP Acquisition Corp., a Delaware
corporation, and American Media, Inc., a Delaware
corporation.
*2.2 -- Certificate of Merger of EMP Acquisition Corp. with and into
American Media, Inc.
*2.3 -- Management Agreement, dated as of May 7, 1999, between
American Media, Inc., a Delaware corporation and Evercore
Advisors, Inc., a Delaware limited liability company.
*3.1 -- Certificate of Incorporation of Enquirer/Star, Inc. and
amendments thereto.(1)
*3.2 -- Amended By-Laws of Enquirer/Star, Inc.(1)
</TABLE>
II-1
<PAGE> 132
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
*3.3 -- Amendment of Certificate of Incorporation of Operations,
dated November 7, 1994, changing its name to American Media
Operations, Inc. from Enquirer/Star, Inc.
*3.4 -- Articles of Incorporation of American Media Marketing, Inc.
*3.5 -- By-laws of American Media Marketing, Inc.
*3.6 -- Certificate of Incorporation of Biocide, Inc.
*3.7 -- By-laws of Biocide, Inc.
*3.8 -- Certificate of Incorporation of Country Weekly, Inc.
*3.9 -- By-laws of Country Weekly, Inc.
*3.10 -- Certificate of Incorporation of Distribution Services, Inc.
*3.11 -- Restated By-laws of Distribution Services, Inc.
*3.12 -- Articles of Incorporation of Fairview Printing, Inc.
*3.13 -- By-laws of Fairview Printing, Inc.
*3.14 -- Articles of Incorporation of Health Xtra, Inc.
*3.15 -- By-laws of Health Xtra, Inc.
*3.16 -- Certificate of Incorporation of Marketing Services, Inc.
*3.17 -- By-laws of Marketing Services, Inc.
*3.18 -- Amendments of Articles of Incorporation of National
Enquirer, Inc.
*3.19 -- Restated By-laws of National Enquirer, Inc.
*3.20 -- Amendment of Certificate of Incorporation of NDSI, Inc.
*3.21 -- By-laws of NDSI, Inc.
*3.22 -- Restated Certificate of Incorporation of Retail Marketing
Network, Inc.
*3.23 -- By-laws of Retail Marketing Network, Inc.
*3.24 -- Amendment of Certificate of Incorporation of Star Editorial,
Inc.
*3.25 -- By-laws of Star Editorial, Inc. (formerly known as "Video
Digest Inc.").
*3.26 -- Amendments of Articles of Incorporation of SOM Publishing,
Inc.
*3.27 -- By-laws of SOM Publishing, Inc. (formerly known as "The
Medium Corporation").
*3.28 -- Articles of Incorporation of Weekly World News, Inc.
*3.29 -- By-laws of Weekly World News, Inc.
*4.1 -- Indenture, dated as of May 7, 1999, among American Media
Operations, Inc., National Enquirer, Inc., Star Editorial,
Inc., SOM Publishing, Inc. Weekly World News, Inc., Country
Weekly, Inc., Distribution Services, Inc., Fairview
Printing, Inc., NDSI, Inc., Biocide, Inc., American Media
Marketing, Inc., Health Xtra, Inc., Retail Marketing Network
and Marketing Services, Inc., and The Chase Manhattan Bank,
a New York banking corporation, as Trustee.
*4.2 -- Exchange and Registration Rights Agreement, dated as of May
7, 1999, among American Media Operations, Inc., National
Enquirer, Inc., Star Editorial, Inc., SOM Publishing, Inc.
Weekly World News, Inc., Country Weekly, Inc., Distribution
Services, Inc., Fairview Printing, Inc., NDSI, Inc.,
Biocide, Inc., American Media Marketing, Inc., Health Xtra,
Inc., Retail Marketing Network and Marketing Services, Inc.
and Chase Securities Inc.
</TABLE>
II-2
<PAGE> 133
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
*4.3 -- Credit Agreement, dated as of May 7, 1999, among American
Media Inc., American Media Operations, Inc., the Lenders
party thereto, The Chase Manhattan Bank, as Administrative
Agent, and Chase Securities Inc., as Arranger.
*4.4 -- Guarantee Agreement, dated as of May 7, 1999, among American
Media, Inc., each of the subsidiaries listed on Schedule I
thereto and The Chase Manhattan Bank, as Collateral Agent
for the Secured Parties (as defined in the Security
Agreement).
*4.5 -- Indemnity, Subrogation and Contribution Agreement, dated as
of May 7, 1999, among American Media Operations, Inc., each
subsidiary of American Media, Inc. listed on Schedule I
thereto and The Chase Manhattan Bank, as Collateral Agent
for the Secured Parties (as defined in the Security
Agreement).
*4.6 -- Pledge Agreement, dated as of May 7, 1999, among American
Media Operations, Inc., American Media, Inc., each
subsidiary of Media listed on Schedule I thereto and The
Chase Manhattan Bank, as Collateral Agent for the Secured
Parties (as defined in the Security Agreement).
*4.7 -- Security Agreement, dated as of May 7, 1999, among American
Media Operations, Inc., American Media, Inc., each
subsidiary of Media listed on Schedule I thereto and The
Chase Manhattan Bank, as collateral agent for the Secured
Parties (as defined herein).
**5 -- Opinion of Simpson Thacher & Bartlett.
**10.1 -- Tax Sharing Agreement, dated as of March 31, 1992, among
Group and its subsidiaries. (1)
*10.2 -- David J. Pecker Employment Agreement, dated as of February
16, 1999.
*10.3 -- Side Letter regarding David J. Pecker Employment Agreement
to David Pecker from EMP Group L.L.C., dated as of April 13,
1999.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
*21 -- Subsidiaries of American Media Operations, Inc.
*23.1 -- Consent of Arthur Anderson LLP.
**23.2 -- Consent of Simpson Thacher & Bartlett (included in Exhibit
5).
*24 -- Powers of Attorney (included on pages II-6 through II-20).
*25 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Chase Manhattan Bank, as Trustee.
*27 -- Financial Data Schedule for period ended March 29, 1999.
**99.1 -- Form of Letter of Transmittal.
**99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
(1) Enquirer/Star, Inc. is now named American Media Operations, Inc.
("Operations"); Enquirer/Star Group, Inc. ("Group") is now named American
Media, Inc. ("Media").
* Filed herewith.
** To be filed by amendment.
II-3
<PAGE> 134
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the 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 the registration statement. Notwithstanding the foregoing, any
increase or decrease in the 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 a 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.
(b) (1) The undersigned registrant hereby undertakes as follows: 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.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE> 135
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE> 136
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
AMERICAN MEDIA OPERATIONS, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Operations,
Inc. (the "Company") do hereby constitute and appoint David J. Pecker and Peter
A. Nelson, or any of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director (Principal Executive
Officer)
/s/ PETER A. NELSON Executive Vice President and Chief July 23, 1999
- --------------------------------------------------- Financial Officer (Principal
Peter A. Nelson Financial and Accounting
Officer)
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-6
<PAGE> 137
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ PAUL G. YOVOVICH Director July 23, 1999
- ---------------------------------------------------
Paul G. Yovovich
Director
- ---------------------------------------------------
Helene Belanger
/s/ BRIAN J. RICHMAND Director July 23, 1999
- ---------------------------------------------------
Brian J. Richmand
/s/ J. WILLIAM GRIMES Director July 23, 1999
- ---------------------------------------------------
J. William Grimes
</TABLE>
II-7
<PAGE> 138
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
AMERICAN MEDIA MARKETING, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of American Media Marketing,
Inc. (the "Company") do hereby constitute and appoint David J. Pecker and Peter
A. Nelson, or any of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-8
<PAGE> 139
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
BIOCIDE, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Biocide, Inc. (the "Company")
do hereby constitute and appoint David J. Pecker and Peter A. Nelson, or any of
them, our true and lawful attorneys and agents, to do any and all acts and
things in our name and on our behalf in our capacities as directors and officers
and to execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys or agents, or either of them, may deem
necessary or advisable to enable the Company to comply with the Securities Act
of 1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names and in the capacities indicated below, any and all amendments
(including post-effective amendments) hereto and we do hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be done
by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-9
<PAGE> 140
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
COUNTRY WEEKLY, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Country Weekly, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and Peter A. Nelson,
or any of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-10
<PAGE> 141
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
DISTRIBUTION SERVICES, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board
POWER OF ATTORNEY
We, the undersigned directors and officers of Distribution Services, Inc.
(the "Company") do hereby constitute and appoint David J. Pecker and Peter A.
Nelson, or any of them, our true and lawful attorneys and agents, to do any and
all acts and things in our name and on our behalf in our capacities as directors
and officers and to execute any and all instruments for us and in our names in
the capacities indicated below, which said attorneys or agents, or either of
them, may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board and Director July 23, 1999
- ---------------------------------------------------
David J. Pecker
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-11
<PAGE> 142
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
FAIRVIEW PRINTING, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Fairview Printing, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and Peter A. Nelson,
or any of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-12
<PAGE> 143
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
HEALTH XTRA, INC.
By: /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Health Xtra, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and Peter A. Nelson,
or any of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-13
<PAGE> 144
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
MARKETING SERVICES, INC.
By: /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Marketing Services, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and Peter A. Nelson,
or any of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-14
<PAGE> 145
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
NATIONAL ENQUIRER, INC.
By: /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of National Enquirer, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and Peter A. Nelson,
or any of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-15
<PAGE> 146
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
NDSI, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of NDSI, Inc. (the "Company") do
hereby constitute and appoint David J. Pecker and Peter A. Nelson, or any of
them, our true and lawful attorneys and agents, to do any and all acts and
things in our name and on our behalf in our capacities as directors and officers
and to execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys or agents, or either of them, may deem
necessary or advisable to enable the Company to comply with the Securities Act
of 1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names and in the capacities indicated below, any and all amendments
(including post-effective amendments) hereto and we do hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be done
by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-16
<PAGE> 147
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
RETAIL MARKETING NETWORK, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Retail Marketing Network,
Inc. (the "Company") do hereby constitute and appoint David J. Pecker and Peter
A. Nelson, or any of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-17
<PAGE> 148
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
STAR EDITORIAL, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Star Editorial, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and Peter A. Nelson,
or any of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-18
<PAGE> 149
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
SOM PUBLISHING, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of SOM Publishing, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and Peter A. Nelson,
or any of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, President, July 23, 1999
- --------------------------------------------------- Chief Executive Officer and
David J. Pecker Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-19
<PAGE> 150
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON JULY 23, 1999.
WEEKLY WORLD NEWS, INC.
By /s/ DAVID J. PECKER
------------------------------------
Name: David J. Pecker
Title: Chairman of the Board,
President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Weekly World News, Inc. (the
"Company") do hereby constitute and appoint David J. Pecker and Peter A. Nelson,
or any of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys or agents, or either of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. PECKER Chairman of the Board, July 23, 1999
- --------------------------------------------------- President, Chief Executive
David J. Pecker Officer and Director
/s/ AUSTIN M. BEUTNER Director July 23, 1999
- ---------------------------------------------------
Austin M. Beutner
/s/ NEERAJ MITAL Director July 23, 1999
- ---------------------------------------------------
Neeraj Mital
/s/ SAUL D. GOODMAN Director July 23, 1999
- ---------------------------------------------------
Saul D. Goodman
/s/ ROBERT V. SEMINARA Director July 23, 1999
- ---------------------------------------------------
Robert V. Seminara
</TABLE>
II-20
<PAGE> 151
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
*1 -- Purchase Agreement, dated as of April 30, 1999, among
American Media Operations, Inc., National Enquirer, Inc.,
Star Editorial, Inc., SOM Publishing, Inc. Weekly World
News, Inc., Country Weekly, Inc., Distribution Services,
Inc., Fairview Printing, Inc., NDSI, Inc., Biocide, Inc.,
American Media Marketing, Inc., Health Xtra, Inc., Retail
Marketing Network and Marketing Services, Inc. and Chase
Securities Inc.
*2.1 -- Agreement and Plan of Merger, dated as of February 16, 1999,
by and between EMP Acquisition Corp., a Delaware
corporation, and American Media, Inc., a Delaware
corporation.
*2.2 -- Certificate of Merger of EMP Acquisition Corp. with and into
American Media, Inc.
*2.3 -- Management Agreement, dated as of May 7, 1999, between
American Media, Inc., a Delaware corporation and Evercore
Advisors, Inc., a Delaware limited liability company.
*3.1 -- Certificate of Incorporation of Enquirer/Star, Inc. and
amendments thereto.(1)
*3.2 -- Amended By-Laws of Enquirer/Star, Inc.(1)
*3.3 -- Amendment of Certificate of Incorporation of Operations,
dated November 7, 1994, changing its name to American Media
Operations, Inc. from Enquirer/Star, Inc.
*3.4 -- Articles of Incorporation of American Media Marketing, Inc.
*3.5 -- By-laws of American Media Marketing, Inc.
*3.6 -- Certificate of Incorporation of Biocide, Inc.
*3.7 -- By-laws of Biocide, Inc.
*3.8 -- Certificate of Incorporation of Country Weekly, Inc.
*3.9 -- By-laws of Country Weekly, Inc.
*3.10 -- Certificate of Incorporation of Distribution Services, Inc.
*3.11 -- Restated By-laws of Distribution Services, Inc.
*3.12 -- Articles of Incorporation of Fairview Printing, Inc.
*3.13 -- By-laws of Fairview Printing, Inc.
*3.14 -- Articles of Incorporation of Health Xtra, Inc.
*3.15 -- By-laws of Health Xtra, Inc.
*3.16 -- Certificate of Incorporation of Marketing Services, Inc.
*3.17 -- By-laws of Marketing Services, Inc.
*3.18 -- Articles of Incorporation of National Enquirer, Inc. and
amendments thereto.
*3.19 -- Restated By-laws of National Enquirer, Inc.
*3.20 -- Certificate of Incorporation of NDSI, Inc. and amendments
thereto.
*3.21 -- By-laws of NDSI, Inc.
*3.22 -- Restated Certificate of Incorporation of Retail Marketing
Network, Inc.
*3.23 -- By-laws of Retail Marketing Network, Inc.
*3.24 -- Certificate of Incorporation of Star Editorial, Inc. and
amendments thereto.
*3.25 -- By-laws of Star Editorial, Inc. (formerly known as "Video
Digest Inc.")
*3.26 -- Articles of Incorporation of SOM Publishing, Inc. and
amendments thereto.
*3.27 -- By-laws of SOM Publishing, Inc. (formerly known as "The
Medium Corporation").
*3.28 -- Articles of Incorporation of Weekly World News, Inc.
*3.29 -- By-laws of Weekly World News, Inc.
</TABLE>
<PAGE> 152
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
*4.1 -- Indenture, dated as of May 7, 1999, among American Media
Operations, Inc., National Enquirer, Inc., Star Editorial,
Inc., SOM Publishing, Inc. Weekly World News, Inc., Country
Weekly, Inc., Distribution Services, Inc., Fairview
Printing, Inc., NDSI, Inc., Biocide, Inc., American Media
Marketing, Inc., Health Xtra, Inc., Retail Marketing Network
and Marketing Services, Inc., and The Chase Manhattan Bank,
a New York banking corporation, as Trustee.
*4.2 -- Exchange and Registration Rights Agreement, dated as of May
7, 1999, among American Media Operations, Inc., National
Enquirer, Inc., Star Editorial, Inc., SOM Publishing, Inc.
Weekly World News, Inc., Country Weekly, Inc., Distribution
Services, Inc., Fairview Printing, Inc., NDSI, Inc.,
Biocide, Inc., American Media Marketing, Inc., Health Xtra,
Inc., Retail Marketing Network and Marketing Services, Inc.
and Chase Securities Inc.
*4.3 -- Credit Agreement, dated as of May 7, 1999, among American
Media Inc., American Media Operations, Inc., the Lenders
party thereto, The Chase Manhattan Bank, as Administrative
Agent, and Chase Securities Inc., as Arranger.
*4.4 -- Guarantee Agreement, dated as of May 7, 1999, among American
Media, Inc., each of the subsidiaries listed on Schedule I
thereto and The Chase Manhattan Bank, as Collateral Agent
for the Secured Parties (as defined in the Security
Agreement).
*4.5 -- Indemnity, Subrogation and Contribution Agreement, dated as
of May 7, 1999, among American Media Operations, Inc., each
subsidiary of American Media, Inc. listed on Schedule I
thereto and The Chase Manhattan Bank, as Collateral Agent
for the Secured Parties (as defined in the Security
Agreement).
*4.6 -- Pledge Agreement, dated as of May 7, 1999, among American
Media Operations, Inc., American Media, Inc., each
subsidiary of Media listed on Schedule I thereto and The
Chase Manhattan Bank, as Collateral Agent for the Secured
Parties (as defined in the Security Agreement).
*4.7 -- Security Agreement, dated as of May 7, 1999, among American
Media Operations, Inc., American Media, Inc., each
subsidiary of Media listed on Schedule I thereto and The
Chase Manhattan Bank, as collateral agent for the Secured
Parties (as defined herein).
**5 -- Opinion of Simpson Thacher & Bartlett.
**10.1 -- Tax Sharing Agreement, dated as of March 31, 1992, among
Group and its subsidiaries.(1)
*10.2 -- David J. Pecker Employment Agreement, dated as of February
16, 1999.
*10.3 -- Side Letter regarding David J. Pecker Employment Agreement
to David Pecker from EMP Group L.L.C., dated as of April 13,
1999.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
*21 -- Subsidiaries of American Media Operations, Inc.
*23.1 -- Consent of Arthur Andersen LLP
**23.2 -- Consent of Simpson Thacher & Bartlett (included in Exhibit
5).
*24 -- Powers of Attorney (included on pages II-6 through II-20).
*25 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Chase Manhattan Bank, as Trustee.
*27 -- Financial Data Schedule for period ended March 29, 1999.
**99.1 -- Form of Letter of Transmittal.
**99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
(1) Enquirer/Star, Inc. is now named American Media Operations, Inc.
("Operations"); Enquirer/Star Group, Inc. ("Group") is now named American
Media, Inc. ("Media").
* Filed herewith.
** To be filed by amendment.
<PAGE> 1
Exhibit 1
AMERICAN MEDIA OPERATIONS, INC.
$250,000,000
10 1/4% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
April 30, 1999
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
American Media Operations, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell $250,000,000 aggregate principal amount
of its 10 1/4% Senior Subordinated Notes due 2009 (the "SECURITIES"). The
Securities will be issued pursuant to an Indenture to be dated as of May 7,
1999 (the "INDENTURE") among the Company, the subsidiaries of the Company
listed on the signature pages hereof (collectively, the "GUARANTORS") and The
Chase Manhattan Bank, as trustee (the "TRUSTEE"), and will be guaranteed on an
unsecured senior subordinated basis by the Guarantors. The Company and the
Guarantors hereby confirm their agreement with Chase Securities Inc. ("CSI" or
the "INITIAL PURCHASER") concerning the purchase of the Securities from the
Company by the Initial Purchaser.
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933 (the
"SECURITIES ACT"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated April 13, 1999 (the
"PRELIMINARY OFFERING MEMORANDUM") and will prepare an offering memorandum
dated the date hereof (the "OFFERING MEMORANDUM") setting forth information
concerning the Company and the Securities. Copies of the Preliminary Offering
Memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchaser pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchaser in accordance with Section 2.
Holders of the Securities (including the Initial Purchaser
and its direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the
Company will agree to file with the Securities and Exchange Commission (the
"COMMISSION") (a) a registration statement under the Securities Act (the
"EXCHANGE OFFER REGISTRATION STATEMENT") registering an issue of senior
subordinated notes of the Company (the "EXCHANGE SECURITIES") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "SHELF REGISTRATION STATEMENT").
<PAGE> 2
2
Pursuant to an Agreement and Plan of Merger (the "MERGER
AGREEMENT") dated as of February 16, 1999, between EMP Acquisition Corp., a
company formed by Evercore Capital Partners L.P. ("EVERCORE"), and American
Media, Inc., a Delaware corporation and the Company's parent company
("HOLDINGS"), (a) EMP will be merged with and into Holdings (the "MERGER"), (b)
the existing stockholders of Holdings will receive aggregate cash consideration
of $299.4 million and (c) Evercore and certain other investors (including Mr.
David Pecker) will beneficially own 100% of the common stock of Holdings.
Substantially concurrently with the Merger and as part of the financing
therefor, the Company will consummate a debt tender offer (the "Debt Tender
Offer") for its 115/8% Senior Subordinated Notes due 2004. The Securities are
being issued in connection with the Merger.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
The Company and each of the Guarantors represent and warrant to, and agree
with, the Initial Purchaser on and as of the date hereof and the Closing Date
(as defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and
the Offering Memorandum, as of its respective date, did not, and on
the Closing Date the Offering Memorandum will 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 the light of the circumstances under which they were made,
not misleading; PROVIDED that the Company and the Guarantors make no
representation or warranty as to information contained in or omitted
from the Preliminary Offering Memorandum or the Offering Memorandum in
reliance upon and in conformity with written information relating to
the Initial Purchaser furnished to the Company by or on behalf of the
Initial Purchaser specifically for use therein (the "INITIAL
PURCHASER'S INFORMATION").
(b) Each of the Preliminary Offering Memorandum and
the Offering Memorandum, as of its respective date, contains all of
the information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchaser contained in Section 2 and its
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchaser and the offer, resale and delivery of the Securities
by the Initial Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended (the "TRUST INDENTURE ACT").
(d) The Company and each of its subsidiaries have
been duly incorporated and are validly existing as corporations in
good standing under the laws of their
<PAGE> 3
3
respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in
which they are engaged, except where the failure to so qualify or have
such power or authority would not, singularly or in the aggregate,
have a material adverse effect on the condition (financial or
otherwise), results of operations or business of the Company and its
subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").
(e) As of the Closing Date, the Company will have an
authorized capitalization as set forth in the Offering Memorandum
under the heading "Capitalization"; and all of the outstanding shares
of capital stock of Holdings and of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable.
All of the outstanding shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and, except with respect to Frontline,
Inc., a Delaware corporation, 80% of the capital stock of which is
owned by the Company, and Biocide, Inc., a Delaware corporation, 80%
of the capital stock of which is owned by the Company, and as
described in the Offering Memorandum under the caption "Description of
Other Indebtedness," are owned directly or indirectly by the Company,
free and clear of any lien, charge, encumbrance, security interest,
restriction upon voting or transfer or any other claim of any third
party. All the capital stock (i) of the Company is owned directly by
Holdings and (ii) of Holdings, after giving effect to the
Transactions, will be owned directly by EMP Group L.L.C., a Delaware
limited liability company (the "LLC"), in each case, except as
described in the Offering Memorandum under the caption "Description of
Other Indebtedness," free and clear of any lien, charge, encumbrance,
security interest, restriction upon voting or transfer or any other
claim of any third party. As of the Closing Date, Evercore has the
power to appoint a majority of the managers of the Board of Managers
of the LLC.
(f) The statements set forth in the Offering
Memorandum under the captions "Summary--The Transactions," "The
Transactions," "Outstanding Voting Securities" and "Certain
Relationships and Related Transactions" insofar as they purport to
describe the documents referred to therein constitute a fair summary
thereof.
(g) Holdings, the Company and the Guarantors each
have or had, as applicable, full right, power and authority to execute
and deliver, as applicable, this Agreement, the Indenture, the
Registration Rights Agreement, the Merger Agreement, the Credit
Agreement dated as of the date hereof among Holdings, the Company, the
lenders thereunder and The Chase Manhattan Bank, as administrative
agent (the "CREDIT AGREEMENT"), and the Securities (collectively, the
"TRANSACTION DOCUMENTS") and to perform their respective obligations
hereunder and thereunder; and all corporate action required to be
taken for the due and proper authorization, execution and delivery of
each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken.
(h) This Agreement has been duly authorized,
executed and delivered by the Company and each of the Guarantors and
constitutes a valid and legally binding agreement of the Company and
each of the Guarantors.
<PAGE> 4
4
(i) The Registration Rights Agreement has been duly
authorized by the Company and each of the Guarantors and, when duly
executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding agreement
of the Company and each of the Guarantors enforceable against the
Company and each of the Guarantors in accordance with its terms,
except to the extent that (i) such enforceability may be limited by
(A) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (B) general equitable principles (whether
considered in a proceeding in equity or at law) and the discretion of
the court before which any proceeding therefor may be brought and (ii)
any rights to indemnity or contribution thereunder may be limited by
federal or state securities laws or public policy considerations.
(j) The Indenture has been duly authorized by the
Company and each of the Guarantors and, when duly executed and
delivered in accordance with its terms by each of the parties thereto,
will constitute a valid and legally binding agreement of the Company
and each of the Guarantors enforceable against the Company and each of
the Guarantors in accordance with its terms, except to the extent that
such enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and (ii)
general equitable principles (whether considered in a proceeding in
equity or at law) and the discretion of the court before which any
proceeding therefor may be brought. On the Closing Date, the Indenture
will conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(k) The Securities have been duly authorized by the
Company and each of the Guarantors and, when duly executed,
authenticated, issued and delivered as provided in the Indenture and
paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations
of the Company, as issuer, and each of the Guarantors, as guarantors,
entitled to the benefits of the Indenture and enforceable against the
Company as issuer, and each of the Guarantors, as guarantors, in
accordance with their terms, except to the extent that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and (ii)
general equitable principles (whether considered in a proceeding in
equity or at law) and the discretion of the court before which any
proceeding therefor may be brought.
(l) The Merger Agreement has been duly authorized,
executed and delivered by Holdings and constitutes a valid and legally
binding agreement of Holdings enforceable against Holdings in
accordance with its terms, except to the extent that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and (ii)
general equitable principles (whether considered in a proceeding in
equity or at law) and the discretion of the court before which any
proceeding therefor may be brought.
<PAGE> 5
5
(m) The Credit Agreement has been duly authorized,
executed and delivered by Holdings and the Company and constitutes a
valid and legally binding agreement of Holdings and the Company
enforceable against Holdings and the Company in accordance with its
terms, except to the extent that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general equitable principles (whether
considered in a proceeding in equity or at law) and the discretion of
the court before which any proceeding therefor may be brought.
(n) Each Transaction Document conforms in all
material respects to the description thereof contained in the Offering
Memorandum.
(o) The execution, delivery and performance by the
Company and each of the Guarantors of each of the applicable
Transaction Documents to which each is a party, the issuance,
authentication, sale and delivery of the Securities and compliance by
the Company and each of the Guarantors with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any material indenture, mortgage, deed of
trust, loan agreement or 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 or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets; and no consent, approval, authorization
or order of, or filing or registration with, any such court or
arbitrator or governmental agency or body under any such statute,
judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by the Company and each of the
Guarantors of each of the Transaction Documents to which each is a
party, the issuance, authentication, sale and delivery of the
Securities and compliance by the Company and each of the Guarantors
with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications
(i) which shall have been obtained or made prior to the Closing Date
and (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement.
(p) Arthur Andersen LLP ("ARTHUR ANDERSEN") are
independent certified public accountants with respect to the Company
and its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder.
The historical financial statements (including the related notes)
contained in the Offering Memorandum comply in all material respects
with the requirements applicable to a registration statement on Form
S-1 under the Securities Act (except that certain supporting schedules
are omitted); such financial statements have been prepared in
accordance with generally accepted accounting principles
<PAGE> 6
6
consistently applied throughout the periods covered thereby and fairly
present the financial position of the entities purported to be covered
thereby at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated;
and the financial information contained in the Offering Memorandum
under the headings "Summary--Summary Historical Financial Data,"
"Capitalization," "Selected Historical Consolidated Financial
Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are derived from the accounting
records of the Company and its subsidiaries and fairly present the
information purported to be shown thereby. The pro forma financial
information contained in the Offering Memorandum under the headings
"Summary--Summary Unaudited Pro Forma Consolidated Financial
Information" and "Unaudited Pro Forma Consolidated Financial
Statements" has been prepared on a basis consistent with the
historical financial statements contained in the Offering Memorandum
(except for the pro forma adjustments specified therein), includes all
material adjustments to the historical financial information required
by Rule 11-02 of Regulation S-X under the Securities Act and the
Exchange Act to reflect the transactions described in the Offering
Memorandum, gives effect to assumptions made on a reasonable basis and
fairly presents the historical and proposed transactions contemplated
by the Offering Memorandum and the Transaction Documents. The other
historical financial and statistical information and data included in
the Offering Memorandum are, in all material respects, fairly
presented.
(q) There are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or
of which any property or assets of the Company or any of its
subsidiaries is the subject which, (i) singularly or in the aggregate,
if determined adversely to the Company or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect or (ii)
question the validity or enforceability of any of the Transaction
Documents or any action taken or to be taken pursuant thereto; and to
the best knowledge of the Company, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others.
(r) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any
governmental agency or body which prevents the issuance of the
Securities or suspends the sale of the Securities in any jurisdiction;
no injunction, restraining order or order of any nature by any federal
or state court of competent jurisdiction has been issued with respect
to the Company or any of its subsidiaries which would prevent or
suspend the issuance or sale of the Securities or the use of the
Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to
the best knowledge of the Company and each of the Guarantors,
threatened against or affecting the Company or any of its subsidiaries
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Securities or
in any manner draw into question the validity or enforceability of any
of the Transaction Documents or any action taken or to be taken
pursuant thereto; and the Company has complied with any and all
requests by any securities authority in any jurisdiction for
additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
<PAGE> 7
7
(s) Neither the Company nor any of its subsidiaries
is (i) in violation of its charter or by-laws, (ii) in default in any
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject or (iii)
in violation in any respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may
be subject except, in the case of (ii) and (iii), for any such
violation or default that would not, singularly or in the aggregate,
have a Material Adverse Effect.
(t) The Company and each of its subsidiaries possess
all material licenses, certificates, authorizations and permits issued
by, and have made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective
properties or the conduct of their respective businesses as described
in the Offering Memorandum, except where the failure to possess or
make the same would not, singularly or in the aggregate, have a
Material Adverse Effect, and neither the Company nor any of its
subsidiaries has received notification of any revocation or
modification of any such license, certificate, authorization or permit
or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course
except where the revocation or modification of any such license,
certificate, authorization or permit, or the failure to renew any such
license, certificate, authorization or permit, would not, singularly
or in the aggregate, have a Material Adverse Effect.
(u) The Company and each of its subsidiaries have
filed all federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
taxes due thereon, and no tax deficiency has been determined adversely
to the Company or any of its subsidiaries which has had (nor does the
Company or any of its subsidiaries have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have) a Material Adverse
Effect.
(v) Neither the Company nor any of its subsidiaries
is (i) an "investment company" or a company "controlled by" an
investment company within the meaning of the Investment Company Act of
1940, as amended (the "INVESTMENT COMPANY ACT"), and the rules and
regulations of the Commission thereunder or (ii) a "holding company"
or a "subsidiary company" of a holding company or an "affiliate"
thereof within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(w) The Company and each of its subsidiaries have
insurance covering their respective properties, operations, personnel
and businesses, which insurance is in amounts and insures against such
losses and risks as are adequate to protect the Company and its
subsidiaries and their respective businesses. Neither the Company nor
any of its subsidiaries has received notice from any insurer or agent
of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance.
<PAGE> 8
8
(x) The Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses;
and the conduct of their respective businesses will not conflict in
any material respect with, and the Company and its subsidiaries have
not received any notice of any claim of conflict with, any such rights
of others.
(y) The Company and each of its subsidiaries have
good and marketable title in fee simple to, or have valid rights to
lease or otherwise use, all items of real and personal property which
are material to the business of the Company and its subsidiaries, in
each case free and clear of all liens, encumbrances, claims and
defects and imperfections of title except those (i) described in the
Offering Memorandum under the caption "Description of Other
Indebtedness," (ii) which do not materially interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries or (iii) could not reasonably be expected to have a
Material Adverse Effect.
(z) No labor disturbance by or dispute with the
employees of the Company or any of its subsidiaries exists or, to the
best knowledge of the Company, is contemplated or threatened.
(aa) No "prohibited transaction" (as defined in
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations
thereunder ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended from time to time (the "CODE")) or "accumulated
funding deficiency" (as defined in Section 302 of ERISA) or any of the
events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any employee
benefit plan of the Company or any of its subsidiaries which could
reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company and each of
its subsidiaries have not incurred and do not expect to incur
liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which the Company or any of
its subsidiaries would have any liability; and each such pension plan
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which could reasonably be
expected to cause the loss of such qualification.
(bb) There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission or
other release of any kind of toxic or other wastes or other hazardous
substances by, due to or caused by the Company or any of its
subsidiaries (or, to the best knowledge of the Company, any other
entity (including any predecessor) for whose acts or omissions the
Company or any of its subsidiaries is or could reasonably be expected
to be liable) upon any of the property now or previously owned or
leased by the Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or which would, under
any statute or
<PAGE> 9
9
any ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability that could not reasonably be expected to have,
singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto such
property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to
which the Company or any of the Guarantors has knowledge, except for
any such disposal, discharge, emission or other release of any kind
which could not reasonably be expected to have, singularly or in the
aggregate with all such discharges and other releases, a Material
Adverse Effect.
(cc) Neither the Company nor, to the best knowledge
of the Company and each of the Guarantors, any director, officer,
agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or (iv) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(dd) On and immediately after the Closing Date, the
Company (after giving effect to the issuance of the Securities and to
the other transactions related thereto as described in the Offering
Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such date
(i) the present fair market value (or present fair saleable value) of
the assets of the Company is not less than the total amount required
to pay the probable liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they
become absolute and matured, (ii) the Company is able to realize upon
its assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the Securities
as contemplated by this Agreement and the Offering Memorandum, the
Company is not incurring debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (iv) the Company is not
engaged in any business or transaction, and is not about to engage in
any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company is engaged.
In computing the amount of such contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that,
in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
(ee) Except as described in the Offering Memorandum,
there are no outstanding subscriptions, rights, warrants, calls or
options to acquire, or instruments convertible into or exchangeable
for, or agreements or understandings with respect to the sale or
issuance of, any shares of capital stock of or other equity or other
ownership interest in Holdings, the Company or any of its subsidiaries
other than those listed on Schedule 2 hereto.
(ff) Neither the Company nor any of its subsidiaries
owns any "margin securities" as that term is defined in Regulation U
of the Board of Governors of the
<PAGE> 10
10
Federal Reserve System (the "FEDERAL RESERVE BOARD"), and none of the
proceeds of the sale of the Securities will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security
or for any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation T, U
or X of the Federal Reserve Board.
(gg) Neither the Company nor any of its subsidiaries
is a party to any contract, agreement or understanding with any person
that would give rise to a valid claim against the Company or the
Initial Purchaser for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
(hh) The Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act.
(ii) None of the Company, any of its affiliates or
any person acting on its or their behalf has engaged or will engage in
any directed selling efforts (as such term is defined in Regulation S
under the Securities Act ("REGULATION S")), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable.
(jj) Neither the Company nor any of its affiliates
has, directly or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
such term is defined in the Securities Act), which is or will be
integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.
(kk) None of the Company or any of its affiliates or
any other person acting on its or their behalf has engaged, in
connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act.
(ll) There are no securities of the Company or
Holdings registered under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), or listed on a national securities
exchange or quoted in a U.S. automated inter-dealer quotation system
other than the Company's 115/8% Senior Subordinated Notes due 2004 and
Holdings' Class A common stock.
(mm) None of the Company or any of the Guarantors
has taken or will take, directly or indirectly, any action prohibited
by Regulation M under the Exchange Act in connection with the offering
of the Securities.
(nn) No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the Preliminary Offering Memorandum or the
Offering Memorandum has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith.
(oo) The Company and its subsidiaries are
implementing a comprehensive, detailed program to analyze and address
the risk that the computer hardware and
<PAGE> 11
11
software used by them may be unable to recognize and properly execute
date-sensitive functions involving certain dates prior to and any
dates after December 31, 1999 (the "YEAR 2000 PROBLEM"), and
reasonably believe that such risk will be remedied on a timely basis
without material expense and will not have a material adverse effect
upon the financial condition and results of operations of the Company
and its subsidiaries, taken as a whole; and the Company believes,
after due inquiry, that each supplier, vendor, customer or financial
service organization used or serviced by the Company and its
subsidiaries has remedied or will remedy on a timely basis the Year
2000 Problem, except to the extent that a failure to remedy by any
such supplier, vendor, customer or financial service organization
would not have a Material Adverse Effect.
(pp) Since the date as of which information is given
in the Offering Memorandum, except as otherwise stated therein, (i)
there has been no material adverse change or any development involving
a prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or management of the
Company or any of the Guarantors, whether or not arising in the
ordinary course of business, (ii) none of the Company or any of the
Guarantors has incurred any material liability or obligation, direct
or contingent, other than in the ordinary course of business, (iii)
none of the Company or any of the Guarantors has entered into any
material transaction other than in the ordinary course of business and
(iv) there has not been any change in the capital stock or long-term
debt of the Company or any of the Guarantors, or any dividend or
distribution of any kind declared, paid or made by the Company or any
of the Guarantors on any class of their respective capital stock.
2. PURCHASE AND RESALE OF THE SECURITIES. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, $250,000,000 principal amount of Securities at a purchase price equal
to 97.00% of the principal amount thereof. The Company shall not be obligated
to deliver any of the Securities except upon payment for all of the Securities
to be purchased as provided herein.
(b) The Initial Purchaser has advised the Company that it
proposes to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. The Initial
Purchaser represents and warrants to and agrees with the Company and the
Guarantors that (i) it is purchasing the Securities pursuant to a private sale
exempt from registration under the Securities Act, (ii) it has not solicited
offers for, or offered or sold, and will not solicit offers for, or offer or
sell, the Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("REGULATION D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of their
initial offering, only (A) within the United States to persons whom it
reasonably believes to be qualified institutional buyers ("QUALIFIED
INSTITUTIONAL BUYERS"), as defined in Rule 144A under the Securities Act ("RULE
144A"), 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 it that each such account is a Qualified Institutional Buyer
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 in
<PAGE> 12
12
accordance with Rule 144A and (B) outside the United States to persons other
than U.S. persons in reliance on Regulation S under the Securities Act
("REGULATION S").
(c) In connection with the offer and sale of Securities in
reliance on Regulation S, the Initial Purchaser represents, warrants and agrees
that:
(i) it has complied and will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells
or delivers Securities or has in its possession or distributed the
Preliminary Offering Memorandum or the Offering Memorandum;
(ii) the Securities have not been registered under the Securities
Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in transactions not subject to, the registration
requirements of the Securities Act;
(iii) the Initial Purchaser has offered and sold the Securities,
and will offer and sell the Securities, (A) as part of their
distribution at any time and (B) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
Closing Date, only in accordance with Regulation S or Rule 144A or any
other available exemption from registration under the Securities Act;
(iv) none of the Initial Purchaser or any of its affiliates or
any other person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities,
and all such persons have complied and will comply with the offering
restriction requirements of Regulation S;
(v) at or prior to the confirmation of sale of any Securities
sold in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling concession,
fee or other remuneration that purchase Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement
of the offering of the Securities and the date of original
issuance of the Securities, except in accordance with
Regulation S or Rule 144A or any other available exemption
from registration under the Securities Act. Terms used above
have the meanings given to them by Regulation S"; and
(vi) it has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of
the Securities, except with its affiliates or with the prior written
consent of the Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation
S.
(d) The Initial Purchaser represents, warrants and agrees that
(i) it has not offered or sold and prior to the date six months after the
Closing Date will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or
<PAGE> 13
13
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995;
(ii) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 and the Public Offers of Securities Regulations
1995 with respect to anything done by it in relation to the Securities in, from
or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Securities to a person who
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(e) The Initial Purchaser agrees that, prior to or simultaneously
with the confirmation of sale by the Initial Purchaser to any purchaser of any
of the Securities purchased by the Initial Purchaser from the Company pursuant
hereto, the Initial Purchaser shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment or supplement thereto that the Company
shall have furnished to the Initial Purchaser prior to the date of such
confirmation of sale). In addition to the foregoing, the Initial Purchaser
acknowledges and agrees that the Company and, for purposes of the opinions to
be delivered to the Initial Purchaser pursuant to Sections 5(e) and (f),
counsel for the Company and for the Initial Purchaser, respectively, may rely
upon the accuracy of the representations and warranties of the Initial
Purchaser and their compliance with their agreements contained in this Section
2, and the Initial Purchaser hereby consents to such reliance.
(f) The Company and each of the Guarantors acknowledge and agree
that the Initial Purchaser may sell Securities to any affiliate of the Initial
Purchaser and that any such affiliate may sell Securities purchased by it to
the Initial Purchaser.
3. DELIVERY OF AND PAYMENT FOR THE SECURITIES. (a) Delivery
of and payment for the Securities shall be made at the offices of Simpson
Thacher & Bartlett, New York, New York, or at such other place as shall be
agreed upon by the Initial Purchaser and the Company, at 10:00 A.M., New York
City time, on May 7, 1999 or at such other time or date, not later than seven
full business days thereafter, as shall be agreed upon by the Initial Purchaser
and the Company (such date and time of payment and delivery being referred to
herein as the "CLOSING DATE").
(b) On the Closing Date, payment of the purchase price for
the Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior
to the Closing Date or by such other means as the parties hereto shall agree
prior to the Closing Date against delivery to the Initial Purchaser of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligations of the Initial Purchaser hereunder. Upon
delivery, the Securities shall be in global form, registered in such names and
in such denominations as the Initial Purchaser shall have requested in writing
not less than two full business days prior to the Closing Date. The Company
agrees to make one or more global certificates evidencing the Securities
available for inspection by the Initial Purchaser in New York, New York at
least 24 hours prior to the Closing Date.
4. FURTHER AGREEMENTS OF THE COMPANY AND THE GUARANTORS. The
Company and each of the Guarantors agree with the Initial Purchaser:
<PAGE> 14
14
(a) to advise the Initial Purchaser promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the
Offering Memorandum untrue or which requires the making of any
additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; to advise the Initial Purchaser promptly of any order
preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its best efforts to prevent the
issuance of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or
suspending any such qualification and, if any such suspension is
issued, to obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to the Initial Purchaser and
counsel for the Initial Purchaser, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum (and
any amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to
the Offering Memorandum, to furnish a copy thereof to the Initial
Purchaser and counsel for the Initial Purchaser and not to effect any
such amendment or supplement to which the Initial Purchaser shall
reasonably object by notice to the Company after a reasonable period
to review;
(d) if, at any time prior to completion of the
resale of the Securities by the Initial Purchaser, any event shall
occur or condition exist as a result of which it is necessary, in the
opinion of counsel for the Initial Purchaser or counsel for the
Company, to amend or supplement the Offering Memorandum in order that
the Offering Memorandum will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading,
or if it is necessary to amend or supplement the Offering Memorandum
to comply with applicable law, to promptly prepare such amendment or
supplement as may be necessary to correct such untrue statement or
omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, to furnish to holders of the Securities and
prospective purchasers of the Securities designated by such holders,
upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act, unless the Company is then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act (the foregoing
agreement being for the benefit of the holders from time to time of
the Securities and prospective purchasers of the Securities designated
by such holders);
<PAGE> 15
15
(f) for so long as the Securities are outstanding,
to furnish to the Initial Purchaser copies of any documents, reports
and information as shall be furnished by the Company to the Trustee or
to the holders of the Securities pursuant to the Indenture or the
Exchange Act or any rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions
as the Initial Purchaser may reasonably request to qualify the
Securities for offering and sale under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchaser may designate and to
continue such qualifications in effect for so long as required for the
resale of the Securities; and to arrange for the determination of the
eligibility for investment of the Securities under the laws of such
jurisdictions as the Initial Purchaser may reasonably request;
PROVIDED that the Company and its subsidiaries shall not be obligated
to qualify as foreign corporations in any jurisdiction in which they
are not so qualified or to file a general consent to service of
process in any jurisdiction;
(h) to assist the Initial Purchaser in arranging for
the Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and
settlement through The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to,
sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as such term is defined in the Securities
Act) which could be integrated with the sale of the Securities in a
manner which would require registration of the Securities under the
Securities Act;
(j) except following the effectiveness of the
Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, not to, and to cause its affiliates not
to, and not to authorize or knowingly permit any person acting on
their behalf to, solicit any offer to buy or offer to sell the
Securities by means of any form of general solicitation or general
advertising within the meaning of Regulation D or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act; and not to offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, any securities under circumstances
where such offer, sale, contract or disposition would cause the
exemption afforded by Section 4(2) of the Securities Act to cease to
be applicable to the offering and sale of the Securities as
contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 90 days from the date of the
Offering Memorandum, not to offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a registration
statement for, or announce any offer, sale, contract for sale of or
other disposition of any debt securities issued or guaranteed by the
Company or any of its subsidiaries (other than the Securities) without
the prior written consent of the Initial Purchaser;
(l) during the period from the Closing Date until
two years after the Closing Date, without the prior written consent of
the Initial Purchaser, not to, and not permit any of its affiliates
(as defined in Rule 144 under the Securities Act) to, resell any
<PAGE> 16
16
of the Securities that have been reacquired by them, except for
Securities purchased by the Company or any of its affiliates and
resold in a transaction registered under the Securities Act;
(m) not to, for so long as the Securities are
outstanding, be or become, or be or become owned by, an open-end
investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act, and to not be or become, or be or become owned
by, a closed-end investment company required to be registered, but not
registered thereunder;
(n) in connection with the offering of the
Securities, until the Initial Purchaser shall have notified the
Company of the completion of the resale of the Securities, not to, and
to cause its affiliated purchasers (as defined in Regulation M under
the Exchange Act) not to, either alone or with one or more other
persons, bid for or purchase, for any account in which it or any of
its affiliated purchasers has a beneficial interest, any Securities,
or attempt to induce any person to purchase any Securities; and not
to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active
trading in or of raising the price of the Securities;
(o) in connection with the offering of the
Securities, to make its officers, employees, independent accountants
and legal counsel reasonably available upon request by the Initial
Purchaser;
(p) to do and perform all things required to be done
and performed by it under this Agreement that are within its control
prior to or after the Closing Date, and to use its best efforts to
satisfy all conditions precedent on its part to the delivery of the
Securities;
(q) except as contemplated by the Offering
Memorandum, to not take any action prior to the execution and delivery
of the Indenture which, if taken after such execution and delivery,
would have violated any of the covenants contained in the Indenture;
(r) to not take any action prior to the Closing Date
which would require the Offering Memorandum to be amended or
supplemented pursuant to Section 4(d);
(s) prior to the Closing Date, not to issue any
press release or other communication directly or indirectly or hold
any press conference with respect to the Company, its condition,
financial or otherwise, or earnings or business affairs (except for
routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of
which the Initial Purchaser is notified), without the prior written
consent of the Initial Purchaser, which consent shall not be
unreasonably withheld, unless in the judgment of the Company and its
counsel, and after notification to the Initial Purchaser, such press
release or communication is required by law; and
(t) to apply the net proceeds from the sale of the
Securities as set forth in the Offering Memorandum under the heading
"Use of Proceeds".
<PAGE> 17
17
5. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The
obligations of the Initial Purchaser hereunder are subject to the accuracy, on
and as of the date hereof and the Closing Date, of the representations and
warranties of the Company and each of the Guarantors contained herein, to the
accuracy of the statements of the Company and each of the Guarantors and their
respective officers made in any certificates delivered pursuant hereto, to the
performance by the Company and each of the Guarantors of their respective
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Offering Memorandum (and any amendments or
supplements thereto) shall have been printed and copies distributed to
the Initial Purchaser as promptly as practicable on or following the
date of this Agreement or at such other date and time as to which the
Initial Purchaser may agree; and no stop order suspending the sale of
the Securities in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(b) The Initial Purchaser shall not have discovered
and disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Initial Purchaser, is material or omits to state any fact which, in
the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal
matters incident to the authorization, form and validity of each of
the Transaction Documents and the Offering Memorandum, and all other
legal matters relating to the Transaction Documents and the
transactions contemplated thereby, shall be satisfactory in all
material respects to the Initial Purchaser, and the Company shall have
furnished to the Initial Purchaser all documents and information that
they or their counsel may reasonably request to enable them to pass
upon such matters.
(d) The Initial Purchaser shall have received true
and correct copies of all agreements entered into in connection with
the Merger, including, without limitation, the Merger Agreement and
the LLC Agreement, as amended through the date hereof.
(e) Simpson Thacher & Bartlett, special counsel to
the Company, and Harvey Blicksilver, general counsel to the Company,
shall have furnished to the Initial Purchaser their respective written
opinions, addressed to the Initial Purchaser and dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchaser, substantially to the effect set forth in Annexes B-1 and
B-2 hereto.
(f) The Initial Purchaser shall have received from
Cravath, Swaine & Moore, counsel for the Initial Purchaser, such
opinion or opinions, dated the Closing Date, with respect to such
matters as the Initial Purchaser may reasonably require, and the
Company shall have furnished to such counsel such documents and
information as they request for the purpose of enabling them to pass
upon such matters.
(g) The Company shall have furnished to the Initial
Purchaser a letter (the "INITIAL LETTER") of Arthur Andersen,
addressed to the Initial Purchaser and dated the date hereof, in form
and substance satisfactory to the Initial Purchaser, substantially to
the effect set forth in Annex C hereto.
<PAGE> 18
18
(h) The Company shall have furnished to the Initial
Purchaser a letter (the "BRING-DOWN LETTER") of Arthur Andersen,
addressed to the Initial Purchaser and dated the Closing Date (i)
confirming that they are independent public accountants with respect
to the Company and its subsidiaries within the meaning of Rule 101 of
the Code of Professional Conduct of the AICPA and its interpretations
and rulings thereunder, (ii) stating, as of the date of the Bring-Down
Letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information
is given in the Offering Memorandum, as of a date not more than three
business days prior to the date of the Bring-Down Letter), that the
conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter
are accurate and (iii) confirming in all material respects the
conclusions and findings set forth in the Initial Letter.
(i) The Company and each of the Guarantors shall
have furnished to the Initial Purchaser a certificate, dated the
Closing Date, of their respective chief executive officers and their
respective chief financial officers stating that (i) such officers
have carefully examined the Offering Memorandum, (ii) in their
opinion, the Offering Memorandum, as of its date, did not include any
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and since the date of the
Offering Memorandum, no event has occurred which should have been set
forth in a supplement or amendment to the Offering Memorandum so that
the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (iii) as of
the Closing Date, the representations and warranties of the Company or
the particular Guarantor, as applicable, in this Agreement are true
and correct in all material respects, the Company or the particular
Guarantor, as applicable, has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder on or prior to the Closing Date, and (iv) except for the
Transactions, subsequent to the date of the most recent financial
statements contained in the Offering Memorandum, there has been no
material adverse change in the financial position or results of
operation of the Company or any of its subsidiaries, or any change, or
any development involving a prospective change, in or affecting the
condition (financial or otherwise), results of operations or business
of the Company and its subsidiaries taken as a whole.
(j) The Initial Purchaser shall have received a
counterpart of the Registration Rights Agreement which shall have been
executed and delivered by a duly authorized officer of the Company.
(k) The Indenture shall have been duly executed and
delivered by the Company, the Guarantors and the Trustee, and the
Securities shall have been duly executed and delivered by the Company
and duly authenticated by the Trustee.
(l) The Securities shall have been approved by the
NASD for trading in the PORTAL Market.
<PAGE> 19
19
(m) If any event shall have occurred that requires
the Company under Section 4(d) to prepare an amendment or supplement
to the Offering Memorandum, such amendment or supplement shall have
been prepared, the Initial Purchaser shall have been given a
reasonable opportunity to comment thereon, and copies thereof shall
have been delivered to the Initial Purchaser reasonably in advance of
the Closing Date.
(n) There shall not have occurred any invalidation
of Rule 144A under the Securities Act by any court or any withdrawal
or proposed withdrawal of any rule or regulation under the Securities
Act or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the judgment of the
Initial Purchaser would materially impair the ability of the Initial
Purchaser to purchase, hold or effect resales of the Securities as
contemplated hereby.
(o) Except for the Transactions or as described in
the Offering Memorandum under the captions "Recent Developments,"
subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there
shall not have been any change in the capital stock or long-term debt
or any change, or any development involving a prospective change, in
or affecting the condition (financial or otherwise), results of
operations or business of the Company and its subsidiaries taken as a
whole, the effect of which, in any such case described above, is, in
the judgment of the Initial Purchaser, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated
by this Agreement and the Offering Memorandum (exclusive of any
amendment or supplement thereto).
(p) No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued
by any governmental agency or body which would, as of the Closing
Date, prevent the issuance or sale of the Securities; and no
injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance or sale
of the Securities.
(q) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Securities or any of the Company's other debt securities
or preferred stock by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and regulations of the Commission under
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Securities or any of the Company's other debt securities
or preferred stock.
(r) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the over-the-counter market shall have been
suspended or limited, or minimum prices shall have been established
<PAGE> 20
20
on any such exchange or market by the Commission, by any such exchange
or by any other regulatory body or governmental authority having
jurisdiction, or trading in any securities of the Company on any
exchange or in the over-the-counter market shall have been suspended
or (ii) any moratorium on commercial banking activities shall have
been declared by federal or New York state authorities or (iii) an
outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) the effect of which, in the case of this
clause (iv), is, in the judgment of the Initial Purchaser, so material
and adverse as to make it impracticable or inadvisable to proceed with
the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(s) All conditions to the consummation of the Merger
(including, without limitation, the execution of the Credit Agreement
and the consummation of the Debt Tender Offer), other than the
Offering of the Securities, shall have been satisfied. The Merger, the
Debt Tender Offer and the initial funding under the Credit Agreement
shall be consummated substantially concurrently with the sale of the
Securities hereunder. All conditions to the other Transactions other
than the sale of the Securities shall have been satisfied.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchaser.
6. TERMINATION. The obligations of the Initial Purchaser
hereunder may be terminated by the Initial Purchaser, in their absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(n), (o), (p), (q) or (r) shall have occurred and be
continuing.
7. REIMBURSEMENT OF INITIAL PURCHASER'S EXPENSES. If (a) this
Agreement shall have been terminated pursuant to Section 6 (other than pursuant
to Section 5(r)), (b) the Company shall fail to tender the Securities for
delivery to the Initial Purchaser for any reason permitted under this Agreement
(other than by reason of any failure by the Initial Purchaser to comply with
any of its material covenants under this Agreement) or (c) the Initial
Purchaser shall decline to purchase the Securities for any reason permitted
under this Agreement, the Company and the Guarantors shall reimburse the
Initial Purchaser for such out-of-pocket expenses (including reasonable fees
and disbursements of counsel) as shall have been reasonably incurred by the
Initial Purchaser in connection with this Agreement and the proposed purchase
and resale of the Securities.
8. INDEMNIFICATION. (a) The Company and each of the
Guarantors shall jointly and severally indemnify and hold harmless the Initial
Purchaser, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Initial
Purchaser within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 8(a) and Section 9 as
the Initial Purchaser), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of the Securities), to which the Initial Purchaser may
<PAGE> 21
21
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum
or the Offering Memorandum or in any amendment or supplement thereto or in any
information provided by the Company pursuant to Section 4(e) or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
shall reimburse the Initial Purchaser promptly upon demand for any legal or
other expenses reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that none of the
Company and the Guarantors shall be liable in any such case to the extent that
any such loss, claim, damage, liability or action arises out of, or is based
upon, an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Initial Purchaser's Information; and PROVIDED, FURTHER, that with respect to
any such untrue statement in or omission from the Preliminary Offering
Memorandum, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of any such Initial Purchaser to the extent that the sale
to the person asserting any such loss, claim, damage, liability or action was
an initial resale by the Initial Purchaser and any such loss, claim, damage,
liability or action of or with respect to the Initial Purchaser results from
the fact that both (A) to the extent required by applicable law, a copy of the
Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless, in either case, such failure to
deliver the Offering Memorandum was a result of non-compliance by the Company
with Section 4(b).
(b) The Initial Purchaser shall indemnify and hold harmless
the Company, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 8(b) and Section 9 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
Initial Purchaser's Information, and shall reimburse the Company for any legal
or other expenses reasonably incurred by the Company in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred.
<PAGE> 22
22
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 8(a) or 8(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
PROVIDED, HOWEVER, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 8 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, PROVIDED, FURTHER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
PROVIDED, HOWEVER, that an indemnified party shall have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel for the indemnified party will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based upon advice of counsel to the indemnified
party) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (iii) a conflict or potential conflict exists (based upon
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iv) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at any one
time for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 8(a) and 8(b),
shall use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
<PAGE> 23
23
The obligations of the Company, the Guarantors and the
Initial Purchaser in this Section 8 and in Section 9 are in addition to any
other liability that the Company, the Guarantors or the Initial Purchaser, as
the case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
9. CONTRIBUTION. If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Guarantors on the
one hand and the Initial Purchaser on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Guarantors on the one hand and the
Initial Purchaser on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchaser on the other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by or on behalf of the Company and the Guarantors, on the one hand, and the
total discounts and commissions received by the Initial Purchaser with respect
to the Securities purchased under this Agreement, on the other, bear to the
total gross proceeds from the sale of the Securities under this Agreement. The
relative fault 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 the Company or information
supplied by the Company and the Guarantors on the one hand or to any Initial
Purchaser's Information on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Guarantors and the Initial
Purchaser agree that it would not be just and equitable if contributions
pursuant to this Section 9 were to be determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 9 shall be deemed to include, for
purposes of this Section 9, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 9, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by the Initial Purchaser with respect to the Securities purchased by
it under this Agreement exceeds the amount of any damages which such Initial
Purchaser has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
10. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchaser, the
Company, the Guarantors and their respective successors. This Agreement and the
terms and
<PAGE> 24
24
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 8 and 9 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company, the
Guarantors and the Initial Purchaser and in Section 4(e) with respect to
holders and prospective purchasers of the Securities. Nothing in this Agreement
is intended or shall be construed to give any person, other than the persons
referred to in this Section 10, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
11. EXPENSES. The Company and the Guarantors agree with the
Initial Purchaser to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and
distribution of the Preliminary Offering Memorandum, the Offering Memorandum
and any amendments or supplements thereto; (c) the costs of reproducing and
distributing each of the Transaction Documents; (d) the costs incident to the
preparation, printing and delivery of the certificates evidencing the
Securities, including stamp duties and transfer taxes, if any, payable upon
issuance of the Securities; (e) the fees and expenses of the Company's counsel
and independent accountants; (f) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided
in Section 4(h) and of preparing, printing and distributing Blue Sky Memoranda
(including related fees and expenses of counsel for the Initial Purchaser); (g)
any fees charged by rating agencies for rating the Securities; (h) all expenses
and application fees incurred in connection with the application for the
inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (i) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement which are not otherwise specifically provided for in this Section 11;
PROVIDED, HOWEVER, that (i) except as provided in this Section 11 and Section
7, the Initial Purchaser shall pay its own costs and expenses and (ii) the
Initial Purchaser shall pay the costs of the airplane used for the "road show."
12. SURVIVAL. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company, the
Guarantors and the Initial Purchaser contained in this Agreement or made by or
on behalf of the Company, the Guarantors or the Initial Purchaser pursuant to
this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancelation of this Agreement or any
investigation made by or on behalf of any of them or any of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
13. NOTICES, ETC.. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered
or sent by mail or telecopy transmission to Chase Securities Inc., 270
Park Avenue, New York, New York 10017, Attention: Alexis Pugliese
(telecopier no.: (212) 270-0994); or
(b) if to the Company, shall be delivered or sent by
mail or telecopy transmission to the address of the Company set forth
in the Offering Memorandum, Attention: Chief Financial Officer
(telecopier no.: (561) 540-1010);
PROVIDED that any notice to the Initial Purchaser pursuant to Section 8(c)
shall also be delivered or sent by mail to the Initial Purchaser at its address
set forth on the signature page
<PAGE> 25
25
hereof. Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Company shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf of the
Initial Purchaser by CSI.
14. DEFINITION OF TERMS. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
15. INITIAL PURCHASER'S INFORMATION. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the Initial
Purchaser's Information consists solely of the following information in the
Preliminary Offering Memorandum and the Offering Memorandum: (a) the last two
bullet points on the front cover page concerning the terms of the offering by
the Initial Purchaser and (b) the statements concerning the Initial Purchaser
contained in the third, ninth, tenth, eleventh and twelfth paragraphs under the
heading "Plan of Distribution."
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
17. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
18. AMENDMENTS. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
19. HEADINGS. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
<PAGE> 26
26
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon
this instrument will become a binding agreement between the Company, the
Guarantors and the Initial Purchaser in accordance with its terms.
Very truly yours,
On behalf of
AMERICAN MEDIA OPERATIONS, INC.,
NATIONAL ENQUIRER, INC., SOM
PUBLISHING, INC., WEEKLY WORLD
NEWS, INC., COUNTRY WEEKLY, INC.,
DISTRIBUTION SERVICES, INC.,
FAIRVIEW PRINTING, INC., NDSI,
INC., HEALTH XTRA, INC., RETAIL
MARKETING NETWORK, INC., BIOCIDE,
INC., AMERICAN MEDIA MARKETING,
INC., and MARKETING SERVICES, INC.,
By /s/ Maynard Rabinowitz
--------------------------------
Name: Maynard Rabinowitz
Title: Secretary
STAR EDITORIAL, INC.,
By /s/ Michael J. Boylan
--------------------------------
Name: Michael J. Boylan
Title: President
<PAGE> 27
27
Accepted:
CHASE SECURITIES INC.,
By /s/ Joe Purcell
-----------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th Floor
New York, New York 10081
Attention: Legal Department
<PAGE> 28
28
SCHEDULE 1
Amended and Restated Limited Liability Company Agreement and Investors Rights
Agreement of EMP Group L.L.C., dated as of February 16, 1999, by and among
Evercore Capital Partners, L.P., Circulation, LLC, Chase Equity Associates,
L.P., Tandem Journalism Investments, L.P., BG Media Investors, L.P., David J.
Pecker, Karen Pecker and Holdings, and Aetna Life Insurance Company and Capital
Communications CDPQ Inc., each as guarantors.
<PAGE> 29
29
ANNEX B-1
Form of Opinion of Simpson Thacher & Bartlett
See attached.
<PAGE> 30
30
ANNEX B-2
Form of Opinion of General Counsel for the Company
See attached.
<PAGE> 31
31
ANNEX C
Form of Initial Comfort Letter
The Company shall have furnished to the Initial Purchaser a
letter of Arthur Andersen, addressed to the Initial Purchaser and dated the
date of the Purchase Agreement, in form and substance satisfactory to the
Initial Purchaser, substantially to the effect set forth below:
(i) they are independent certified public
accountants with respect to the Company within the meaning of Rule 101
of the Code of Professional Conduct of the AICPA and its
interpretations and rulings;
(ii) in their opinion, the audited financial
statements and pro forma financial information included in the
Offering Memorandum and reported on by them comply in form in all
material respects with the accounting requirements of the Exchange Act
and the related published rules and regulations of the Commission
thereunder that would apply to the Offering Memorandum if the Offering
Memorandum were a prospectus included in a registration statement on
Form S-1 under the Securities Act (except that certain supporting
schedules are omitted);
(iii) based upon a reading of the latest unaudited
financial statements made available by the Company, the procedures of
the AICPA for a review of interim financial information as described
in Statement of Auditing Standards No. 71, reading of minutes and
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters and certain other limited
procedures requested by the Initial Purchaser and described in detail
in such letter, nothing has come to their attention that causes them
to believe that (A) any unaudited financial statements included in the
Offering Memorandum do not comply as to form in all material respects
with applicable accounting requirements, (B) any material
modifications should be made to the unaudited financial statements
included in the Offering Memorandum for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Offering Memorandum or (C) the information included
under the headings "Summary--Summary Historical Financial Data,"
"Capitalization," "Selected Historical Consolidated Financial
Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" is not in conformity with the
disclosure requirements of Regulation S-K that would apply to the
Offering Memorandum if the Offering Memorandum were a prospectus
included in a registration statement on Form S-1 under the Securities
Act;
(iv) based upon the procedures detailed in such
letter with respect to the period subsequent to the date of the last
available balance sheet, including reading of minutes and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters, nothing has come to their attention that
causes them to believe that (A) at a specified date not more than
three business days prior to the date of such letter, there was any
change in capital stock, increase in long-term debt or decrease in net
current assets as compared with the amounts shown in the
<PAGE> 32
32
December 28, 1998 unaudited balance sheet included in the Offering
Memorandum or (B) for the period from December 28, 1998 to a specified
date not more than three business days prior to the date of such
letter, there were any decreases, as compared with the corresponding
period in the preceding year, in net sales, income from operations,
except in all instances for changes, increases or decreases that the
Offering Memorandum discloses have occurred or which are set forth in
such letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Initial Purchaser;
(v) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which
is limited to accounting, financial or statistical information derived
from the general accounting records of the Company) set forth in the
Offering Memorandum agrees with the accounting records of the Company,
excluding any questions of legal interpretation; and
(vi) on the basis of a reading of the unaudited pro
forma financial information included in the Offering Memorandum,
carrying out certain specified procedures, reading of minutes and
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial information, nothing
came to their attention which caused them to believe that the pro
forma financial information does not comply in form in all material
respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
information.
<PAGE> 1
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
EMP ACQUISITION CORP.
AND
AMERICAN MEDIA, INC.
DATED
February 16, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. THE MERGER 2
SECTION 1.1. The Merger 2
SECTION 1.2. Closing 2
SECTION 1.3. Effective Time 2
SECTION 1.4. Effects of the Merger 3
SECTION 1.5. Certificate of Incorporation and By-Laws of
the Surviving Corporation 3
SECTION 1.6. Directors 3
SECTION 1.7. Officers 3
ARTICLE II. EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS 3
SECTION 2.1. Effect On Capital Stock 3
SECTION 2.2. Company Option Plan 4
SECTION 2.3. Consent Statement; Action by Written Consent 5
SECTION 2.4. Releases 6
ARTICLE III. DISSENTING SHARES; PAYMENT FOR SHARES 7
SECTION 3.1. Dissenting Shares 7
SECTION 3.2. Payment for Shares 7
SECTION 3.3. The Debt Offer 10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 11
SECTION 4.1. Organization and Qualification; Subsidiaries 11
SECTION 4.2. Certificate of Incorporation and By-laws 12
SECTION 4.3. Capitalization 12
SECTION 4.4. Authority Relative to this Agreement 13
SECTION 4.5. No Conflict; Required Filings and Consents 14
SECTION 4.6. SEC Reports and Financial Statements 15
SECTION 4.7. Information 16
SECTION 4.8. Litigation 17
SECTION 4.9. Compliance with Applicable Laws 17
SECTION 4.10. Employee Benefit Plans 17
SECTION 4.11. Intellectual Property 19
SECTION 4.12. Environmental Matters 20
SECTION 4.13. Material Adverse Change 22
SECTION 4.14. Certain Approvals 22
SECTION 4.15. Opinion of Financial Advisor 23
SECTION 4.15.1. Brokers 23
SECTION 4.16. Contracts, Etc. 23
SECTION 4.17. Labor Matters 25
SECTION 4.18. Tax Matters 25
SECTION 4.19. Make Goods; Advertising Credits 26
SECTION 4.20. Insurance 26
SECTION 4.21. Year 2000 26
SECTION 4.22. Soap Opera Sale 26
</TABLE>
(2)
<PAGE> 3
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF NEWCO 27
SECTION 5.1. Organization and Qualification 27
SECTION 5.2. Authority Relative to this Agreement 27
SECTION 5.3. No Conflict; Required Filings and Consents 28
SECTION 5.4. Information 28
SECTION 5.5. Financing 29
SECTION 5.6. Newco Not an Interested Stockholder or an Acquiring Person 29
SECTION 5.7. Newco 29
SECTION 5.8. Brokers 30
ARTICLE VI. COVENANTS 30
SECTION 6.1. Conduct of Business of the Company 30
SECTION 6.2. Access to Information; Interim Financials 34
SECTION 6.3. Reasonable Best Efforts 35
SECTION 6.4. Consents 36
SECTION 6.5. Public Announcements 36
SECTION 6.6. Employee Benefits Matters 36
SECTION 6.7. Indemnification 37
SECTION 6.8. No Solicitation 38
SECTION 6.9. Notification of Certain Matters 39
SECTION 6.10. State Takeover Laws 39
SECTION 6.11. Disposition of Litigation 39
SECTION 6.12. Stop Transfer Order 39
SECTION 6.13. Financing 39
SECTION 6.14. Newco Action 40
ARTICLE VII. CONDITIONS TO CONSUMMATION OF THE MERGER 40
SECTION 7.1. Conditions of Each Party's Obligation to Consummate
the Merger 40
SECTION 7.2. Conditions to Obligation of Newco 41
SECTION 7.3. Conditions to Obligation of the Company 42
ARTICLE VIII. TERMINATION; AMENDMENT; WAIVER 43
SECTION 8.1. Termination 43
SECTION 8.2. Effect of Termination 44
SECTION 8.3. Expenses 44
SECTION 8.4. Amendment 45
SECTION 8.5. Extension; Waiver 45
ARTICLE IX. MISCELLANEOUS 46
SECTION 9.1. Non-Survival of Representations and Warranties 46
SECTION 9.2. Entire Agreement; Assignment 46
SECTION 9.3. Validity 46
SECTION 9.4. Notices 46
SECTION 9.5. Governing Law; Jurisdiction 47
SECTION 9.6. Waiver of Jury Trial 48
SECTION 9.7. Descriptive Headings 48
SECTION 9.8. Counterparts 48
-3-
<PAGE> 4
SECTION 9.9. Parties in Interest 48
SECTION 9.10. Certain Definitions 48
SECTION 9.11. Specific Performance 52
DISCLOSURE SCHEDULE
-4-
<PAGE> 5
EXHIBITS
EXHIBIT A Form of Certificate of Incorporation of Company immediately
after the Effective Time.
-5-
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 16, 1999, by
and between EMP ACQUISITION CORP., a Delaware corporation ("NEWCO"), and
AMERICAN MEDIA, INC., a Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Newco and the
Company have declared this Agreement to be advisable and determined that the
merger of Newco with and into the Company (the "MERGER"), in accordance with the
General Corporation Law of the State of Delaware (the "GCL") and upon the terms
and subject to the conditions set forth in this Agreement, would be fair to and
in the best interests of their respective stockholders, and such Boards of
Directors have approved such Merger, pursuant to which each share of Class A
Common Stock, par value $.01 per share (the "CLASS A SHARES"), and each share of
Class C Common Stock, par value $.01 per share (the "CLASS C SHARES" and,
collectively with the Class A Shares, the "SHARES"), in each case which is
issued and outstanding immediately prior to the Effective Time (as defined in
Section 1.3) and not owned directly or indirectly by Newco or the Company will
be converted into the right to receive $7.00 in cash;
WHEREAS, all of the issued and outstanding Common Stock, par
value $.01 per share (the "NEWCO SHARES"), of Newco is owned by EMP Group LLC
or an affiliate thereof;
WHEREAS, the adoption of this Agreement requires the approval
of a majority of the voting power of the outstanding Shares, voting as a single
class (with each Class A Share having one vote per share and each Class C Share
having three votes per share) (the "COMPANY STOCKHOLDER APPROVAL");
WHEREAS, as a condition to their willingness to enter into
this Agreement and consummate the transactions contemplated hereby, Newco has
required that Boston Ventures Limited Partnership III, Boston Ventures Limited
Partnership IIIA, Boston Ventures Company Limited Partnership III, Pemima,
L.P. and Michael J. Boylan (each, a "PRINCIPAL STOCKHOLDER") agree, among
other things, to execute a written consent in favor of adoption of this
Agreement on the date hereof in accordance with the provisions of Section 228
of the GCL, vote the Shares beneficially owned by each of them in accordance
with the Voting Agreement and comply with the other provisions of such Voting
Agreement; and in order to induce Newco to enter into this Agreement, each
Principal Stockholder has executed and delivered the Voting Agreement, dated
as of the date hereof, with Newco (the "Voting Agreement");
WHEREAS, Newco and the Company desire to make certain
<PAGE> 7
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, certain capitalized terms used herein are defined or
cross-referenced in Section 9.10.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Newco and the Company agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the GCL, at the Effective Time (as
defined in Section 1.3) Newco shall be merged with and into the Company.
Following the Merger, the separate corporate existence of Newco shall cease and
the Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION").
SECTION 1.2. CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1 and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the closing of the Merger (the "CLOSING")
will take place at 10:00 am. on the second business day after satisfaction or
waiver of the conditions set forth in Article VII (the "CLOSING DATE"), at the
offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York
10017, unless another date, time or place is agreed to in writing by the parties
hereto; PROVIDED that Newco may, upon written notice given to the Company no
later than one business day before the date on which the Closing would otherwise
occur, as contemplated by this Section 1.2 cause the Closing to be postponed to
a date specified in such notice so long as such date is not more than 85 days
after the date hereof, Newco states in such notice that such delay is necessary
to permit completion of the offering of Senior Subordinated Notes (as defined in
and contemplated by the Commitment Letters) and such notice is accompanied by a
letter from the initial purchaser in respect of such offering and addressed to
the Company to the effect that such initial purchaser agrees with the aforesaid
statement.
SECTION 1.3. EFFECTIVE TIME . As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the Company
shall execute in the manner required by the GCL and deliver to the Secretary of
State of the State of Delaware
-7-
<PAGE> 8
a duly executed certificate of merger, and the parties shall take such other and
further actions as may be required by law to make the Merger effective. The time
the Merger becomes effective in accordance with applicable law is referred to as
the "EFFECTIVE TIME."
SECTION 1.4. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the GCL.
SECTION 1.5. CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE
SURVIVING CORPORATION.
(a) The certificate of incorporation of the Company,
as in effect immediately prior to the Effective Time, shall be amended in the
Merger so as to read in its entirety in the form set forth as Exhibit A hereto
and, as so amended, shall be the certificate of incorporation of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and applicable law.
(b) Subject to the provisions of Section 6.7, the
by-laws of Newco in effect at the Effective Time shall be the by-laws of the
Surviving Corporation, until thereafter amended in accordance with the
provisions thereof and applicable law.
SECTION 1.6. DIRECTORS. Subject to applicable law, the
directors of Newco immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
SECTION 1.7. OFFICERS. The officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal.
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
SECTION 2.1. EFFECT ON CAPITAL STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of the Company,
Newco or the holders of Shares or Newco Shares:
(a) CONVERSION OF SHARES. Each Share issued and
outstanding immediately prior to the Effective Time (other than any Shares held
by Newco or any wholly-owned subsidiary of Newco, in the treasury of the Company
or by any wholly-owned subsidiary of the Company), which Shares, by virtue of
the Merger and without any action on the part of the holder thereof, shall be
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canceled and retired and shall cease to exist with no payment being made with
respect thereto, and other than Dissenting Shares (as defined in Section 3.1)
shall be converted into the right to receive following the Merger an amount in
cash equal to $7.00 (the "MERGER PRICE").
(b) CANCELLATION AND RETIREMENT OF SHARES. As of the
Effective Time, all Shares (other than Shares referred to in Section 2.1(a)
which shall be canceled and retired in connection therewith and Dissenting
Shares) issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the Merger Price, without interest thereon,
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such Shares so converted (a "CERTIFICATE") shall
cease to have any rights with respect thereto, except the right to receive the
Merger Price, without interest thereon.
(c) CONVERSION OF NEWCO SHARES. As of the Effective
Time, each Newco Share that was issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly issued, fully paid
and nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
SECTION 2.2. COMPANY OPTION PLAN. (a) Newco and the Company
shall take all actions necessary so that, immediately prior to the Effective
Time, (i) each outstanding option to purchase Shares (an "OPTION") granted under
the Company's Amended and Restated Stock Option Plan (the "OPTION PLAN"),
whether or not then exercisable or vested, shall become fully exercisable and
vested, (ii) each Option which is then outstanding shall be canceled and (iii)
in consideration of such cancellation, and except to the extent that Newco and
the holder of any such Option otherwise agree, as soon as practicable following
the Effective Time, the Company shall pay to such holders of Options an amount
in respect thereof equal to the product of (A) the excess of the Merger Price
over the exercise price thereof and (B) the number of Shares subject thereto
(such payment to be net of taxes required by law to be withheld with respect
thereto).
(b) Effective as of the Effective Time, the Company
shall use its reasonable best efforts to take all such action as is necessary
prior to the Effective Time to terminate the Option Plan so that on and after
the Effective Time no current or former employee or director shall have any
Option to purchase shares of common stock or any other equity interest in the
Company under the Option Plan. The Company shall use its reasonable best efforts
to obtain any consents necessary to release the Company from any liability in
respect of any Options.
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SECTION 2.3. CONSENT STATEMENT; ACTION BY WRITTEN CONSENT.
(a) As soon as practicable following the date of
this Agreement, the Company and Newco shall prepare and file with the SEC a
consent statement (the "CONSENT STATEMENT") in connection with the solicitation
of written consents in favor of the adoption of this Agreement (the "Consent
Solicitation"). The Company and Newco shall use their reasonable best efforts to
have the Consent Statement approved by the SEC as promptly as practicable after
such filing and the Company shall use its reasonable best efforts to cause the
Consent Statement to be mailed to its stockholders as promptly as practicable
after receipt of such approval. The Company will notify Newco of the receipt of
any comments from the SEC or its staff or of any request by the SEC or its staff
for amendments or supplements to the Consent Statement or for additional
information and will supply Newco with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Consent Statement prior to its
being filed with the SEC and shall give Newco and its counsel the reasonable
opportunity to review the Consent Statement and all amendments and supplements
thereto and all responses to requests for additional information and replies to
comments prior to their being filed with or sent to the SEC. The Company agrees
to use its reasonable best efforts, after consultation with Newco, to respond
promptly to all such comments of and requests by the SEC. The Company will cause
the Consent Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act. If at any time prior to the Effective
Time any information relating to Newco or the Company, or any of their
respective affiliates, officers or directors, should be discovered by Newco or
the Company that should be set forth in an amendment or supplement to the
Consent Statement so that such document would not include a misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other party hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of the Company. The Company
shall include in the Consent Statement the recommendation of the Company's Board
of Directors that the shareholders consent to the adoption of this Agreement.
(b) Upon approval of the Consent Statement by the
SEC, the Company shall solicit written consents for the adoption of this
Agreement in compliance with the applicable rules of the New York Stock Exchange
and the SEC. Notwithstanding the foregoing, the parties understand that,
pursuant to the Voting Agreement, immediately following the execution of this
Merger Agreement, the Principal Shareholders will effect the adoption of this
Agreement by the stockholders of the Company by taking
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<PAGE> 11
action by written consent of the stockholders of the Company in lieu of calling
a meeting of stockholders pursuant to, and in accordance with, the requirements
set forth in Section 228 of the GCL. The Company shall use its best efforts in
the making of the Consent Solicitation and in causing the approval of this
Agreement and the Merger to become effective as soon as practicable after the
date of this Agreement, including but not limited to, fixing a record date for
the purpose of determining the holders of Shares entitled to consent to the
adoption of this Agreement and distributing the consents to the holders of
Shares. The Company shall deliver to Newco, promptly after receipt, but in no
case, more than two business days after receipt, notice of receipt of all
consents received pursuant to the Consent Solicitation and filing of such
consents with the Secretary of the Company. The Company shall promptly file with
the Secretary of the Company after receipt, but in no case, more than one (1)
business day after receipt, all consents received pursuant to the Consent
Solicitation. The Company shall ensure that the Consent Solicitation is
conducted in accordance with applicable laws.
SECTION 2.4. RELEASES.
(a) Effective upon the Effective Time, the Company
hereby releases and forever discharges each person who is now, or has been at
any time prior to the date hereof, an officer, director or stockholder (and any
direct or indirect partner of any stockholder that is a partnership), trustee or
agent of the Company or any of its subsidiaries and each person controlling any
of the foregoing persons (individually, a "RELEASED PARTY" and collectively, the
"RELEASED PARTIES"), from any and all claims, rights, obligations, debts,
liabilities, actions or causes of action of every kind and nature, whether
foreseen or unforeseen, contingent or actual, and whether now known or hereafter
discovered, which the Company or any of its subsidiaries had, now has or may in
the future have, in law or in equity, against any Released Party in any way
arising out of, pertaining to or incurred in connection with acts or omissions
or alleged acts or omissions by any of them in their capacity as an officer,
director or stockholder which acts or omissions existed or occurred at or prior
to the Effective Time other than acts or omissions or alleged acts or omissions
involving criminal activity, willful misconduct or fraudulent activity by such
Released Party (a "RELEASED CLAIM"). This Section 2.4 shall not apply to loans
from the Company to any Released Party.
(b) The Company shall pay all expenses, including
attorneys' fees, that may be incurred by any Released Party in enforcing the
obligations provided for in this Section 2.4 and all expenses, including
attorneys' fees, that may be incurred by any Released Party in defending any
Released Claim; provided, that the Company shall not be obligated to pay any
such expenses incurred by an officer, director or stockholder in the event that
the Company is purchasing a claim against such officer, director
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or stockholder for acts or omissions or alleged acts or omissions involving
criminal activity, willful misconduct or fraudulent activity unless such person
is determined not to have committed such acts or omissions.
(c) The rights of each Released Party hereunder shall
be in addition to any other rights such Released Party may have under the
charter or by-laws of the Company, under applicable law or otherwise, the
provisions of this Section 2.4 shall survive the Merger and each Released Party
shall, for all purposes, be a third-party beneficiary of the covenants and
agreements of the Company under this Section 2.4 and, accordingly, shall be
treated as a party to this Agreement for purposes of the rights and remedies
relating to enforcement of such covenants and agreements and shall be entitled
to enforce any such rights and exercise any such remedies directly.
ARTICLE III.
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.1. DISSENTING SHARES. Notwithstanding anything in
this Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who demands in writing appraisal for such
Shares in accordance with Section 262 of the GCL, if such Section 262 provides
for appraisal rights for such Shares in the Merger ("DISSENTING SHARES"), shall
not be converted into the right to receive the Merger Price as provided in
Section 2.1(a), but shall be entitled to receive the consideration as shall be
determined pursuant to Section 262 of the GCL unless and until such holder fails
to perfect or withdraws or otherwise loses his right to appraisal and payment
under the GCL. If any such holder fails to perfect or withdraws or loses his
right to appraisal, such Dissenting Shares shall thereupon be treated as if they
had been converted as of the Effective Time into the right to receive the Merger
Price, if any, to which such holder is entitled, without interest or dividends
thereon. The Company shall give Newco prompt notice of any demands received by
the Company for appraisal of Shares, withdrawals of such demands and any other
instruments served pursuant to the GCL and received by the Company and, prior to
the Effective Time, Newco shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Newco, make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.2. PAYMENT FOR SHARES.
(a) From and after the Effective Time, a bank or
trust company mutually acceptable to Newco and the Company shall
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act as paying agent (the "PAYING AGENT") in effecting the payment of the Merger
Price. Immediately prior to the Effective Time, Newco shall deposit, or cause to
be deposited, in trust with the Paying Agent the aggregate Merger Price to which
holders of Shares shall be entitled at the Effective Time pursuant to Section
2.1(a).
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each record holder of
Certificates (other than Certificates representing Dissenting Shares and
Certificates representing Shares held by Newco, any wholly-owned subsidiary of
Newco, in the treasury of the Company or by any wholly-owned subsidiary of the
Company) (i) a form of letter of transmittal which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Paying Agent and which
shall be in such form and have such other provisions as Newco may reasonably
specify and to which the Company consents (such consent not to be unreasonably
withheld or delayed) and (ii) instructions for use in surrendering such
Certificates and receiving the aggregate Merger Price in respect thereof. Upon
the surrender of each such Certificate, duly completed and validly executed in
accordance with the instructions thereto, the Paying Agent shall pay the holder
of such Certificate the Merger Price multiplied by the number of Shares formerly
represented by such Certificate in consideration therefor, and such Certificate
shall forthwith be canceled. Until so surrendered, each such Certificate (other
than Certificates representing Dissenting Shares and Certificates representing
Shares held by Newco, any wholly-owned subsidiary of Newco, in the treasury of
the Company or by any wholly-owned subsidiary of the Company) shall represent
solely the right to receive the aggregate Merger Price relating thereto. No
interest or dividends shall be paid or accrued on the Merger Price. If the
Merger Price (or any portion thereof) is to be delivered to any person other
than the person in whose name the Certificate formerly representing Shares
surrendered therefor is registered, it shall be a condition to such right to
receive such Merger Price, that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise be in proper form for transfer
and that the person surrendering such Certificates shall pay to the Paying Agent
any transfer or other taxes required by reason of the payment of the Merger
Price to a person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable.
(c) Promptly following the date which is 180 days
after the Effective Time, the Paying Agent shall deliver to the Surviving
Corporation all cash, Certificates and other documents in its possession
relating to the transactions described in this Agreement, and the Paying Agent's
duties shall terminate. Thereafter, each holder of a Certificate formerly
representing
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<PAGE> 14
Shares who has not theretofore complied with Article II and this Article III
shall look only to the Surviving Corporation (as a general creditor thereof) for
payment of its claim for the Merger Price (without any interest or dividends
thereon).
(d) NO LIABILITY. None of Newco, the Company or the
Paying Agent shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law to the extent any such law so provides.
(e) INVESTMENT IN EXCHANGE FUND. The Paying Agent
shall invest the Merger Price as directed by the Surviving Corporation (within
guidelines approved by the Company prior to the Closing Date, which approval
shall not be unreasonably withheld or delayed). Any interest resulting from such
investment shall be paid to the Surviving Corporation.
(f) STOCK TRANSFER BOOKS. After the Effective Time,
there shall be no registrations of transfers on the stock transfer books of the
Surviving Corporation of any Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates formerly
representing Shares are presented to the Surviving Corporation or the Paying
Agent, they shall be surrendered and canceled in return for the payment of the
aggregate Merger Price relating thereto, as provided in this Article III.
(g) NO FURTHER OWNERSHIP RIGHTS IN SHARES EXCHANGED
FOR CASH. All cash paid upon the surrender for exchange of Certificates formerly
representing Shares in accordance with the terms of this Article III shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
Shares formerly represented by such Certificates.
(h) LOST CERTIFICATES. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable and customary amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to the
Certificate, the Paying Agent shall deliver in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Price with respect thereto.
(i) WITHHOLDING RIGHTS. The Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable to any holder of Shares pursuant to this Agreement such amounts as may
be required to be deducted and withheld with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "CODE"), or
under any provision of state, local or foreign Tax law.
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SECTION 3.3. THE DEBT OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1, the Company shall, as soon as
practicable following execution of this Agreement (but in no event later than 15
calendar days after the public announcement of the execution of this Agreement),
commence an offer to purchase all of the outstanding aggregate principal amount
of the Company's 11.63% Senior Subordinated Notes due 2004 (the "SUBORDINATED
NOTES") on the terms set forth in Section 3.3 of the Company Disclosure Schedule
(as defined in Article IV) and such other customary terms and conditions as are
reasonably acceptable to Newco (the "DEBT OFFER"). The Company shall waive any
of the conditions (other than that the Merger shall have been consummated) to
the Debt Offer and make any other changes in the terms and conditions of the
Debt Offer as reasonably requested by Newco, and the Company shall not, without
Newco's prior consent, waive any condition to the Debt Offer or make any changes
to the terms and conditions of the Debt Offer. Notwithstanding anything in this
Agreement, including the immediately preceding sentence, to the contrary, Newco
shall not request that the Company make any change to the terms and conditions
of the Debt Offer that, in the Company's reasonable judgment, is adverse to the
holders of the Subordinated Notes or the Shares or that reasonably could be
expected to delay or impair consummation of the Merger or the transactions
contemplated hereby unless such change was previously approved by the Company in
writing. The Company covenants and agrees that, subject to the terms and
conditions of this Agreement, including but not limited to the conditions to the
Debt Offer, it will accept for payment and pay for the Subordinated Notes as
soon as the condition set forth in Section 7.2(f) is satisfied or waived and
immediately prior to the Effective Time so long as it is permitted to do so
under applicable law.
(b) Promptly following the date of this Agreement,
Newco and the Company shall prepare an offer to purchase the Subordinated Notes
(or portions thereof) and forms of the related letter of transmittal (the
"LETTER OF TRANSMITTAL") (collectively, the "OFFER TO PURCHASE") and summary
advertisement, as well as all other information and exhibits (collectively, the
"OFFER DOCUMENTS"). Newco and the Company will cooperate with each other in the
preparation of the Offer Documents. All mailings to the holders of Subordinated
Notes in connection with the Debt Offer shall be subject to the prior review,
comment and reasonable approval of Newco. The Company will use its reasonable
best efforts to cause the Offer Documents to be mailed to the holders of the
Subordinated Notes as promptly as practicable following commencement of the Debt
Offer in accordance with Section 3.3(a). The Company agrees promptly to correct
any information in the Offer Documents that shall be or have become false or
misleading in any material respect.
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(c) In connection with the Debt Offer, if requested
by Newco, the Company shall promptly furnish Newco with security position
listings, any non-objecting beneficial owner lists and any available listings or
computer files containing the names and addresses of the beneficial owners
and/or record holders of Subordinated Notes, each as of a recent date, and shall
promptly furnish Newco with such additional information (including but not
limited to updated lists of holders of the Subordinated Notes, mailing labels,
security position listings and non-objecting beneficial owner lists) and such
other assistance as Newco or its agents may reasonably require in communicating
the Debt Offer to the record and beneficial holders of Subordinated Notes.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Newco that (i) except
as set forth in the Company Disclosure Schedule delivered to Newco prior to the
execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), but, with
respect to any representation or warranty, only to the extent that it would be
reasonably apparent that a reference on the Company Disclosure Schedule relates
to such representation or warranty, and (ii) except as fairly reflected in the
notes to the financial statements described in Section 4.6(b) hereof.
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company and each of its
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, reasonably could not,
individually or in the aggregate, be expected to have a Material Adverse Effect
on the Company. The term "MATERIAL ADVERSE EFFECT ON THE COMPANY", as used in
this Agreement, means any change, effect, event, occurrence or development that
is (i) materially adverse to the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations or prospects of the
Company and its subsidiaries taken as a whole except for any change or effect
resulting from (a) general economic, financial or market conditions, (b) any
change or effect resulting from conditions or
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circumstances generally affecting the newspaper or magazine publishing industry
so long as such change or effect does not have a materially disproportionate
effect on the Company, or (c) changes in laws of general applicability or
applicable generally to the newspaper or magazine publishing industry so long as
such change or effect does not have a materially disproportionate effect on the
Company or (ii) materially adversely affects the ability of the Company to
perform its obligations under this Agreement.
SECTION 4.2. CERTIFICATE OF INCORPORATION AND BY-LAWS. The
Company has heretofore delivered to Newco a complete and correct copy of the
certificate of incorporation and the by-laws, each as amended to the date
hereof, of the Company and of each of its subsidiaries. Such certificates of
incorporation and by-laws are in full force and effect and no other
organizational documents are applicable to or binding upon the Company or its
subsidiaries, as applicable. Neither the Company nor any of its subsidiaries is
in violation of any of the provisions of its certificate of incorporation or
by-laws.
SECTION 4.3. CAPITALIZATION. The authorized capital stock of
the Company consists of 155,000,000 Shares divided into 100,000,000 Class A
Shares, 20,000,000 shares of Class B Common Stock, par value $.01 per share (the
"CLASS B SHARES"), 25,000,000 Class C Shares and 10,000,000 shares of Serial
Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"), none of which
preferred shares are outstanding. As of the close of business on February 8,
1999, there were 21,793,184 Class A Shares issued and outstanding. As of the
date of this Agreement, there were no Class B Shares and 20,702,005 Class C
Shares issued and outstanding. The Company has no shares of capital stock
reserved for issuance, except that (i), as of the close of business on February
8, 1999, there were 1,672,912 Class A Shares issuable upon exercise of
outstanding Options (with an average exercise price of $6.02) and (ii) as of the
date of this Agreement, there are 20,702,005 Class A Shares issuable upon
conversion of Class C Shares. Except as set forth above, as of the close of
business on February 8, 1999, or the date of this Agreement, as the case may be,
no shares of capital stock or other voting securities of the Company are issued,
reserved for issuance or outstanding. All the outstanding Shares are, and all
Shares which may be issued pursuant to the exercise of outstanding Options or
the conversion of Class C Shares will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable and free of preemptive (or similar) rights. There are no bonds,
debentures, notes or other indebtedness or securities 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, there are no existing options, warrants, calls, subscriptions or
other rights, agreements, arrangements or commitments of any character,
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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,
deliver, transfer or sell or cause to be issued, delivered, transferred or sold
any shares of capital stock or Voting Debt of, or other equity or voting
interest in, the Company or any of its subsidiaries or securities convertible
into or exchangeable or exercisable for such shares or equity or voting
interests or obligations of 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. All Options were granted under the
Option Plan. Since the close of business on February 8, 1999 and prior to the
execution of this Agreement, there have been no Options, Shares or any other
voting securities or capital stock issuances by the Company or any subsidiary
except for issuances of Shares pursuant to the exercise of Options. Except for
the Company's obligations to accept surrendered Class C Shares upon conversion
thereof into Class A Shares, there are no outstanding obligations of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire, or make
any payment in respect of, any Shares or the capital stock of the Company or any
of its subsidiaries, or to provide funds or make any investment (in the form of
a loan, capital contribution or otherwise) in, any other person (other than cash
equivalents, trade receivables and investments in wholly-owned subsidiaries). To
the knowledge of the Company, there are no irrevocable proxies with respect to
Shares of the Company or any shares of capital stock of any subsidiary of the
Company. Section 4.3 of the Company Disclosure Schedule constitutes a true and
complete list of the subsidiaries and associated entities of the Company and
evidences the amount of capital stock or other equity interests owned by the
Company, either directly or indirectly, in such subsidiaries or associated
entities. Each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and such shares of the Company's subsidiaries are 100% owned by
the Company or by a subsidiary of the Company (other than the shares of
Frontline Marketing, Inc. and Biocide, Inc. (collectively, the "SPECIAL SUBS"),
the shares of which are each 80% owned by the Company), in each case free and
clear of any lien, claim, option, charge, security interest, limitation,
encumbrance, agreement, limitation on voting rights and restriction of any kind
(any of the foregoing being a "LIEN"). For the purposes of this Agreement, the
Special Subs are considered to be wholly-owned subsidiaries of the Company. No
entity in which the Company owns, directly or indirectly, less than a 50% equity
interest is, individually or when taken together with all such other entities,
material to the business of the Company and its subsidiaries taken as a whole.
SECTION 4.4. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations under this Agreement and to consummate the
transactions
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contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Board and no other corporate proceedings on the part of the Company are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
adoption of this Agreement by holders of the Shares to the extent required by
the Company's certificate of incorporation and by applicable law). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due and valid authorization, execution and delivery of this
Agreement by Newco, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and (ii) is subject
to general principles of equity (whether considered in a proceeding in equity or
in law).
SECTION 4.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) None of the execution, delivery and 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 (in each case other than in respect of the financing to be
obtained contemplated by the Commitment Letters or any other financing obtained
in connection with the transactions contemplated hereby) will (i) conflict with
or violate any provision of the certificate of incorporation or by-laws of the
Company or the comparable organizational documents of any of its subsidiaries,
(ii) subject to the governmental filings and of matters referred to in Section
4.5(b), conflict with or violate any statute, ordinance, rule, regulation,
order, judgment or decree applicable to the Company or its subsidiaries, or by
which any of them or any of their respective properties or assets may be bound
or affected, or (iii) result in a violation or breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any material benefit, or the creation
of any Lien on any of the property or assets of the Company or any of its
subsidiaries (any of the foregoing referred to in clause (ii) or this clause
(iii) being a "VIOLATION") pursuant to, any loan or credit agreement, note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties may be bound or affected, except in the case
of the foregoing clauses (ii) or (iii) for any such Violations which,
individually or in the
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aggregate, reasonably could not be expected to have a Material Adverse Effect on
the Company.
(b) None of the execution, delivery and 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 (in each case other than in respect of the financing
contemplated by the Commitment Letters or any other financing obtained in
connection with the transactions contemplated hereby) will require any consent,
waiver, approval, authorization or permit of, or registration or filing with or
notification to (any of the foregoing being a "CONSENT"), any administrative,
government or regulatory authority, agency, court, commission, tribunal or body,
domestic, foreign or supranational (a "GOVERNMENTAL ENTITY"), except for (i)
compliance with any applicable requirements of the Exchange Act, (ii) the filing
of a certificate of merger, pursuant to the GCL, (iii) applicable state takeover
statutes, (iv) compliance with the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR ACT"), and any requirements of any foreign or
supranational Antitrust Laws (as hereinafter defined) and (v) Consents, the
failure of which to obtain or make, individually or in the aggregate, could not
be reasonably expected to have a Material Adverse Effect on the Company.
SECTION 4.6. SEC REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed with the SEC all forms,
reports, schedules, registration statements and definitive proxy statements
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC REPORTS") required to be
filed by the Company with the SEC since December 31, 1995. Other than American
Media Operations, Inc. ("OPERATIONS"), no subsidiary of the Company is required
to file any form, report, schedule, registration statement or proxy statement
with the SEC. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Exchange Act or the Securities
Act of 1933, as amended, and the rules and regulations of the SEC promulgated
thereunder applicable, as the case may be, to such SEC Reports, and none of the
SEC Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) Each of the audited and unaudited consolidated
financial statements of the Company (including any related notes and schedules,
if any, thereto) included in the SEC Reports complies as to form in all material
respects with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, represents
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fairly, in all material respects, the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated subsidiaries as of the dates or for the periods presented therein
and has been prepared in conformity with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved except as otherwise noted therein, including in the notes thereto.
Except as set forth in the consolidated balance sheet of the Company at
September 28, 1998, included in the SEC Reports, as of such date, neither the
Company nor any of its subsidiaries has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) that (i) is required
by GAAP to be reflected on a consolidated balance sheet of the Company as of
such date, and (ii) individually or in the aggregate, reasonably could be
expected to have a Material Adverse Effect on the Company. Except as set forth
in the consolidated balance sheet of the Company at September 30, 1998, included
in the SEC Reports, neither the Company nor any of its subsidiaries had any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required by GAAP to be reflected on a consolidated
balance sheet of the Company, except for liabilities or obligations (i) incurred
in the ordinary course of business since September 28, 1998, or (ii) which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. As of January 31, 1999, the aggregate Funded Debt of the Company
and its subsidiaries was less than $483 million.
SECTION 4.7. INFORMATION. None of the information supplied by
the Company for inclusion or incorporation by reference in (i) the Offer
Documents, (ii) the Consent Statement or (iii) any other document to be filed
with the SEC or any other Governmental Entity in connection with the
transactions contemplated by this Agreement (the "OTHER FILINGS") will, at the
respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Consent Statement, at the date it or any amendment
or supplement is mailed to stockholders, and at the Effective Time, and, in the
case of the Offer Documents, at the time the Offer Documents or any amendments
or supplements are first published or sent or given to Holders of the
Subordinated Notes, as the case may be, or at the time the Debt Offer is
consummated, 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 made therein, in light of the circumstances under which they were
made, not misleading except, in each case, as the same may be amended or
supplemented prior to the Effective Time. The Consent Statement will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder, except that no representation is made by the
Company with respect to statements made therein based on information supplied by
Newco in writing specifically for inclusion in the Consent Statement. For
purposes of this Agreement, the parties
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agree that statements made and information in the Consent Statement relating to
the Federal income tax consequences of the transactions herein contemplated to
holders of Shares shall be deemed to be supplied by the Company and not by
Newco.
SECTION 4.8. LITIGATION. As of the date hereof: there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
subsidiaries that, individually or in the aggregate, reasonably could be
expected to (x) have a Material Adverse Effect on the Company or (y) prevent or
delay in any material respect the consummation of the transactions contemplated
by this Agreement, nor is there any judgment, decree, injunction or order of any
Governmental Entity, administrative or regulatory authority or body, or
arbitrator outstanding against the Company or any of its subsidiaries that
reasonably could be expected to (x) have, individually or in the aggregate, a
Material Adverse Effect on the Company or (y) prevent or delay in any material
respect the consummation of the transactions contemplated by this Agreement.
Neither the Company nor any of its subsidiaries nor any of their respective
properties is or are subject to any order, writ, judgment, injunction, decree,
determination or award which reasonably could be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company or would enjoin or
prohibit the consummation of the transactions contemplated hereby.
SECTION 4.9. COMPLIANCE WITH APPLICABLE LAWS. Each of the
Company and its subsidiaries has been and is in compliance with all permits,
licenses and franchises from Governmental Entities required to conduct its
business as now being conducted, except to the extent that the failure to have
been or comply with such permits, licenses and franchises reasonably could not,
individually or in the aggregate, be expected to have a Material Adverse Effect
on the Company. The Company and its subsidiaries are, and are conducting their
respective business operations, in compliance with all laws, regulations and
orders of any Governmental Entity applicable to any of them, except for such
failures so to comply which, individually or in the aggregate, reasonably could
not be expected to have a Material Adverse Effect on the Company.
SECTION 4.10. EMPLOYEE BENEFIT PLANS.
(a) Section 4.10 of the Company Disclosure Schedule
includes a complete list of each material "employee benefit plan" (within the
meaning of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (including, without limitation, multiemployer plans within
the meaning of ERISA section 3(37)), stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs,
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policies or other arrangements, whether or not subject to ERISA (including any
funding mechanism therefor now in effect or required in the future as a result
of the transaction contemplated by this Agreement or otherwise), whether formal
or informal, oral or written, legally binding or not under which any employee or
former employee of the Company or any of its subsidiaries has any present or
future right to benefits or under which the Company or any of its subsidiaries
has any present or future liability. All such plans, agreements, programs,
policies and arrangements shall be collectively referred to as the "PLANS."
(b) With respect to each Plan, the Company has made
available to Parent a true, correct and complete copy of: (i) all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (iii) the current summary plan description,
if any, and other written communications; (iv) the three most recent annual
financial reports, if any; (v) the three most recent actuarial reports, if any;
and (vi) the most recent determination letter from the Internal Revenue Service
(the "IRS"), if any.
(c) Each Plan has been established and administered
in accordance with its terms, and in compliance with the applicable provisions
of ERISA, the Code and other applicable laws, rules and regulations except for
such violations or non-compliances, which, individually or in the aggregate,
reasonably could not be expected to have a Material Adverse Effect on the
Company. With respect to each Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code ("QUALIFIED PLANS"), the IRS
has issued a favorable determination letter and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualification.
(d) All contributions required to be made to any
Plan by applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Plan, for any period through the Effective Time
have been timely made or paid in full or, to the extent not required to be made
or paid on or before the date hereof, have been fully reflected in the financial
statements of the Company to the extent required under GAAP.
(e) No Plan is subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code. There does not now exist, nor do any
circumstances exist that could reasonably be expected to result in, any material
liability under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections
412 and 4971 of the Code or (iv) the continuation coverage requirements of
section 601 et seq. of ERISA and section 4980B of the Code.
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(f) (i) With respect to any Plan, no actions, suits
or claims (other than routine claims for benefits in the ordinary course) are
pending or threatened and no facts or circumstances exist which could give rise
to any such actions, suits or claims; (ii) neither the Company nor any other
party has engaged in a prohibited transaction, as such term is defined under
Code section 4975 or ERISA section 406, which would subject the Company, any of
its subsidiaries or the Buyer to any taxes, penalties or other liabilities under
Code section 4975 or ERISA sections 409 or 502(i); (iii) no event has occurred
and no condition exists that would subject the Company or any of its
subsidiaries, either directly or by reason of its affiliation with any member of
its Controlled Group (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code sections 414(b),
(c), (m) or (o)), to any tax, fine or penalty imposed by ERISA, the Code or
other applicable laws, rules and regulations; (iv) no Plan provides for an
increase in benefits on or after the Closing Date; and (v) each Plan, excluding
individual employment agreements or individual contracts with employees, may be
amended or terminated without obligation or liability (other than those
obligations and liabilities for which specific assets have been set aside in a
trust or other funding vehicle or reserved for on the Company's balance sheet).
(g) Except as set forth in Section 4.10 of the
Company Disclosure Schedule, no Plan exists which could result in the payment to
any employee of the Company or any of its subsidiaries of any money or other
property or rights or accelerate or provide any other rights or benefits to any
employee of the Company or any of its subsidiaries as a result of the
transaction contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code section 280G, and
whether or not some other subsequent action or event would be required to cause
such payment, acceleration or provision to be triggered.
SECTION 4.11. INTELLECTUAL PROPERTY.
(a) Schedule 4.11(a) sets forth (i) all patents,
registrations and applications for Intellectual Property owned, held or used by
the Company or any of its subsidiaries, (ii) all material unregistered
Intellectual Property owned, held or used by the Company or any of its
subsidiaries, and (iii) all material licenses, sublicenses, consent-to-use
agreements and other agreements concerning Intellectual Property to which the
Company or any of its subsidiaries is a party ("IP LICENSES"). The Company or
any of its subsidiaries owns or has the right to use all the Intellectual
Property listed on Schedule 4.11(a), and all the Intellectual Property necessary
or desirable for the operation of the Company or any of its subsidiaries as each
is currently operated and consistent with past practice.
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(b) Except as set forth on Schedule 4.11(b), and
except for such matters that, individually or in the aggregate, reasonably could
not be expected to have a Material Adverse Effect on the Company, (i) all of the
Intellectual Property owned or used by the Company or any of its subsidiaries is
valid, enforceable and unexpired, is free of all Liens, has not been abandoned,
does not infringe or impair the Intellectual Property of any third party and is
not being infringed or impaired by any third party; (ii) no judgment, decree,
injunction, rule or order has been rendered or, to the Company's knowledge, is
threatened by any Governmental Entity which would limit, cancel or question the
validity of (or the Company's or any of its subsidiaries' rights regarding
ownership or use of) any Intellectual Property owned, held or used by the
Company or any of its subsidiaries; (iii) no action, suit or proceeding is
pending, or to the Company's knowledge, threatened that seeks to limit, cancel
or question the validity of (or the Company's or any of its subsidiaries' rights
regarding ownership or use of) any Intellectual Property owned, held or used by
the Company or any of its subsidiaries; and (iv) the Company and its
subsidiaries are not in breach of or default under any IP License, nor to the
Company's knowledge, does a valid basis exist for any other party to any IP
License to claim same.
(c) For purposes of this Section 4.11, "INTELLECTUAL
PROPERTY" shall mean all U.S., state and foreign intellectual property,
including without limitation all (i) (A) patentable inventions, discoveries,
processes, designs, techniques, developments, technology, and related
improvements and know-how; (B) copyrights in works of authorship in any language
or media, including computer software, databases and related items, textual
works, graphics, artwork, photography, advertising and promotional materials,
designs, web site content, and all authors' rights and waivers; (C) trademarks,
service marks, trade names, brand names, corporate names, domain names, logos,
trade dress and all elements thereof, the goodwill of any business symbolized
thereby, and all common-law rights relating thereto; and (D) trade secrets,
subscriber and advertiser lists and other confidential information; (ii) all
registrations, applications, recordings, licenses and other agreements related
thereto; and (iii) all rights to obtain renewals, extensions, continuations,
continuations-in-part, reissues, divisions or similar legal protections related
thereto.
SECTION 4.12. ENVIRONMENTAL MATTERS. Except for items referred
to below which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company, (a) each of the
Company and each of its subsidiaries complies and has complied with all
Environmental Laws applicable to the properties, assets or businesses of the
Company and its subsidiaries, and possesses and complies with and has possessed
and complied with all Environmental Permits required under such laws; (b) no
modification, revocation,
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reissuance, alteration, transfer, or amendment of any of the Environmental
Permits, or any review by, or approval of, any third party of any of the
Environmental Permits is required in connection with the execution or delivery
of this Agreement or the consummation of the transactions contemplated hereby or
the continuation of the business of the Company and its subsidiaries following
such consummation; (c) no judicial or administrative proceeding is pending or to
the knowledge of the Company threatened relating to liability for any off-site
disposal or contamination; (d) none of the Company or any of its subsidiaries
has received any Environmental Claim, and none of the Company or any of its
subsidiaries is aware after reasonable inquiry of any threatened Environmental
Claim; (e) none of the Company or any of its subsidiaries has assumed,
contractually or by operation of law, any liabilities or obligations under any
Environmental Laws; (f) there are and have been no Hazardous Materials at any
property owned, operated or otherwise used by the Company or any subsidiary now
or in the past that reasonably could be expected to give rise to liability that
could reasonably be expected to have a Material Adverse Effect on the Company or
any subsidiary under any Environmental Law; (g) there are no past or present
events, conditions, circumstances, practices, plans or legal requirements that
could reasonably be expected to result in liability to the Company or any of its
subsidiaries under Environmental Laws or prevent or increase either the
Company's or any of its subsidiaries' burden of complying with Environmental
Laws, in either case, such that, individually or in the aggregate, such matters
could reasonably be expected to have a Material Adverse Effect; and (h) none of
the Company or any of its subsidiaries has entered into or agreed to any
consent, decree, order or agreement under any Environmental Law, and none of the
Company or any of its subsidiaries is subject to any judgment, decree or order
relating to compliance with any Environmental Law or to investigation, cleanup,
remediation or removal of Hazardous Materials. For purposes of this Agreement,
the following terms shall have the following meanings:
"ENVIRONMENTAL CLAIM" means any written or oral notice, claim,
demand, action, suit, complaint, proceeding or other communication by
any person alleging liability or potential liability arising out of,
relating to, based on or resulting from (i) the presence, discharge,
emission, release or threatened release of any Hazardous Materials at
any location, whether or not owned, leased or operated by the Company
or any of its subsidiaries or (ii) circumstances forming the basis of
any violation or alleged violation of any Environmental Law or
Environmental Permit or (iii) otherwise relating to obligations or
liabilities under any Environmental Laws.
"ENVIRONMENTAL LAWS" means all applicable federal, state and
local statutes, rules, regulations, ordinances,
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orders, decrees and common law, as they exist at the date hereof,
relating in any manner to contamination, pollution or protection of
human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act,
the Solid Waste Disposal Act, the Resource Conservation and Recovery
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances
Control Act, the Occupational Safety and Health Act, the Emergency
Planning and Community-Right-to-Know Act, the Safe Drinking Water Act,
all as amended, and similar state laws.
"ENVIRONMENTAL PERMITS" means all permits, licenses,
registrations and other governmental authorizations required for the
Company and the operations of the Company's and its subsidiaries'
facilities and otherwise to conduct its business under Environmental
Laws.
"HAZARDOUS MATERIALS" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and
asbestos-containing materials, pollutants, contaminants and all other
materials and substances regulated pursuant to, or that could form the
basis of liability under, any Environmental Law.
SECTION 4.13. MATERIAL ADVERSE CHANGE. Since September 28,
1998, the Company and its subsidiaries have conducted their businesses only in
the ordinary course of business consistent with past practice (except with
respect to the Soap Opera Sale) in all material respects, and, since such date,
there has not been (a) any change, effect, event, occurrence or development in
the business, operations, assets, liabilities, condition (financial or
otherwise), results of operations or prospects of the Company or any of its
subsidiaries that reasonably could be expected to be materially adverse to the
Company and its subsidiaries taken as a whole except for any change resulting
from (i) general economic, financial or market conditions, (ii) conditions or
circumstances generally affecting the newspaper or magazine publishing industry
so long as such change does not have a materially disproportionate effect on the
Company, or (iii) changes in laws of general applicability or applicable
generally to the newspaper or magazine publishing industry so long as such
change does not have a materially disproportionate effect on the Company, (b)
any action by the Company or any of its subsidiaries which, if taken after the
date of this Agreement, would constitute a breach of any provision of Section
6.1 (other than Section 6.1(i) and (n)) or (c) any change, effect, event,
occurrence of development which reasonably could be expected to prevent or delay
in any material respect the consummation of the transactions contemplated by
this Agreement.
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SECTION 4.14. CERTAIN APPROVALS.
(a) The Board of Directors of the Company, at a
meeting duly called and held, has by unanimous vote of the directors present and
with the written consent of the one director not present (who together
constituted 100% of the directors then in office) (a) declared this Agreement
advisable and determined that the transactions contemplated hereby, including
the Merger and the Debt Offer, are fair to and in the best interests of the
stockholders of the Company, (b) duly approved this Agreement and the
transactions contemplated hereby, including the Merger and the Debt Offer, and
the Voting Agreement and (c) resolved to recommend that the holders of Shares
adopt this Agreement. The Board of Directors of the Company has taken
appropriate action such that, assuming the accuracy of Newco's representation in
Section 5.6 of this Agreement, the provisions of Section 203 of the GCL will not
apply to Newco, any "affiliate" or "associate" (each as defined in Section 203)
of Newco or any of the transactions contemplated by this Agreement or the Voting
Agreement.
(b) The Company Stockholder Vote is the only vote of
the holders of any class or series of the Company's voting securities necessary
to approve this Agreement and the transactions contemplated hereby. There is no
vote of the holders of any class or series of the Company's securities necessary
to approve the Voting Agreement.
SECTION 4.15. OPINION OF FINANCIAL ADVISOR. The Company has
received the written opinion of Lazard Freres & Co., LLC ("LAZARD FRERES") to
the effect that the Merger Price is fair to the holders of the Shares from a
financial point of view.
SECTION 4.15.1. BROKERS. Except for the engagement of Lazard
Freres, none of the Company, any of its subsidiaries, or any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement. The Company is obligated
to pay to Lazard Freres at the Effective Time an aggregate fee of $3.45 million
plus its costs and expenses.
SECTION 4.16. CONTRACTS, ETC. Section 4.16 of the Company
Disclosure Schedule contains a complete and accurate list of all material
contracts (written or oral), plans, undertakings, commitments or agreements to
which the Company or any of its subsidiaries is a party or by which any of them
is bound as of the date of this Agreement ("Contracts") (other than Contracts
between or solely among the Company and any of its wholly owned subsidiaries),
including those agreements included in the following categories.
(a) To the extent not already listed in the Company
Disclosure Schedule, employment contracts, including, without limitation,
contracts to employ executive officers and other
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contracts with officers or directors of the Company or the Principal
Stockholders (or their affiliates), and all severance, change in control or
similar arrangements with any officers, employees or agents of the Company that
will result in any obligation (absolute or contingent) of the Company or any of
its subsidiaries to make any payment to any officers, employees or agents of the
Company following either the consummation of the transactions contemplated
hereby, termination of employment or both;
(b)(i) Contracts for the purchase of
inventory/supplies which are not cancelable (without penalty, cost or other
liability in excess of $100,000) within one (1) year and (ii) other contracts
made in the ordinary course of business involving future annual expenditures or
liabilities of the Company and its subsidiaries in excess of $100,000 which are
not cancelable (without penalty, cost or other liability in excess of $100,000)
within ninety (90) days;
(c) Promissory notes, loans, agreements, indentures,
evidences of indebtedness or other instruments providing for the lending of
money in excess of $1,000,000, whether as borrower, lender or guarantor;
(d) Contracts containing covenants limiting the
freedom of the Company or any of its subsidiaries to engage in any line of
business or compete with any person or operate at any location;
(e) Joint venture or partnership agreements or joint
development or similar agreements pursuant to which any third party is entitled
to develop any products on behalf of the Company or its subsidiaries;
(f) Any Contract pending or the acquisition or
disposition, directly or indirectly (by merger or otherwise) of assets with fair
market value or book value in excess of $100,000 (other than inventory) or
capital stock of another person;
(g) Any Contract with an affiliate of the Company or
any of its subsidiaries;
(h) Any other Contract containing "change of control"
provisions which would be triggered upon the Merger, sale of the Company or any
of its subsidiaries or similar transaction; and
(i) all Contracts governing the material distribution
of the publications, subscription servicing and any other material Contract
governing the operations of the Company or any subsidiary.
True and complete copies of the written Contracts
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identified on Section 4.16 of the Company Disclosure Schedule have been filed
with the SEC as exhibits to the Company SEC Reports or delivered to Newco,
including, without limitation, all schedules, exhibits and annexes to such
contracts. Except as set forth in Section 4.16 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries nor any other party to
any Contract is in default under, or in breach or violation of, any Contract
and, to the knowledge of the Company, no event has occurred which, with the
giving of notice or passage of time or both would constitute a default under any
Contract, except for such defaults, breaches and violations which, individually
or in the aggregate, reasonably could not be expected to have a Material Adverse
Effect on the Company. Other than contracts which have terminated or expired in
accordance with their terms, each of the Contracts is valid, binding and
enforceable in accordance with its terms (subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered on a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing) and is in full force and
effect. No event (except for the execution, delivery and performance of this
Agreement) has occurred which either entitles, or would, on notice or lapse of
time or both, entitle, the holder of any indebtedness for borrowed money of the
Company or any of its subsidiaries to accelerate, or which does accelerate, the
maturity of any indebtedness affecting the Company or any of its subsidiaries.
SECTION 4.17. LABOR MATTERS. The Company is not a party to any
agreement pursuant to which a labor organization is certified under applicable
labor law as a bargaining agent for any of the Company's or any of its
subsidiaries' employees, nor is such an agreement being negotiated. There are no
representation or certification proceedings, or petitions seeking a
representation proceeding pending or, to the knowledge of the Company,
threatened to be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority; and there are not any organizing
activities or strikes involving the Company or any of its subsidiaries with
respect to any group of employees of the Company or its subsidiaries.
SECTION 4.18. TAX MATTERS. Except as set forth on Section 4.18
of the Company Disclosure Schedule: the Company and each of its subsidiaries and
any consolidated, combined, unitary or aggregate group for Tax purposes of which
the Company or any of its subsidiaries is a member has timely filed all material
Tax Returns required to be filed by it in the manner provided by law, has timely
paid all material Taxes and has provided adequate reserves as required by GAAP
in its financial statements with respect to any liability for Taxes not yet due
and payable. Except as set forth in Section 4.18 of the Company Disclosure
Schedule: (i) no deficiencies for any United States federal
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income Taxes have been proposed, asserted or assessed in writing against the
Company or any of its subsidiaries that are not adequately reserved for as
required by GAAP; (ii) no audit of any United States Tax Return of the Company
or any of subsidiaries is being conducted by a Tax authority; (iii) no extension
of the statute of limitations on the assessment of any Taxes has been granted by
the Company or any of its subsidiaries and is currently in effect; (iv) neither
the Company nor any of its subsidiaries (x) has been a member of an affiliated
group filing a consolidated Federal Income Tax Return (other than a group the
common parent of which was the Company) or (y) has any liability for the Taxes
of any person (other than the Company and its subsidiaries) arising from the
application of Treasury Regulations Section 1.1502-6 or any analogous provision
of state, local or foreign law; (v) no consent under Section 341(f) of the Code
has been filed with respect to the Company or any of its subsidiaries; (vi)
neither the Company nor any of its subsidiaries has issued or assumed any
obligations described in Section 279(a) of the Code that remains outstanding;
(vii) no claim for unpaid Taxes has become a Lien against the property of the
Company or any of its subsidiaries or is being asserted against the Company or
any of its subsidiaries; and (viii) neither the Company nor any of its
subsidiaries has made any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments, that will not be
deductible under Sections 162(m) or 2180G of the Code. As used herein, "TAXES"
shall mean any taxes of any kind including but not limited to those on or
measured by or referred to as income, gross receipts, capital, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "TAX RETURN" shall mean any return, report or statement required
to be filed with any governmental authority with respect to Taxes.
SECTION 4.19. MAKE GOOD; ADVERTISING CREDITS. Set forth in
Section 4.19 of the Company Disclosure Schedule is a description of the policies
of the Company and its subsidiaries regarding "make good" and advertising credit
requests for each publication.
SECTION 4.20. INSURANCE. Section 4.20 of the Company
Disclosure Schedule contains a correct and complete description of all
performance bonds, policies or binders of insurance held by or on behalf of the
Company or its subsidiaries exclusively, or providing coverage for any of their
respective properties or assets (in each case specifying the insurer, the amount
of coverage, the type of insurance, the risks insured, the expiration date, and
the policy number). Except as set forth in Section 4.20 of the Company
Disclosure Schedule, to the best of the
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Company's knowledge, no state or fact exists and no event has occurred which
reasonably might form the basis of any claim against or relating to the Company
and its subsidiaries which might substantially increase the insurance premiums
payable under or result in the cancellation or nonrenewal of any of the policies
or binders listed on such schedule.
SECTION 4.21. YEAR 2000. The statement set forth in Section
4.21 of the Company Disclosure Schedule is, as of the date hereof, materially
true and correct.
SECTION 4.22. SOAP OPERA SALE. On February 3, 1999, the Soap
Opera Sale was consummated.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF NEWCO
Newco represents and warrants to the Company that, except as
set forth in the Newco Disclosure Schedule delivered to the Company prior to the
execution of this Agreement (the "NEWCO DISCLOSURE SCHEDULE"), but, with respect
to any representation or warranty, only to the extent that it would be
reasonably apparent that a reference on the Newco Disclosure Schedule relates to
such representation or warranty:
SECTION 5.1. ORGANIZATION AND QUALIFICATION. Newco is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the requisite corporate power and authority to
own, operate or lease its properties and to carry on its business as it is now
being conducted, and is duly qualified or licensed to do business, and is in
good standing, in, each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary, except where the failure to have such power or
authority, or the failure to be so qualified, licensed or in good standing,
would not have a Material Adverse Effect on Newco. The term "MATERIAL ADVERSE
EFFECT ON NEWCO", as used in this Agreement, means any change in or effect on
the business, operations or financial condition of Newco or any of its
subsidiaries that (a) materially and adversely affects the ability of Newco to
perform its obligations under this Agreement or (b) prevents or delays in any
material respect consummation of the transactions contemplated by this Agreement
(including, in each case and without limitation, the financing contemplated by
the Commitment Letters or any other financing obtained in connection with the
transactions contemplated hereby).
SECTION 5.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Newco has
all necessary corporate power and authority to execute and
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deliver this Agreement, to perform its obligations under this Agreement and to
consummate the transactions contemplated hereby (including the financing
contemplated by the Commitment Letters or any other financing obtained in
connection with the transactions contemplated hereby). The execution, delivery
and performance of this Agreement by Newco and the consummation by Newco of the
transactions contemplated hereby have been duly and validly authorized and
approved by all necessary corporate actions on the part of Newco and no other
corporate proceedings on the part of Newco are necessary to authorize or approve
this Agreement or to consummate the transactions contemplated hereby (including
the financing contemplated by the Commitment Letters or any other financing
obtained in connection with the transactions contemplated hereby). This
Agreement has been duly executed and delivered by Newco and, assuming the due
and valid authorization, execution and delivery by the Company, constitutes a
valid and binding obligation of Newco enforceable against it in accordance with
its terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting or relating to the enforcement of creditors' rights (whether
considered in a proceeding in equity or in law) generally and (ii) is subject to
general principles of equity.
SECTION 5.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) None of the execution, delivery and performance
of this Agreement by Newco, the consummation by Newco of the transactions
contemplated hereby or compliance by Newco with any of the provisions hereof
will (i) conflict with or violate any provision of the organizational documents
of Newco, (ii) subject to the governmental filings and other matters referred to
in Section 5.3(b) below, conflict with or violate any statute, ordinance, rule,
regulation, order, judgment or decree applicable to Newco, or any of its
subsidiaries, or by which any of them or any of their respective properties or
assets may be bound or affected, or (iii) result in a Violation pursuant to any
loan or credit agreement, note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Newco or any its subsidiaries is a party or by which any of their respective
properties or assets may be bound or affected, except in the case of the
foregoing clauses (ii) and (iii) for any such Violations which reasonably could
not be expected to have a Material Adverse Effect on Newco.
(b) None of the execution, delivery and performance
of this Agreement by Newco, the consummation by Newco of the transactions
contemplated hereby (including the financing contemplated by the Commitment
Letters or any other financing obtained in connection with the transactions
contemplated hereby) or compliance by Newco with any of the provisions hereof
will require any Consent of any Governmental Entity, except for
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(i) compliance with any applicable requirements of the Exchange Act, (ii) the
filing of a certificate of merger, pursuant to the GCL, (iii) applicable state
takeover and environmental statutes, (iv) compliance with the HSR Act and any
requirements of any foreign or supranational Antitrust Laws, and (v) Consents,
the failure of which to obtain or make reasonably could not be expected to have
a Material Adverse Effect on Newco.
SECTION 5.4. INFORMATION. None of the information supplied or
to be supplied by Newco in writing specifically for inclusion in (i) the Offer
Documents, (ii) the Consent Statement or (iii) the Other Filings will, at the
respective times filed with the SEC or such other Governmental Entity and, in
addition, in the case of the Consent Statement, at the date it or any amendment
or supplement is mailed to stockholders, and at the Effective Time, and, in the
case of the Offer Documents, at the time the Offer Documents or any amendments
or supplements are first published or sent or given to holders of the
Subordinated Notes, as the case may be, or at the time the Debt Offer is
consummated, 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 made therein, in light of the circumstances under which they were
made, not misleading, except, in each case, as the same may be amended or
supplemented prior to the Effective Time. Notwithstanding the foregoing, Newco
makes no representation or warranty with respect to any information supplied by
the Company or its subsidiaries or any of their respective representatives which
is contained in or incorporated by reference in the Consent Statement.
SECTION 5.5. FINANCING. Attached as Annex A-1 to A-2 of the
Newco Disclosure Schedule are true and complete copies of the letters addressed
to the Company, dated the date hereof, issued in connection with the financing
of the transactions contemplated by this Agreement (collectively, the
"Commitment Letters"). The terms and conditions of the letters attached as Annex
A-1 to A-2 of the Newco Disclosure Schedule are satisfactory to Newco.
SECTION 5.6. NEWCO NOT AN INTERESTED STOCKHOLDER OR AN
ACQUIRING PERSON. Except as a result of the execution of this Agreement or the
Voting Agreement, as of the date of this Agreement Newco is not an "INTERESTED
STOCKHOLDER" of the Company as such term is defined in Section 203 of the GCL.
SECTION 5.7. NEWCO.
(a) Except as contemplated by this Agreement, none of
Newco, Evercore Capital Partners L.P., any of their affiliates controlled by any
of them, Evercore Partners LLC or any of its affiliates are engaged in the
magazine or newspaper publishing business, and there is no intention as of the
date hereof, on the part of Newco, Evercore Capital Partners L.P., any of their
affiliates controlled by any of them, Evercore Partners
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LLC or any of its affiliates, to cause Newco to become affiliated with any
person engaged in the magazine or newspaper publishing business.
(b) Newco has not engaged in any business, and has
(and prior to the Effective Time will have) no liabilities except for costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including costs and expenses of providers of the financing
contemplated by the Commitment Letters) in connection with the transactions
contemplated hereby), liabilities under this Agreement and liabilities to the
providers of finance pursuant to the Commitment Letters as described in the
Commitment Letters.
(c) None of the Commitment Letters requires that
Newco or its affiliates make any payments (other than reimbursement of costs and
expenses as therein provided) before the Effective Time.
SECTION 5.8. BROKERS. Neither Newco nor any of its
subsidiaries, officers, directors or employees, has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated by this Agreement for or
with respect to which the Company is or might be liable.
ARTICLE VI.
COVENANTS
SECTION 6.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
expressly contemplated by this Agreement (and, for purposes of Section 4.13, the
Soap Opera Sale) or with the prior written consent of Newco, during the period
from the date of this Agreement to the Effective Time, the Company will, and
will cause each of its subsidiaries to, conduct its operations only in the
ordinary course of business consistent with past practice and in compliance with
applicable laws and will use its reasonable efforts, and will cause each of its
subsidiaries to use its reasonable efforts, to preserve intact the business
organization of the Company and each of its subsidiaries, to keep available the
services of its and their present officers and employees, and to preserve the
good will of those having business relationships with it. Without limiting the
generality of the foregoing, and except as otherwise expressly contemplated by
this Agreement, the Company Disclosure Schedule (or for purposes of Section
4.13, the Soap Opera Sale), the Company will not, and will not permit any of its
subsidiaries to, prior to the Effective Time, without the prior written consent
of Newco:
(a) adopt any amendment to its certificate of
incorporation or by-laws or comparable organizational documents;
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(b) except for issuances of capital stock of the
Company's subsidiaries to the Company or a wholly-owned subsidiary of the
Company, issue, reissue, deliver, sell, pledge or otherwise encumber, agree or
commit to issue, reissue, deliver, sell, pledge or otherwise encumber, or
authorize the issuance, reissuance, delivery, sale, pledge or encumbrance of
shares of capital stock of any class, any other voting securities or equity
equivalents (including, without limitation, stock appreciation rights) or
securities convertible into, or exchangeable for capital stock or equity
equivalents, or any rights, warrants or options to acquire any convertible
securities, capital stock, voting securities or equity equivalents other than
the issuance of Class A Shares pursuant to the exercise of the Options
outstanding on September 30, 1998, and in accordance with their terms as of the
date of this Agreement or pursuant to the conversion of Class C Shares;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock or rights,
warrants or options to acquire any such securities, except for the Debt Offer
and the purchase of the Subordinated Notes and transactions between or among the
Company and any of its wholly-owned subsidiaries;
(d) split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any shares of its capital stock, or any of its other securities or
rights, warrants or options to acquire any such shares or securities, except for
the Debt Offer and the purchase of the Subordinated Notes and transactions
between or among the Company and any of its wholly owned subsidiaries;
(e) (i) except for increases in salary or wages,
benefits of officers or of employees of the Company or its subsidiaries (who are
not officers of the Company or Operations) in the ordinary course of business
and in accordance with past practice, (ii) increases in salary, wages and
benefits granted to officers and employees of the Company or its subsidiaries
(who are not officers of the Company or Operations) in conjunction with new
hires, promotions or other changes in job status or (iii) increases in salary,
wages and benefits to employees of the Company pursuant to collective bargaining
agreements entered into in the ordinary course of business or pursuant to
agreements disclosed in Sections 4.10 or 4.16 of the Company Disclosure
Schedule, increase the compensation or fringe benefits payable or to become
payable to its directors, officers or key employees (whether from the Company or
any of its subsidiaries), or pay any benefit not required by any existing plan
or arrangement (including, without limitation, the granting of stock options,
stock appreciation rights, shares of restricted stock or performance units) or
grant any severance or termination pay to (except pursuant to existing
agreements, plans or policies), or
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enter into any employment, consulting or severance agreement with, any director,
officer or other key employee of the Company or any of its subsidiaries or
establish, adopt, enter into, or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, savings, welfare, deferred compensation, employment termination,
severance or other employee benefit plan, agreement, trust, fund, policy or
arrangement for the benefit or welfare of any directors, officers or current or
former employees (any of the foregoing being an "EMPLOYEE BENEFIT ARRANGEMENT"),
except in each case to the extent required by applicable law or regulation;
(f) acquire, sell, lease, license, mortgage, encumber
or dispose of any assets (other than inventory) or securities (including capital
stock of the Company's subsidiaries), or enter into any commitment to do any of
the foregoing, in each case outside the ordinary course of business, other than
transactions between or among the Company and any of its wholly owned
subsidiaries;
(g) merge or consolidate with, or purchase an equity
interest in or a substantial portion of the assets of, any corporation,
partnership, association or other business organization or any division or
business thereof other than transactions between or among the Company or any of
its fully owned subsidiaries;
(h) (i) incur, assume or pre-pay any long-term debt,
incur or assume any short-term debt, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of
its subsidiaries (other than transactions between or among the Company and any
of its wholly-owned subsidiaries or (except for incurring Funded Debt in the
ordinary course of business consistent with past practice so long as the
aggregate amount of Funded Debt does not exceed $474 million at any one time
outstanding) except that the Company and its subsidiaries may incur, assume or
pre-pay debt to the extent necessary to effect the Debt Offer and except that
the $474 million limitation shall not apply to periods prior to the date hereof;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person (other than checks in collection and transactions between or among the
Company and any of its wholly owned subsidiaries) or (iii) make any loans,
advances or capital contributions to, or investments in, any other person except
for loans, advances, capital contributions or investments between or among the
Company and any of its wholly owned subsidiaries and investments in cash
equivalents or trade receivables; or
(i) take any other action that reasonably could be
expected to result in any of the representations and warranties of the Company
set forth in this Agreement becoming
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untrue or any of the conditions to the Merger set forth in Section 7.1 or 7.2
hereof not being satisfied;
(j) adopt a plan of complete or partial liquidation
or resolutions provided for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization of
Company or any of its subsidiaries;
(k) change any assumption underlying, or method of
calculating, any bad debt, contingency or other reserve, or change any other
material accounting principles or practices used by it (except changes that may
be necessary or appropriate in order to comply with a change in GAAP that takes
effect after the date of this Agreement);
(l)(i) pay, discharge or satisfy any claims
(including claims of stockholders or repayment of debt otherwise permitted),
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) other than the payment, discharge or satisfaction of
(A) liabilities in the ordinary course consistent with past practices, and (B)
costs relating to this Agreement and the transactions contemplated hereby, (ii)
other than in connection with a settlement otherwise permitted under clause
(iii) below, waive, release, grant or transfer any rights of material value or
terminate, modify or change in any material respect any existing material
license, lease, contract or other document or (iii) settle or compromise any
litigation (whether or not commenced prior to the date of this Agreement) other
than settlements or compromises of litigation in the ordinary course of business
consistent with past practice if the amount paid (after giving effect to
insurance proceeds actually received or to be received) in settlement or
compromise does not exceed $75,000; PROVIDED that the aggregate amount paid
(after giving effect to insurance proceeds actually received or to be received)
in connection with the settlement or compromise of all such litigation matters
shall not exceed $1 million (exclusive, in the case of Section 4.13 hereof, of
amounts paid in settlement or compromise of litigation after September 28, 1998,
but before December 28, 1998);
(m) enter into any collective bargaining agreement or
any successor collective bargaining agreement to any collective bargaining
agreement;
(n) make or agree (other than pursuant to contracts
or arrangements that are terminable by the Company after nor more than 90 days
notice and without penalty or cost in excess of $100,000) to make any new
capital expenditure or expenditures which exceed, in the aggregate, $5 million
if such expenditures are made in the ordinary course of business consistent with
past practice
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(o) engage in any transaction with, or enter into any
agreement, arrangement or understanding with, directly or indirectly, any of the
Company's affiliates (other than wholly-owned subsidiaries of the Company);
(p) make or change any material Tax election, file
any material amended Tax Return, settle or compromise any material federal,
state, local or foreign Tax liability, change any annual Tax accounting period,
change any method of Tax accounting, enter into any material closing agreement
relating to any Tax, surrender any right to claim a material Tax refund, or
consent to any extension or waiver of the limitations period applicable to any
material Tax claim or assessment;
(q)(i) grant any material bonus, free or make good
space to any advertiser or change the discount structure for any of the
Company's advertising customers other than in the ordinary course of business
consistent with past practice, (ii) (x) change the 52-week subscription pricing
of any of the publications, (y) change the other subscription pricing in any of
the publications other than, in the case of this clause (y), in the ordinary
course of business consistent with past practice or (z) enter into, amend or
terminate any material arrangements with any subscription agents, (iii) change
any cover prices, wholesaler discounts or any other changes to the Company's
incentive sales programs (wholesale or retail), (iv) enter into any material
licensing agreement, arrangement or understanding with respect to television,
radio, Internet or other media or enter into any material licensing agreement,
arrangement or understanding with respect to any "branded" merchandise bearing
any of the trademarks or tradenames owned or licensed by the Company or any
subsidiary; (v) enter into, amend or terminate any agreements or arrangements
with the national distributor of the publications; or (vi) take any action with
respect to the publications in contravention of the advice of the Company's
litigation counsel; or
(r) authorize any of, or commit, contract, arrange or
agree in writing or otherwise to take any of the foregoing actions.
SECTION 6.2. ACCESS TO INFORMATION; INTERIM FINANCIALS.
(a) From the date hereof until the Effective Time,
the Company will, and will cause its subsidiaries, and each of their respective
officers, directors, employees, counsel, advisors and representatives
(collectively, the "COMPANY REPRESENTATIVES") to, provide Newco and its
respective officers, employees, counsel, advisors and representatives
(collectively, the "NEWCO REPRESENTATIVES") reasonable access (subject, however,
to existing confidentiality and similar non-disclosure obligations), during
normal business hours and upon reasonable notice, to the offices and other
facilities and to the books and
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records and personnel of the Company and its subsidiaries, as will permit Newco
to make inspections of such as it may reasonably require, and will cause the
Company Representatives and the Company's subsidiaries to furnish Newco and the
Newco Representatives to the extent available with such other information with
respect to the business and operations of the Company and its subsidiaries as
Newco may from time to time reasonably request. Unless otherwise required by
law, Newco will, and will cause the Newco Representatives to, hold any such
information in confidence to the extent required by, and in accordance with, the
Confidentiality Agreement (as hereinafter defined).
(b) No investigation pursuant to this Section 6.2
shall affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
(c) As promptly as practicable after their
completion, the Company shall deliver to Newco copies of monthly consolidated
balance sheets, statements of operations and cash flows to the extent
customarily prepared by the Company in the ordinary course of business and in a
manner consistent with past practice.
SECTION 6.3. REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions herein
provided, each of the parties hereto agrees to, and shall cause each of its
subsidiaries to, use its reasonable best efforts to take, or cause to be taken,
all action, and to do, or cause to be done, and to assist and cooperate with the
other parties hereto in doing, as promptly as practicable, all things necessary,
proper or advisable to ensure that the conditions set forth in Article VII are
satisfied and to consummate and make effective, in the most expeditious manner
practicable, the Merger, the Debt Offer and the other transactions contemplated
by this Agreement and the Voting Agreement.
(b) The Company agrees to provide, and will cause its
subsidiaries and its and their respective officers, employees and advisers to
provide, all necessary cooperation in connection with the arrangement of any
financing to be consummated contemporaneous with or at or after the Closing in
respect of the transactions contemplated by this Agreement, including without
limitation, participation in meetings, due diligence sessions, road shows, the
preparation of offering memoranda, private placement memoranda, prospectuses and
similar documents, the execution and delivery of any commitment letters,
underwriting or placement agreements, pledge documents, or other definitive
financing documents including a certificate of the chief financial officer
(without personal liability thereto) of the Company with respect to solvency
matters, comfort letters of accountants and legal opinions as may be requested
by Newco. In
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addition, in conjunction with the obtaining of any such financing, the Company
agrees, at the request of Newco, to call for prepayment or redemption, or to
prepay, redeem and/or renegotiate, as the case may be, any then existing
indebtedness of the Company. Anything in this Agreement to the contrary
notwithstanding, none of the actions, agreements or documents described in this
Section 6.3(b) shall impose any liability on the Company or its subsidiaries
until after the Effective Time and Newco shall reimburse the Company for all
Expenses incurred thereby (or by its subsidiaries) in respect of the foregoing
to the extent provided in Section 8.3 hereof (and all costs of litigation in
respect of the Debt Offer as described in Section 6.11 hereof).
(c) If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
(d) The Company shall not take any action with
respect to any transaction or proposed transaction with a third party with the
intention of impeding, interfering with, preventing or materially delaying the
Debt Offer or the Merger or diluting the benefits to Newco of the transactions
contemplated by this Agreement. The Company agrees not to release any third
party from, or waive any provisions of, any confidentiality or standstill
agreement to which the company is a party. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
conducted heretofore by or on behalf of the Company with respect to any of the
foregoing.
(e) Each of the parties agrees to cooperate with each
other in taking, or causing to be taken, all actions necessary to delist the
Shares from the New York Stock Exchange; provided, that such delisting shall not
be effective until after the Effective Time. The parties also acknowledge that
it is Newco's intent that the Shares following the Merger will not be listed on
any national securities exchange or quoted on NASDAQ/NMS.
SECTION 6.4. CONSENTS. Each of the parties will use its
reasonable best efforts to obtain as promptly as practicable all Consents of any
Governmental Entity or any other person required in connection with, and waivers
of any Violations that may be caused by, the consummation of the Merger, the
Debt Offer and the other transactions contemplated by this Agreement and the
Voting Agreement (provided that the Company shall not pay or agree to pay any
material amount to obtain a Consent without the prior approval of Newco).
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SECTION 6.5. PUBLIC ANNOUNCEMENTS. So long as this Agreement
is in effect, Newco and the Company agree to use reasonable efforts to consult
with each other before issuing, and provide each other with a reasonable
opportunity to review and comment upon, any press release or otherwise making
any public statement with respect to the transactions contemplated by this
Agreement and the Voting Agreement. The parties agree that the initial press
release or releases to be issued with respect to the transactions contemplated
by this Agreement and the Voting Agreement shall be mutually agreed upon prior
to the issuance thereof.
SECTION 6.6. EMPLOYEE BENEFITS MATTERS.
(a) Except as contemplated herein, the Surviving
Corporation, for a period of at least six months from the Effective Time, shall
provide employee benefits under plans, programs and arrangements (other than
equity-based plans) which, in the aggregate, will provide benefits to all
employees of the Surviving Corporation or its subsidiaries which are no less
favorable, in the aggregate, than those provided pursuant to the plans, programs
and arrangements of the Company and its subsidiaries in effect and disclosed to
Newco as of the date hereof; PROVIDED, HOWEVER, that nothing herein shall (i)
require that the Surviving Corporation provide or permit investment in the
securities of the Surviving Corporations or (ii) interfere with the Surviving
Corporation's right or obligation to make such changes as are necessary to
conform with applicable law or (iii) prevent the amendment or termination of any
such plan, program or arrangement, so long as in each such case the aggregate of
benefits provided to all employees of the Surviving Corporation or its
subsidiaries for such six month period are no less favorable than those provided
pursuant to the plans, programs and arrangements of the Company and its
subsidiaries in effect and as disclosed to Newco as of the date hereof.
(b) Newco and the Company agree that, for purposes
of the Employee Severance Policy as reflected in Section 6.6 of the Company
Disclosure Schedule the resignations contemplated by Section 7.2(h) hereof from
persons who are also employees of the Company or any of its subsidiaries shall
not affect the rights of such resigning directors under such severance policy.
SECTION 6.7. INDEMNIFICATION.
(a) Newco agrees that all rights to indemnification
now existing in favor of any current or former employee, agent, director or
officer of the Company and its subsidiaries (the "INDEMNIFIED PARTIES") as
provided in their respective certificates of incorporation or by-laws, in an
agreement between an Indemnified Party and the Company or one of its
subsidiaries, in effect on the date hereof and disclosed in Section 6.7 of the
Company Disclosure Schedule shall survive the
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Merger and shall continue in full force and effect for a period of six years
from the Effective Time; PROVIDED that in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until final disposition of
any and all such claims.
(b) Subject to the terms hereof, Newco agrees that
the Company and, from and after the Effective Time, the Surviving Corporation
shall cause to be maintained in effect for six years from the Effective Time the
current policies of the directors' and officers' liability insurance maintained
by the Company; PROVIDED that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time. Prior to the Effective Time, the Company shall endeavor to, and
shall be permitted to, satisfy its obligations under the preceding sentence by
extending coverage under such insurance policies pursuant to a six-year "tail"
policy if the terms of such "tail" policy are agreed to in writing by Newco. If
such a "tail" policy cannot be purchased on such terms prior to the Effective
Time, then the Company shall endeavor to obtain coverage contemplated by the
first sentence of this Section 6.7(b) at the lowest premium cost available;
PROVIDED, that the Surviving Corporation shall not be required to pay an annual
premium in excess of 200% of the last annual premium paid by the Company prior
to the date hereof and if the Surviving Corporation is unable to obtain the
insurance required by this Section 6.7(b) within such limitation it shall obtain
as much comparable insurance as possible for an annual premium equal to such
maximum amount; and PROVIDED, FURTHER, that during such six-year period the
Surviving Corporation shall review, not less than annually, the feasibility of
purchasing tail coverage for the balance of such six-year period and shall
endeavor to purchase such coverage if it is available at a cost not exceeding
the maximum amount that the Surviving Corporation would otherwise be obligated
to pay for such remaining period under the first proviso to this sentence. The
Company represents and warrants that the current annual premium for such
insurance coverage is $182,200.
(c) The provisions of this Section 6.7 shall survive
the Merger, and each Indemnified Party shall, for all purposes, be a third-party
beneficiary of the covenants and agreements of Newco and the Company under this
Section 6.7 and, accordingly, shall be treated as a party to this Agreement for
purposes of the rights and remedies relating to enforcement of such covenants
and agreements and shall be entitled to enforce any such rights and exercise any
such remedies directly.
SECTION 6.8. NO SOLICITATION. The Company agrees that, prior
to the Effective Time, it and each of its subsidiaries
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shall not, and shall not authorize or permit any of its or its subsidiaries'
directors, officers, employees, agents, advisors or representatives, directly or
indirectly, to (a) solicit, initiate or encourage or knowingly facilitate the
submission of any inquiries or the making of any proposal (a "TAKEOVER
PROPOSAL") with respect to any acquisition or purchase of a significant amount
of assets of the Company and its subsidiaries, taken as a whole (other than
inventory), or of over 15% of any class of equity securities of the Company or
any of its subsidiaries or any tender offer (including a self tender offer) or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of the Company or any of
its subsidiaries, or any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, reclassification, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries other than the transactions contemplated by this Agreement and the
Voting Agreement (an "ACQUISITION TRANSACTION"), (b) negotiate, explore or
otherwise participate in discussions with any person (other than Newco or its
directors, officers, employees, agents and representatives) with respect to any
Acquisition Transaction, or furnish to any person (other than Newco or its
directors, officers, employees, agents and representatives) any information with
respect to its business, properties or assets or any of the foregoing, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person (other than Newco or its
directors, officers, employees, agents and representatives) to do or seek any of
the foregoing, in each case, in respect of an Acquisition Transaction or (c)
enter into any agreement, arrangement or understanding with respect to, or
endorse, any Takeover Proposal.
SECTION 6.9. NOTIFICATION OF CERTAIN MATTERS. Newco and the
Company shall promptly notify each other of (a) the occurrence or non-occurrence
of any fact or event which would be reasonably likely (i) to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (ii) to cause any covenant, condition or agreement hereunder
not to be complied with or satisfied in all material respects and (b) any
failure of the Company or Newco, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect; PROVIDED, HOWEVER, that no such notification
shall affect the representations or warranties of any party or the conditions to
the obligations of any party hereunder or shall limit or otherwise affect the
remedies available hereunder to the parties receiving such notice.
SECTION 6.10. STATE TAKEOVER LAWS. The Company shall, upon the
request of Newco, take all reasonable steps to assist in any challenge by Newco
to the validity or applicability to the
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transactions contemplated by this Agreement, including the Merger and the Voting
Agreement, of any state takeover law.
SECTION 6.11. DISPOSITION OF LITIGATION. The Company will not
voluntarily cooperate with any third party which has sought or may hereafter
seek to restrain or prohibit or otherwise oppose the Debt Offer or the Merger
and will cooperate with Newco to resist any such effort to restrain or prohibit
or otherwise oppose the Debt Offer or the Merger.
SECTION 6.12. STOP TRANSFER ORDER. The Company shall notify
the Company's transfer agent that there is a stop transfer order with respect to
all of the Subject Shares (as defined in the Voting Agreement) and that the
Voting Agreement places limits on the voting of the Subject Shares.
SECTION 6.13. FINANCING.
(a) Newco shall use its reasonable best efforts
(including complying with the provisions of the Commitment Letters) to obtain
the debt and equity financing necessary to consummate the Merger.
(b) Newco shall (i) fully enforce its rights under
the Commitment Letters and the documents contemplated thereby and (ii) not
amend, modify or terminate any of the Commitment Letters in a manner which
reasonably could be expected to result in a Material Adverse Effect on Newco.
(c) Newco shall not include any information
concerning the Company or its subsidiaries in any offering document to be used
in connection with a sale of securities contemplated by the Commitment Letters
to which the Company reasonably objects and Newco shall provide the Company with
copies of all such material to enable the Company to comment thereon.
(d) At the Effective Time, Newco shall provide the
Company with a copy of each solvency opinion (if any) delivered to any source of
financing in respect of the transactions contemplated hereby. Such opinion shall
state that it may be relied upon by the Board of Directors of the Company.
(e) None of Newco, Evercore Capital Partners L.P.,
any of their affiliates controlled by any of them, Evercore Partners LLC or any
of its affiliates shall announce, or announce any intention to pursue, any
transaction that, if announced on the date hereof, could reasonably be expected
to have a Material Adverse Effect on Newco.
SECTION 6.14. NEWCO ACTION. Newco shall not take any action
that reasonably could be expected to result in any of the representations and
warranties of Newco set forth in this
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Agreement becoming untrue or any of the conditions to the Merger set forth in
Section 7.1 or 7.3 not being satisfied.
ARTICLE VII.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1. CONDITIONS OF EACH PARTY'S OBLIGATION TO
CONSUMMATE THE MERGER. The respective obligations of Newco and the Company to
consummate the Merger are subject to the satisfaction, at or before the
Effective Time, of each of the following conditions:
(a) STOCKHOLDER APPROVAL. The stockholders
of the Company shall have duly approved the transactions contemplated by this
Agreement, pursuant to the requirements of the Company's certificate of
incorporation and applicable law.
(b) HSR ACT. The waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired.
(c) INJUNCTIONS; ILLEGALITY. The
consummation of the Merger, shall not be restrained, enjoined or prohibited by
any order, judgment, decree, injunction or ruling of a court of competent
jurisdiction or any Governmental Entity and there shall not have been any
statute, rule or regulation enacted, promulgated or deemed applicable to the
Merger by any Governmental Entity which prevents the consummation of the Merger;
provided, however, that each of the parties shall have used their reasonable
best efforts to prevent the entry of such order, judgment, decree, injunction or
ruling and to appeal as promptly as practicable any such order, judgment,
decree, injunction or ruling.
SECTION 7.2. CONDITIONS TO OBLIGATION OF NEWCO. The
obligations of Newco to effect the Merger are further subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company 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 as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date. Newco
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company (with no
personal liability thereto) to the effect set forth in this paragraph.
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(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The
Company shall have performed, in all material respects, the obligations required
to be performed by it under this Agreement at or prior to the Closing Date.
(c) CONSENTS, ETC. Newco shall have received
evidence, in form and substance reasonably satisfactory to it, that such
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities, the failure of which to obtain reasonably could
be expected to have a Material Adverse Effect on the Company, have been
obtained.
(d) NO MATERIAL LITIGATION. There shall not be
pending by any Governmental Entity or any other third party any suit, action or
proceeding which has a reasonable likelihood of success (i) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or the Voting Agreement or
seeking to obtain from Newco or any of its affiliates any damages that are
material (assuming that the Merger had been consummated) to any party, (ii)
seeking to prohibit or limit the ownership or operation by the Company or any of
its subsidiaries of any material portion of the business or assets of the
Company or any of its subsidiaries or (iii) seeking to impose limitations on the
ability of Newco (or any designee of Newco pursuant to the Voting Agreement) or
any stockholder of Newco or the Company to acquire or hold, or exercise full
rights of ownership of, any Shares, including, without limitation, the right to
vote the Company's shares on all matters properly presented to the stockholders
of the Company.
(e) FINANCING. Newco shall have received the
proceeds of financing on the terms and conditions set forth in Annexes A-1
through A-2 of the Newco Disclosure Schedule or upon terms and conditions which
are substantially equivalent thereto and to the extent that any terms and
conditions are not set forth in Annexes A-1 through A-2 of the Newco Disclosure
Schedule, on terms and conditions reasonably satisfactory to Newco.
(f) SUBORDINATED NOTES. Newco shall have received
evidence that the terms of the Subordinated Notes shall have been amended as
contemplated by the terms of the Debt Offer. The Company shall have purchased at
least that principal amount of Subordinated Notes as equals the minimum
condition of the Debt Offer.
(g) APPRAISAL RIGHTS. Stockholders comprising no more
than 20% of the outstanding Shares shall have demanded appraisal rights under
Section 262 of the GCL.
(h) RESIGNATIONS OF COMPANY DIRECTORS. Each director
of the Company shall have resigned as a director of the Company pursuant to a
letter of resignation signed thereby and
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delivered to Newco and the Company.
(i) NO MATERIAL ADVERSE CHANGE. Since March 31, 1998,
there shall not have occurred any change, effect, event, occurrence or
development that is materially adverse to the business, operations, assets,
liabilities, condition (financial or otherwise), results of operations or
prospects of the Company and its subsidiaries taken as a whole except for any
change or effect resulting from (i) general economic, financial or market
conditions, (ii) any change or effect resulting from conditions or circumstances
generally affecting the newspaper or magazine publishing industry so long as
such change or effect does not have a materially disproportionate effect on the
Company or (iii) changes in laws of general applicability or applicable
generally to the newspaper or magazine publishing industry so long as such
change or effect does not have a materially disproportionate effect on the
Company.
SECTION 7.3. CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligations of the Company to effect the Merger are further subject to the
satisfaction at or prior to the Effective Time of the following conditions.
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Newco 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 as of the date of this Agreement
and as of the Closing Date. The Company shall have received a certificate signed
on behalf of Newco by an authorized officer of Newco (with no personal liability
thereto) to the effect set forth in this paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF NEWCO. Newco shall
have performed, in all material respects, the obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated
and the Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company or of Newco:
(a) by the mutual written consent of Newco and the
Company;
(b) by Newco or the Company if any court or other
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Governmental Entity shall have issued, enacted, entered, promulgated or enforced
any order, judgment, decree, injunction, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger, the Debt Offer or
any of the transactions contemplated by the Merger Agreement, or otherwise
altering the terms of any of the forgoing in any material respect and such
order, judgment, decree, injunction, ruling or other action shall have become
final and nonappealable;
(c) by the Company if there shall have occurred, on
the part of Newco, a breach of any representation, warranty, covenant or
agreement contained in this Agreement which would give rise to the failure of a
condition set forth in Section 7.3(a) or 7.3(b) and which is not curable or, if
curable, is not cured within 30 calendar days after written notice of such
breach is given by the Company to Newco or cannot be cured by the termination
date set forth in Section 8.1(e) (provided that the Company is not then in
breach of any representation, warranty covenant or agreement contained in this
Agreement which would give rise to a failure of a condition set forth in Section
7.2(a) or 7.2(b));
(d) by Newco if there shall have occurred, on the
part of the Company, a breach of any representation, warranty, covenant or
agreement contained in this Agreement which would give rise to the failure of a
condition set forth in Section 7.2(a) or 7.2(b) and which is not curable or, if
curable, is not cured within 30 calendar days after written notice of such
breach is given by Newco to the Company or cannot be cured by the termination
date set forth in Section 8.1(e) (provided that Newco is not then in breach of
any representation, warranty, covenant or agreement contained in this Agreement
which would give rise to a failure of a condition set forth in Section 7.3(a) or
7.3(b));
(e) by Newco or the Company, if the Merger shall not
have been consummated on or before the earlier of (i) the later of 120 days
after the date hereof or 25 business days after the first date on which the
Company is permitted to disseminate the Consent Statement to its stockholders
pursuant to the rules and regulations under the Exchange Act and the NYSE or
(ii) 140 days after the date hereof; PROVIDED, that the right to terminate this
Agreement under this Section 8.1(e) shall not be available to the party whose
action or failure to act has been the cause of or resulted in the failure of the
Merger to occur on or before such date and such action or failure to act
constitutes a material breach of any representation, warranty or covenant in
this Agreement;
(f) by Newco, if the Company Stockholder Approval
shall not have been obtained.
SECTION 8.2. EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 8.1, this
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Agreement shall forthwith become void and have no effect, without any liability
on the part of any party or its directors, officers or stockholders, other than
the provisions of this Section 8.2, Section 8.3, the last sentence of Section
6.2 and Article IX, which shall survive any such termination. Nothing contained
in this Section 8.2 or Section 8.3 shall relieve any party from liability for
any willful breach of any agreement or covenant of such party prior to
termination of this Agreement or for any breach of the Confidentiality
Agreement.
SECTION 8.3. EXPENSES.
(a) Whether or not the Merger is consummated (unless
otherwise provided in Section 8.2 or this Section 8.3), all costs and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses; PROVIDED,
HOWEVER, if the Merger as contemplated by this Agreement is consummated, then
the fees and expenses incurred by Newco and its affiliates in connection with
this transaction shall be paid by the Company.
(b) If this Agreement is terminated pursuant to
Section 8.1(e), then Newco shall pay to the Company all Expenses incurred by the
Company in respect of the performance of the Company's obligations in Sections
3.3, 6.3 and 6.11 hereof in respect of the Debt Offer and the financing
contemplated by the Commitment Letters.
(c) If this Agreement is terminated by Newco pursuant
to Section 8.1(d) or 8.1(f), then the Company shall pay to Newco all Expenses
incurred by Newco and its affiliates. Any payment pursuant to this Section
8.3(c) shall reduce damages otherwise obtainable by Newco in respect of a
willful breach by the Company of this Agreement.
(d) If this Agreement is terminated by the Company
pursuant to Section 8.1(c), then Newco shall pay to the Company all Expenses
incurred by the Company thereby. Any payment pursuant to this Section 8.3(d)
shall reduce damages otherwise obtainable by the Company in respect of a willful
breach by Newco of this Agreement.
"EXPENSES" means all out-of-pocket fees and expenses actually
incurred by any party hereto or on its behalf, whether before or after the
execution and delivery of this Agreement, in connection with the transactions
contemplated by this Agreement, including the Merger and the Debt Offer, and the
Voting Agreement, including without limitation the costs and expenses payable by
such party or its affiliates to all banks, investment banking firms and other
financial institutions, and the fees and expenses of their respective agents and
counsel, all fees and expenses of counsel, accountants, experts and consultants
to such party or its affiliates, and, in the case of Newco and its
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affiliates, all salary and bonus payments, expense reimbursements and other
payments (not to exceed an amount disclosed to the Company in a letter dated the
date hereof from Newco to the Company) made by Newco or its affiliates to David
Pecker and, further, including without limitation fees and expenses of the party
attempting to collect such Expenses that are incurred in connection with, any
litigation or other proceedings to collect the Expenses if such party prevails
in such litigation or proceeding. Expenses shall not include fees to any person
(or its affiliates) providing, directly or indirectly, equity finance or costs
of employee compensation or overhead thereof.
SECTION 8.4. AMENDMENT. This Agreement may be amended by the
Company and Newco at any time before or after any approval of this Agreement by
the stockholders of Newco or of the Company but, after any such approval, no
amendment shall be made which under applicable law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
SECTION 8.5. EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties hereto may (i) extend the time for the performance
of any of the obligations or other acts of any other party hereto, (ii) waive
any inaccuracies in the representations and warranties contained herein by any
other party or in any document, certificate or writing delivered pursuant
thereto by any other party or (iii) subject to applicable law, waive compliance
with any of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made in this Agreement shall not survive
beyond the Effective Time. Notwithstanding the foregoing, the agreements set
forth in Sections 2.4 and 3.2, Section 6.3(c) and Sections 6.6 and 6.7 shall
survive the Effective Time indefinitely (except to the extent a shorter period
of time is explicitly specified therein).
SECTION 9.2. ENTIRE AGREEMENT; ASSIGNMENT.
(a) This Agreement (including the documents and
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the instruments referred to herein) and the letter agreement, by and between
Purchaser and the Company (the "CONFIDENTIALITY AGREEMENT"), 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 thereof.
(b) Neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of
the other party; PROVIDED, that Newco may assign its rights hereunder to any of
its affiliates, but no such assignment shall relieve Newco of its obligations
hereunder or cause any representation or warranty of the Company or Newco herein
to be materially incorrect or, in the Company's reasonable judgment, materially
delay the Closing or the consummation of the transactions contemplated hereby.
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 9.3. VALIDITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, each of which shall remain in full
force and effect.
SECTION 9.4. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person, by overnight courier or facsimile
to the respective parties as follows:
If to Newco:
EMP Acquisition Corp.
65 East 55th Street
New York, New York 10022
Attention: Austin Beutner
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Alan G. Schwartz, Esq.
If to the Company:
American Media, Inc.
600 South East Coast Avenue
Lantana, Florida 33464
Attention: Peter J. Callahan
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with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Jack H. Nusbaum, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.5. GOVERNING LAW; JURISDICTION. (a) This Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(a)(b) In addition, each of the parties hereto
(i) consents to submit itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a federal or
state court sitting in the State of Delaware.
SECTION 9.6. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS
LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.6.
SECTION 9.7. DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
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SECTION 9.8. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
SECTION 9.9. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and, except
with respect to Sections [2.4 and] 6.6(b), 6.7, nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 9.10. CERTAIN DEFINITIONS. As used in this Agreement:
"ACQUISITION TRANSACTION" shall have the meaning set forth in
Section 6.8.
"AFFILIATE", as applied to any person, shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
"CERTIFICATE" shall have the meaning set forth in Section
2.1(b).
"CLASS A SHARES" shall have the meaning set forth in the
Recitals hereto.
"CLASS B SHARES" shall have the meaning set forth in Section
4.3.
"CLASS C SHARES" shall have the meaning set forth in the
Recitals hereto.
"CODE" shall have the meaning set forth in Section 3.2(i).
"COMMITMENT LETTERS" shall have the meaning set forth in
Section 5.5.
"COMPANY" shall have the meaning set forth in the first
paragraph of this Agreement.
"COMPANY DISCLOSURE SCHEDULE" shall have the meaning set forth
in Article 4.
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"COMPANY REPRESENTATIVES" shall have the meaning set forth in
Section 6.2.
"CONFIDENTIALITY AGREEMENT" shall have the meaning set forth
in Section 9.2(a).
"CONSENT" shall have the meaning set forth in Section 4.5(b).
"CONSENT STATEMENT" shall have the meaning set forth in
Section 2.3(a).
"CONTROL" shall have the meaning set forth in the definition
of affiliate.
"DISSENTING SHARES" shall have the meaning set forth in
Section 3.1.
"EFFECTIVE TIME" shall have the meaning set forth in Section
2.2.
"EMPLOYEE BENEFIT ARRANGEMENT" shall have the meaning set
forth in Section 6.1(e).
"ENVIRONMENTAL LAW" shall have the meaning set forth in
Section 4.12.
"ERISA" shall have the meaning set forth in Section 4.10(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FUNDED DEBT" means, in respect of the Company and its
subsidiaries as of any date, all indebtedness of such person which by its terms
or by the terms of any instrument or agreement relating thereto matures one year
or more from, or is directly or indirectly renewable or extendible at the option
of the obligor in respect thereof to a date one year or more (including without
limitation an option of such obligor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of one
year or more) from, the date of the creation thereof, and shall also include the
current maturities of any such indebtedness as of such date.
"GAAP" shall have the meaning set forth in Section 4.6(b).
"GCL" shall have the meaning set forth in the Granting
Clauses.
"GOVERNMENTAL ENTITY" shall have the meaning set forth in
Section 4.5(b).
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"HSR ACT" shall have the meaning set forth in Section 4.5(b).
"HAZARDOUS SUBSTANCE" shall have the meaning set forth in
Section 4.12.
"IRS" shall have the meaning set forth in Section 4.10(c).
"INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 6.7(a).
"INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 4.11(c).
"INTERESTED STOCKHOLDER" shall have the meaning set forth in
Section 5.6.
"LAZARD FRERES" shall have the meaning set forth in Section
4.15.
"LIEN" shall have the meaning set forth in Section 4.3.
"MATERIAL ADVERSE EFFECT ON THE COMPANY" shall have the
meaning set forth in Section 4.1.
"MATERIAL ADVERSE EFFECT ON PARENT" shall have the meaning set
forth in Section 5.1.
"MERGER" shall have the meaning set forth in the Granting
Clauses.
"MERGER PRICE" shall have the meaning set forth in Section
2.1.
"OPERATIONS" shall have the meaning set forth in Section
4.6(a).
"OPTION" shall have the meaning set forth in Section 2.2.
"OPTION PLAN" shall have the meaning set forth in Section 2.2.
"OTHER FILINGS" shall have the meaning set forth in Section
4.7.
"PAYING AGENT" shall have the meaning set forth in Section
3.2(a).
"PERSON" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of
-56-
<PAGE> 57
the Exchange Act).
"PLANS" shall have the meaning set forth in Section 4.10(a).
"PREFERRED STOCK" shall have the meaning set forth in Section
4.3.
"RELEASED CLAIM" shall have the meaning set forth in Section
2.4.(a).
"RELEASED PARTY" shall have the meaning set forth in Section
2.4(a).
"SEC" means the Securities and Exchange Commission.
"SEC REPORTS" shall have the meaning set forth in Section
4.6(a).
"SHARES" shall have the meaning set forth in the Granting
Clauses.
"SOAP OPERA SALE" means the sale of the assets of the Company
and its subsidiaries pursuant to the agreements and documents included in
Section 4.22 of the Company Disclosure Schedule.
"SPECIAL SUBS" shall have the meaning set forth in Section
4.3.
"SUBSIDIARY" or "SUBSIDIARIES" means, with respect to Newco,
the Company or any other person, any corporation, partnership, joint venture or
other legal entity of which Newco, the Company or such other person, as the case
may be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"SURVIVING CORPORATION" shall have the meaning set forth in
Section 2.1.
"TAX RETURN" shall have the meaning set forth in Section 4.19.
"TAXES" shall have the meaning set forth in Section 4.19.
"VIOLATION" shall have the meaning set forth in Section
4.5(a).
"VOTING DEBT" shall have the meaning set forth in
Section 4.3.
-57-
<PAGE> 58
SECTION 9.11. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any federal court
located in the State of Delaware or any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
-58-
<PAGE> 59
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its respective officer thereunto duly
authorized, all as of the day and year first above written.
EMP ACQUISITION CORP.
By: /s/ Austin Beutner
---------------------------------
Name: Austin Beutner
Title: President
AMERICAN MEDIA, INC.
By: /s/ Michael J. Boylan
---------------------------------
Name: Michael J. Boylan
Title: Vice Chairman,
Publishing Operations
-59-
<PAGE> 1
Exhibit 2.2
CERTIFICATE OF MERGER
OF
EMP ACQUISITION CORP.
WITH AND INTO
AMERICAN MEDIA, INC.
(Under Section 251 of the General
Corporation Law of the State of Delaware)
American Media, Inc., a Delaware corporation, hereby
certifies that:
1. The name and state of incorporation of each of the constituent
corporations is as follows:
(a) EMP Acquisition Corp., a Delaware corporation ("EMP
Acquisition");
(b) American Media, Inc., a Delaware corporation ("American
Media").
2. The Agreement and Plan of Merger (the "Agreement and Plan of
Merger"), dated as of February 16, 1999, by and between EMP Acquisition and
American Media has been approved, adopted, certified, executed and acknowledged
by each of the constituent corporations in accordance with Section 251 (and by
the written consent of the stockholders of the constituent corporations in
accordance with Section 228) of the General Corporation Law of the State of
Delaware.
3. The name of the surviving corporation is American Media, Inc. (the
"Surviving Corporation").
4. The Restated Certificate of Incorporation of American Media as in
effect immediately prior to the merger shall be amended in its entirety to read
as set forth in Exhibit A hereto and, as so amended, shall be the Restated
Certificate of Incorporation of the Surviving Corporation.
5. The executed Agreement and Plan of Merger is on file at an office
of the Surviving Corporation at 600 East Coast Avenue, Lantana, Florida 33464.
6. A copy of the Agreement and Plan of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of any
constituent corporation.
<PAGE> 2
IN WITNESS WHEREOF, American Media has caused this
certificate to be signed as of the 7th day of May, 1999.
AMERICAN MEDIA, INC.
By: /s/ Maynard Rabinowitz
-----------------------------------
Name: Maynard Rabinowitz
Office: Vice-Chairman
<PAGE> 1
EXHIBIT 2.3
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement"), dated as of May
7, 1999, between American Media, Inc., a Delaware corporation (together with
its subsidiaries, the "Company"), and Evercore Advisors Inc., a Delaware
limited liability company ("Evercore").
WHEREAS, Evercore, by and through itself, its affiliates and
their respective officers, employees and representatives, has expertise in the
areas of management, finance, strategy, investment, acquisitions and other
matters relating to the business of the Company; and
WHEREAS, the Company desires to avail itself, for the term of
this Agreement, of the expertise of Evercore in the aforesaid areas and
Evercore wishes to provide the services to the Company as herein set forth.
NOW, THEREFORE, in consideration of the foregoing recitals
and the covenants and conditions contained herein, the parties hereto agree as
follows:
1. DEFINITIONS. Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Amended and
Restated Limited Liability Agreement and Investors Rights Agreement, dated as
of February 16, 1999, of EMP Group L.L.C. (as amended from time to time, the
"LLC Agreement").
2. APPOINTMENT. The Company hereby appoints Evercore to
render the advisory and consulting services described in Section 3 hereof for
the term of this Agreement.
3. SERVICES. Evercore hereby agrees that during the term of
this Agreement it shall render to the Company and its subsidiaries, by and
through itself, its affiliates, and their respective officers, members,
employees, agents and representatives as Evercore in its sole discretion shall
designate from time to time, advisory and consulting services in relation to
the affairs of the Company and its subsidiaries in connection with ongoing
strategic and operational oversight of the Company, including, without
limitation, (i) advice in designing financing structures and advice regarding
relationships with the Company's lenders and bankers; (ii) advice regarding the
structure and timing of public offerings of debt and equity securities of the
Company; (iii) advice regarding property dispositions or acquisitions; and (iv)
such other advice directly related or ancillary to the above financial advisory
services as
<PAGE> 2
2
may be reasonably requested by the Company. It is expressly agreed that the
services to be performed hereunder shall not include investment banking or
other financial advisory services rendered by Evercore or its affiliates to the
Company in connection with any specific acquisition, divestiture, refinancing
or recapitalization by the Company or any of its subsidiaries. Evercore may be
entitled to receive additional compensation for providing services of the type
specified in the preceding sentence by mutual agreement of the Company or such
subsidiary and Evercore.
4. FEES. In consideration of the services contemplated by
Section 3, for the term of this Agreement, the Company and its successors agree
to pay to Evercore an annual monitoring fee (the "Monitoring Fee") which will
be paid annually and in advance. The first payment of $750,000 shall be paid on
the Closing Date (as defined in the Agreement and Plan of Merger, by and
between the Company and EMP Acquisition Corp. dated as of February 16, 1999).
Thereafter, commencing on June 1, 2000, on each June 1, the Company shall pay
Evercore $750,000, PROVIDED that: (a) the Company will not be required to pay
Evercore the annual Monitoring Fee in any calendar year that the EBITDA for the
Fiscal Year that ends in such calendar year (as calculated in good faith with
due care by the EBITDA Committee) is less than the EBITDA test applicable to
such Fiscal Year as set forth in Schedule 1 hereto; and (b) in the case of any
calendar year where an annual Monitoring Fee has not been paid to Evercore
pursuant to clause (a) above, (i) the Company will pay Evercore such Monitoring
Fee and any previous Monitoring Fee that could have been paid in that year
pursuant to this clause (b)(i) on June 1 of the first subsequent calendar year
(in addition to any Monitoring Fee that otherwise would be payable to Evercore
in such year) that (A) the sum of the EBITDA for the Fiscal Years from and
including the Fiscal Year that ends in the calendar year in which such
Monitoring Fee was not paid to and including the Fiscal Year that ends in such
subsequent calendar year EXCEEDS (B) the sum of the EBITDA tests for such
Fiscal Years as set forth in Schedule 1; and (ii) in the event of (A) any IPO,
merger, consolidation, recapitalization or similar transaction involving the
Company, (B) sale of all or substantially all of the assets of the Company and
its subsidiaries taken as a whole or (C) acquisition by any Person or group
(other than Evercore and its affiliates) of beneficial ownership of a majority
of the Company's outstanding common stock, the Company will promptly pay
Evercore any Monitoring Fee that has not been paid pursuant to clause (a)
(after giving effect to any subsequent payments pursuant to clause (b)) in the
event that the Members (as defined in the LLC Agreement) of the LLC have
received aggregate distributions from the LLC that, when added to the value of
the Members' remaining interests in the LLC (determined by reference to the IPO
price or the consideration paid in the relevant transaction), exceeds their
aggregate capital contributions to
<PAGE> 3
3
the LLC. For purposes of this Section 4, "EBITDA" shall have the
meaning set forth in the LLC Agreement.
5. REIMBURSEMENTS. In addition to the Monitoring Fee payable
pursuant to this Agreement, the Company shall pay directly or reimburse
Evercore for its Out-of-Pocket Expenses (as defined below). Promptly following
the Company's request therefor, Evercore will provide written back-up relating
to any Out-of-Pocket Expenses to be paid or reimbursed by the Company pursuant
to this Agreement. For the purposes of this Agreement, the term "Out-of-Pocket
Expenses" shall mean the reasonable out-of-pocket costs and expenses incurred
by Evercore or its affiliates in connection with the services rendered
hereunder, including, without limitation, (i) fees and disbursements of any
independent professionals and organizations, including independent accountants,
outside legal counsel or consultants, (ii) costs of any outside services or
independent contractors such as financial printers, couriers, business
publications, on-line financial services or similar services, (iii) research
and research related expenses and (iv) transportation, per diem costs, word
processing expenses or any similar expense not associated with its ordinary
operations. All reimbursements for Out-of-Pocket Expenses shall be made
promptly upon or as soon as practicable after presentation by Evercore to the
Company of a written statement thereof.
6. INDEMNIFICATION. The Company will indemnify and hold
harmless Evercore, its affiliates and their respective partners (both general
and limited), members (both managing and otherwise), officers, directors,
employees, agents and representatives (each such person being an "Indemnified
Party") from and against any and all losses, claims, damages and liabilities,
whether joint or several, expenses of any nature (including reasonable
attorneys' fees and disbursements), judgments, fines, settlements and other
amounts arising from any and all claims, demands, actions, suits or
proceedings, whether, civil, criminal, administrative, arbitral or
investigative, in which an Indemnified Party was involved or may be involved,
or threatened to be involved, as a party or otherwise (the "Liabilities"),
related to, arising out of or in connection with the advisory and consulting
services contemplated by this Agreement or the engagement of Evercore pursuant
to, and the performance by Evercore of the services contemplated by, this
Agreement, and any other action taken by an Indemnified Party on behalf of the
LLC, whether or not pending or threatened, and any other action taken by an
Indemnified Party on behalf of the LLC, whether or not resulting in any
liability and whether or not such action, claim, suit, investigation or
proceeding is initiated or brought by the Company. The Company will reimburse
any Indemnified Party for all reasonable costs and expenses
<PAGE> 4
4
(including reasonable attorneys' fees and expenses) as they are incurred in
connection with investigating, preparing, pursuing, defending or assisting in
the defense of any action, claim, suit, investigation or proceeding for which
the Indemnified Party would be entitled to indemnification under the terms of
the previous sentence, or any action or proceeding arising therefrom, whether
or not such Indemnified Party is a party thereto, provided that, subject to the
following sentence, the Company shall be entitled to assume the defense thereof
at its own expense, with counsel satisfactory to such Indemnified Party in its
reasonable judgment. Any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense, and in any action, claim,
suit, investigation or proceeding in which both the Company and/or one or more
of its subsidiaries, on the one hand, and an Indemnified Party, on the other
hand, is, or is reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel at the expense of the Company
and to control its own defense of such action, claim, suit, investigation or
proceeding if, in the reasonable opinion of counsel to such Indemnified Party,
a conflict or potential conflict exists between the Company, on the one hand,
and such Indemnified Party, on the other hand, that would make such separate
representation advisable. The Company agrees that it will not, without the
prior written consent of the applicable Indemnified Party, settle, compromise
or consent to the entry of any judgment in any pending or threatened claim,
suit, investigation, action or proceeding relating to the matters contemplated
hereby (if any Indemnified Party is a party thereto or has been threatened to
be made a party thereto) unless such settlement, compromise or consent includes
an unconditional release of the applicable Indemnified Party and each other
Indemnified Party from all liability arising or that may arise out of such
claim, suit, investigation, action or proceeding. Provided the Company is not
in breach of its indemnification obligations hereunder, no Indemnified Party
shall settle or compromise any claim subject to indemnification hereunder
without the consent of the Company. The Company will not be liable under the
foregoing indemnification provision with respect to any Indemnified Party, to
the extent that any loss, claim, damage, liability, cost or expense is
determined by a court, in a final judgment from which no further appeal may be
taken, to have resulted primarily from the gross negligence or willful
misconduct of Evercore. If an Indemnified Party is reimbursed hereunder for any
expenses, such reimbursement of expenses shall be refunded to the extent it is
finally judicially determined that the Liabilities in question resulted
primarily from the gross negligence or willful misconduct of Evercore.
The Company agrees that if any indemnification sought by any
Indemnified Party pursuant to this Section 6 is
<PAGE> 5
5
unavailable for any reason or is insufficient to hold the Indemnified Party
harmless against any Liabilities referred to herein, then the Company shall
contribute to the Liabilities for which such indemnification is held
unavailable or insufficient in such proportion as is appropriate to reflect the
relative benefits received (or anticipated to be received) by the Company, on
the one hand, and Evercore, on the other hand, in connection with the
transactions which gave rise to such Liabilities or, if such allocation is not
permitted by applicable law, not only such relative benefits but also the
relative faults of the Company, on the one hand, and Evercore, on the other
hand, as well as any other equitable considerations, subject to the limitation
that in any event the aggregate contribution by the Indemnified Parties to all
Liabilities with respect to which contribution is available hereunder shall not
exceed the fees pursuant to this Agreement actually received by Evercore in
connection with the transaction which gave rise to such Liabilities (excluding
any amounts paid as reimbursement of expenses).
7. ACCURACY OF INFORMATION. The Company shall furnish or
cause to be furnished to Evercore such information as Evercore believes
appropriate to its assignment (all such information so furnished being the
"Information"). The Company recognizes and confirms that Evercore (i) will use
and rely primarily on the Information and on information available from
generally recognized public sources in performing the services contemplated by
this Agreement without having independently verified the same, (ii) does not
assume responsibility for the accuracy or completeness of the Information and
such other information and (iii) is entitled to rely upon the Information
without independent verification.
8. TERM. This Agreement shall be effective as of the date
hereof and shall continue until the later of (i) the first date on which EMP
Group L.L.C. and its affiliates beneficially own in the aggregate less than 30%
of the common stock of the Company and (ii) the date on which the persons who
beneficially own interests in the LLC on the date of the LLC is dissolved no
longer beneficially own in the aggregate 30% of the common stock of the Company
(such termination date, the "Agreement Termination Date"); provided that
Section 5 shall remain in effect with respect to Out-of-Pocket Expenses
incurred prior to the Agreement Termination Date. The provisions of Sections 6,
8 and 10 and otherwise as the context so requires shall survive the termination
of this Agreement.
9. PERMISSIBLE ACTIVITIES. Subject to applicable law, nothing
herein shall in any way preclude Evercore, its affiliates or their respective
partners (both general and limited), members (both managing and otherwise),
officers, directors, employees,
<PAGE> 6
6
agents or representatives from engaging in any business activities or from
performing services for its or their own account or for the account of others,
including for companies that may be in competition with the business conducted
by the Company.
10. MISCELLANEOUS.
(a) No amendment or waiver of any provision of this
Agreement, or consent to any departure by either party hereto from any such
provision, shall be effective unless the same shall be in writing and signed by
all of the parties hereto. Any amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. The
waiver by any party of any breach of this Agreement shall not operate as or be
construed to be a waiver by such party of any subsequent breach.
(b) Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent by
telecopier, Federal Express, or other overnight courier, addressed as follow or
to such other address of which the parties may have given notice:
If to Evercore: Evercore Advisors Inc.
65 East 55th Street
New York, New York 10022
Attention: Austin Beutner
Telecopy: (212) 857-3122
Telephone: (212) 857-3120
If to the Company: American Media, Inc.
600 South East Coast Avenue
Lantana, Florida 33464
Attention: Peter A. Nelson
Telecopy: (561) 540-1018
Telephone: (561) 540-1000
Unless otherwise specified herein, such notices or other communications shall
be deemed received (i) on the date delivered, if delivered personally or sent
by telecopier, and (ii) one business day after being sent by Federal Express or
other overnight courier.
(c) This Agreement shall constitute the entire agreement
between the parties with respect to the subject matter hereof, and shall
supersede all previous oral and written (and all contemporaneous oral)
negotiations, commitments, agreements and understandings relating hereto.
<PAGE> 7
7
(d) This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York. This
Agreement shall inure to the benefit of, and be binding upon, Evercore, the
Company and their respective successors and assigns. The provisions of Section
6 shall inure to the benefit of each Indemnified Party.
(e) This Agreement may be executed by one or more parties to
this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
(f) The waiver by any party of any breach of this Agreement
shall not operate as or be construed to be a waiver by such party of any
subsequent breach.
(g) 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.
<PAGE> 8
8
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers or agents as of the
date first above written.
AMERICAN MEDIA, INC.
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and CFO
EVERCORE ADVISORS INC.
By: /s/ Austin Beutner
------------------------------------
Name: Austin Beutner
Title: Founder, Vice President
and Assistant Secretary
<PAGE> 9
SCHEDULE 1
EBITDA TEST
FOR THE FISCAL YEAR ENDED (IN MILLIONS) PAYMENT DATE
- ------------------------- ------------- ------------
March 31, 2000 $ 90.0 June 1, 2000
March 31, 2001 $ 97.5 June 1, 2001
March 31, 2002 $107.5 June 1, 2002
March 31, 2003 $110.0 June 1, 2003
March 31, 2004 $120.0 June 1, 2004
Each March 31 thereafter $120.0 June 1 of each
year thereafter
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ENQUIRER/STAR, INC.
Under Section 242 of the General Corporation Law
of the State of Delaware
The undersigned, being the Executive Vice President and Secretary,
respectively, of Enquirer/Star, Inc., a Delaware corporation, hereby certify as
follows:
FIRST: The name of the corporation is Enquirer/Star, Inc. (hereinafter
referred to as the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation was filed in
the office of the Secretary of State of Delaware on February 19, 1981, under the
corporation's former name, GP Group, Inc.
THIRD: Article "FOURTH" of the Certificate of Incorporation of the
Corporation is hereby amended to read as follows:
"FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is ten thousand (10,000) shares of common
stock of the corporation of the par value of $.20 per share."
FOURTH: The aforesaid amendment of the Certificate of Incorporation of the
Corporation was
<PAGE> 2
authorized by resolution of the Board of Directors of the Corporation adopted by
unanimous written consent dated as of December 21, 1992, pursuant to Section
141(f) of the General Corporation Law of the State of Delaware and, pursuant to
Section 228 of said General Corporation Law, by written consent of the sole
stockholder of the Corporation dated as of December 21, 1992 in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS THEREOF, this Corporation has caused this Certificate to be
executed by its Executive Vice President and Secretary on this 21st day of
December, 1992.
ENQUIRER/STAR, INC.
By /s/ David H. Galpern
-----------------------------
David H. Galpern
Executive Vice President
ATTEST:
By /s/ Maynard Rabinowitz
---------------------------
Maynard Rabinowitz
Secretary
<PAGE> 3
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
GP GROUP, INC.
Pursuant to Sections 228 and 242 of
the General Corporation Law
of the State of Delaware
GP GROUP, INC., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows;
FIRST: The name of the corporation is GP GROUP, INC.
SECOND: The Certificate of Incorporation of the Corporation was filed in
the Office of the Secretary of State of the State of Delaware on February 19,
1981.
THIRD: Article "FIRST" of the Certificate of Incorporation is hereby
amended to read as follows:
"FIRST: The name of the corporation is ENQUIRER/STAR, INC.".
FOURTH: The amendment of the Certificate of Incorporation of the
Corporation set forth in paragraph THIRD above was duly adopted by written
consent of the sole stockholder of the Corporation in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
<PAGE> 4
IN WITNESS WHEREOF, GP GROUP, INC. has caused this Certificate to be
executed by its President and Secretary this 16th day of May, 1991.
GP GROUP, INC.
By: /s/
----------------------------------
President
ATTEST:
By: /s/
- --------------------------
Secretary
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GP GROUP, INC.
Under Section 242 of the General Corporation Law
of the State of Delaware
The undersigned, being the President and Secretary, respectively, of
GP GROUP, INC., a Delaware corporation hereby certify as follows:
FIRST: The name of the corporation is GP GROUP, INC. (hereinafter referred
to as the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation was filed in
the office of the Secretary of State of Delaware on February 19, 1981.
THIRD: Article "FOURTH" of the Certificate of Incorporation of the
Corporation is hereby amended to read as follows:
"FOURTH: The total number of shares of
stock which the corporation shall have
authority to issue is twenty million
(20,000,000) shares of common stock of
the corporation of par value $.0001
per share."
FOURTH: The aforesaid amendment of the Certificate of Incorporation of the
Corporation was authorized by resolution of the Board of Directors of the
Corporation adopted by unanimous written consent dated May 17, 1990 pursuant to
Section 141(f) of the General Corporation Law of the State of Delaware and,
<PAGE> 6
pursuant to Section 228 of said General Corporation Law, by written consent of
the sole stockholder of the Corporation dated May 17, 1990 in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Corporation has caused this Certificate to be
executed by its President and Secretary this 25th day of May, 1990.
GP GROUP, INC.
By: /s/
--------------------------
President
ATTEST:
By: /s/
- ---------------------------------
Secretary
<PAGE> 7
CERTIFICATE OF MERGER
OF
GP GROUP ACQUISITION CORPORATION
(a Delaware corporation)
INTO
GP GROUP, INC.
(a Delaware corporation)
It is hereby certified that:
1. GP Group Acquisition Corporation ("Acquisition") is a corporation
incorporated under the laws of the State of Delaware.
2. Acquisition is the owner of all of the outstanding shares of the stock
of GP Group, Inc., a corporation incorporated under the laws of the State of
Delaware ("GP Group").
3. A Plan and Agreement of Merger (the "Agreement") has been approved,
adopted, certified, executed and acknowledged by each of Acquisition and
GP Group.
4. The name of the surviving corporation is:
GP Group, Inc.
5. Upon the effectiveness of the merger, Article Fourth of the Certificate
of Incorporation of GP Group shall be amended to read in its entirety as
follows:
"FOURTH: The total number of shares of
capital stock which the Corporation shall
have authority to issue is 12,000,000 shares
of common stock, $.0001 par value."
<PAGE> 8
The Certificate of Incorporation of GP Group, as amended above, shall be the
Certificate of Incorporation of the surviving corporation.
6. The Agreement is on file at the principal place of business of the
surviving corporation, the address of which is: 600 South East Coast Avenue,
Lantana, Florida 33464.
7. The merger shall be effective upon the filing of this Certificate with
the Secretary of State of the State of Delaware.
GP GROUP, INC.
By: /s/
_________________________________
Its Vice President
Attest:
/s/
____________________________
Its Assistant Secretary
-2-
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GP GROUP, INC.
Under Section 242 of the General Corporation Law
of the State of Delaware
GP GROUP, INC., a Delaware corporation (the "Corporation"), hereby
certifies as follows:
FIRST: The Certificate of Incorporation of the Corporation was filed in
the office of the Secretary of State of the State of Delaware on February 19,
1981.
SECOND: Article NINTH of the Certificate of Incorporation of the
Corporation is hereby amended by adding the following to the end thereof:
To the full extent permitted by the Delaware General Corporation Law,
as the same exists or may hereafter be amended or supplemented, or by any
successor thereto, a director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duties as a director.
THIRD: The aforesaid amendment of the Certificate of Incorporation of the
Corporation was duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
<PAGE> 10
IN WITNESS WHEREOF, this Corporation has caused this Certificate to be
executed by its President and Secretary this 24 day of January, 1989.
GP GROUP, INC.
By /s/
-------------------------------
President
ATTEST:
By /s/
-------------------------------
Secretary
-2-
<PAGE> 11
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GP GROUP, INC.
Under Section 242 of the General Corporation Law
of the State of Delaware
The undersigned, being the President and Secretary, respectively, of GP
GROUP, INC., a Delaware corporation, hereby certify as follows:
FIRST: The name of the corporation is GP GROUP, INC. (hereinafter referred
to as the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation was filed in
the office of the Secretary of State of Delaware on February 19, 1981.
THIRD: Article "FOURTH" of the Certificate of Incorporation of the
Corporation is hereby amended to read as follows:
"FOURTH: The total number of shares of stock
which the corporation shall have authority to
issue is two hundred thousand (200,000) shares of
common stock, no par value. Each share of common
stock of the corporation of par value one dollar
($1) per share outstanding when this amendment
becomes effective shall be changed and
reclassified into one thousand (1,000) shares of
common stock of the corporation, no par value,
each of which shall be included in the two hundred
thousand (200,000) shares of common stock herein
authorized. Each outstanding stock
<PAGE> 12
certificate theretofore representing one
share of common stock of the corporation,
par value one dollar ($1), shall thereafter
represent one thousand (1,000) shares of
common stock of the corporation, no par value."
FOURTH: The aforesaid amendment of the Certificate of
Incorporation of the Corporation was authorized by resolution of the Board of
Directors of the Corporation adopted by unanimous written consent dated October
23, 1981 pursuant to Section 141(f) of the General Corporation Law of the State
of Delaware and, pursuant to Section 228 of said General Corporation Law, by
written consent of the sole stockholder of the Corporation dated October 23,
1981 in accordance with Section 242 of the General Corporation Law of the State
of Delaware.
FIFTH: The capital of the Corporation will not be reduced
under or by reason of the foregoing amendment.
IN WITNESS WHEREOF, the undersigned have executed this
Certificate this 23rd day of October, 1981.
GP GROUP, INC.
(CORPORATE SEAL) By /s/
------------------------------------
President
[CORPORATE SEAL
LOGO] ATTEST:
By /s/
------------------------------------
Secretary
2
<PAGE> 13
STATE OF FLORIDA )
) SS.:
COUNTY OF PALM BEACH )
On the 23rd day of October, 1981, before me personally came Generoso Pope,
Jr., to me known, who, being by me duly sworn, did depose and say that he is
the President of GP GROUP, INC. and that he executed the above instrument on
behalf of the Corporation and that he has read the above instrument and knows
the contents thereof, and that all statements contained therein are true.
/s/ Susan Napolitano
----------------------------------------
NOTARY PUBLIC
[SEAL]
3
<PAGE> 14
CERTIFICATE OF INCORPORATION
OF
GP GROUP, INC.
FIRST: The name of the corporation is GP GROUP, INC.
SECOND: The address of its registered office in the State of Delaware is
306 South State Street, in the City of Dover, County of Kent. The name of its
registered agent at such address is the United States Corporation Company.
THIRD: The nature of the business or purpose to be conducted or promoted
is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is two hundred (200) shares of common stock and the par
value of each of such shares is One Dollar ($1.00) amounting in the aggregate to
Two Hundred Dollars ($200.00).
FIFTH: The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Jerome S. Traum Janklow, Traum & Klebanoff
598 Madison Avenue
New York, New York 10022
<PAGE> 15
SIXTH: The corporation is to have perpetual existence.
SEVENTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for further
definition, limitation and regulation of the powers of the corporation and of
its directors and stockholders:
1. The number of directors of the corporation shall be such as from time to
time shall be fixed by, or in the manner provided in, the by-laws. Election of
directors need not be by ballot unless the by-laws so provide.
2. The Board of Directors shall have power without the assent or vote of
the stockholders:
(a) to make, alter, amend, change, add to or repeal the by-laws of
the corporation;
(b) to fix and vary the amount to be reserved for any proper purpose;
(c) to authorize and cause to be executed mortgages and liens upon
all or any part of the property of the corporation;
(d) to determine the use and disposition of any surplus or net
profits;
(e) to determine from time to time whether, and to what extent, and
at what times and places, and under what conditions and
regulations, the accounts and books of the corporation (other
than the stock ledger) or any of them, shall be open to the
inspection of the stockholders.
2
<PAGE> 16
3. The directors in their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders called for
the purpose of considering any such act or contract, and any contract or act
that shall be approved or be ratified by the vote of the holders of a majority
of the stock of the corporation which is represented in person or by proxy at
such meeting and entitled to vote thereat (provided that a lawful quorum of
stockholders by there represented in person or by proxy) shall be as valid and
as binding upon the corporation and upon all the stockholders as though it had
been approved or ratified by every stockholder of the corporation, whether or
not the contract or act would otherwise be open to legal attack because of
directors' interest; or for any other reason.
4. In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation; subject, nevertheless, to the provisions of that statutes of
Delaware, of this certificate, and to any by-laws from time to time made by the
directors or stockholders; provided, however, that no by-laws so made shall
invalidate any prior act of the directors which would have been valid if such
by-law had not been made.
3
<PAGE> 17
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or
<PAGE> 18
on all the stockholders or class of stockholders, of this corporation, as the
case may be, and also on this corporation.
NINTH: The corporation shall, to the full extent permitted by Section 145
of the Delaware General Corporation Law, as amended from time to time, indemnify
all persons whom it may indemnify pursuant thereto.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
The undersigned, the incorporator hereinbefore named, for the purpose of
forming a corporation pursuant to the General Corporation Law of the State 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 5th day of February, 1981.
/s/ Jerome S. Traum
_______________________________________
Jerome S. Traum
5
<PAGE> 19
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this 5th day of February A.D. 1981, personally
came before me, a notary public for the State of New York, JEROME S. TRAUM, the
party to the foregoing Certificate of Incorporation, known to me personally to
be such, and acknowledged the said certificate to be his act and deed and that
the facts therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/
-------------------------------
Notary Public
[SEAL]
<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED
BY-LAWS
ENQUIRER/STAR, INC.
ARTICLE I
OFFICES
SECTION 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
SECTION 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. All meetings of the stockholders for the election of directors
shall be held in Lantana, Florida, at such place as may be fixed from time to
time by the board of directors, or at such other place either within or without
the State of Delaware as shall be designated from time to time by the board of
directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
<PAGE> 2
Section 2. Annual meetings of stockholders, commencing with the year 1981,
shall be held on the second Tuesday in November, if not a legal holiday, and if
a legal holiday, then on the next succeeding business day, at 10:00 A.M., or at
such other date and time as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which they shall elect
by plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than fifty days before the date of the
meeting. Any proper business, in addition to the election of directors, may be
transacted at the annual meeting, if notice of such additional business is given
in the notice of the meeting.
Section 4. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman of the board, if any, or the
president and shall be called by the president or secretary or an assistant
secretary at the request in writing of a majority of the members of the board of
directors, then in office, or at the request in writing of stockholders owning a
majority in amount of the
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<PAGE> 3
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 5. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than fifty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 6. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 7. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as
-3-
<PAGE> 4
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 8. Meetings of the stockholders shall be presided over by the
chairman of the board, if any, or by the president, or in his absence, by a
vice-president, or if none of the foregoing officers is present, by a chairman
to be chosen at the meeting. The secretary of the corporation, or in his
absence, an assistant secretary, shall act as secretary of the meeting, but if
none of these officers is present, a secretary shall be chosen at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Notwithstanding the foregoing, at all elections of directors, a plurality of
votes cast thereat shall elect, if a quorum is present.
<PAGE> 5
6319C
Section 10. Each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Any action required or permitted by any provision of law or by
the certificate of incorporation or otherwise to be taken at any annual or
special meeting of such stockholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than one or more than ten. The first board shall consist of
one director.
-5-
<PAGE> 6
6319C
Thereafter, the number of directors shall be determined by resolution of the
board of directors or by the stockholders at the annual meeting or a special
meeting called for the purpose. The directors shall be elected at the annual
meeting of the stockholders, or a special meeting called for the purpose,
except as provided in Section 2 of this Article, and each director elected shall
hold office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, or by a plurality of the votes cast at a meeting of stockholders
entitled to vote at elections of directors, and the directors so chosen shall
hold office until the next annual meeting of stockholders and until their
successors are duly elected and shall qualify, unless sooner displaced. The
stockholders may, at a duly convened meeting, by vote of the holders of a
majority of the shares present in person or represented by proxy at the meeting
and entitled to vote at elections of directors, summarily remove any director
or directors from office with or without cause.
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
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<PAGE> 7
6319C
things as are not by statute or by the certificate of incorporation or by these
by-laws directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. Meetings of the board of directors shall be held at such place
within or without the State of Delaware as may from time to time be fixed by
resolution of the board or as may be specified in the call of any meeting.
Regular meetings of the board shall be held at such time as may from time to
time be fixed by resolution of the board, and notice of such meetings need not
be given. Special meetings of the board may be called at any time by the
chairman of the board, if any, or the president, and shall be called by the
secretary or an assistant secretary on the written request of any two directors,
on at least two days' notice to each director, either personally or by mail or
by telegram. A meeting of the board may be held without notice, if all the
directors are present or if those not present waive notice of the meeting in
accordance with Article IV, Section 2 of these by-laws.
Section 6. A majority of the total number of directors shall constitute a
quorum for the transaction of business at any meeting of the board provided,
however, that if
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<PAGE> 8
the board shall consist of one director, one director shall constitute a quorum.
If at any meeting there shall be less than a quorum present, a majority of those
present may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present, at which time any
business may be transacted which might have been transacted at the meeting as
first convened had there been a quorum. Except as otherwise provided by law or
by the certificate of incorporation or by-laws, the act of a majority of the
directors present at any meeting at which a quorum is present shall be the act
of the board.
Section 7. Unless otherwise restricted by the certificate of incorporation
or these by-laws, members of the board of directors or any committee designated
by such board, 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 pursuant to this shall constitute presence in person at such
a meeting.
Section 8. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case
-8-
<PAGE> 9
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 9. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution, 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, 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 quorum, may unanimously appoint
another member or the board of directors to act at the meeting in the place of
any such absent or disqualified member. 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.
-9-
<PAGE> 10
Section 10. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 11. The 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.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given
-10-
<PAGE> 11
under the provisions of the statutes or of the certificate of incorporation or
of these 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 meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice unless
so required by the certificate of incorporation or the by-laws.
ARTICLE V
OFFICERS
SECTION 1. The board of directors, as soon as may be practicable after the
annual meeting of stockholders in each year, shall elect a president of the
corporation, a secretary and a treasurer, and from time to time may elect such
vice presidents and appoint such assistant secretaries, assistant treasurers and
other officers, agents and employees as it may deem proper. The board of
directors may also elect a chairman of the board. More than one office may be
held by the same person.
-11-
<PAGE> 12
SECTION 2. The term of office of all officers shall be until the first
meeting of the board following the annual meeting of stockholders next
succeeding their election or appointment and, in the case of elected officers,
until their respective successors are chosen and qualified, but any officer may
be removed from office at any time, with or without cause, and vacancies
occurring for whatever cause may be filled at any time, by the affirmative vote
of a majority of the members of the board at the time in office.
SECTION 3. Subject to such limitations as the board of directors may from
time to time prescribe, the officers of the corporation shall each have such
powers and duties as generally pertain to their respective offices, as well as
such powers and duties as from time to time may be conferred by the board of
directors. The board of directors may require the treasurer, any assistant
treasurers and any other officers, agents or employees of the corporation to
give bond for the faithful discharge of their duties, in such sum and of such
character as the board may from time to time prescribe.
SECTION 4. The chairman of the board, if any, the president or any vice
president shall have the power to vote or give a proxy for the voting of all
shares of stock of any corporation or other organization owned by the
corporation at any meeting of the stockholders of any such corporation or
organization, subject to any specific direction by the board of directors of the
corporation.
-12-
<PAGE> 13
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or vice chairman of the board of directors, or the president or vice
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation. Certificates may be issued for partly paid shares
and in such case upon the face or back of the certificates issued to represent
any such partly paid shares, the total amount of the consideration to be paid
therefor, and the amount paid thereon shall be specified.
Section 2. Where a certificate is countersigned (1) by a transfer agent
other than the corporation or its employee, or (2) by a registrar other than
the corporation or its employee, any other signature on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
-13-
<PAGE> 14
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, 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.
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<PAGE> 15
6319C
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a 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
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<PAGE> 16
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting to the extent permitted
by law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers
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<PAGE> 17
or such other person or persons as the board of directors may from time to time
designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new by-laws
may be adopted by the stockholders or by the board of directors at any regular
meeting of the stockholders or of the board of directors or at any special
meeting of the stockholders or of the board of directors if notice of such
alteration, amendment, repeal or adoption of new by-laws be contained in the
notice of such special meeting.
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<PAGE> 1
Exhibit 3.3
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
ENQUIRER/STAR, INC.
Pursuant to Sections 228 and 242 of
the General Corporation Law
of the State of Delaware
ENQUIRER/STAR, INC., a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies as follows:
FIRST: The name of the Corporation is ENQUIRER/STAR, INC.
SECOND: The Certificate of Incorporation of the Corporation was filed in
the Office of the Secretary of State of the State of Delaware on February 19,
1981.
THIRD: Article "FIRST" of the Certificate of Incorporation is hereby
amended to read as follows:
"FIRST: The name of the Corporation is
AMERICAN MEDIA OPERATIONS, INC."
FOURTH: The amendment of the Certificate of Incorporation of the
Corporation set forth in paragraph THIRD above was duly adopted by the Board of
Directors of the Corporation and a majority of the outstanding shares entitled
to vote thereon and a majority of the outstanding shares of each class of stock
entitled to vote thereon in accordance with the provisions of Section 228 and
242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, ENQUIRER/STAR, INC., has caused this Certificate to be
executed by its Executive Vice President and its Assistant Secretary this 7th
day of November, 1994.
ATTEST:
By: /s/ /s/
--------------------------- ----------------------------
Assistant Secretary Executive Vice President
<PAGE> 1
EXHIBIT 3.4
ARTICLES OF INCORPORATION
OF
AMERICAN MEDIA MARKETING, INC.
WE, THE UNDERSIGNED, being desirous of associating ourselves together for
the purposes of becoming a corporation for profit under the laws of the State of
Florida, do make, subscribe and acknowledge these Articles of Incorporation,
pursuant to Chapter 607 of the Florida Business Corporation Act, and other
applicable provisions of the Corporation Law of the State of Florida, and acts
amendatory thereof and supplemental thereto.
FIRST: The name of the corporation is:
AMERICAN MEDIA MARKETING, INC.
SECOND: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the corporation
laws of the State of Florida.
THIRD: The corporation shall be authorized to issue the following
shares:
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES PAR VALUE
- ----- ---------------- ---------
<S> <C> <C>
COMMON............................................ 1,000 $.01
</TABLE>
FOURTH: The address of the initial registered and principal office of
this corporation in this state is c/o United Corporate Services, Inc., 801
N.E. 167th Street, Suite 300, in the City of North Miami Beach, County of
Dade, State of Florida 33162 and the name of the registered agent at said
address is United Corporate Services, Inc.
FIFTH: The name and address of the incorporators are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
Maria R. Fischetti........................... 10 Bank Street
White Plains, New York 10606
Mark Skubicki................................ 10 Bank Street
White Plains, New York 10606
</TABLE>
SIXTH: Any person who was or is a party or is threatened to be made a
party to any proceeding, (whether or not 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, shall
be entitled to be indemnified by the corporation to the full extent then
permitted by law against liability incurred in connection with such
proceeding, including any appeal thereof. Such right of indemnification
shall incur whether or not the claim asserted is based on matters which
antedate the adoption of this Article SEVENTH. Such right of
indemnification shall continue as to a person who has ceased to be a
director, officer, employee, or agent and shall incur to the benefit of the
heirs and personal representatives of such a person. The indemnification
provided by this Article SEVENTH shall not be deemed exclusive of any other
rights which may be provided now or in the future under any provision
currently in effect or hereof or adopted by the By-Laws, by any agreement,
by vote of stockholders, by resolution or disinterested directors, by
provision of law, or otherwise.
SEVENTH: No director of the corporation shall be personally liable to
the corporation or any other person for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for a violation of
criminal law, unless the director has reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
lawful, (ii) for any transaction from which the director directly or
indirectly derived an improper personal benefit, (iii) under
<PAGE> 2
section 607.144 of the Florida General Corporation Act, (iv) for conscious
disregard for the best interest of the corporation or willful misconduct,
or (v) for recklessness or an act or omission which was committed in bad
faith or with a malicious purpose or in a matter exhibiting wanton and
willful disregard of human, rights, safety or property.
IN WITNESS WHEREOF, the undersigned have this thirteenth day of May, 1997
made and subscribed these Articles of Incorporation at New York, New York for
the uses and purposes aforesaid.
/s/ MARIA R. FISCHETTI
--------------------------------------
MARIA R. FISCHETTI (SEAL)
Maria R. Fischetti
/s/ MARK SKUBICKI
--------------------------------------
Mark Skubicki
2
<PAGE> 1
EXHIBIT 3.5
BYLAWS
OF
AMERICAN MEDIA MARKETING, INC.
ARTICLE I
Section 1. Registered Office. The registered office of American Media
Marketing, Inc., a Florida corporation (the "Corporation"), shall be located in
the State of Florida.
Section 2. Other Offices. The Corporation may also have offices at such
other places, either within or without the State of Florida, as the Board of
Directors of the Corporation (the "Board of Directors") may from time to time
determine or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meetings. All annual meetings of the shareholders of the
Corporation for the election of directors and for such other business as may
properly come before the meeting shall be held on such date and at such time as
may be fixed, from time to time, by the Board of Directors, and at such place,
within or without the State of Florida, as may be designated by the Board of
Directors and stated in the notice of meeting or in a duly executed waiver of
notice thereof.
Section 2. Business at Annual Meeting. At an annual meeting of the
shareholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (c) otherwise properly brought before an annual meeting by a
shareholder. For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 50 days nor more than 90 days prior to the meeting;
provided, however, that if less than 60 days' notice or prior public disclosure
of the date of the meeting is given or made to the shareholders, notice by the
shareholder to be timely must be so received not later than the close of
business on the 10th day following the day on which the notice of the date of
the annual meeting was mailed or the public disclosure was made. A shareholder's
notice to the Secretary shall set forth as to each matter the shareholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the shareholder proposing such
business, (c) the class and number of shares of the Corporation which are owned
of record and beneficially by the shareholder, and (d) any material interest of
the shareholder in such business. No later than the 15th day following the date
of receipt of a shareholder notice pursuant to this Section 2, the Chairman of
the Board of Directors of the Corporation shall, if the facts warrant, determine
and notify in writing the shareholder submitting such notice that such notice
was not made in accordance with the time limits and/or other procedures
prescribed by the Bylaws. If no such notification is mailed to such shareholder
within such 15-day period, such shareholder notice containing a matter of
business shall be deemed to have been made in accordance with the provisions of
this Section 2. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section 2. Notwithstanding the foregoing provisions
of this Section, a shareholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder, with respect to the
matters set forth in this Section. Nothing in this Section shall
<PAGE> 2
be deemed to affect any rights of shareholders to request inclusion of proposals
in the Corporation's proxy statement pursuant to the applicable rules under the
Exchange Act.
Section 3. Special Meeting. (a) Special meetings of the shareholders may
be called by the Board of Directors, the Chairman of the Board or the President,
and shall be called by the Chairman of the Board or Secretary upon the request
of the holders of not less than 50% of the issued and outstanding shares of the
capital stock of the Corporation entitled to vote on each issue proposed to be
considered at such meeting. Before a shareholder may request or demand that a
special meeting of the shareholders be held for any purpose, the following
procedure must be satisfied:
(i) Each shareholder seeking to request or demand, or to have the
shareholders request or demand, a special meeting shall first, by written
notice to the Secretary of the Corporation, request the Board of Directors
to fix a record date, pursuant to Section 6 of Article II of these Bylaws,
for the purpose of determining the shareholders entitled to request the
special meeting. The Board of Directors shall promptly, but in all events
within 15 days after the date upon which such a request is received, fix
such a record date. Every request to fix a record date for determining the
shareholders entitled to request a special meeting shall be in writing and
shall set forth (i) a brief description of the business desired to be
brought before a special meeting and the reasons for conducting such
business at a special meeting, (ii) the name and address, as they appear on
the Corporation's books, of the shareholder making such request, (iii) the
class and number of shares of the Corporation which are owned of record and
beneficially by the shareholder, (iv) any material interest of the
shareholder in the business and (v) shall bear the signature and date of
signature of the shareholder.
In the event of the delivery to the Corporation of any request(s) or
demand(s) by shareholders with respect to a special meeting, and/or any
related revocation or revocations, the Corporation shall engage nationally
recognized independent inspectors of elections for the purpose of
performing a prompt ministerial review of the validity of the requests,
demands and/or revocations.
(ii) No request or demand with respect to calling a special meeting of
shareholders shall constitute a valid and effective shareholder request or
demand for a special meeting (i) unless (x) within 60 days of the record
date established in accordance with paragraph (A) of this Section 3(a),
written requests or demands signed by shareholders of record representing a
sufficient number of shares as of such record date to request or demand a
special meeting pursuant to this Section are delivered to the Secretary of
the Corporation and (y) each request or demand is made in accordance with
and contains the information required by paragraph (A) of this Section 3(a)
and (ii) until such date as the independent inspectors engaged in
accordance with this Section 3(a) certify to the Corporation that the
requests or demands delivered to the Corporation in accordance with clause
(i) of this paragraph (B) represent at least the minimum number of shares
that would be necessary to request such a meeting pursuant to this Section.
(iii) If the Corporation determines that a shareholder or shareholders
have satisfied the notice, information and other requirements specified in
this Section 3, then the Board of Directors shall adopt a resolution
calling a special meeting of the shareholders and fixing a record date,
pursuant to Section 6 of this Article II, for the purposes of determining
the shareholders entitled to notice of and to vote at such special meeting.
Notice of such special meeting shall be provided in accordance with Section
4 of this Article II, provided that such notice shall be given within 60
days (or such longer period as from time to time may be permitted by law)
after the date the request(s) or demand(s) for such special meeting is
(are) delivered to the Corporation in accordance with this Section.
(b) Subject to the foregoing, special meetings of shareholders may be held
at such time and date, and at such place, within or without the State of
Florida, as shall be designated by the Board of Directors or the Chairman and
set forth in the notice of meeting required pursuant to Section 4 of this
Article. In fixing a meeting date for a special meeting of shareholders, the
Board of Directors may consider such factors as it deems relevant within the
good faith exercise of its business judgment, including, without limitation, the
nature of the action proposed to be taken, the facts and circumstances
surrounding the request, and any plan of the Board of Directors to call a
special or annual meeting of shareholders for the
2
<PAGE> 3
conduct of related business, provided that such meeting date shall be within 120
days (or such longer period as may from time to time be permitted by law) after
the date the request(s) or demand(s) for such special meeting is (are) delivered
to the Corporation in accordance with this Section. Only business within the
purpose or purposes described in the notice required pursuant to Section 4 of
this Article may be conducted at a special meeting of shareholders.
(c) Notwithstanding the foregoing provisions of this Section, a shareholder
shall also comply with all applicable requirements of the Exchange Act, and the
rules and regulations promulgated thereunder, with respect to the matters set
forth in this Section. Nothing contained in this Section shall in any way be
construed to suggest or imply that the Board of Directors or any shareholder
shall not be entitled to contest the validity of any request or demand or
revocation thereof, or to take any other action (including, without limitation,
the commencement, prosecution or defense of any litigation with respect
thereto).
Section 4. Notice. A written notice of each meeting of shareholders shall
be given to each shareholder entitled to vote at the meeting at the address as
it appears on the stock transfer records of the Corporation, not less than 10
nor more than 60 days before the date of the meeting, by or at the direction of
the Chairman, the Board of Directors, the President or the Secretary. If the
notice is mailed at least 30 days before the date of the meeting, it may be done
by a class of United States mail other than first class. The notice so given
shall state the date, time and place of the meeting and, in the case of a
special shareholders' meeting, the purpose or purposes for which the meeting is
called. If mailed, 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 a
shareholders' meeting is adjourned to a different date, time or place, notice
need not be given of the new date, time or place if the new date, time or place
is announced at the meeting before an adjournment is taken. At such an adjourned
meeting any business may be transacted that might have been transacted on the
original date of the meeting. If, however, after the adjournment, the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting will be given on the new record date as provided in this
Article to each shareholder of record entitled to vote at such meeting.
Section 5. Waiver of Notice. Shareholders may waive notice of any meeting
before or after the date and time specified in the written notice of meeting.
Any such waiver of notice must be in writing, be signed by the shareholder
entitled to the notice and be delivered to the Corporation for inclusion in the
appropriate corporate records. Neither the business to be transacted at, nor the
purpose of, any shareholders' meeting need be specified in any written waiver of
notice. Attendance of a person at a shareholders' meeting shall constitute a
waiver of notice of such meeting, unless the shareholder at the beginning of the
meeting objects to holding the meeting or transacting business at the meeting.
Section 6. Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at a shareholders' meeting, to demand a special
meeting, or to take any other action, 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 70 days nor, in the case of a shareholders'
meeting, less than 10 days, prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If no record date
is fixed for the determination of shareholders entitled to notice of or to vote
at a shareholders' meeting, then the record date for such meeting shall be the
close of business on the day before the first notice is delivered to
shareholders. A determination of shareholders entitled to notice of or to vote
at a shareholders' meeting is effective for any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting,
which it must do if the meeting is adjourned to a date more than 120 days after
the date fixed for the original meeting.
Section 7. Quorum. A majority of the shares entitled to vote on a matter,
represented in person or by proxy, shall constitute a quorum for action on that
matter at a meeting of shareholders. If a quorum is not present or represented
at a meeting of shareholders, the holders of a majority of the shares
represented, and who would be entitled to vote at a meeting if a quorum were
present, may adjourn the meeting from time to time. Once a quorum has been
established at a shareholders' meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shares entitled to vote at the
3
<PAGE> 4
meeting below the number required for a quorum, shall not affect the validity of
any action taken at the meeting or any adjournment thereof.
Section 8. Voting. If a quorum is present, action on a matter, other than
the election of directors, shall be approved if the votes cast by the
shareholders represented at the meeting and entitled to vote on the subject
matter favoring the action exceeds the votes cast opposing the action, unless a
different number of affirmative votes or voting by classes is required by
Florida law or by the Articles of Incorporation or these Bylaws. Directors shall
be elected in accordance with Article III, Section 3, of these Bylaws. Each
outstanding share shall be entitled to vote at a meeting of shareholders as
provided under the Articles of Incorporation or any amendment thereof or under
Florida law. An alphabetical list of shareholders entitled to notice of a
shareholder's meeting shall be available for inspection by any shareholder for a
period of 10 days prior to the meeting or such shorter time as exists between
the record date and the meeting and continuing through the meeting at a place as
permitted by Section 607.0720 of the Florida Business Corporation Act.
Section 9. Shareholder Actions. Any action required or permitted to be
taken by the shareholders may be taken only at an annual or special meeting of
shareholders.
Section 10. Proxies. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for him by signing an
appointment form, either personally or by his attorney-in-fact. An appointment
of proxy is effective when received by the Secretary or other officer or agent
authorized to tabulate votes. If an appointment form designates two or more
persons to act as proxies, a majority of these persons present at the meeting,
or if only one is present, that one, has all of the powers conferred by the
instrument upon all the persons designated unless the instrument provides
otherwise. No appointment shall be valid for more than 11 months after the date
of its execution unless a longer period is expressly provided in the appointment
form.
ARTICLE III
DIRECTORS
Section 1. Powers. All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. Directors must be natural persons
who are at least 18 years of age but need not be residents of Florida or
shareholders of the Corporation.
Section 2. Compensation. Unless specifically authorized by a resolution of
the Board of Directors, the directors shall serve in such capacity without
compensation. The directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors. No such payments shall preclude any
director from serving in any other capacity and receiving compensation therefor.
Section 3. Number, Election and Term. The number of directors which shall
constitute the whole board shall be such number as is determined from time to
time by resolutions of the Board of Directors, but not less than one. Any
decrease in the number of directors shall not shorten the term of an incumbent
director. [Non-classified Board: Directors shall be elected annually, at the
annual meeting of shareholders of the Corporation, by a plurality of the votes
cast by the shares entitled to vote in the election at a meeting at which a
quorum is present. The terms of all directors expire at the next annual
shareholders' meeting following their election and when their successors are
elected and shall qualify, or upon their earlier resignation, removal from
office or death.] [Classified Board: At the first annual meeting of shareholders
and at each annual meeting thereafter, the shareholders shall elect directors to
replace those directors whose terms then expire, by a plurality of the votes
cast by the shares entitled to vote in the election at a meeting at which a
quorum is present.] The Chairman of the Board of Directors shall preside at all
meetings of directors and of shareholders.
4
<PAGE> 5
Section 4. Nominating Committee. Only persons who are nominated in
accordance with the procedures set forth in this Section 4 shall be eligible for
election as directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of shareholders by or at
the direction of the Board of Directors or by any shareholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 4. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a shareholder's notice shall be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 50 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 60 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such shareholder's notice shall set forth (a)
as to each person whom the shareholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Corporation which are
beneficially owned by such person, and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including, without limitation, such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); and (b) as to the shareholder giving the
notice (i) the name and address, as they appear on the Corporation's books, of
such shareholder and (ii) the class and number of shares of the Corporation
which are beneficially owned by such shareholder. At the request of the Board of
Directors, any person nominated by the Board of Directors for election as a
director shall furnish to the Secretary of the Corporation that information
required to be set forth in a shareholder's notice of nomination which pertains
to the nominee. No later than the 15th day following the date of receipt of a
shareholder nomination submitted pursuant to this Section 4, the Chairman of the
Board of Directors of the Corporation shall, if the facts warrant, determine and
notify in writing the shareholder making such nomination that such nomination
was not made in accordance with the time limits and/or other procedures
prescribed by the Bylaws. If no such notification is mailed to such shareholder
within such 15-day period, such nomination shall be deemed to have been made in
accordance with the provisions of this Section 4. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in this Section 4.
Section 5. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number 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 hold office only until the next shareholders' meeting at which
directors are elected.
Section 6. Removal of Directors. The shareholders may remove one or more
directors at any time, but only for cause and by the affirmative vote of the
holders of 80% of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote generally for the election of directors. A director
may be removed for cause by the shareholders at a meeting of shareholders,
provided the notice of the meeting states that the purposes, or one of the
purposes, of the meeting is the removal of the director.
Section 7. Quorum and Voting. A majority of the number of directors fixed
by or in accordance with these Bylaws shall constitute a quorum for the
transaction of business at any meeting of directors. If a quorum is present when
a vote is taken, the affirmative vote of a majority of the directors present
shall be the act of the Board of Directors.
Section 8. Deemed Assent. A director who is present at a meeting of the
Board of Directors or a committee of the Board of Directors when corporate
action is taken is deemed to have assented to the action taken unless (i) the
director objects at the beginning of the meeting (or promptly upon his arrival)
to the holding of the meeting or transacting specified business at the meeting,
or (ii) the director votes against or abstains from the action taken.
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<PAGE> 6
Section 9. Committees. The Board of Directors, by resolution adopted by a
majority of the full Board of Directors, may designate from among its members an
executive committee and one or more other committees each of which must have at
least two members and, to the extent provided in the designating resolution,
shall have and may exercise all the authority of the Board of Directors, except
such authority as may be reserved to the Board of Directors under Florida law.
Section 10. Meetings. Regular and special meetings of the Board of
Directors shall be held at the principal place of business of the Corporation or
at any other place, within or without the State of Florida, designated by the
person or persons entitled to give notice of or otherwise call the meeting.
Meetings of the Board of Directors may be called by the Chairman of the Board,
by the President or any two directors. A majority of the directors present,
whether or not a quorum exists, may adjourn any meeting of the Board of
Directors to another time and place. Notice of an adjourned meeting shall be
given to the directors who were not present at the time of the adjournment and,
unless the time and place of the adjourned meeting are announced at the time of
the adjournment, to the directors who were present. Members of the Board of
Directors (and any committee of the Board) may participate in a meeting of the
Board (or any committee of the Board) by means of a telephone conference or
similar communications equipment through which all persons participating may
simultaneously hear each other during the meeting; participation by these means
constitutes presence in person at the meeting.
Section 11. Notice of Meetings. Regular meetings of the Board of Directors
may be held without notice of the date, time, place or purpose of the meeting,
so long as the date, time and place of such meetings are fixed generally by the
Board of Directors. Special meetings of the Board of Directors must be preceded
by at least two days' written notice of the date, time and place of the meeting.
The notice need not describe either the business to be transacted at or the
purpose of the special meeting.
Section 12. Waiver of Notice. Notice of a meeting of the Board of
Directors need not be given to a director who signs a waiver of notice either
before or after the meeting. Attendance of a director at a meeting shall
constitute a waiver of notice of that meeting and a waiver of any and all
objections to the place of the meeting, the time of the meeting and the manner
in which it has been called or convened, except when a director states, at the
beginning of the meeting or promptly upon arrival at the meeting, any objection
to the transaction of business because the meeting is not lawfully called or
convened. The waiver of notice need not describe either the business to be
transacted at or the purpose of the special meeting.
Section 13. Director Action Without a Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors (or a committee of
the Board) may be taken without a meeting if the action is taken by the written
consent of all members of the Board of Directors (or of the committee of the
Board). The action must be evidenced by one or more written consents describing
the action to be taken and signed by each director (or committee member), which
consent(s) shall be filed in the minutes of the proceedings of the Board. The
action taken shall be deemed effective when the last director signs the consent,
unless the consent specifies otherwise.
ARTICLE IV
OFFICERS
Section 1. Officers. The Corporation shall have a President, one or more
Vice Presidents, a Secretary and a Treasurer, each of whom shall be appointed by
the Board of Directors. Such other officers and assistant officers and agents as
may be deemed necessary or desirable may be appointed by the Board of Directors
from time to time. Any two or more offices may be held by the same person.
Section 2. Duties. The officers of the Corporation shall have the
following duties:
The President shall be the chief executive officer of the Corporation
and shall have general and active management of the business and affairs of
the Corporation subject to the direction of the Board of Directors. The
President shall see to it that all orders and resolutions of the Board are
carried into
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<PAGE> 7
effect. The President shall preside at all meetings of the shareholders and
the Board of Directors, unless the Board of Directors shall have elected a
Chairman other than the President.
Each Vice President shall perform such duties as the Board of
Directors may from time to time prescribe.
The Secretary shall have custody of and shall maintain all of the
corporate records (except the financial records), shall record the minutes
of all meetings of the shareholders and the Board of Directors, shall
authenticate records of the Corporation, shall send all notices of meetings
and shall perform such other duties as are prescribed by the Board of
Directors.
The Treasurer shall have custody of all corporate funds, securities
and financial records, shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Corporation in such depositaries as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements,
and shall render an account of all his transactions as treasurer and of the
financial condition of the Corporation at regular meetings of the Board or
when the Board of Directors so requests. The Treasurer shall also perform
such other duties as are prescribed by the Board of Directors.
Each other officer and assistant officer, if any, shall be appointed
by the Board of Directors and shall have such powers and shall perform such
duties as shall be assigned by them by the Board of Directors.
Section 3. Resignation of Officer. An officer may resign at any time by
delivering notice to the Corporation. The resignation shall be effective upon
receipt, unless the notice specifies a later effective date. If the resignation
is effective at a later date and the Corporation accepts the future effective
date, the Board of Directors may fill the pending vacancy before the effective
date provided the Board of Directors provides that the successor officer does
not take office until the future effective date.
Section 4. Removal of Office. The Board of Directors may remove any
officer at any time with or without cause. Any officer or assistant officer, if
appointed by another officer, may be removed by the appointing officer.
Section 5. Compensation. The compensation of officers shall be fixed from
time to time at the discretion of the Board of Directors. The Corporation may
enter into employment agreements with any officer of the Corporation.
ARTICLE V
STOCK CERTIFICATES
Section 1. Issuance. Every holder of shares in this Corporation shall be
entitled to have a certificate representing all shares to which he is entitled.
No certificate shall be issued for any share until the consideration therefor
has been fully paid.
Section 2. Form. Certificates representing shares in this Corporation
shall be signed by the President and the Secretary or any Assistant Secretary of
the Corporation, or by any other two officers designated by the Board of
Directors.
Section 3. Registered Shareholders. The Corporation shall be entitled to
treat the holder of record of shares as the holder in fact and, except as
otherwise provided by the laws of Florida, shall not be bound to recognize any
equitable or other claim to or interest in the shares.
Section 4. Transfer of Shares. Shares of the Corporation shall be
transferred on its books only after the surrender to the Corporation or the
transfer agent of the share certificates duly endorsed by the holder
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<PAGE> 8
of record or attorney-in-fact. If the surrendered certificates are canceled, new
certificates shall be issued to the person entitled to them, and the transaction
recorded on the books of the Corporation.
Section 5. Lost, Stolen or Destroyed Certificates. If a shareholder claims
that one or more of his certificates for shares issued by the Corporation have
been lost, stolen or destroyed, a new certificate shall be issued upon delivery
to the Corporation of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed, and, at the discretion of
the Board of Directors, upon the deposit of a bond or other indemnity as the
Board reasonably requires.
ARTICLE VI
DISTRIBUTIONS
The Board of Directors may from time to time authorize and declare, and the
Corporation may pay, distributions (including, but not limited to, dividends on,
and redemptions and other acquisitions of shares of the Corporation's stock) on
its outstanding shares in cash, property, or its own shares, provided any such
distribution is in compliance with the applicable restrictions and other
provisions of Florida law.
ARTICLE VII
CORPORATE RECORDS; FINANCIAL INFORMATION
Section 1. Corporate Records.
(A) The Corporation shall keep as permanent records minutes of all meetings
of its shareholders and Board of Directors, a record of all actions taken by the
shareholders or Board of Directors without a meeting, and a record of all
actions taken by a committee of the Board of Directors in place of the Board of
Directors on behalf of the Corporation.
(B) The Corporation or its agent shall maintain accurate accounting records
and a record of its shareholders in a form that permits preparation of a list of
the names and addresses of all shareholders in alphabetical order by class of
shares showing the number and series of shares held by each.
(C) The Corporation shall keep a copy of: its Articles of Incorporation or
restated Articles of Incorporation and all amendments to them currently in
effect; its Bylaws or restated Bylaws and all amendments currently in effect;
resolutions adopted by the Board of Directors creating one or more classes or
series of shares and fixing their relative rights, preferences, and limitations,
if shares issued pursuant to those resolutions are outstanding; the minutes of
all shareholders' meetings and records of all actions taken by shareholders
without a meeting for the past three years; written communications to all
shareholders generally or all shareholders of a class or series within the past
three years, including the financial statements furnished for the past three
years; a list of names and business street addresses of its current directors
and officers; and its most recent annual report delivered to the Department of
State.
(D) The Corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
Section 2. Financial Statements for Shareholders.
(A) Unless modified by resolution of the shareholders within 120 days after
the close of each fiscal year, the Corporation shall furnish its shareholders
with annual financial statements which may be consolidated or combined
statements of the Corporation and one or more of its subsidiaries, as
appropriate, that include a balance sheet as of the end of the fiscal year, an
income statement for that year, and a statement of cash flows for that year. If
financial statements are prepared for the Corporation on the basis of generally
accepted accounting principles, the annual financial statements must also be
prepared on that basis.
8
<PAGE> 9
(B) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the President, the Treasurer or the person
responsible for the Corporation's accounting records stating his reasonable
belief whether the statements were prepared on the basis of generally accepted
accounting principles and, if not, describing the basis of preparation and
describing any respects in which the statements were not prepared on a basis of
accounting consistent with the statements prepared for the preceding year.
(C) The Corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the Corporation
to prepare its financial statements if, for reasons beyond the Corporation's
control, it is unable to prepare its financial statements within the prescribed
period. Thereafter, on written request from a shareholder who was not mailed the
statements, the Corporation shall mail him the latest annual financial
statements.
Section 3. Other Reports to Shareholders.
(A) If the Corporation indemnifies or advances expenses to any director,
officer, employee or agent otherwise than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance maintained by the
Corporation, the Corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to the meeting if the indemnification or advance occurs after
the giving of the notice but prior to the time the meeting is held. This report
shall include a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
(B) If the Corporation issues or authorizes the issuance of shares for
promises to render services in the future, the Corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the Corporation, with or before the notice of the next
shareholders' meeting; provided, however, that the failure to provide such
notice to the shareholders shall not affect the validity of any shares so issued
or authorized to be issued.
ARTICLE VIII
INDEMNIFICATION
Indemnification of certain persons by the Corporation shall be as specified
in or determined pursuant to the Articles of Incorporation of the Corporation as
in effect from time to time.
ARTICLE IX
MISCELLANEOUS
Section 1. Corporate Seal. The corporate seal of the Corporation shall be
circular in form and shall include the name and jurisdiction of incorporation of
the Corporation.
Section 2. Fiscal Year. The fiscal year of the Corporation shall end on
December 31st of each calendar year, unless otherwise fixed by resolution of the
Board of Directors.
Section 3. Checks. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by the President, the Treasurer or such other
officer(s) or agent(s) of the Corporation as shall be determined from time to
time by resolution of the Board of Directors.
9
<PAGE> 10
ARTICLE X
AMENDMENT
These bylaws may be altered, amended and/or repealed and new bylaws may be
adopted by the Board of Directors. Shareholders may adopt, amend, repeal or
alter the bylaws of the corporation, including bylaws adopted by the Board of
Directors, without approval of the Board of Directors only if such adoption,
amendment, repeal or alteration is approved by the affirmative vote of the
holders of at least 80% of the issued and outstanding shares of the capital
stock of the Corporation entitled to vote on such matter, voting together as a
single class.
The undersigned, the Secretary of the Corporation, hereby certifies that
the foregoing bylaws were adopted by resolution of the Board of Directors during
a duly called meeting of the Board of Directors held on August 13, 1997 and are
effective as of May 14, 1997.
------------------------------------------,
Secretary
10
<PAGE> 1
EXHIBIT 3.6
CERTIFICATE OF INCORPORATION
OF
BIOCIDE INC.
The undersigned, being of legal age, in order to form a corporation under
and pursuant to the laws of the State of Delaware, does hereby set forth as
follows:
FIRST: The name of the corporation is:
BIOCIDE INC.
SECOND: The address of the initial registered and principal office of
this corporation in this state is c/o United Corporate Services, Inc., 15
East North Street, in the City of Dover, County of Kent, State of Delaware
19901 and the name of the registered agent at said address is United
Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporation may be organized under the corporation
laws of the State of Delaware.
FOURTH: The corporation shall be authorized to issue the following
shares:
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES PAR VALUE
- ----- ---------------- ---------
<S> <C> <C>
COMMON............................................. 3,000 $1.00
</TABLE>
FIFTH: The name and address of the incorporator are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
Ray A. Barr.................................... 10 Bank Street
White Plains, New York 10606
</TABLE>
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for
further definition, limitation and regulation of the powers of the
corporation and of its directors and stockholders:
(1) The number of directors of the corporation shall be such as
from time to time shall be fixed by, or in the manner provided in the
by-laws. Election of directors need not be by ballot unless the By-Laws
so provide.
(2) The Board of Directors shall have power without the assent or
vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the By-Laws
of the corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the corporation; to
determine the use and disposition of any surplus or net profits; and
to fix the time for the declaration and payment of dividends.
(b) To determine from time to time whether, and to what times
and places, and under what conditions the accounts and books of the
corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or
act for approval or ratification at any annual meeting of the
stockholders, at any meeting of the stockholders called for the purpose
of considering any such act or contract, or through a written consent in
lieu of a meeting in accordance with the requirements of the General
Corporation Law of Delaware as amended from time to time, and any
contract or act that shall be so approved or be so ratified by the vote
of the holders of a majority of the stock of the corporation which is
represented in
<PAGE> 2
person or by proxy at such meeting, (or by written consent whether
received directly or through a proxy) and entitled to vote thereon
(provided that a lawful quorum of stockholders be there represented in
person or by proxy) shall be as valid and as binding upon the
corporation and upon all the stockholders as though it had been
approved, ratified, or consented to by every stockholder of the
corporation, whether or not the contract or act would otherwise be open
to legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the corporation; subject, nevertheless, to
the provisions of the statutes of Delaware, of this certificate, and to
any by-laws from time to time made by the stockholders; provided,
however, that no by-laws so made shall invalidate any prior act of the
directors which would have been valid if such by-law had not been made.
SEVENTH: No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a
director, except with respect to (1) a breach of the director's duty of
loyalty to the corporation or its stockholders, (2) acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (3) liability under Section 174 of the Delaware General
Corporation Law or (4) a transaction from which the director derived an
improper personal benefit, it being the intention of the foregoing
provision to eliminate the liability of the corporation's directors to the
corporation or its stockholders to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law, as amended from time to
time. The corporation shall indemnify to the fullest extent permitted by
Sections 102(b)(7) and 145 of the Delaware General Corporation Law, as
amended from time to time, each person that such Sections grant the
corporation the power to indemnify.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware, may, on the
application in a summary way of this corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for this corporation under the provisions of Section 291 of Title
8 of the Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this corporation under the
provisions of Section 279 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 ( 3/4) in value of the creditors or class of creditors, and/
or of the stockholders or class of stockholders of this corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
NINTH: 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 and powers
conferred herein on stockholders, directors and officers are subject to
this reserved power.
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under the penalties of perjury
this twenty-first day of January, 1997.
/s/ RAY A. BARR
--------------------------------------
Ray A. Barr, Incorporator
2
<PAGE> 1
EXHIBIT 3.7
BY LAWS
OF
BIOCIDE INC.
------------------------
ARTICLE I -- OFFICES
The principal office of the corporation shall be located in the City,
County and State so provided in the Certificate of Incorporation. The
Corporation may also maintain offices at such other places within or without the
State of Delaware as the board of Directors may, from time to time, determine
and the business may require.
ARTICLE II -- SHAREHOLDERS
1. Place of Meetings.
Meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places within or without the State of Delaware as
the Board shall authorize.
2. Annual Meetings.
The annual meeting of the shareholders of the Corporation shall be held at
2:00 PM on the last Tuesday of the third month in each year after the close of
the fiscal year of the Corporation, if such date is not a legal holiday and if a
legal holiday, then on the next business day following at the same hour, at
which time the shareholders shall elect a Board of Directors, and transact such
other business as may properly come before the meeting.
3. Special Meetings.
Special meetings of the shareholders may be called at any time by the Board
or by the President, and shall be called by the President or the Secretary at
the written request of the holders of ten (10%) per cent of the outstanding
shares entitled to vote thereat, or as otherwise required by law.
4. Notice of Meetings.
Written notice of each meeting of shareholders, whether annual or special,
stating the time when and place where it is to be held, shall be served either
personally or by mail. Such notice shall be served not less than ten (10) nor
more than sixty (60) days before the meeting, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by the person calling the meeting. If at any
meeting, action is proposed to be taken that would, if taken, entitle
shareholders to receive payment for their shares, the notice of such meeting
shall include a statement of that purpose and to that effect. If mailed, such
notice shall be directed to each such shareholder at his address, as it appears
on the records of the shareholders of the Corporation, unless he shall have
previously filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which event, it
shall be mailed to the address designated in such request.
5. Waiver.
Notice of any meeting need not be given to any shareholder who submits a
signed waiver of notice either before or after a meeting. The attendance of any
shareholder at a meeting, in person or by proxy, shall constitute a waiver of
notice by such shareholder.
<PAGE> 2
6. Fixing Record Date.
For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the Board shall
fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than 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, it shall be determined in accordance
with the provisions of law.
7. Quorum.
(a) Except as otherwise provided by the Certificate of Incorporation, at
all meetings of shareholders of the Corporation, the presence at the
commencement of such meeting, in person or by proxy, of shareholders holding a
majority of the total number of shares of the Corporation then issued and
outstanding on the records of the Corporation and entitled to vote, shall be
necessary and sufficient to constitute a quorum for the transaction of any
business. If a specified item of business is required to be voted on by a class
or classes, the holder of a majority of the shares of such class or classes
shall constitute a quorum for the transaction of such specified item of
business. The withdrawal of any shareholder after the commencement of a meeting
shall have no effect on the existence of a quorum, after a quorum has been
established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting.
8. Voting.
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation,
(1) directors shall be elected by a plurality of the votes cast; and
(2) all other corporate action to be taken by vote of the shareholders,
shall be authorized by a majority of votes cast;
at a meeting of shareholders by the holders of shares entitled to vote thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of shares
of the Corporation entitled to vote, shall be entitled to one vote for each
share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent
without a meeting, may do so by proxy; provided, however, that the instrument
authorizing such proxy to act shall have been executed in writing by the
shareholder himself, or by his attorney-in-fact duly authorized in writing. No
proxy shall be voted or acted upon after three (3) years, unless the proxy shall
specify the length of time it is to continue in force. The proxy shall be
delivered to the Secretary at the meeting and shall be filed with the records of
the Corporation. Every proxy shall be revocable at the pleasure of the
shareholder executing it, unless the proxy states that it is irrevocable, except
as otherwise provided by law.
(d) Any action that may be taken by vote may be taken without a meeting on
written consent. Such action shall constitute action by such shareholders with
the same force and effect as if the same had been approved at a duly called
meeting of shareholders and evidence of such approval signed by all of the
shareholders shall be inserted in the Minute Book of the Corporation.
2
<PAGE> 3
ARTICLE III -- BOARD OF DIRECTORS
1. Number.
The number of the directors of the Corporation shall be one (1) until
otherwise determined by a vote of the Board.
2. Election.
Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board need not be shareholders and shall be
elected by a majority of the votes cast at a meeting of shareholders, by the
holders of shares entitled to vote in the election.
3. Term of Office.
Each director shall hold office until the annual meeting of the
shareholders next succeeding his election, and until his successor is elected
and qualified, or until his prior death, resignation or removal.
4. Duties and Powers.
The Board shall be responsible for the control and management of the
affairs, property and interests of the Corporation, and may exercise all powers
of the Corporation, except those powers expressly conferred upon or reserved to
the shareholders.
5. Annual Meetings.
Regular annual meetings of the Board shall be held immediately following
the annual meeting of shareholders.
6. Regular Meetings and Notice.
The Board may provide by resolution for the holding of regular meetings of
the Board of Directors, and may fix the time and place thereof.
Notice of regular meetings shall not be required to be given and, if given,
need not specify the purpose of the meeting; provided, however, that in case the
Board shall fix or change the time or place of any regular meeting, notice of
such action be given to each director who shall not have been present at the
meeting at which such action was taken within the time limited, and in the
manner set forth at Section 7 of this Article III, unless such notice shall be
waived.
7. Special Meetings and Notice.
(a) Special meetings of the Board shall be held whenever called by the
President or by one of the directors, at such time and place as may be specified
in the respective notices or waivers of notice thereof.
(b) Notice of special meetings shall be mailed directly to each director,
addressed to him at the address designated by him for such purpose at his usual
place of business, at least two (2) business days before the day on which the
meeting is to be held, or delivered to him personally or given to him orally,
not later than the business day before the day on which the meeting is to be
held.
(c) Notice of a special meeting shall not be required to be given to any
director who shall attend such meeting, or who submits a signed waiver of
notice.
8. Chairman.
At all meetings of the Board, the Chairman, if present, shall preside. If
there shall be no Chairman, or he shall be absent, then the President shall
preside. In his absence, the Chairman shall be chosen by the Directors present.
3
<PAGE> 4
9. Quorum and Adjournments.
(a) At all meetings of the Board, the presence of a majority of the entire
board shall be necessary to constitute a quorum for the transaction of business,
except as otherwise provided by law, by the Certificate of Incorporation, or by
these By-laws. Participation of any one or more members of the Board by means of
a conference telephone or similar communications equipment, allowing all persons
participating in the meeting to hear each other at the same time, shall
constitute presence in person at any such meeting.
(b) A majority of the directors present at any regular or special meeting,
although less than a quorum, may adjourn the same from time to time without
notice, until a quorum shall be present.
10. Manner of Acting.
(a) At all meetings of the Board, each director present shall have one
vote.
(b) Except as otherwise provided by law, by the Certificate of
Incorporation, or these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board. Any action authorized, in writing, by all of the directors entitled to
vote thereon and filed with the minutes of the Corporation shall be the act of
the Board with the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the board.
11. Vacancies.
Any vacancy in the Board of Directors resulting from an increase in the
number of directors, or the death, resignation, disqualification, removal or
inability to act of any director, shall be filled for the unexpired portion of
the term by a majority vote of the remaining directors, though less than a
quorum, at any regular meeting or special meeting of the Board called for that
purpose.
12. Resignation.
Any director may resign at any time by giving written notice to the Board,
the President or the Secretary of the Corporation. Unless otherwise specified in
such written notice, such resignation shall take effect upon receipt thereof by
the Board or such officer, and the acceptance of such resignation shall not be
necessary to make it effective.
13. Removal.
Any director may be removed, with or without cause, at any time by the
holders of a majority of the shares then entitled to vote at an election of
directors, at a special meeting of the shareholders called for that purpose, and
may be removed for cause by action of the Board.
14. Compensation.
No compensation shall be paid to directors as such, for their services, but
by resolution of the BOARD, a fixed sum and expenses for actual attendance may
be authorized for attendance at each regular or special meeting of the Board.
Nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
15. Contracts.
(a) No contract or other transaction between this Corporation and any other
business shall be affected or invalidated, nor shall any director be liable in
any way by reason of the fact that a director of this Corporation is interested
in, or is financially interested in such other business, provided such fact is
disclosed to the Board.
(b) Any director may be a party to or may be interested in any contract or
transaction of this Corporation individually, and no director shall be liable in
any way by reason of such interest, provided that the fact of such participation
or interest be disclosed to the Board and provided that the Board shall
4
<PAGE> 5
authorize or ratify such contract or transaction by the vote (not counting the
vote of any such director) of a majority of a quorum, notwithstanding the
presence of any such director at the meeting at which such action is taken. Such
director may be counted in determining the presence of a quorum at such meeting.
This Section shall not be construed to invalidate or in any way affect any
contract or other transaction which would otherwise be valid under the law
applicable thereto.
16. Committees.
The Board, by resolution adopted by a majority of the entire Board, may
from time to time designate from among its members an executive committee and
such other committees, and alternate members thereof, as they deem desirable,
each consisting of three or more members, which such powers and authority (to
the extent permitted by law) as may be provided in such resolution. Each such
committee shall remain in existence at the pleasure of the Board. Participation
of any one or more members of a 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, shall constitute a director's
presence in person at any such meeting. Any action authorized in writing by all
of the members of a committee and filed with the minutes of the committee shall
be the act of the committee with the same force and effect as if the same had
been passed by unanimous vote at a duly called meeting of the committee.
ARTICLE IV -- OFFICERS
1. Number and Qualifications.
The officers of the Corporation shall consist of a President, one or more
Vice Presidents, a Secretary, a Treasurer, and such other officers, including a
Chairman of the Board, as the Board of Directors may from time to time deem
advisable. Any officer other than the Chairman of the Board may be, but is not
required to be, a director of the Corporation. Any two or more offices a
director of the Corporation. Any two or more offices may be held by the same
person, except the offices of President and Secretary.
2. Election.
The officers of the Corporation shall be elected by the Board of the
regular annual meeting of the Board following the annual meeting of
shareholders.
3. Term of Office.
Each officer shall hold office until the annual meeting of the Board next
succeeding his election, and until his successor shall have been elected and
qualified, or until his death, resignation or removal.
4. Resignation.
Any officer may resign at any time by giving written notice thereof to the
Board, the President or the Secretary of the Corporation. Such resignation shall
take effect upon receipt thereof by the Board or by such officer, unless
otherwise specified in such written notice. The acceptance of such resignation
shall not be necessary to make it effective.
5. Removal.
Any officer, whether elected or appointed by the Board, may be removed by
the Board, with or without cause, and a successor elected by the Board at any
time.
6. Vacancies.
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board.
5
<PAGE> 6
7. Duties.
Unless otherwise provided by the Board, officers of the Corporation each
shall have powers and duties as generally pertain to their respective offices,
such powers and duties as may be set forth in these by-laws, and such powers and
duties as may be specifically provided for by the Board. The President shall be
the chief executive officer of the Corporation.
8. Sureties and Bonds.
At the request of the Board, any officer, employee or agent of the
Corporation shall execute for the Corporation a bond in such sum, and with such
surety as the Board may direct, conditioned upon the faithful performance of his
duties to the Corporation, including responsibility for negligence and for the
accounting for all property, funds or securities of the Corporation which may
come into his hands.
9. Shares of Other Corporations.
Whenever the Corporation is the holder of shares of any other corporation,
any right or power of the Corporation as such shareholder shall be exercised on
behalf of the Corporation in such manner as the Board may authorize.
ARTICLE V -- SHARES OF STOCK
1. Certificate.
(a) The certificates representing shares in the Corporation shall be in
such form as shall be approved by the Board and shall be numbered and registered
in the order issued. They shall bear the holder's name and the number of shares
and shall be signed by (i) the Chairman of the Board or the Vice Chairman of the
Board or the President or a Vice President, and (ii) the Secretary or Treasurer,
or any Assistant Secretary or Assistant Treasurer, and shall bear the corporate
seal.
(b) Certificate representing shares shall not be issued until they are
fully paid for.
(c) The Board may authorize the issuance of certificates for fractions of a
share which shall entitle the holder to exercise voting rights, receive
dividends and participate in liquidating distributions, in proportion to the
fractional holdings.
2. Lost or Destroyed Certificates.
Upon notification by the holder of any certificate representing shares of
the Corporation or the loss of destruction of one or more certificates
representing the same, the Corporation may issue new certificates in place of
any certificates previously issued by it, and alleged to have been lost or
destroyed. Upon production of evidence of loss or destruction, in such form as
the Board in its sole discretion may require, the Board may require the owner of
the lost or destroyed certificates to provide the Corporation with a bond in
such sum as the Board may direct, and with such surety as may be satisfactory to
the Board, to indemnify the Corporation against any claims, loss, liability or
damage it may suffer on account of the issuance of the new certificates. A new
certificate may be issued without requiring any such evidence or bond when, in
the judgment of the Board, it is proper to do so.
3. Transfers of Shares.
(a) Transfers of shares of the Corporation may be made on the share records
of the Corporation solely by the holder of such records, in person or by a duly
authorized attorney, upon surrender for cancellation of the certificates
representing such shares, with an assignment or power of transfer endorsed
thereon or delivered therewith, duly executed and with such proof of the
authenticity of the signature, and the authority to transfer and the payment of
transfer taxes as the Corporation or its agents may require.
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<PAGE> 7
(b) The Corporation shall be entitled to treat the holder of record of any
shares as the absolute owner thereof for all purposes and shall not be bound to
recognize any legal, equitable or other claim to, or interest in, such shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise expressly provided by law.
(c) The Corporation shall be entitled to impose such restrictions on the
transfer of shares as may be necessary for the purpose of electing or
maintaining Subchapter S status under the Internal Revenue Code or for the
purpose of securing or maintaining any other tax advantage to the Corporation.
4. Record Date
In lieu of closing the share records of the Corporation, the Board may fix,
in advance, a date not less than ten (10) days nor more than sixty (60) days, as
the record date for the determination of shareholders entitled to receive notice
of, and to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of determining shareholders entitled to receive payment of any dividends, or
allotment of any rights, or for the purpose of any other action. If no record
date is fixed, the record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day immediately preceding the day on which notice is given, or,
if the notice is waived, at the close of business on the day immediately
preceding the day on which the meeting is held; the record date for determining
shareholders for any other purpose shall be at the close of business on the day
on which the resolution of the directors relating thereto is adopted. The record
date for determining shareholders 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.
When a determination of shareholders of record entitled to notice of or to vote
at any meeting of shareholders has been made as provided for herein, such
determination shall apply to any adjournment thereof, unless the directors fix a
new record date for the adjourned meeting.
ARTICLE VI -- DIVIDENDS
Subject to this Certificate of Incorporation and to applicable law,
dividends may be declared and paid out of any funds available therefor, as
often, in such amount, and at such time or times as the Board may determine.
Before payment of any dividends, there may be set aside out of the net proceeds
of the Corporation available for dividends, such sum or sums as the Board, from
time to time, in its sole discretion, deems proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the Board shall think
conducive to the interests of the Corporation, and the Board may modify or
abolish any such reserve.
ARTICLE VII -- FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board from time to
time, subject to applicable law.
ARTICLE VIII -- CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from
time to time by the Board.
ARTICLE IX -- AMENDMENTS
1. By Shareholders.
All by-laws of the Corporation shall be subject to revision, amendment or
repeal, and new by-laws may be adopted from time to time by a majority of the
shareholders who are at such time entitled to vote in the election of directors.
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<PAGE> 8
2. By Directors.
The Board of Directors shall adopt a resolution setting forth the amendment
proposed declaring its advisability, and either calling a special meeting of the
stockholders entitled to vote in respect thereto for the consideration of such
amendment or directing that the amendment proposed be considered at the next
annual meeting of stockholders. Such special or annual meeting shall be called
and held upon notice. This notice shall set forth such amendment in full or a
brief summary of the changes to be effected thereby, as the directors shall deem
advisable. At the meeting a vote of the stockholders entitled to vote thereon
shall be taken for and against the proposed amendment. If a majority of the
outstanding stock entitled to vote thereon, and a majority of the outstanding
stock of each class entitled to vote thereon as a class has been voted in favor
of the amendment, a certificate setting forth the amendment and certifying that
such amendment has been duly adopted in accordance with this Section shall be
executed, acknowledged, filed and recorded and shall become effective.
The undersigned Incorporator certifies that he has adopted the foregoing
by-laws as the first by-laws of the Corporation, in accordance with the
requirements of the Business Corporation Law.
Dated:
- -------------------------------------------------
---------------------------------------------------------
8
<PAGE> 1
EXHIBIT 3.8
CERTIFICATE OF INCORPORATION
OF
COUNTRY WEEKLY, INC.
The undersigned, being of legal age, in order to form a corporation under
and pursuant to the laws of the State of Delaware, do hereby set forth as
follows:
FIRST: The name of the corporation is
COUNTRY WEEKLY, INC.
SECOND: The address of the initial registered and principal office of
this corporation in this state is c/o United Corporate Services, Inc., 15
East North Street, in the City of Dover, County of Kent, State of Delaware
19901 and the name of the registered agent at said address is United
Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the corporation
laws of the State of Delaware.
FOURTH: The corporation shall be authorized to issue the following
shares:
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES PAR VALUE
----- ---------------- ---------
<S> <C> <C>
COMMON............................................ 1,500 $1.00
</TABLE>
FIFTH: The name and address of the incorporator are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
Ray A. Barr................................... 10 Bank Street
White Plains, New York, 10606
</TABLE>
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for
further definition, limitation and regulation of the powers of the
corporation and of its directors and stockholders:
(1) The number of directors of the corporation shall be such as
from time to time shall be fixed by, or in the manner provided in the
by-laws. Election of directors need not be by ballot unless the by-laws
so provide.
(2) The Board of Directors shall have power without the assent or
vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the By-Laws
of the corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the corporation; to
determine the use and disposition of any surplus or net profits; and
to fix the times for the declaration and payments of dividends.
(b) To determine from time to time whether, and to what times
and places, and under what conditions the accounts and books of the
corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or
act for approval or ratification at any annual meeting of the
stockholders or at any meeting of the stockholders called for the
purpose of considering any such act or contract, and any contract or act
that shall be approved or be ratified by the vote of the holders of a
majority of the stock of the corporation which is represented in person
or by proxy at such meeting and entitled to vote thereat (provided that
a lawful quorum of stockholders be there represented in person or by
proxy) shall be as valid
<PAGE> 2
and as binding upon the corporation and upon all the stockholders as
though it had been approved or ratified by every stockholder of the
corporation, whether or not the contract or act would otherwise be open
to legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statue expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate, and to any
by-laws from time to time made by the stockholders; provided, however,
that no by-laws so made shall invalidate any prior act of the directors
which would have been valid if such by-law had not been made.
SEVENTH: No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a
director, except with respect to (1) a breach of the director's duty of
loyalty to the corporation or its stockholders, (2) acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (3) liability under Section 174 of the Delaware General
Corporation Law or (4) a transaction from which the director derived an
improper personal benefit, it being the intention of the foregoing
provision to eliminate the liability of the corporation's directors to the
corporation or its stockholders to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law, as amended from time to
time. The corporation shall indemnify to the fullest extent permitted by
Sections 102(b)(7) and 145 of the Delaware General Corporation Law, as
amended from time to time, each person that such Sections grant the
corporation the power to indemnify.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware, may, on the
application in a summary way of this corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for this corporation under the provisions of Section 291 of Title
8 of the Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this corporation under the
provisions of Section 279 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 ( 3/4) in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as
the case may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
NINTH: The corporation reserves the right to amend, altar, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are subject to
this reserved power.
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under the penalties of perjury
this eleventh day of January, 1994.
/s/ RAY A. BARR
--------------------------------------
Ray A. Barr, Incorporator
2
<PAGE> 1
EXHIBIT 3.9
BY LAWS
OF
COUNTRY WEEKLY, INC
------------------------
ARTICLE I -- OFFICES
The principal office of the Corporation shall be located in the City,
County and State so provided in the Certificate of Incorporation. The
Corporation may also maintain offices at such other places within or without the
State of Delaware as the Board of Directors may, from time to time, determine
and the business may require.
ARTICLE II -- SHAREHOLDERS
1. Place of Meetings.
Meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places within or without the State of Delaware as
the Board shall authorize.
2. Annual Meetings.
The annual meeting of the shareholders of the Corporation shall be held at
2:00 PM on the last Tuesday of the third month in each year after the close of
the fiscal year of the Corporation, if such date is not a legal holiday and if a
legal holiday, then on the next business day following at the same hour, at
which time the shareholders shall elect a Board of Directors, and transact such
other business as may properly come before the meeting.
3. Special Meetings.
Special meetings of the shareholders may be called at any time by the Board
or by the President, and shall be called by the President or the Secretary at
the written request of the holders of ten (10%) per cent of the outstanding
shares entitled to vote thereat, or as otherwise required by law.
4. Notice of Meetings.
Written notice of each meeting of shareholders, whether annual or special,
stating the time when and place where it is to be held, shall be served either
personally or by mail. Such notice shall be served not less than ten (10) nor
more than sixty (60) days before the meeting, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by the person calling the meeting. If at any
meeting, action is proposed to be taken that would, if taken, entitle
shareholders to receive payment for their shares, the notice of such meeting
shall include a statement of that purpose and to that effect. If mailed, such
notice shall be directed to each such shareholder at his address, as it appears
on the records of the shareholders of the Corporation, unless he shall have
previously filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which event, it
shall be mailed to the address designated in such request.
5. Waiver.
Notice of any meeting need not be given to any shareholder who submits a
signed waiver of notice either before or after a meeting. The attendance of any
shareholder at a meeting, in person or by proxy, shall constitute a waiver of
notice by such shareholder.
<PAGE> 2
6. Fixing Record Date.
For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the Board shall
fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than 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, it shall be determined in accordance
with the provisions of law.
7. Quorum.
(a) Except as otherwise provided by the Certificate of Incorporation, at
all meetings of shareholders of the Corporation, the presence at the
commencement of such meetings, in person or by proxy, of shareholders holding a
majority of the total number of shares of the Corporation then issued and
outstanding on the records of the Corporation and entitled to vote, shall be
necessary and sufficient to constitute a quorum for the transaction of any
business. If a specified item of business is required to be voted on by a class
or classes, the holder of a majority of the shares of such class or classes
shall constitute a quorum for the transaction of such specified item of
business. The withdrawal of any shareholder after the commencement of a meeting
shall have no effect on the existence of a quorum, after a quorum has been
established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting.
8. Voting.
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation,
(1) directors shall be elected by a plurality of the votes cast; and
(2) all other corporate action to be taken by vote of the shareholders,
shall be authorized by a majority of votes cast;
at a meeting of shareholders by the holders of shares entitled to vote thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of shares
of the Corporation entitled to vote, shall be entitled to one vote for each
share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent
without a meeting, may do so by proxy; provided, however, that the instrument
authorizing such proxy to act shall have been executed in writing by the
shareholder himself, or by his attorney-in-fact duly authorized in writing. No
proxy shall be voted or acted upon after three (3) years, unless the proxy shall
specify the length of time it is to continue in force. The proxy shall be
delivered to the Secretary at the meeting and shall be filed with the records of
the Corporation. Every proxy shall be revocable at the pleasure of the
shareholder executing it, unless the proxy states that it is irrevocable, except
as otherwise provided by law.
(d) Any action that may be taken by vote may be taken without a meeting on
written consent. Such action shall constitute action by such shareholders with
the same force and effect as if the same had been approved at a duly called
meeting of shareholders and evidence of such approval signed by all of the
shareholders shall be inserted in the Minute Book of the Corporation.
2
<PAGE> 3
ARTICLE III -- BOARD OF DIRECTORS
1. Number.
The number of the directors of the Corporation shall be three (3), until
otherwise determined by a vote of the Board, and it shall in no event be less
than three, unless all of the outstanding shares are owned of record by less
than three shareholders, in which event, the number of directors shall not be
less than the number of shareholders.
2. Election.
Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board need not be shareholders and shall be
elected by a majority of the votes cast at a meeting of shareholders, by the
holders of shares entitled to vote in the election.
3. Term of Office.
Each director shall hold office until the annual meeting of the
shareholders next succeeding his election, and until his successor is elected
and qualified, or until his prior death, resignation or removal.
4. Duties and Powers.
The Board shall be responsible for the control and management of the
affairs, property and interests of the Corporation, and may exercise all powers
of the Corporation, except those powers expressly conferred upon or reserved to
the shareholders.
5. Annual Meetings.
Regular annual meetings of the Board shall be held immediately following
the annual meeting of shareholders.
6. Regular Meetings and Notice.
The Board may provide by resolution for the holding of regular meetings of
the Board of Directors, and may fix the time and place thereof.
Notice of regular meetings shall not be required to be given and, if given,
need not specify the purpose of the meeting; provided, however, that in case the
Board shall fix or change the time or place of any regular meeting, notice of
such action be given to each director who shall not have been present at the
meeting at which such action was taken within the time limited, and in the
manner set forth at Section 7 of this Article III, unless such notice shall be
waived.
7. Special Meetings and Notice.
(a) Special meetings of the Board shall be held whenever called by the
President or by one of the directors, at such time and place as may be specified
in the respective notices or waivers of notice thereof.
(b) Notice of special meetings shall be mailed directly to each director,
addressed to him at the address designated by him for such purpose at his usual
place of business, at least two (2) business days before the day on which the
meeting is to be held, or delivered to him personally or given to him orally,
not later than the business day before the day on which the meeting is to be
held.
(c) Notice of a special meeting shall not be required to be given to any
director who shall attend such meeting, or who submits a signed waiver of
notice.
3
<PAGE> 4
8. Chairman.
At all meetings of the Board, the Chairman, if present, shall preside. If
there shall be no Chairman, or he shall be absent, then the President shall
preside. In his absence, the Chairman shall be chosen by the Directors present.
9. Quorum and Adjournments.
(a) At all meetings of the Board, the presence of a majority of the entire
Board shall be necessary to constitute a quorum for the transaction of business,
except as otherwise provided by law, by the Certificate of Incorporation, or by
these By-laws. Participation of any one or more members of the Board by means of
a conference telephone or similar communications equipment, allowing all parsons
participating in the meeting to hear each other at the same time, shall
constitute presence in person at any such meeting.
(b) A majority of the directors present at any regular or special meeting,
although less than a quorum, may adjourn the same from time to time without
notice, until a quorum shall be present.
10. Manner of Acting.
(a) At all meetings of the Board, each director present shall have one
vote.
(b) Except as otherwise provided by law, by the Certificate of
Incorporation, or these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board. Any action authorized, in writing, by all of the directors entitled to
vote thereon and filed with the minutes of the Corporation shall be the act of
the Board with the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the Board.
11. Vacancies.
Any vacancy in the Board of Directors resulting from an increase in the
number of directors, or the death, resignation, disqualification, removal or
inability to act of any director, shall be filled for the unexpired portion of
the term, by a majority vote of the remaining directors, though less than a
quorum, at any regular meeting or special meeting of the Board called for that
purpose.
12. Resignation.
Any director may resign at any time by giving written notice to the Board,
the President or the Secretary of the Corporation. Unless otherwise specified in
such written notice, such resignation shall take effect upon receipt thereof by
the Board or such officer, and the acceptance of such resignation shall not be
necessary to make it effective.
13. Removal.
Any director may be removed, with or without cause, at any time by the
holders of a majority of the shares then entitled to vote at an election of
directors, at a special meeting of the shareholders called for that purpose, and
may be removed for cause by action of the Board.
14. Compensation.
No compensation shall be paid to directors as such, for their services, but
by resolution of the BOARD, a fixed sum and expenses for actual attendance may
be authorized for attendance at each regular or special meeting of the Board.
Nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
15. Contracts.
(a) No contract or other transaction between this Corporation and any other
business shall be affected or invalidated, nor shall any director be liable in
any way by reason of the fact that a director of
4
<PAGE> 5
this Corporation is interested in, or is financially interested in such other
business, provided such fact is disclosed to the Board.
(b) Any director may be a party to or may be interested in any contract or
transaction of this Corporation individually and no director shall be liable in
any way by reason of such interest, provided that the fact of such participation
or interest be disclosed to the Board and provided that the Board shall
authorize or ratify such contract or transaction by the vote (not counting the
vote of any such director) of a majority of a quorum, notwithstanding the
presence of any such director at the meeting at which such action is taken. Such
director may be counted in determining the presence of a quorum at such meeting.
This Section shall not be construed to invalidate or in any way affect any
contract or other transaction which would otherwise be valid under the law
applicable thereto.
16. Committees.
The Board, by resolution adopted by a majority of the entire Board, may
from time to time designate from among its members an executive committee and
such other committees, and alternate members thereof, as they deem desirable,
each consisting of three or more members, which such powers and authority (to
the extent permitted by law) as may be provided in such resolution. Each such
committee shall remain in existence at the pleasure of the Board. Participation
of any one or more members of a 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, shall constitute a director's
presence in person at any such meeting. Any action authorized in writing by all
of the members of a committee and filed with the minutes of the committee shall
be the act of the committee with the same force and effect as if the same had
been passed by unanimous vote at a duly called meeting of the committee.
ARTICLE IV -- OFFICERS
1. Number and Qualifications.
The officers of the Corporation shall consist of a President, one or more
Vice Presidents, a Secretary, Treasurer, and such other officers, including a
Chairman of the Board, as the Board of Directors may from time to time deem
advisable. Any officer other than the Chairman of the Board may be, but is not
required to be, a director of the Corporation. Any two or more offices may be
held by the same person, except the offices of President and Secretary.
2. Election.
The officers of the Corporation shall be elected by the Board at the
regular annual meeting of the Board following the annual meeting of
shareholders.
3. Term of Office.
Each officer shall hold office until the annual meeting of the Board next
succeeding his election, and until his successor shall have been elected and
qualified, or until his death, resignation or removal.
4. Resignation.
Any officer may resign at any time by giving written notice thereof to the
Board, the President or the Secretary of the Corporation. Such resignation shall
take effect upon receipt thereof by the Board or by such officer, unless
otherwise specified in such written notice. The acceptance of such resignation
shall not be necessary to make it effective.
5. Removal.
Any officer, whether elected or appointed by the Board, may be removed by
the Board, either with or without cause, and a successor elected by the Board at
any time.
5
<PAGE> 6
6. Vacancies.
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board.
7. Duties.
Unless otherwise provided by the Board, officers of the Corporation shall
each have such powers and duties as generally pertain to their respective
offices, such powers and duties as may be set forth in these by-laws, and such
powers and duties as may be specifically provided for by the Board. The
President shall be the chief executive officer of the Corporation.
8. Sureties and Bonds.
At the request of the Board, any officer, employee or agent of the
Corporation shall execute for the Corporation a bond in such sum, and with such
surety as the Board may direct, conditioned upon the faithful performance of his
duties to the Corporation, including responsibility for negligence and for the
accounting for all property, funds or securities of the Corporation which may
come into his hands.
9. Shares of Other Corporations.
Whenever the Corporation is the holder of shares of any other corporation,
any right or power of the Corporation as such shareholder shall be exercised on
behalf of the Corporation in such manner as the Board may authorize.
ARTICLE V -- SHARES OF STOCK
1. Certificates.
(a) The certificates representing shares in the Corporation shall be in
such form as shall be approved by the Board and shall be numbered and registered
in the order issuer. They shall bear the holder's name and the number of shares
and shall be signed by (i) the Chairman of the Board, or the Vice Chairman of
the Board or the President or a Vice President, and (ii) the Secretary or
Treasurer, or any Assistant Secretary or Assistant Treasurer, and shall bear the
corporate seal.
(b) Certificate representing shares shall not be issued until they are
fully paid for.
(c) The Board may authorize tile issuance of certificates for fractions of
a share which shall entitle the holder to exercise voting rights, receive
dividends and participate in liquidating distributions, in proportion to the
fractional holdings.
2. Lost or Destroyed Certificates.
Upon notification by the holder of any certificate representing shares of
the Corporation of the loss or destruction of one or more certificates
representing the same, the Corporation may issue new certificates in place of
any certificates previously issued by it, and alleged to have been lost or
destroyed. Upon production of evidence of loss or destruction, in such form as
the Board in its sole discretion may require, the Board may require the owner of
the lost or destroyed certificates to provide the Corporation with a bond in
such sum as the Board may direct, and with such surety as may be satisfactory to
the Board, to indemnify the Corporation against any claims, loss, liability or
damage it may suffer on account of the issuance of the new certificates. A new
certificate may be issued without requiring any such evidence or bond when, in
the judgment of the Board, it is proper to do so.
3. Transfers of Shares.
(a) Transfers of shares of the Corporation may be made on the share records
of the Corporation solely by the holder of such records, in person or by a duly
authorized attorney, upon surrender for
6
<PAGE> 7
cancellation of the certificates representing such shares, with, an assignment
or power of transfer endorsed thereon or delivered therewith, duly executed and
with such proof of the authenticity of the signature, and the authority to
transfer and the payment of transfer taxes as the Corporation or its agents may
require.
(b) The Corporation shall be entitled to treat the holder of record of any
shares as the absolute owner thereof for all purposes and shall not be bound to
recognize any legal, equitable or other claim to, or interest in, such shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise expressly provided by law.
(c) The Corporation shall be entitled to impose such restrictions on the
transfer of shares as may be necessary for the purpose of electing or
maintaining Subchapter S status under the Internal Revenue Code or for the
purpose of securing or maintaining any other tax advantage to the Corporation.
4. Record Date.
In lieu of closing the share records of the Corporation, the Board may fix,
in advance, a date not less than ten (10) days nor core than sixty (60) days, as
the record date for the determination of shareholders entitle to receive notice
of, and to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of determining shareholders entitled to receive payment of any dividends, or
allotment of any rights, or for the purpose of any other action. If no record
date is fixed, the record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day immediately preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day immediately preceding
the day on which the meeting is held; the record date for determining
shareholders for any other purpose shall be at the close of business on the day
on which the resolution of the directors relating thereto is adopted. 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.
When a determination of shareholders of record entitled to notice of or to vote
at any meeting of shareholders has been made as provided for herein, such
determination shall apply to any adjournment thereof, unless the directors fix a
new record date for the adjourned meeting.
ARTICLE VI -- DIVIDENDS
Subject to this Certificate of Incorporation and to applicable law,
dividends may be declared and paid out of any funds available therefor, as
often, in such amount, and at such time or times as the Board may determine.
Before payment of any dividends, there may be set aside out of the net profits
of the Corporation available for dividends, such sum or sums as the Board, from
time to time, in its sole discretion, deems proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the Board shall think
conducive to the interests of the Corporation, and the Board may modify or
abolish any such reserve.
ARTICLE VII -- FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board from time to
time, subject to applicable law.
ARTICLE VIII -- CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from
time to time by the Board.
7
<PAGE> 8
ARTICLE IX -- AMENDMENTS
1. By Shareholders.
All by-laws of the Corporation shall be subject to revision, amendment or
repeal, and new by laws may be adopted from time to time by a majority of the
shareholders who are at such time entitled to vote in the election of directors.
2. By Directors.
The Board of Directors shall adopt a resolution setting forth the amendment
proposed declaring its advisability, and either calling a special meeting of the
stockholders entitled to vote in respect thereto for the consideration of such
amendment or directing that the amendment proposed be considered at the next
annual meeting of stockholders. Such special or annual meeting shall be called
and held upon notice. This notice shall set forth such amendment in full or a
brief summary of the changes to be effected thereby, as the directors shall deem
advisable. At the meeting a vote of the stockholders entitled to vote thereon
shall be taken for and against the proposed amendment. If a majority of the
outstanding stock entitled to vote thereon, and a majority of the outstanding
stock of each class entitled to vote thereon as a class has been voted in favor
of the amendment, a certificate setting forth the amendment and certifying that
such amendment has been duly adopted in accordance with this section shall be
executed. acknowledged, filed and recorded and shall become effective.
The undersigned Assistant Secretary certifies that he has adopted the
foregoing by-laws as the first by-laws of the Corporation, in accordance with
the requirements of the Business Corporation Law.
Date:
- --------------------------------------------------
---------------------------------------------------------
Assistant Secretary
8
<PAGE> 1
EXHIBIT 3.10
CERTIFICATE OF INCORPORATION
OF
DISTRIBUTION SERVICES, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts mandatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is
DISTRIBUTION SERVICES, INC.
SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is 229
South State Street, City of Dover, county of Kent; and the name of the
registered agent of the corporation in the State of Delaware at such
address is The Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and of the purposes to be conducted
and promoted by the corporation, which shall be in addition to the
authority of the corporation to conduct any lawful business, to promote any
lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the
State of Delaware, is as follows:
To service retail outlets for magazines, newspapers, periodicals
and other printed matter; to act as a distributor or jobber for
magazines and periodicals of all kinds; to maintain and conduct a
service or services, or bureau or bureaus, for the collection,
transmission, sale, and disposal of printed and reproduced matter of any
kind and nature; to act as news, advertising, and general
representatives and agents for newspapers, magazines, and other
publications, and for persons, firms, and corporations, and to contract
for and buy, sell, lease, or otherwise acquire or dispose of or deal in
advertising and news space, and to make contracts and conduct operations
of any kind or nature with reference thereto.
To purchase, receive, take by grant, gift, device, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use
and otherwise deal in and with real or personal property, or any
interest therein, wherever situated, and to sell, convey, lease,
exchange, transfer or otherwise dispose of, or mortgage or pledge, all
or any of its property and assets, or any interest therein, wherever
situated.
To engage generally in the real estate business as principal,
agent, broker, and in any lawful capacity, and generally to take, lease,
purchase, or otherwise acquire, and to own, use, hold, sell, convey,
exchange, lease, mortgage, work, clear, improve, develop, divide, and
otherwise handle, manage, operate, deal in and dispose of real estate,
real property, lands, multiple-dwelling structures, houses, buildings
and other works and any interest or right therein; to take, lease,
purchase or otherwise acquire, and to own, use, hold, sell, convey,
exchange, hire, lease, pledge, mortgage, and otherwise handle, and deal
in and dispose of, as principal, agent, broker, and in any lawful
capacity, such personal property, chattels, chattels real, rights,
easements, privileges, choses in action, notes, bonds, mortgages, and
securities as may lawfully be acquired, held, or disposed of; and to
acquire, purchase, sell, assign, transfer, dispose of, and generally
deal in and with, as principal, agent, broker, and in any lawful
capacity, mortgages and other interests in real, personal, and mixed
properties; to carry on a general construction, contracting, building,
and realty management business as principal, agent, representative,
contractor, subcontractor, and in any other lawful capacity.
<PAGE> 2
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as leasor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in respect
of, and generally deal in and with, at wholesale and retail, as
principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor,
and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal, and mixed property of any and all kinds, together with
the components, resultants, and by-products thereof.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, turn to account, grant licenses and immunities in
respect of, manufacture under and to introduce, sell, assign, mortgage,
pledge or otherwise dispose of, and, in any manner deal with and
contract with reference to:
(a) inventions, devices, formulas, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks, trade names,
trade symbols and other indications of origin and ownership granted
by or recognized under the laws of the United States of America, the
District of Columbia, any state or subdivision thereof, and any
commonwealth, territory, possession, dependency, colony, possession,
agency or instrumentality of the United States of America and of any
foreign country, and all rights connected therewith or appertaining
thereunto;
(c) franchises, licenses, grants and commissions.
To guarantee, purchase, take, receive, subscribe for, and otherwise
acquire, own, hold, use, and otherwise employ, sell, lease, exchange,
transfer, and otherwise dispose of, mortgage, lend, pledge, and
otherwise deal in and with, securities (which term, for the purpose of
this Article THIRD, includes, without limitation of the generality
thereof, any shares of stock, bonds, debentures, notes, mortgages, other
obligations, and any certificates, receipts or other instruments
representing rights to receive, purchase or subscribe for the same, or
representing any other rights or interests therein or in any property or
assets) of any persons, domestic and foreign firms, associations, and
incorporations, and by any government or agency or instrumentality
thereof; to make payment therefor in any lawful manner; and, while owner
of any such securities, to exercise any and all rights, powers and
privileges in respect thereof, including the right to vote.
To make, enter into, perform and carry out contracts of every kind
and description with any person, firm, association, corporation or
government or agency, or instrumentality thereof.
To acquire by purchase, exchange or otherwise, all, or any part, or
any interest in, the properties, assets, business and good will of any
one or more persons, firms, associations or corporations heretofore or
hereafter engaged in any business for which a corporation may now or
hereafter be organized under the laws of the State of Delaware; to pay
for the name in cash, property or its own or other securities; to hold,
operate, reorganize, liquidate, sell or in any manner dispose of the
whole or any part thereof; and in connection therewith, to assume or
guarantee performance of any liabilities, obligations or contracts of
such persons, firms, associations or corporations, and to conduct the
whole or any part of any business thus acquired.
To lend money in furtherance of its corporate purposes and to
invest and reinvest its funds from time to time to such extent, to such
persons, firms, associations, corporations, governments or agencies or
instrumentalities thereof, and on such terms and on such security, if
any, as the Board of Directors of the corporation may determine.
2
<PAGE> 3
To make contracts of guaranty and suretyship of all kinds and
endorse or guarantee the payment of principal, interest or dividends
upon, and to guarantee the performance of sinking fund or other
obligations of, any securities, and to guarantee in any way permitted by
law the performance of any of the contracts or other undertakings in
which the corporation may otherwise be or become interested, of any
person, firm, association, corporation, government or agency or
instrumentality thereof, or of any other combination, organization or
entity whatsoever.
To borrow money without limit as to amount and at such rates of
interest as it may determine; from time to time to issue and sell its
own securities, including its share of stock, notes, bonds, debentures,
and other obligations, in such amounts, on such terms and conditions,
for such purposes and for such prices, nor or hereafter permitted by the
laws of the State of Delaware and by this certificate of incorporation,
as the Board of Directors of the corporation may determine; and to
secure any of its obligations by mortgage, pledge or other encumbrance
of all or any of its property, franchises and income.
To be a promoter or manager of other corporations of any type or
kind; and to participate with others in any corporation, partnership,
limited partnership, joint venture, or other association of any kind, or
in any transaction, undertaking or arrangement which the corporation
would have power to conduct by itself, whether or not such participation
involves sharing or delegation of control with or to others.
To draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments and
evidences of indebtedness whether assured by mortgage or otherwise, as
well as to assure the same by mortgage or otherwise, so far as may be
permitted by the laws of the State of Delaware.
To purchase, receive, take, reacquire or otherwise acquire, own and
hold, sell, lend, exchange, reissue, transfer or otherwise dispose of,
pledge, use, cancel, and otherwise deal in and with its own shares and
its other securities from time to time to such an extent and in such
manner and upon such terms as the Board of Directors of the corporation
shall determine; provided that the corporation shall not use its funds
or property for the purchase of its own shares of capital stock when its
capital is impaired or when such use would cause any impairment of its
capital, except to the extent permitted by law.
To organize, as an incorporator, or cause to be organized under the
laws of the State of Delaware, or of any other State of the United
States of America, or of the District of Columbia, or of any
commonwealth, territory, dependency, colony, possession, agency, or
instrumentality of the United States of America, or of any foreign
country, a corporation or corporations for the purpose of conducting and
promoting any business or purpose for which corporations may be
organized, and to dissolve, wind up, liquidate, merge or consolidate any
such corporation or corporations or to cause the same to be dissolved,
wound up, liquidated, merged or consolidated.
To conduct its business, promote its purposes, and carry-on its
operations in any and all of its branches and maintain offices both
within and without the State of Delaware, in any and all States of the
United States of America, in the District of Columbia, and in any or all
commonwealths, territories, dependencies, colonies, possessions,
agencies, or instrumentalities of the United States of America and of
foreign governments.
To promote and exercise all or any part of the foregoing purposes
and powers in any and all parts of the world, and to conduct its
business in all or any of its branches as principal, agent, broker,
factor, contractor, and in any other lawful capacity either alone or
through or in conjunction with any corporations, associations,
partnerships, firms, trustees, syndicates, individuals, organizations,
and other entities in any part of the world, and, in conducting its
business and promoting any of its purposes, to maintain offices,
branches and agencies in any part of the world, to make and perform any
contracts and to do any acts and things, and to carry on any business,
and to exercise any powers and privileges suitable, convenient, or
proper for the conduct,
3
<PAGE> 4
promotion, and attainment of any of the business and purposes herein
specified or which at any time may be incidental thereto or may appear
conducive to or expedient for the accomplishment of any of such business
and purposes and which might be engaged in or carried on by a
corporation incorporated or organized under the General Corporation Law
of the State of Delaware, and to have and exercise all of the powers
conferred by the laws of the State of Delaware upon corporations
incorporated or organized under the General Corporation Law of the State
of Delaware.
The foregoing provisions of this Article THIRD shall be construed both as
purposes and powers and each as an independent purpose and power. The foregoing
enumeration of specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
certificate of incorporation; provided, that the corporation shall not conduct
any business, promote any purpose, or exercise any power or privilege within or
without the State of Delaware which, under the laws thereof, the corporation may
not lawfully conduct, promote, or exercise.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is One Thousand (1,000), all of which are
without par value. All such shares are of one class and are Common Stock.
No holder of any of the shares of the stock of the corporation,
whether now or hereafter authorized and issued, shall be entitled as of
right to purchase or subscribe for (1) any unissued stock of any class, or
(2) any additional shares of any class to be issued by reason of any
increase of the authorized capital stock of the corporation of any class,
or (3) bonds, certificates of indebtedness, debentures or other securities
convertible into stock of the corporation, or carrying any right to
purchase stock of any class, but any such unissued stock or such additional
authorized issue of any stock or of other securities convertible into
stock, or carrying any right to purchase stock, may be issued and disposed
of pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations and upon such terms as may be deemed advisable
by the Board of Directors in the exercise of its discretion.
FIFTH: The name and the mailing address of the incorporator are as
follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
- ---- ---------------
<S> <C>
R. G. Dickerson....................................... 229 South State Street
Dover, Delaware
</TABLE>
SIXTH: The corporation is to have perpetual existence.
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 section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this corporation under the provisions
of section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of
this corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made, be binding on all
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
4
<PAGE> 5
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further
provided:
1. The management of the business and the conduct of the affairs
of the corporation shall be vested in its Board of Directors. The number
of directors which shall constitute the whole Board of Directors shall
be fixed by, or in the manner provided in, the By-Laws. The phrase
"whole Board" and the phrase "total number of directors" shall be deemed
to have the same meaning, to wit, the total number of directors which
the corporation would have if there were no vacancies. No election of
directors need be by written ballot.
2. After the original or other By-laws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance
with the provisions of Section 109 of the General Corporation Law of the
State of Delaware, and, after the corporation has received any payment
for any of its stock, the power to adopt, amend, or repeal the By-Laws
of the corporation may be exercised by the Board of Directors of the
corporation; provided, however, that any provision for the
classification of directors of the corporation for staggered terms
pursuant to the provisions of subsection (d) of Section 141 of the
General Corporation Law of the State of Delaware shall be set forth in
an initial By-Law or in a By-Law adopted by the stockholders entitled to
vote of the corporation unless provisions for such classification shall
be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof
to notice of, and the right to vote at, any meeting of stockholders.
Whenever the corporation shall be authorized to issue more than one
class of stock, no outstanding share of any class of stock which is
denied voting power under the provisions of the certificate of
incorporation shall entitle the holder thereof to the right to vote, at
any meeting of stockholders (illegible) the provisions of paragraph
(illegible) of section (illegible) of the General Corporation Law of the
State of Delaware shall otherwise require; provided, that no share of
any such class which is otherwise denied voting power shall entitle the
holder thereof to vote upon the increase or decrease in the number of
authorized shares of said class.
NINTH: The corporation shall, to the fullest extent permitted by the
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented indemnify any and all persons whom it shall have
power to indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which the indemnified may be entitled under any
By-Law, agreement, vote 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 (illegible) person who has
ceased to be a director, officer, employee or (illegible) and shall (illegible)
to the benefit of the heirs, executors and administrators of such a person.
TENTH: From time to time any provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed be said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article TENTH.
Signed on December 23, 1975.
By: /s/ R.G. DICKERSON
------------------------------------
R.G. Dickerson, Incorporator
5
<PAGE> 1
EXHIBIT 3.11
RESTATED BY-LAWS
NOVEMBER 30, 1981
OF
DISTRIBUTION SERVICES, INC.
ARTICLE I -- OFFICES
The office of the Corporation shall be located in the City, County and
State designated in the Certificate of Incorporation. The Corporation may also
maintain offices at such other places within or without the United States as the
Board of Directors may, from time to time, determine.
ARTICLE II -- MEETING OF SHAREHOLDERS
Section 1 -- Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held
within five months after the close of the fiscal year of the Corporation, for
the purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2 -- Special Meetings:
Special meetings of the shareholders may be called at any time by the Board
of Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of twenty-five per cent (25%) of
the shares then outstanding and entitled to vote thereat, or as otherwise
required by law.
Section 3 -- Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
Section 4 -- Notice of Meetings:
(a) Except as otherwise provided by Statute, written notice of each meeting
of shareholders, whether annual or special, stating the time when and place
where it is to be held, shall be served either personally or by mail, not less
than ten or more than fifty days before the meeting, upon each shareholder of
record entitled to vote at such meeting, and to any other shareholder to whom
the giving of notice may be required by law. Notice of a special meeting shall
also state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle shareholders to receive payment for their shares
pursuant to Statute, the notice of such meeting shall include a statement of
that purpose and to that effect. If mailed, such notice shall be directed to
each such shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to some other address, in which case, it shall be mailed to the address
designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by statute.
<PAGE> 2
Section 5 -- Quorum:
(a) Except as otherwise provided herein, or by statute, or in the
Certificate of Incorporation (such Certificate and any amendments thereof being
hereinafter collectively referred to as the "Certificate of Incorporation"), at
all meetings of shareholders of the Corporation, the presence at the
commencement of such meetings in person or by proxy of shareholders holding of
record a majority of the total number of shares of the Corporation then issued
and outstanding and entitled to vote, shall be necessary and sufficient to
constitute a quorum for the transaction of any business. The withdrawal of any
shareholder after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called if a quorum had been present.
Section 6 -- Voting:
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors, to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
therein.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent
without a meeting, may do so by proxy; provided, however, that the instrument
authorizing such proxy to act shall have been executed in writing by the
shareholder himself, or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from the
date of its execution, unless the person executing it shall have specified
therein the length of time it is to continue in force. Such instrument shall be
exhibited to the Secretary at the meeting and shall be filed with the records of
the Corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled
to vote thereon, shall be and constitute action by such shareholders to the
effect therein expressed, with the same force and effect as if the same had been
duly passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the Corporation
under its proper date.
ARTICLE III -- BOARD OF DIRECTORS
Section 1 -- Number, Election and Term of Office:
(a) The number of the directors of the Corporation shall be ( ), unless and
until otherwise determined by vote of a majority of the entire Board of
Directors. The number of Directors shall not be less than three, unless all of
the outstanding shares are owned beneficially and of record by less than three
shareholders, in which event the number of directors shall not be less than the
number of shareholders permitted by statute.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares, present in person or by
proxy, entitled to vote in the election.
(c) Each director shall hold office until the annual meeting of the
shareholders next succeeding his election, and until his successor is elected
and qualified, or until his prior death, resignation or removal.
2
<PAGE> 3
Section 2 -- Duties and Powers:
The Board of Directors shall be responsible for the control and management
of the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholders.
Section 3 -- Annual and Regular Meetings; Notice:
(a) A regular annual meeting of the Board of Directors shall be held
immediately following the annual meeting of the shareholders, at the place of
such annual meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by resolution
for the holding of other regular meetings of the Board of Directors, and may fix
the time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) Section 4 of this Article III, with respect to special meetings,
unless such notice shall be waived in the manner set forth in paragraph (c) of
such Section 4.
Section 4 -- Special Meetings; Notice:
(a) Special meetings of the Board of Directors shall be held whenever
called by the President or by one of the directors, at such time and place as
may be specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meetings
shall be mailed directly to each director, addressed to him at his residence or
usual place of business, at least two (2) days before the day on which the
meeting is to be held, or shall be sent to him at such place by telegram, radio
or cable, or shall be delivered to him personally or given to him orally, not
later than the day before the day on which the meeting is to be held. A notice,
or waiver of notice, except as required by Section 8 of this Article III, need
not specify the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to
be given.
Section 5 -- Chairman:
At all meetings of the Board of Directors, the Chairman of the Board, if
any and if present, shall preside. if there shall be no Chairman, or he shall be
absent, then the President shall preside, and in his absence, a Chairman chosen
by the directors shall preside.
Section 6 -- Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a majority
of the entire Board shall be necessary and sufficient to constitute a quorum for
the transaction of business, except as otherwise provided by law, by the
Certificate of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn the same
from time to time without notice, until a quorum shall be present.
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<PAGE> 4
Section 7 -- Manner of Acting:
(a) At all meetings of the Board of Directors, each director present shall
have one vote, irrespective of the number of shares of stock, if any, which he
may hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or by these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. Any action authorized, in writing, by all of the directors
entitled to vote thereon and filed with the minutes of the corporation shall be
the act of the Board of Directors with the same force and effect as if the same
had been passed by unanimous vote at a duly called meeting of the Board.
Section 8 -- Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase in
the number of directors, or by reason of the death, resignation,
disqualification, removal (unless a vacancy created by the removal of a director
by the shareholders shall be filled by the shareholders at the meeting at which
the removal was effected) or inability to act of any director, or otherwise,
shall be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 9 -- Resignation:
Any director may resign at any time by giving written notice to the Board
of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 10 -- Removal:
Any director may be removed with or without cause at any time by the
affirmative vote of shareholders holding of record in the aggregate at least a
majority of the outstanding shares of the Corporation at a special meeting of
the shareholders called for that purpose, and may be removed for cause by action
of the Board.
Section 11 -- Salary:
No stated salary shall be paid to directors, as such, for their services,
but by resolution of the Board of Directors a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided, however, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 12 -- Contracts:
(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other Corporation provided that such facts are
disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board of Directors, and provided
that the Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in
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<PAGE> 5
determining the presence of a quorum at such meeting. This Section shall not be
construed to impair or invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
Section 13 -- Committees:
The Board of Directors, by resolution adopted by a majority of the entire
Board, may from time to time designate from among its members an executive
committee and such other committees, and alternate members thereof, as they may
deem desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
ARTICLE IV -- OFFICERS
1. General. The officers of the Corporation shall consist of a Chairman of
the Board, a President, a Secretary and a Treasurer, and may include one or more
Vice Chairmen of the Board, Vice Presidents (any one or more of whom the Board
of Directors may designate an Executive Vice President or a Senior Vice
President) Assistant Secretaries, Assistant Treasurers and other officers, with
such authority and duties as the Board of Directors may from time to time
determine. Each officer shall be elected by the Board of Directors and, except
as otherwise provided by these By-Laws, shall hold office until his successor
has been elected or appointed and qualified or until his earlier resignation or
removal. Any vacancy occurring in any office shall be filled by the Board of
Directors. Any two or more offices may be held by the same person, except the
offices of President and Secretary. No officer other than the Chairman of the
Board need be a director. The Board may require any officer to give security for
the faithful performance of his duties.
2. Chairman of the Board. The Chairman of the Board shall be the chief
executive officer of the Corporation, and, subject to the direction of the Board
of Directors, shall have general control of its affairs and business. He shall
also have such other powers and duties as may be prescribed by the Board of
Directors from time to time. The Chairman of the Board shall, when present,
preside at all meetings of the shareholders and the Board of Directors.
3. President. The President shall, subject to the direction of the Board
of Directors and the Chairman of the Board, have active management of the
Corporation's affairs and business and shall have such other powers and duties
as may be prescribed by the Board of Directors from time to time.
4. Vice Presidents. Except as hereinafter provided, the Vice Presidents
shall have such powers and duties as are generally incident to that office and
such powers and duties as may be assigned to them by the Chairman of the Board,
the President or the Board of Directors.
The Board of Directors shall also have the power to appoint a class of Vice
Presidents who shall have such powers and duties with respect to the department
or departments to which their work relates as may be consistent with the
responsibility assigned to them by the Board of Directors, the Chairman of the
Board or the President. This class of Vice Presidents shall not otherwise have
the powers or duties ordinarily incident to such corporate office, and shall not
be considered corporate officers who may bind the Corporation except to the
extent specifically authorized by resolution of the Board of Directors. The
official title of this class of Vice Presidents shall denote the department as
to which they have authority (e.g., Vice President -- Advertising).
5. Secretary. The Secretary shall keep the minutes of all proceedings of
the shareholders and the Board of Directors. He shall attend to the giving of
notices to the shareholders and directors, or other notice required by law or by
these By-Laws. He shall have custody of the seal of the Corporation and shall
affix such seal to deeds, contracts and other written instruments when duly
authorized. He shall have charge of the stock certificate book and stock ledger
and such other books and papers as the Board may
5
<PAGE> 6
direct. He shall have all such powers and duties as are generally incident to
the office of secretary and such other powers and duties as may from time to
time be assigned to him by the Chairman of the Board, the President or the Board
of Directors.
6. Treasurer. The Treasurer shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
Corporation and shall deposit the same in accordance with instructions of the
Board of Directors. He may receive and give receipts and acquittances for
payments made to the Corporation. He shall keep full and accurate accounts of
all moneys received and paid out on account of the Corporation. He shall have
all such powers and duties as are generally incident to the office of treasurer
and such other powers and duties as from time to time may be assigned to him by
the Chairman of the Board, the President or by the Board of Directors.
7. Compensation of Officers. Each officer shall receive such salary or
compensation as may be determined by the Board of Directors, and no officer
shall be prevented from receiving such compensation by reason of the fact that
he is also a director of the Corporation.
8. Resignation and Removal of Officers. Any officer may resign at any time
by giving written notice thereof to the President or to the Board of Directors,
and such resignation shall take effect at the time therein specified. Any
officer may be removed from office, with or without cause by vote of a majority
of the entire Board of Directors.
ARTICLE V -- SHARES OF STOCK
Section 1 -- Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in
such form as shall be adopted by the Board of Directors, and shall be numbered
and registered in the order issued. They shall bear the holder's name and the
number of shares, and shall be signed by (i) the Chairman of the Board or the
President or a Vice President, and (ii) the Secretary or Treasurer, or any
Assistant Secretary or Assistant Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until the full
amount of consideration therefor has been paid, except as otherwise permitted by
law.
(c) To the extent permitted by law, the Board of Directors may authorize
the issuance of certificates for fractions of a share which shall entitle the
holder to exercise voting rights, receive dividends and participate in
liquidating distributions, in proportion to the fractional holdings; or it may
authorize the payment in cash of the fair value of fractions of a share, as of
the time when those entitled to receive such fractions are determined; or it may
authorize the issuance, subject to such conditions as may be permitted by law,
of scrip in register or bearer form over the signature of an officer or agent of
the Corporation, exchangeable as therein provided for full shares, but such
scrip shall not entitle the holder to any rights of a shareholder, except as
therein provided.
Section 2 -- Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representative to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issue of the new certificate. A new certificate may be
issued without requiring any such evidence or bond when, in the judgment of the
Board of Directors, it is proper so to do.
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<PAGE> 7
Section 3 -- Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share
records of the Corporation only by the holder of record thereof, in person or by
his duly authorized attorney, upon surrender for cancellation of the certificate
or certificates representing such shares, with an assignment or power of
transfer endorsed thereon or delivered therewith, duly executed, with such proof
of the authenticity of the signature and of authorization to transfer and of
payment of transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposes and, accordingly,
shall not be bound to recognize any legal, equitable or other claim to, or
interest in, such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 -- Record Date:
In lieu of closing the share records of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding fifty days, nor less than
ten days, as the record date for the determination of shareholders entitled to
receive notice of, or to vote at, any meeting of shareholders, or to consent to
any proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividends, or allotment of any rights, or for
the purpose of any other action. If no record date is fixed, the record date for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of shareholders
of record entitled to notice of or to vote at any meeting of shareholders has
been made as provided for herein, such determination shall apply to any
adjournment thereof, unless the directors fix a new record date for the
adjourned meeting.
ARTICLE VI -- DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any
funds available therefor, as often, in such amounts, and at such time or times
as the Board of Directors may determine.
ARTICLE VII -- FISCAL YEAR
The fiscal year of the corporation shall be fixed by the Board of Directors
from time to time, subject to applicable law.
ARTICLE VIII -- CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from
time to time by the Board of Directors.
ARTICLE IX -- AMENDMENTS
Section 1 -- By Shareholders:
All by-laws of the Corporation shall be subject to alteration or repeal,
and new by-laws may be made, by the affirmative vote of shareholders holding of
record in the aggregate at least a majority of the outstanding shares entitled
to vote in the election of directors at any annual or special meeting of
shareholders, provided that the notice or waiver of notice of such meeting shall
have summarized or set forth in full therein the proposed amendment.
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<PAGE> 8
Section 2 -- By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and
repeal, from time to time, by-laws of the Corporation provided, however, that
the shareholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal by-laws made by the Board of
Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of shareholders or of the Board of Directors or to change
any provisions of the by-laws with respect to the removal of directors or the
filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors,
the by-law so adopted, amended or repealed, together with a concise statement of
the changes made.
ARTICLE X -- INDEMNITY
(a) Any person made a party to any action, suit or proceeding, by reason of
the fact that he, his testator or intestate representative is or was a director,
officer or employee of the Corporation, or of any Corporation in which he served
as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding, or in connection with any appeal therein that such officer, director
or employee is liable for negligence or misconduct in the performance of his
duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which any officer or director or employee may be entitled
apart from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be
entitled shall be fixed by the Board of Directors, except that in any case where
there is no disinterested majority of the Board available, the amount shall be
fixed by arbitration pursuant to the then existing rules of the American
Arbitration Association.
The undersigned Incorporator certifies that he has adopted the foregoing
by-laws as the first by-laws of the Corporation.
Dated:
--------------------------------------
8
<PAGE> 1
EXHIBIT 3.12
ARTICLES OF INCORPORATION
OF
FAIRVIEW PRINTING, INC.
The undersigned incorporator, for the purpose of establishing a corporation
under the provisions and subject to the requirements of the Florida General
Corporation Act, does hereby certify as follows:
FIRST: The name of the corporation is FAIRVIEW PRINTING, INC.
(hereinafter called the "Corporation").
SECOND: The duration of the Corporation is to be perpetual.
THIRD: The general purposes for which the Corporation is initially
organized are as follows:
To conduct in all its branches a general lithographing, printing,
publishing, paper products, stationery, bookbinding, engraving,
photoengraving, duplicating, offsetting, processing, facsimile, and
image, color, line, word and shadow reproduction, artists' supplies, and
mailorder business, and, without limiting the generality of any of the
purposes herein contained, to edit, print, bind, buy, sell, publish and
generally deal in newspapers, magazines, books, pamphlets and other
publications of every kind, nature and description. To design,
manufacture, buy, sell, import, export, distribute, use, license the use
of, prepare, produce and generally deal in and with, whether as
principal, agent, jobber, distributor, broker, licensor, licensee, or
otherwise, any and all equipment, apparatus, machinery, devices, plants,
facilities, improved and unimproved real, personal and mixed properties,
and materials and supplies, used or useful in or about such business and
related businesses.
To engage in a general publishing business, to acquire all rights
in literary properties and publish the same on a royalty basis, to
publish under contract the literary properties of others; and to buy,
lease, maintain, and dispose of real property, buildings, printing
plants, printing presses, and all such incidental machinery and
appliances as may be necessary or useful in such business.
To conduct and carry on in all of its branches the business of
buying, selling, and dealing in and with newspapers, periodicals and
books of any and all kinds, whether new or old, as well as manuscripts,
prints, engravings, lithographs, pamphlets, writings, publications, and
similar goods or merchandise; to conduct the business of an agency in
all of its branches for any and all of said goods or merchandise; and to
acquire and carry on a selling agency or agencies for the sale of any
and all merchandise pertaining or relating to newspapers, magazines,
books, manuscripts, prints, engravings, lithographs, pamphlets,
writings, and similar goods or merchandise.
To manufacture, produce, prepare, purchase, import, export, sell,
and generally to deal in any and all kinds of paper and in all
ingredients, products, and compounds thereof, and in any materials that
now are or may hereafter be used in connection with such manufacture.
To collect, assemble, compile, edit, prepare, buy, sell, license
the use of as licensor and licensee, acquire, receive, grant, assign,
and transfer options to copyrighted materials, articles and other
written materials, whether published or unpublished, copyrights. To
distribute, syndicate, disseminate, publish, print and circulate in
newspapers, magazines, books, brochures, leaflets, pamphlets, and other
printed and reproduced media, broadcast by radio, record, and reproduce
by platter, disc, wire and tape recording, television, telecast,
facsimile, sound, image, and other lawful methods, means, devices, and
techniques, whether now or hereafter devised, discovered, invented,
improved, or developed, and generally deal in and with in any lawful
capacity, published materials, information, techniques, critiques,
analyses, charts, outlines, sketches, suggestions, guidance, advice, and
items of interest in the field of general publishing.
<PAGE> 2
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in respect
of, and generally deal in and with, at wholesale and retail, as
principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor,
and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal, and mixed property of any and all kinds, together with
the components, resultants, and by-products thereof; to acquire by
purchase or otherwise own, hold, lease, mortgage, sell or otherwise
dispose of, erect, construct, make, alter, enlarge, improve, and to aid
or subscribe toward the construction, acquisition or improvement of any
factories, shops, storehouses, buildings, and commercial and retail
establishments of every character, including all equipment, fixtures,
machinery, implements and supplies necessary, or incidental to, or
connected with, any of the purposes of business of the corporation; and
generally to perform any and all acts connected therewith or arising
therefrom or incidental thereto, and all acts proper or necessary for
the purpose of the business.
To engage generally in the real estate business as principal,
agent, broker, and in any lawful capacity, and generally to take, lease,
purchase, or otherwise acquire, and to own, use, hold, sell, convey,
exchange, lease, mortgage, work, clear, improve, develop, divide, and
otherwise handle, manage, operate, deal in and dispose of real estate,
real property, lands, multiple-dwelling structures, houses, buildings
and their works and any interest or right therein; to take, lease,
purchase or otherwise acquire, and to own, use, hold, sell, convey,
exchange, hire, lease, pledge, mortgage, and otherwise handle, and deal
in and dispose of, as principal, agent, broker, and in any lawful
capacity, such personal property, chattels, rights, easements,
privileges, chooses in action, notes, bonds, mortgages, and securities
as may lawfully be acquired, held, or disposed of; and to acquire,
purchase, sell, assign, transfer, dispose of, and generally deal in and
with, as principal, agent, broker, and in any lawful capacity, mortgage,
and other interests in real, personal, mixed properties, to carry on a
general construction, contracting, building, and realty management
business as principal, agent, representative, contractor, subcontractor,
and in any other lawful capacity.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, turn to account, grant licenses and immunities in
respect of, manufacture under and to introduce, sell, assign, mortgage,
pledge or otherwise dispose of, and, in any manner deal with and
contract with reference to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks, trade symbols
and other indications of origin and ownership granted by or
recognized under the laws of the United States of America or of any
state or subdivision thereof, or of any foreign country or
subdivision thereof, and all rights connected therewith or
appertaining thereunto;
(c) franchises, licenses, grants and concessions.
To transact any or all lawful business for which corporations may
be incorporated under the Florida General Corporation Act.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is Two Hundred (200) shares of Common Stock of the
par value of One Dollar ($1.00) each.
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<PAGE> 3
FIFTH: The street address of the initial registered office of the
Corporation is 600 South East Coast Avenue, Lantana, Florida 33464 and the
name of its initial registered agent at such address is Guy Galiardo.
SIXTH: The number of directors constituting the initial Board of
Directors of the Corporation is two, and the names and addresses of the
persons who are to serve as members thereof are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
James K. Johnson........................ John F. Kennedy Memorial Hospital
S. Congress Avenue
Atlantis, Florida
33462
Harry C. Moore.......................... P.O. Box 853
Beloit, Wisconsin
53511
</TABLE>
SEVENTH: The name and address of the incorporator is as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
Samuel R. Newborn....................... 598 Madison Avenue
New York, New York
10022
</TABLE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 8th day of March, 1985.
/s/ SAMUEL R. NEWBORN
--------------------------------------
Samuel R. Newborn
ACCEPTANCE BY
REGISTERED AGENT
/s/ GUY GALIARDO
--------------------------------------
Guy Galiardo
<TABLE>
<S> <C>
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss.:
</TABLE>
BE IT REMEMBERED that personally appeared before me, a Notary Public in and
for the County and State aforesaid, Samuel R. Newborn, the incorporator who
executed the foregoing Articles of Incorporation, known to me personally to be
such, and did acknowledge the same to be his voluntary act and deed, and that
the facts therein stated are true and correct.
GIVEN under my hand and seal of office this 8th day of March, 1985.
--------------------------------------
Notary Public
(Notarial Seal)
3
<PAGE> 1
EXHIBIT 3.13
BY-LAWS
OF
FAIRVIEW PRINTING, INC.
A FLORIDA CORPORATION
ARTICLE I -- OFFICES
The office of the Corporation shall be located in the City of Lantana and
the State of Florida. The Corporation may also maintain offices at such other
places within or without the United States as the Board of Directors ("Board")
may, from time to time, determine.
ARTICLE II -- MEETING OF SHAREHOLDERS
Section 1 -- Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held
each year on the third Wednesday in the first month immediately following the
fiscal year of the Corporation at 10 a.m., at the principal office of the
Corporation or at such other places, within or without the State of Florida, as
the Board may authorize, for the purpose of electing directors, and transacting
such other business as may properly come before the meeting.
Section 2 -- Special Meetings:
Special meetings of the shareholders may be called at any time by the
Board, the President, or by the holders of ten per cent (10%) of the shares then
outstanding and entitled to vote thereat, or such other persons or groups as may
be authorized in the Articles of Incorporation.
Section 3 -- Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as the Board shall designate in the notice
of such meetings.
Section 4 -- Notice of Meetings:
(a) Except as otherwise provided by Statute, written notice of each meeting
of shareholders, whether annual or special, stating the time when and place
where it is to be held, shall be served either personally or by first-class
mail, not less than ten or more than sixty days before the meeting, upon each
shareholder of record entitled to vote at such meeting, and to any other
shareholder to whom the giving of notice may be required by law. Notice of a
special meeting shall also state the purpose or purposes for which the meeting
is called, and shall indicate that it is being issued by, or at the direction
of, the person or persons calling the meeting. If, at any meeting, action is
proposed to be taken that would, if taken, entitle shareholders to receive
payment for their shares pursuant to Statute, the notice of such meeting shall
include a statement of that purpose and to that effect. If mailed, such notice
shall be directed to each such shareholder at his address, as it appears on the
stock transfer books of Corporation, unless he shall have previously filed with
the Secretary of the Corporation a written request that notices intended for him
be mailed to some other address, in which case, it shall be mailed to the
address designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by Statute.
<PAGE> 2
Section 5 -- Quorum:
(a) Except as otherwise provided herein, or by Statute, or in the Articles
of Incorporation (such Articles and any amendments thereof being hereinafter
collectively referred to as the "Articles of Incorporation"), at all meetings of
shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, but in no event less than one-third of the shares entitled to
vote at the meeting, shall be necessary and sufficient to constitute a quorum
for the transaction of any business. The withdrawal of any shareholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called if a quorum had been present.
Section 6 -- Voting:
(a) Except as otherwise provided by Statute or by the Articles of
Incorporation, any corporate action, other than the election of directors, to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
(b) Except as otherwise provided by Statute or by the Articles of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the stock transfer books of the
Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent
without a meeting, may do so by proxy; provided, however, that the instrument
authorizing such proxy to act shall have been executed in writing by the
shareholder himself, or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from the
date of its execution, unless the person executing it shall have specified
therein the length of time it is to continue in force. Such instrument shall be
exhibited to the Secretary at the meeting and shall be filed with the records of
the Corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled
to vote thereon, shall be and constitute action by such shareholders to the
effect therein expressed, with the same force and effect as if the same had been
duly passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the Corporation
under its proper date.
ARTICLE III -- BOARD OF DIRECTORS
Section 1 -- Number, Election and Term of Office:
(a) The number of the directors of the Corporation shall be two (2), unless
and until otherwise determined by vote of a majority of the entire Board.
(b) Except as may otherwise be provided herein or in the Articles of
Incorporation, the members of the Board, who need not be shareholders, shall be
elected by a majority of the votes cast at a meeting of shareholders, by the
holders of shares, present in person or by proxy, entitled to vote in the
election.
(c) Each director shall hold office until the annual meeting of the
shareholders next succeeding his election, and until his successor is elected
and qualified, or until his prior death, resignation or removal.
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Section 2 -- Duties and Powers:
The Board shall be responsible for the control and management of the
affairs, property and interests of the Corporation, and may exercise all powers
of the Corporation, except as are in the Articles of Incorporation or by Statute
expressly conferred upon or reserved to the shareholders.
Section 3 -- Annual and Regular Meetings; Notice:
(a) A regular annual meeting of the Board shall be held immediately
following the annual meeting of the shareholders, at the place of such annual
meeting of shareholders.
(b) The Board from time to time, may provide by resolution for the holding
of other regular meetings of the Board, and may fix the time and place thereof.
(c) Notice of any regular meeting of the Board shall not be required to be
given and, if given, need not specify the purpose of the meeting; provided,
however, that in case the Board shall fix or change the time or place of any
regular meeting, notice of such action shall be given to each director who shall
not have been present at the meeting at which such action was taken within the
time limits, and in the manner set forth in paragraph (b) Section 4 of this
Article III, with respect to special meetings; unless such notice shall be
waived in the manner set forth in paragraph (c) of such Section 4.
Section 4 -- Special Meetings; Notice:
(a) Special meetings of the Board shall be held whenever called by the
President or by one of the directors, at such time and place as may be specified
in the respective notice or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meetings
shall be mailed directly to each director, addressed to him at his residence or
usual place of business, at least two (2) days before the day on which the
meeting is to be held, or shall be sent to him at such place by telegram, radio
or cable, or shall be delivered to him personally or given to him orally, not
later than two (2) days before the day on which the meeting is to be held. A
notice, or waiver of notice, except as required by Section 8 of this Article
III, need not specify the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 -- Chairman:
At all meetings of the Board, the Chairman of the Board, if any and if
present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.
Section 6 -- Quorum and Adjournments:
(a) At all meetings of the Board, the presence of a majority of the entire
Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Articles of
Incorporation, or by these by-laws.
(b) A majority of the directors present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn the same
from time to time without notice, until a quorum shall be present.
Section 7 -- Manner of Acting:
(a) At all meetings of the Board, each director present shall have one
vote, irrespective of the number of shares of stock, if any, which he may hold.
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(b) Except as otherwise provided by Statute, by the Articles of
Incorporation, or by these by-laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board. Any action authorized, in writing, by all of the directors entitled to
vote thereon and filed with the minutes of the Corporation shall be the act of
the Board with the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the Board.
Section 8 -- Vacancies:
Any vacancy in the Board occurring by reason of an increase in the number
of directors, or by reason of the death, resignation, disqualification, removal
(unless a vacancy created by the removal of a director by the shareholders shall
be filled by the shareholders at the meeting at which the removal was effected)
or inability to act of any director, or otherwise, shall be filled for the
unexpired portion of the term by a majority vote of the remaining directors,
though less than a quorum, at any regular meeting or special meeting of the
Board called for that purpose.
Section 9 -- Resignation:
Any director may resign at any time by giving written notice to the Board,
the President or the Secretary of the Corporation. Unless otherwise specified in
such written notice, such resignation shall take effect upon receipt thereof by
the Board or such officer, and the acceptance of such resignation shall not be
necessary to make it effective.
Section 10 -- Removal:
Any director may be removed with or without cause at any time by the
affirmative vote of shareholders holding of record in the aggregate at least a
majority of the outstanding shares of the Corporation at a special meeting of
the shareholders called for that purpose, and may be removed for cause by action
of the Board.
Section 11 -- Salary:
No stated salary shall be paid to directors, as such for their services,
but by resolution of the Board a fixed sum and expenses of attendance, if any,
may be allowed for attendance at each regular or special meeting of the Board;
provided, however, that nothing herein contained shall be construed to preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 12 -- Contracts:
(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other Corporation, provided that such facts are
disclosed or made known to the Board.
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board, and provided that the
Board shall authorize, approve or ratify such contract or transaction by the
vote (not counting the vote of any such director) of a majority of a quorum,
notwithstanding the presence of any such director at the meeting at which such
action is taken. Such director or directors may be counted in determining the
presence of a quorum at such meeting. This Section shall not be construed to
impair or invalidate or in any way affect any contract or other transaction
which would otherwise be valid under the law (common, statutory or otherwise)
applicable thereto.
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<PAGE> 5
Section 13 -- Committees:
The Board, by resolution adopted by a majority of the entire Board, may
from time to time designate from among its members an executive committee and
such other committees, and alternate members thereof, as they may deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
ARTICLE IV -- OFFICERS
Section 1 -- Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a
Secretary, a Treasurer, and such other officers, including a Chairman of the
Board, and one or more Vice-Presidents, as the Board may from time to time deem
advisable. Any officer other than the Chairman may be, but is not required to
be, a director of the Corporation. Any two or more offices may be held by the
same person.
(b) The officers of the Corporation shall be elected by the Board at the
regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board
next succeeding his election, and until his successor shall have been elected
and qualified, or until his death, resignation or removal.
Section 2 -- Resignation:
Any officer may resign at any time by giving written notice of such
resignation to the Board, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board or by such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 3 -- Removal:
Any officer may be removed, either with or without cause, and a successor
elected by a majority vote of the Board at any time.
Section 4 -- Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by a majority vote of the Board.
Section 5 -- Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board,
each have such powers and duties as generally pertain to their respective
offices as well as such powers and duties as may be set forth in these by-laws,
or may from time to time be specifically conferred or imposed by the Board. The
President shall be the chief executive officer of the Corporation.
Section 6 -- Sureties and Bonds:
In case the Board shall so require, any officer, employee or agent of the
Corporation shall execute to the Corporation a bond in such sum, and with such
surety or sureties as the Board may direct, conditioned upon the faithful
performance of his duties to the Corporation, including responsibility for
negligence and for the accounting for all property, funds or securities of the
Corporation which may come into his hands.
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Section 7 -- Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other Corporation,
any right or power of the Corporation as such shareholder (including the
attendance, acting and voting at shareholders' meetings and execution of
waivers, consents, proxies or other instruments) may be exercised on behalf of
the Corporation by the President, any Vice President, or such other person as
the Board may authorize.
ARTICLE V -- SHARES OF STOCK
Section 1 -- Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in
such form as shall be adopted by the Board, and shall be numbered and registered
in the order issued. They shall bear the holder's name and the number of shares,
and shall be signed by (i) the Chairman of the Board or the President or a Vice
President, and (ii) the Secretary or Treasurer, or any Assistant Secretary or
Assistant Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until the full
amount of consideration therefor has been paid, except as otherwise permitted by
law.
(c) To the extent permitted by law, the Board may authorize the issuance of
certificates for fractions of a share which shall entitle the holder to exercise
voting rights, receive dividends and participate in liquidating distributions,
in proportion to the fractional holdings; or it may authorize the payment in
cash of the fair value of fractions of a share as of the time when those
entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a shareholder, except as therein
provided.
Section 2 -- Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board in
its discretion may require, the Board may, in its discretion, require the owner
of the lost or destroyed certificate or his legal representatives, to give the
Corporation a bond in such sum as the Board may direct, and with such surety or
sureties as may be satisfactory to the Board, to indemnify the Corporation
against any claims, loss, liability or damage it may suffer on account of the
issuance of the new certificate. A new certificate may be issued without
requiring any such evidence or bond when, in the judgment of the Board, it is
proper so to do.
Section 3 -- Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share
records of the Corporation only at the direction of the holder of record
thereof, in person or by his duly authorized attorney, upon surrender for
cancellation of the certificate or certificates representing such shares, with
an assignment or power of transfer endorsed thereon or delivered therewith, duly
executed, with such proof of the authenticity of the signature and of authority
to transfer and of payment of transfer taxes as the Corporation or its agents
may require.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposes and, accordingly,
shall not be bound to recognize any legal, equitable or other claim to, or
interest in, such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise expressly
provided by law.
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Section 4 -- Record Date:
In lieu of closing the share records of the Corporation, the Board may fix,
in advance, a date not exceeding sixty days, nor less than ten days, as the
record date for the determination of shareholders entitled to receive notice of,
or to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business the day on which notice is given,
or, if no notice is given, the day on which the meeting is held; the record date
for determining shareholders for any other purpose shall be at the close of
business on the day on which the resolution of the directors relating thereto is
adopted. When a determination of shareholders of record entitled to notice of or
to vote at any meeting of shareholders has been made as provided for herein,
such determination shall apply to any adjournment thereof, unless the directors
fix a new record date for the adjourned meeting.
ARTICLE VI -- DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any
funds available therefor, as often, in such amounts, and at such time or times
as the Board may determine.
ARTICLE VII -- FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board from time to
time, subject to applicable law.
ARTICLE VIII -- CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from
time to time by the Board.
ARTICLE IX -- AMENDMENTS
Section 1 -- By Shareholders:
If not reserved to the shareholders by the Articles of Incorporation, all
by-laws of the Corporation shall be subject to alteration or repeal, and new
by-laws may be made, by the affirmative vote of shareholders holding of record
in the aggregate at least a majority of the outstanding shares entitled to vote
in the election of directors at any annual or special meeting of shareholders,
provided that the notice or waiver of notice of such meeting shall have
summarized or set forth in full therein, the proposed amendment.
Section 2 -- By Directors:
If not reserved to the shareholders by the Articles of Incorporation, the
Board shall have the power to make, adopt, alter, amend and repeal, from time to
time, by-laws of the Corporation; provided, however, that the shareholders
entitled to vote with respect thereto as in this Article IX above-provided may
alter, amend or repeal by-laws made by the Board, except that the Board shall
have no power to change the quorum for meetings of shareholders or of the Board,
or to change any provisions of the by-laws with respect to the removal of
directors or the filling of vacancies in the Board resulting from the removal by
the shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board, there shall be set forth in the
notice of the next meeting of shareholders for the election of directors, the
by-law so adopted, amended or repealed, together with a concise statement of the
changes made.
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ARTICLE X -- INDEMNITY
(a) Any person made a party to any action, suit or proceeding, by reason of
the fact that he, his testator or intestate representative is or was a director,
officer or employee of the Corporation, or of any Corporation in which he served
as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding, or in connection with any appeal therein that such officer, director
or employee is liable for negligence or misconduct in the performance of his
duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which any officer or director or employee may be entitled
apart from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be
entitled shall be fixed by the Board, except that in any case where there is no
disinterested majority of the Board available, the amount shall be fixed by
arbitration pursuant to the then existing rules of the American Arbitration
Association.
The undersigned certifies that the foregoing by-laws are the first by-laws
of the Corporation.
Dated: April 15, 1985
--------------------------------------
James K. Johnson
--------------------------------------
Harry C. Moore
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EXHIBIT 3.14
ARTICLES OF INCORPORATION
The undersigned incorporator, for the purpose of forming a corporation
under the Florida Business Corporation Act, hereby adopts the following Articles
of Incorporation.
ARTICLE I
NAME
The name of the corporation shall be:
HEALTH XTRA, INC.
ARTICLE II
PRINCIPAL OFFICE
The principal place of business and mailing address of this corporation
shall be:
600 East Coast Avenue, Lantana, Florida 33464
ARTICLE III
SHARES
The number of shares of stock that this corporation is authorized to have
outstanding at any one time is:
3,000 shares/with no par
ARTICLE IV
INITIAL REGISTERED AGENT AND STREET ADDRESS
The name and Florida street address of the initial registered agent are:
Capital Connection, Inc.
417 E. Virginia Street, Suite 1
Tallahassee, Florida 32301
ARTICLE V
INCORPORATOR
The name and address of the incorporator to these Articles of Incorporation
are:
Harvey Blicksilver
600 East Coast Avenue
Lantana, Florida 33464
<TABLE>
<S> <C>
/s/ HARVEY BLICKSILVER 6/23/98
- ----------------------------------------------------- -----------------------------------------------------
SIGNATURE/INCORPORATOR DATE
</TABLE>
(An additional article must be added if an effective date is requested.)
Having been named as registered agent and to accept service of process for
the above stated corporation at the place designated in this certificate, I
hereby accept the appointment as registered agent and agree to act in this
capacity. I further agree to comply with the provisions of all statutes relating
to the proper and complete performance of my duties, and I am familiar with and
accept the obligations of my position as registered agent.
<TABLE>
<S> <C>
/s/ CHRIS GREENWALD 6/24/98
- ----------------------------------------------------- -----------------------------------------------------
SIGNATURE/REGISTERED AGENT DATE
FOR CAPITAL CONNECTION
</TABLE>
<PAGE> 1
EXHIBIT 3.15
CORPORATE BY-LAWS FOR
HEALTH XTRA, INC.
ARTICLE I: CORPORATE OFFICE
The corporation's principal office shall be located in the city of Lantana,
county of Palm Beach, in the state of Florida. Various offices may exist for the
corporation, either within or outside Florida, as the board of directors may
designate or as the business of the corporation may require.
ARTICLE II: MEETINGS OF THE SHAREHOLDERS
1) MEETINGS
The annual meeting of the shareholders shall be on the 12th day of August,
1998 at 9:00 o'clock a.m. The purpose of the meeting shall be to elect directors
and transact such business as may be deemed necessary. Meetings of the
shareholders shall be at the principal place of business of the corporation or
at a place designated by the board of directors. If the day fixed for the annual
meeting shall be a legal holiday in the state of Florida, then the meeting shall
be held on the first business day thereafter.
2) SPECIAL MEETINGS
The president, board of directors or a written request by the shareholders
may initiate a special meeting for the shareholders. A written request must be
by the holders of not less than 10% of all shares entitled to vote at the
meeting. A meeting requested by the shareholders shall be called for, at a date
not less than 14 or more than 60 days after the request is made, unless the
shareholders requesting the meeting designate a later date. The secretary shall
issue the notice of the special meeting unless another person is designated to
do so.
3) NOTICE OF MEETING
The president, secretary, officer or director of the corporation may give
notice of a meeting. This notice must be in written form and must state the
place, day and hour of the meeting and in the case of a special meeting must
state the purpose for which the meeting is called. If mailed, the notice must be
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid. Such notice shall be
deemed to be delivered when deposited in the United States mail.
4) NOTICE OF AN ADJOURNED MEETING
When a meeting is adjourned to another time or place, it will not be
necessary to give any notice of the adjourned meeting provided that the time and
place to which the meeting is adjourned is announced at the meeting at which the
adjournment is taken. At such adjourned meeting any business may be transacted
that might have been transacted on the original date of the meeting. If a new
record date is set by the board of directors, other than the new date given at
the meeting that was adjourned, written notice must be given as stated in
Section 2, Articles II.
5) QUORUM
A quorum at a meeting of shareholders shall be constituted by the majority
of the shares entitled to vote, represented in person or by proxy. The
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote shall constitute a binding act unless otherwise provided by
law.
<PAGE> 2
6) PROXY
Every shareholder, entitled to vote at a meeting of shareholders, may
authorize another person or persons to act for him by proxy. All proxies must be
executed in writing by the shareholder or his duly authorized attorney-in-fact,
and must be filed with the secretary of the corporation before or at the time of
the meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
7) VOTING OF SHARES
Subject to the provisions of these By-laws, each outstanding share entitled
to vote at specified meetings, shall have the right to one vote, in person or by
proxy, upon each matter submitted to a vote at the shareholder's meeting.
8) ACTION TAKEN BY SHAREHOLDERS WITHOUT A MEETING
Any action, within the laws of the corporation, may be taken without prior
notice of a meeting or without a vote, provided that a written consent setting
forth the action so taken, is signed by the shareholders who are entitled to
vote in the corporation, and whose votes would be necessary to authorize or take
such action at a said meeting.
ARTICLE III: BOARD OF DIRECTORS
1) POWERS
The board of directors shall manage the business of the corporation and
exercise its corporate powers.
2) NUMBER OF DIRECTORS AND THEIR TERMS
There shall be a minimum number of three directors for the corporation.
Each director shall be elected at the annual shareholder's meeting, and shall
hold office until the next annual meeting of shareholders and until his
successor is elected and qualified.
3) VACANCIES
A qualified person may be appointed to fill a vacancy on the board of
directors but only by an affirmative vote of the majority of the remaining
directors. The incoming director shall hold office for the rest of the term and
until his successor is elected and qualified.
4) RESIGNATIONS
Resignations may be given by a director of the corporation at any time
during his term. Written notice must be filed with the secretary or president of
the corporation; and unless otherwise specified in the notice, said resignation
shall take effect upon receipt thereof and acceptance of the resignation shall
not be necessary to make it effective.
5) REMOVAL OF DIRECTORS
Any and all of the directors may be removed with or without cause by a vote
of the majority of holders of stock who are authorized to vote at an election of
directors.
6) NOTICES
A written notice for any and all meetings must be given within 5 days. This
notice must be in written form and must state the place, day and hour of the
meeting and in the case of a special meeting must state the purpose for which
the meeting is called. If mailed, the notice must be addressed to the director
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<PAGE> 3
at his address as it appears on the records of the corporation, with postage
thereon prepaid. Such notice shall be deemed to be delivered when deposited in
the United States mail.
7) ANNUAL MEETINGS
The board of directors shall designate the place, time and date of their
meeting. Notices of said meeting must be sent to all directors unless stated at
the previous meetings where all directors are present.
8) SPECIAL MEETINGS
Special meetings of the board shall be held upon notice to the directors
and may be called by the president upon a 5 day notice to each director either
personally or by mail as stated in Article III Section 6. Notice of a meeting
need not be given to any director who submits a waiver of notice whether before
or after the meeting.
9) QUORUM
A majority of the directors shall constitute a quorum for the transaction
of business. If at any meeting of the board there shall be less than a quorum
present, a majority of those present may adjourn the meeting.
10) ACTION TAKEN WITHOUT A MEETING
Any action that may be taken by the board of directors at a meeting, may be
taken without a meeting if a consent in writing, setting forth the action so to
be taken, shall be signed before such action by all the directors.
11) COMPENSATION
The board of directors shall have the authority to fix a rate to reasonably
compensate the board of directors.
ARTICLE IV: CORPORATE OFFICERS
1) OFFICES AND ELECTIONS
The board of directors shall elect the president, vice-president, secretary
and treasurer for the corporation. Other officers or assistant officers may be
elected when deemed necessary. These officers shall serve a term of one year,
and will hold office until their successor is elected and qualified. The
officers for the corporation shall be appointed at the annual meeting of the
board. Any two or more offices may be held by the same person.
2) VACANCIES
In the event of death, resignation or removal of an officer from office,
the board of directors shall appoint a successor to fill the open term. Any
officer elected or appointed by the board may be removed by the board with or
without cause. This action must be preceded by a vote from the board unless
otherwise approved by the shareholders.
3) DUTIES
a) PRESIDENT: Shall be the corporate chief executive officer, shall have
general and active management of the business and its affairs; shall be subject
to the direction of the board of directors, and shall in general supervise and
control all of the business and affairs of the corporation. He shall be present
at all meetings of the shareholders and of the board of directors.
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<PAGE> 4
b) VICE-PRESIDENT: In the event of the president's absence or inability or
refusal to act as president, the vice-president shall perform all the powers of
and be subject to all the restrictions upon the elected president. In general
perform all of the duties required of the office of vice-president and such
duties as from time to time that may be assigned by the president or board of
directors.
c) SECRETARY: Shall maintain and keep record of all corporate papers
excluding the financial records. Shall record the minutes of all corporate
meetings and shall send notices of meetings to those deemed appropriate. In
general to perform all of the duties required of the office of secretary and
such other duties as from time to time may be assigned by the president or board
of directors.
d) TREASURER: Shall maintain and keep record of all corporate financial
papers and records. Shall keep full and accurate accounts of receipts and
disbursements and render account reports at the annual meeting of the
shareholders, and whenever required by the president or board of directors. In
general to perform all of the duties required of the office of treasurer and
such other duties as from time to time may be assigned by the president or board
of directors.
4) SALARIES
The board of directors shall have the authority to fix a rate to reasonably
compensate the corporate officers.
ARTICLE V: STOCK CERTIFICATES
1) ISSUANCE
Certificates of shares shall be issued to every holder of shares for that
which he is entitled. Certificates must be paid in full before issuance can take
place. Corporate certificates of shares must be signed by the president and
secretary and must be sealed with the corporate seal.
2) TRANSFER OF SHARES
Transfer of shares of the corporation shall be made only on the stock
transfer book of the corporation, by the holder of record or by his legal
representative, who shall furnish proper evidence or authority to transfer said
shares. The person in whose name shares stand on the corporate transfer ledger
shall be deemed to be the owner thereof for all purposes.
3) LOST, STOLEN OR DESTROYED CERTIFICATES
If certificates of shares are claimed to be lost, stolen or destroyed, a
new certificate shall be issued upon receipt of proper affidavit. The affidavit
must reflect ownership of the person claiming the certificate and state how the
certificate was lost. Upon deposit of a bond or other indemnity in such amount
decided by the board of directors and at their discretion, the certificate of
stock shall be replaced.
ARTICLE VI: CORPORATE RECORDS AND BOOKS
1) RESPONSIBILITIES
The corporation shall maintain through its officers accurate and
accountable books, records and minutes of all the board of directors,
shareholders and officers' meetings. The corporation is responsible for keeping
its principal corporate address and its registered agent office available and
current to all directors and shareholders. A record, which shall be kept at the
corporate office, shall list names, addresses and amounts of purchased stock
shares of all directors, shareholders and officers of the corporation.
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<PAGE> 5
2) SHAREHOLDER'S INSPECTION RIGHTS
The holder of record of shares or of voting trust certificates of at least
5% of the outstanding shares of the corporation, shall be allowed to examine, at
a reasonable time, in person or by agent or by an attorney, the corporate books
and records of accounts, minutes and records of shareholders and make extracts
thereof.
3) FINANCIAL RECORDS
Four months after the close of each corporate fiscal year, the corporation
shall prepare a balance sheet and a profit and loss statement showing in
reasonable detail the financial condition of the corporation. Upon written
request, the corporation shall issue to any shareholder or holder of voting
trust certificates of shares in the corporation, a copy of the most recent
balance sheet and profit and loss statement, showing in reasonable detail the
financial condition of the corporation. These records shall be filed in the
corporate office and shall be kept on file for a minimum of 5 years and may be
subject to inspection during business hours by any shareholder or holder of
voting trust certificates, in person or by an appointed agent.
4) DIVIDENDS
Dividends may be declared by the board of directors on its shares in
property, cash or its own shares, except when the corporation is insolvent or
when-payment of said dividends would render the corporation insolvent.
ARTICLE VII: FISCAL YEAR
The corporation's fiscal year shall begin with the last Tuesday of March in
each year.
ARTICLE VIII: AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by the board of directors at any regular or special meeting of the board
of directors.
5
<PAGE> 1
EXHIBIT 3.16
CERTIFICATE OF INCORPORATION
OF
MARKETING SERVICES, INC.
The undersigned, being of legal age, in order to form a corporation under
and pursuant to the laws of the State of Delaware, do hereby set forth as
follows:
FIRST: The name of the corporation is
MARKETING SERVICES, INC.
SECOND: The address of the initial registered and principal office of
this corporation in this state is c/o United Corporate Services, Inc., 15
East North Street, in the City of Dover, County of Kent, State of Delaware
19901 and the name of the registered agent at said address is United
Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the corporation
laws of the State of Delaware.
FOURTH: The corporation shall be authorized to issue the following
shares:
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES PAR VALUE
- ----- ---------------- ---------
<S> <C> <C>
COMMON............................................ 3,000 $.01
</TABLE>
FIFTH: The name and address of the incorporator are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
9 East 40th Street
Ray A. Barr...................................... New York, New York 10016
</TABLE>
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for
further definition, limitation and regulation of the powers of the
corporation and of its directors and stockholders:
(1) The number of directors of the corporation shall be such as
from time to time shall be fixed by, or in the manner provided in the
by-laws. Election of directors need not be by ballot unless the by-laws
so provide.
(2) The Board of Directors shall have power without the assent or
vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the By-Laws
of the corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the corporation; to
determine the use and disposition of any surplus or net profits; and
to fix the times for the declaration and payment of dividends.
(b) To determine from time to time whether, and to what times
and places, and under what conditions the accounts and books of the
corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or
act for approval or ratification at any annual meeting of the
stockholders or at any meeting of the stockholders called for the
purpose of considering any such act or contract, and any contract or act
that shall be approved or be ratified by the vote of the holders of a
majority of the stock of the corporation which is represented in person
or by proxy at such meeting and entitled to vote thereat (provided that
a lawful quorum of stockholders be there represented in person or by
proxy) shall be as valid
<PAGE> 2
and as binding upon the corporation and upon all the stockholders as
though it had been approved or ratified by every stockholder of the
corporation, whether or not the contract or act would otherwise be open
to legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the corporation; subject, nevertheless, to
the provisions of the statutes of Delaware, of this certificate, and to
any by-laws from time to time made by the stockholders; provided,
however, that no by-laws so made shall invalidate any prior act of the
directors which would have been valid if such by-law had not been made.
SEVENTH: No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a
director, except with respect to (1) a breach of the director's duty of
loyalty to the corporation or its stockholders, (2) acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (3) liability under Section 174 of the Delaware General
Corporation Law or (4) a transaction from which the director derived an
improper personal benefit, it being the intention of the foregoing
provision to eliminate the liability of the corporation's directors to the
corporation or its stockholders to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law, as amended from time to
time. The corporation shall indemnify to the fullest extent permitted by
Sections 102(b)(7) and 145 of the Delaware General Corporation Law, as
amended from time to time, each person that such Sections grant the
corporation the power to indemnify.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware, may, on the
application in a summary way of this corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for this corporation under the provisions of Section 291 of Title
8 of the Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this corporation under the
provisions of Section 279 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 ( 3/4) in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as
the case may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
NINTH: The corporation reserves the right to amend, altar, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are subject to
this reserved power.
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under the penalties of perjury
this eighteenth day of October, 1990.
/s/ RAY A. BARR
--------------------------------------
Ray A. Barr, Incorporator
2
<PAGE> 1
EXHIBIT 3.17
MARKETING SERVICES, INC.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders of
the Corporation shall be held at such place either within or without the State
of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of stockholders
shall be held, at a date, time and place fixed by the Board of Directors and
stated in the notice of meeting, to elect a Board of Directors and to transact
such other business as may properly come before the meeting. Special meetings of
the stockholders may be called by the President for any purpose and shall be
called by the President or Secretary if directed by the Board of Directors or
requested in writing by the holders of not less than 25% of the capital stock of
the Corporation. Each such stockholder request shall state the purpose of the
proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 1 and not
more than 60 days before each meeting of stockholders, written notice of the
time, date and place of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of record,
present in person or by proxy, of a majority of the Corporation's issued and
outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of one
Director. Thereafter, within the limits specified above, the number of Directors
shall be determined by the Board of Directors or the stockholders. The Directors
shall be elected by stockholders at their annual meeting. Vacancies and newly
created directorships resulting from any increase in the number of Directors may
be filled by a majority of the Directors then in office, although less than a
quorum, or by the sole remaining Director or by the stockholders. A Director may
be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by the Board of
Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of
<PAGE> 2
Incorporation of the Corporation or these By-Laws, the act of a majority of the
Directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution adopted
by a majority of the whole Board, designate one or more committees, including,
without limitation, an Executive Committee, to have and exercise such power and
authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he, she
or they constitute a quorum, may unanimously appoint another Director to act as
the absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President and Chief
Executive Officer, a Vice President, a Chief Financial Officer and a Secretary,
and such other additional officers with such titles as the Board of Directors
shall determine, all of which shall be chosen by and shall serve at the pleasure
of the Board of Directors. Such officers shall have the usual powers and shall
perform all the usual duties incident to their respective offices. All officers
shall be subject to the supervision and direction of the Board of Directors. The
authority, duties or responsibilities of any officer of the Corporation may be
suspended by the President with or without cause. Any officer elected or
appointed by the Board of Directors may be removed by the Board of Directors
with or without cause.
ARTICLE IV
INDEMNIFICATION
Section 1. Indemnity Undertaking. To the fullest extent permitted by law
(including, without limitation, Section 145 of the General Corporation Law of
the State of Delaware (as amended from time to time, the "General Corporation
Law")), the Corporation shall indemnify any person who is or was made, or
threatened to be made, a party to any threatened, pending or completed action,
suit or proceeding (a "Proceeding"), whether civil, criminal, administrative or
investigative, including, without limitation, an action by or in the right of
the Corporation to procure a judgment in its favor, by reason of the fact that
such person, or a person of whom such person is the legal representative, is or
was a Director or officer of the Corporation, or is or was serving in any
capacity at the request of the Corporation for any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise (an
"Other Entity"), against judgments, fines, penalties, excise taxes, amounts paid
in settlement and costs, charges and expenses (including attorneys' fees and
disbursements). Persons who are not Directors or officers of the Corporation may
be similarly indemnified in respect of service to the Corporation or to an Other
Entity at the request of the Corporation to the extent the Board of Directors at
any time specifies that such persons are entitled to the benefits of this
Article IV.
Section 2. Advancement of Expenses. The Corporation shall, from time to
time, reimburse or advance to any Director or officer or other person entitled
to indemnification hereunder the funds necessary for payment of expenses,
including attorneys' fees and disbursements, incurred in connection with any
Proceeding, in advance of the final disposition of such Proceeding; provided,
however, that, if required by the General Corporation Law, such expenses
incurred by or on behalf of any such Director, officer or other person may be
paid in advance of the final disposition of a Proceeding only upon receipt by
the Corporation of an undertaking, by or on behalf of such Director, officer or
other person indemnified hereunder, to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is no
further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
Section 3. Rights Not Exclusive. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article IV shall not be deemed exclusive of any other
2
<PAGE> 3
rights which a person seeking indemnification or reimbursement or advancement of
expenses may have or to which such person hereafter may be entitled under any
statute, the Certificate of Incorporation, these By-Laws, any agreement, any
vote of stockholders or disinterested Directors or otherwise, both as to action
in his or her official capacity and as to action in another capacity while
holding such office.
Section 4. Continuation of Benefits. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article IV shall continue as to a person who has ceased to be a Director or
officer (or other person indemnified hereunder) and shall inure to the benefit
of the executors, administrators, legatees and distributees of any such person.
Section 5. Insurance. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of an Other Entity,
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 IV or the Certificate of
Incorporation or under Section 145 of the General Corporation Law or any other
provision of law.
Section 6. Binding Effect. The provisions of this Article IV shall be a
contract between the Corporation, on the one hand, and each Director and officer
who serves in such capacity at any time while this Article IV is in effect
and/or any other person indemnified hereunder, on the other hand, pursuant to
which the Corporation and each such Director, officer or other person intend to
be legally bound. No repeal or modification of this Article IV shall affect any
rights or obligations with respect to any state of facts then or theretofore
existing or thereafter arising or any proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
Section 7. Procedural Rights. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article IV shall be enforceable by any person entitled to such
indemnification or reimbursement or advancement of expenses in any court of
competent jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that such indemnification
or reimbursement or advancement of expenses is proper in the circumstances nor
an actual determination by the Corporation (including its Board of Directors,
its independent legal counsel and its stockholders) that such person is not
entitled to such indemnification or reimbursement or advancement of expenses
shall constitute a defense to the action or create a presumption that such
person is not so entitled. Such a person shall also be indemnified for any
expenses incurred in connection with successfully establishing his or her right
to such indemnification or reimbursement or advancement of expenses, in whole or
in part, in any such proceeding.
Section 8. Service Deemed at Corporation's Request. Any Director or
officer of the Corporation serving in any capacity (a) another corporation of
which a majority of the shares entitled to vote in the election of its directors
is held, directly or indirectly, by the Corporation or (b) any employee benefit
plan of the Corporation or any corporation referred to in clause (a) shall be
deemed, in each case, to be doing so at the request of the Corporation.
Section 9. Election of Applicable Law. Any person entitled to be
indemnified or to receive reimbursement or advancement of expenses as a matter
of right pursuant to this Article IV may elect to have the right to
indemnification or reimbursement or advancement of expenses interpreted on the
basis of the applicable law in effect at the time of the occurrence of the event
or events giving rise to the applicable Proceeding, to the extent permitted by
law, or on the basis of the applicable law in effect at the time such
indemnification or reimbursement or advancement of expenses is sought. Such
election shall be made, by a notice in writing to the Corporation, at the time
indemnification or reimbursement or advancement of expenses is sought; provided,
however, that if no such notice is given, the right to indemnification or
reimbursement or advancement of expenses shall be determined by the law in
effect at the time indemnification or reimbursement or advancement of expenses
is sought.
3
<PAGE> 4
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of Incorporation
or these By-Laws require notice to be given to any Director or stockholder, such
notice may be given in writing by mail, addressed to such Director or
stockholder at his address as it appears in the records of the Corporation, with
postage thereon prepaid. Such notice shall be deemed to have been given when it
is deposited in the United States mail. Notice to Directors may also be given by
telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors.
4
<PAGE> 1
EXHIBIT 3.18
ARTICLES OF AMENDMENT
OF
NATIONAL ENQUIRER, INC.
Pursuant to Section 607.187 of the General Corporation Act of Florida, the
undersigned adopts these Articles of Amendment.
FIRST: The name of the corporation is National Enquirer, Inc.
SECOND: The Articles of Incorporation of this corporation are amended
by changing the article numbered "TENTH" so that, as amended, the paragraph
numbered 5 of said article shall read as follows:
5. The Corporation shall, to the fullest extent permitted by the
Florida General Corporation Act (Chapter 607, Official Florida
Statutes), as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said Act
from and against, any and all of the expenses, liabilities or other
matters referred to in or covered by said Act and the indemnification
provided for herein shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action, in another capacity
while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
THIRD: The Amendment to the Articles of Incorporation was adopted by
the sole shareholder of the Corporation on the 7th day of September, 1980,
by his written consent.
FOURTH: The above Amendment to the Articles of Incorporation does not
pertain to the exchange, reclassification or cancellation of issued shares.
Signed this 16th day of September, 1980.
NATIONAL ENQUIRER, INC.
BY /s/ IAIN CALDER
------------------------------------
Iain Calder
President
/s/ GUY GALIARDO
------------------------------------
Guy Galiardo
Secretary
<TABLE>
<S> <C>
STATE OF FLORIDA )
COUNTY OF PALM BEACH ) ss.:
</TABLE>
The foregoing instrument was acknowledged before me this 16th day of
September, 1980, by Guy Galiardo the Secretary of National Enquirer, Inc., on
behalf of the Corporation.
[Notarial Seal]
/s/ NUAIMA TOMASEK
------------------------------------
Notary Public
<PAGE> 2
ARTICLES OF AMENDMENT
OF
NATIONAL ENQUIRER, INC.
Pursuant to Section 607.187 of the General Corporation Act of Florida, the
undersigned adopts these Articles of Amendment.
FIRST: The name of the corporation is National Enquirer, Inc.
SECOND: The Articles of Incorporation of this corporation are amended
by changing the article numbered "THIRD" so that, as amended, the first
paragraph of said article shall read as follows:
"THIRD: The amount of the capital stock shall be $201,000 to
consist of one million (1,000,000) shares of Common Stock of the par
value of one-tenth (1/10th) of one cent (1 cent) each, one hundred (100)
shares of Preferred Stock of the par value of One Thousand Dollars
($1,000) each, and one hundred (100) shares of Second Preferred Stock of
the par value of One Thousand Dollars ($1,000) each."
THIRD: The Amendment to the Articles of Incorporation was adopted by
the sole shareholder of the corporation on the 20th day of March, 1978, by
his written consent.
FOURTH: If such Amendment provides for an exchange, reclassification
or cancellation of issued shares, the manner in which the same shall be
effected, if it is not set forth in the Amendment itself, is as follows:
Each of the ten (10) shares of Common Stock of the Corporation, par
value One Hundred Dollars ($100) per share, issued and outstanding
immediately prior to the time the Amendment becomes effective, shall be
and is automatically reclassified and changed without any further act
into one hundred thousand (100,000) shares of new Common Stock of the
corporation, par value one-tenth (1/10th) of one cent (1 cent), per
share, fully paid and non-assessable.
Signed this 7th day of April, 1978.
NATIONAL ENQUIRER, INC.
BY: /s/ IAIN CALDER
------------------------------------
Iain Calder
President
/s/ DINO M. GALLO
------------------------------------
Dino M. Gallo
Secretary
STATE OF FLORIDA:
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this 7th day of April,
1978, by Dino M. Gallo, the Secretary of National Enquirer, Inc., on behalf of
the corporation.
(Notarial seal)
/s/
--------------------------------------
Notary Public
<PAGE> 3
ARTICLES OF INCORPORATION
OF
NATIONAL ENQUIRER, INC.
The undersigned, being a natural person and competent to contract, for the
purpose of establishing a corporation under the provisions and subject to the
requirements of the laws of the State of Florida (particularly Chapter 608,
Official Florida Statutes, and the acts amendatory thereof and supplemental
thereto), does hereby adopt and make the following Articles of Incorporation and
does hereby certify that:
FIRST: The name of the corporation (hereinafter called the
corporation) is NATIONAL ENQUIRER, INC.
SECOND: The general nature of the business or businesses to be
transacted by the corporation, which shall include the authority to engage
in any business or activity permitted under the laws of the United States
and of the State of Florida, is as follows:
To design, create, prepare, make, edit, sell, obtain copyrights in
and for, obtain, receive, grant, transfer and assign options, rights,
franchises, and royalties in respect of, license the use of, market,
distribute, syndicate, furnish, and generally deal in and with, as
principal, agent, broker, distributor, or in any other lawful capacity,
any and all kinds of printed and reproduced matter, magazines,
newspapers, books, pamphlets and other publications of every kind,
nature, and description, and to do everything necessary, useful, or
convenient in furtherance thereof.
To conduct in all its branches, a general lithographing, printing,
publishing, paper products, stationery, bookbinding, engraving,
photoengraving, duplicating, offsetting, processing, facsimile, and
image, color, line, word and shadow reproduction, artists' supplies, and
mail-order business, and, without limiting the generality of any of the
purposes herein contained, to edit, print, bind, buy, sell, publish and
generally deal in books, pamphlets and other pub-lications of every
kind, nature and description. To design, manufacture, buy, sell, import,
export, distribute, use, license the use of, prepare, produce and
generally deal in and with, whether as principal, agent, jobber,
distributor, broker, licensor, licensee, or otherwise, any and all
equipment, apparatus, machinery, devices, plants, facilities, improved
and unimproved real, personal and mixed properties, and materials and
supplies, used or useful in or about such business and related
businesses.
To collect, assemble, compile, edit, prepare, buy, sell, license
the use of as licensor and licensee, acquire, receive, grant, assign,
and transfer options, copyrights, and other rights in respect of,
distribute, syndicate, disseminate, publish, print and circulate in
books, brochures, leaflets, pamphlets, and other printed and reproduced
media, broadcast by radio, record, and reproduce by platter, disc, wire
and tape recording, television, telecast, facsimile sound, image, and
other lawful methods, means, devices, and techniques, whether now or
hereafter devised, discovered, invented, improved, or developed, and
generally deal in and with in any lawful capacity, information,
techniques, critiques, analyses, charts, outlines, sketches, paintings,
drawings, sculptures, suggestions, guidance, advice, and items of
interest in the field of the fine arts.
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in respect
of, and generally deal in and with, at wholesale and retail, as
principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor,
and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal, and mixed property of any and all kinds, together with
the components, resultants, and by-products thereof; to acquire by
purchase or otherwise own, hold,
<PAGE> 4
lease, mortgage, sell, or otherwise dispose of, erect, construct, make,
alter, enlarge, improve, and to aid or subscribe toward the
construction, acquisition or improvement of any factories, shops,
storehouses, buildings, and commercial and retail establishments of
every character, including all equipment, fixtures, machinery,
implements and supplies necessary, or incidental to, or connected with,
any of the purposes or business of the corporation; and generally to
perform any and all acts connected therewith or arising herefrom or
incidental thereto, and all acts proper or necessary for the purpose of
the business.
To engage generally in the real estate business as principal,
agent, broker, and in any lawful capacity, and generally to take, lease,
purchase, or otherwise acquire, and to own, use, hold, sell, convey,
exchange, lease, mortgage, work, clear, improve, develop, divide, and
otherwise handle, manage, operate, deal in and dispose of real estate,
real property, lands, multiple-dwelling structures, houses, buildings
and their works and any interest or right therein; to take, lease,
purchase or otherwise acquire, and to own, use, hold, sell, convey,
exchange, hire, lease, pledge, mortgage, and otherwise handle, and deal
in and dispose of, as principal, agent, broker, and in any lawful
capacity, such personal property, chattels, chattels real, rights,
easements, privileges, choses in action, notes, bonds, mortgages, and
securities as may lawfully be acquired, held, or disposed of; and to
acquire, purchase, sell, assign, transfer, dispose of, and generally
deal in and with, as principal, agent, broker, and in any lawful
capacity, mortgages and other interests in real, personal, and mixed
properties; to carry on a general construction, contracting, building,
and realty management business as principal, agent, representative,
contractor, subcontractor, and in any other lawful capacity.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, turn to account, grant licenses and immunities in
respect of, manufacture under and to introduce, sell, assign, mortgage,
pledge or otherwise dispose of, and, in any manner deal with and
contract with reference to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters, patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks, trade symbols
and other indications of origin and ownership granted by or
recognized under the laws of the United States of America or of any
state or subdivision thereof, or of any foreign country or
subdivision thereof, and all rights connected therewith or
appertaining thereunto;
(c) franchises, licenses, grants and concessions.
To have all of the powers conferred upon corporations organized
pursuant to the provisions of Chapter 608, Official Florida Statutes, as
amended and supplemented.
THIRD: The amount of the capital stock shall be Two Hundred and One
Thousand ($201,000,00) Dollars to consist of Ten (10) shares of Common
Stock of the par value of One Hundred ($100.00) Dollars each, One Hundred
(100) shares of Preferred Stock of the par value of One Thousand
($1,000.00) Dollars each and One Hundred (100) shares of Second Preferred
Stock of the par value of One Thousand ($1,000.00) Dollars each.
The designations, preferences, privileges and voting powers of the
shares of each class and the restrictions and qualifications thereof shall
be as follows:
a. The holders of the Preferred Stock shall be entitled to have
declared and set apart for their benefit, annually out of surplus
profits, cumulative dividends at the rate of Four and one-half (4- 1/2%)
Per Cent per annum on the par value thereof before any dividends shall
be declared on the Second Preferred Stock, and the holders of the Second
Preferred Stock shall be entitled to have declared and set apart for
their benefit annually out of the surplus profits, cumulative dividends
at the rate of Six (6%) Per Cent per annum on the par value thereof
2
<PAGE> 5
before any dividends shall be declared on the Common Stock, but the
holders of the Preferred Stock and the Second Preferred Stock shall not
be entitled to any other or further participation in profits.
b. Upon liquidation of the affairs of the corporation and the
distribution of its assets, either by dissolution or otherwise, the
holders of the Preferred Stock shall be entitled to receive payment in
full of the par value of their shares with cumulative dividends, before
any payment shall be made on account of the Second Preferred Stock and
the holders of the Second Preferred Stock shall be entitled to receive
payment in full of the par value of their shares, with cumulative
dividends, before any payment shall be made on account of the Common
Stock, and after the payment of the amount of such Preferred Stock and
Second Preferred Stock to the holders thereof, the balance of the assets
and funds of the corporation shall be distributed wholly among the
holders of the Common Stock.
c. The corporation may, from its surplus profits, retire the
Preferred Stock and the Second Preferred Stock on any day on which a
dividend thereon shall be payable, at the price per share of One
Thousand ($1,000.00) Dollars each, and accrued dividends.
d. The Preferred Stock and the Second Preferred Stock shall not
confer upon the holders thereof any right or privilege of voting at any
regular, special or adjourned meeting of the corporation on any matter
whatsoever.
No holder of any of the shares of the corporation shall be entitled as of
right to purchase or subscribe for any treasury shares and any unissued shares
of any class or any additional shares of any class to be issued by reason of any
increase of the authorized number of shares of the corporation of any class, or
bonds, certificates of indebtedness, debentures or other securities convertible
into shares of the corporation or carrying any right to purchase shares of any
class, but any such treasury shares and any such unissued shares or such
additional authorized issue of any shares or of other securities convertible
into shares, or carrying any right to purchase shares, may be issued and
disposed of pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations and upon such terms as may be deemed
advisable by the Board of Directors in the exercise of its discretion.
FOURTH: The minimum amount of capital with which the corporation will
commence business is Five Hundred Dollars.
FIFTH: The corporation is to have perpetual existence.
SIXTH: The address, including initial street address, of the principal
office of the corporation in the State of Florida is 600 South East Coast
Avenue, c/o Dino M. Gallo, City of Lantana 33460, County of Palm Beach.
SEVENTH: The number of directors constituting the first Board of
Directors of the corporation is six.
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<PAGE> 6
EIGHTH: The name and the address, including street address, of each
member of the first Board of Directors are as follows:
<TABLE>
<CAPTION>
NAME POST-OFFICE ADDRESS
---- -------------------
<S> <C>
Generoso Pope, Jr. ........................... 1370 South Ocean Boulevard
Manalapan, Florida 33460
Nathan Chrzan................................. 561 North East 19th Avenue
Deer Field Beach, Florida 33441
Henry O. Dormann.............................. 988 Fifth Avenue
New York, New York 10021
Guy Galiardo.................................. 742 Forsyth Street
Boca Raton, Florida 33432
Dino M. Gallo................................. 1346 North West 4th Street
Boca Raton, Florida 33432
William C. Hall............................... 571 North East Philipe Drive
Boca Raton, Florida 33432
</TABLE>
NINTH: The name and the address, including street address, of the
person subscribing these Articles of Incorporation are as follows:
<TABLE>
<CAPTION>
NAME POST-OFFICE ADDRESS
---- -------------------
<S> <C>
Frances A. Wrigley............................ 521 Fifth Avenue,
New York, New York 10017
</TABLE>
TENTH: For the regulation of the business and for the conduct of the
affairs of the corporation, and in further creating, dividing, limiting and
regulating the powers of the corporation and of its directors and
stockholders, it is hereby provided:
1. The By-Laws shall prescribe the conditions under which stock
certificates may be issued to replace lost or destroyed stock
certificates.
2. The Board of Directors is expressly authorized and empowered to
adopt and amend the first By-Laws of the corporation and thereafter to
adopt and amend By-Laws which are not inconsistent with any By-Laws that
may have been adopted by the stockholders entitled to vote.
3. Any director may be removed, with or without cause, or may be
suspended for cause, at any time in such manner as shall be provided in
the By-Laws of the corporation.
4. No contract or other transaction between the corporation and any
other corporation and no other act of the corporation shall, in the
absence of fraud, in any way be affected or invalidated by the fact that
any of the directors of the corporation are pecuniarily or otherwise
interested in, or are directors or officers of, such other corporation.
Any director of the corporation individually or any firm or association
of which any director may be a member, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of
the corporation, provided that the fact that he individually or such
firm or association is so interested shall be disclosed or shall have
been known to the Board of Directors or a majority of such members
thereof as shall be present at any meeting of the Board of Directors at
which action upon any such contract or transaction shall be taken. Any
director of the corporation who is also a director or officer of such
other corporation or who is not interested may be counted in determining
the existence of a quorum at any meeting of the Board of Directors which
shall authorize any such contract or transaction, and may vote thereat
to authorize any such contract or transaction, with like force and
effect as if he were not such director or officer of such other
corporation or not so interested. Any director of the corporation may
vote upon any contract or
4
<PAGE> 7
other transaction between the corporation and any subsidiary or
affiliated corporation without regard to the fact that he is also a
director of such subsidiary or affiliated corporation.
Any contract, transaction or act of the corporation or of the
directors, which shall be ratified by a majority of a quorum of the
stockholders of the corporation at any annual meeting, or at any special
meeting called for such purpose, shall, in so far as permitted by law or
by the Articles of Incorporation of the corporation, be as valid and as
binding as though ratified by every stockholder of the corporation;
provided, however, that any failure of the stockholders to approve or
ratify any such contract, transaction or act, when and if submitted,
shall not be deemed in any way to invalidate the same or deprive the
corporation, its directors, officers or employees, of its or their right
to proceed with such contract, transaction or act.
5. The Corporation shall, to the fullest extent permitted by
Chapter 608, Official Florida Statutes, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said Act from and against, any and all of the expenses,
liabilities or other matters referred to in or covered by said Act and
the indemnification provided for herein shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any
By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in its 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.
6. Subject to any limitation in the By-Laws, the members of the
Board of Directors may be entitled to and may prescribe reasonable fees,
salaries or other compensation for their services and to reimbursement
for their expenses as such members. Nothing contained herein shall
preclude any director from serving the corporation, or any subsidiary or
affiliated corporation, in any other capacity and receiving proper
compensation therefor.
7. The vote of the holders of a least a majority of stock entitled
to vote shall be necessary to authorize an amendment to these Articles
of Incorporation, the merger or consolidation of the corporation with or
into one or more other corporations, or the dissolution of the
corporation. Except in the election of directors, and, except as may
otherwise be provided by law, the vote of at least a majority of the
votes cast at a duly constituted meeting shall be the act of the
stockholders entitled to vote.
ELEVENTH: From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Florida at the time in force may be
added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the
corporation by these Articles of Incorporation are granted subject to the
provisions of this Article ELEVENTH.
TWELFTH: Upon the filing of these Articles of Incorporation with the
Secretary of State of Florida, together with his endorsement of approval
thereon, upon compliance with every statutory prerequisite of the State of
Florida, and upon commencement of corporate existence, these Articles of
Incorporation shall, and they are hereby deemed to be, the Certificate of
Incorporation of the corporation and any reference to the term "Certificate
of Incorporation" shall include these Articles of Incorporation as so
approved.
IN WITNESS WHEREOF, I have made and subscribed these Articles of
Incorporation.
Dated: February 28, 1972
/s/ FRANCES A. WRIGLEY
--------------------------------------
Frances A. Wrigley
5
<PAGE> 8
<TABLE>
<S> <C>
STATE OF NEW YORK )
COUNTY OF NEW YORK ) SS.:
</TABLE>
BE IT REMEMBERED that personally appeared before me, a Notary Public in and
for the County and State aforesaid, Frances A. Wrigley, the incorporator who
made and subscribed the foregoing Articles of Incorporation, known to me
personally to be such, and I having made known to her the contents of said
Articles of Incorporation, she did acknowledge the same to be her act and deed,
and that the facts therein stated are truly set forth.
GIVEN under my hand and seal of office this 28th day of February, 1972.
--------------------------------------
Notary Public
(Notarial Seal)
6
<PAGE> 1
EXHIBIT 3.19
RESTATED BY-LAWS
NOVEMBER 30, 1981
OF
NATIONAL ENQUIRER, INC.
(A FLORIDA CORPORATION)
------------------------
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate signed by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the corporation and sealed with the seal of the
corporation and certifying the number and class of shares owned by him in the
corporation. The corporate seal may be facsimile, engraved or printed. If such
certificate is signed by a transfer agent or an assistant transfer agent other
than the corporation or by a transfer clerk acting on behalf of the corporation
and a registrar the signature of any of the aforesaid officers may be a
facsimile on the certificate. In case any officer who signed, or whose facsimile
signature has been used on a certificate shall cease to be such officer before
such certificate has been delivered by the corporation, it may be issued by the
corporation and issued and delivered as though the person who signed it or whose
facsimile signature has been used thereon had not ceased to be such officer.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered or bearer form which
shall entitle the holder to receive a certificate for a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share shall, but scrip or warrants shall not unless otherwise
provided therein, entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the corporation in
the event of liquidation. The Board of Directors may cause scrip or warrants to
be issued subject to the conditions that they shall become void if not exchanged
for certificates representing full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
3. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining 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 as permitted by law, or entitled to receive
<PAGE> 2
payment of any dividend or other distribution 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 directors
may fix, in advance, a record date, which shall not be more than sixty days nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. If no record date is fixed, 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; and the record date
for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at any 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.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term, "share" or "shares" or "share of stock" or "shares of
stock" or, "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom Chapter 608, Official Florida Statutes, confers
such rights notwithstanding that the certificate of incorporation may provide
for more than one class or series of shares of stock, one or more of which are
limited or denied such rights thereunder however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation.
6. STOCKHOLDER MEETINGS.
-- TIME. The annual meeting shall be held on the day of of
each year (or, if said day be other than a business day, then on the next
succeeding day which is not a business day). A special meeting shall be held on
the date and at the time fixed by the directors.
-- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Florida, as the directors may, from time
to time, fix. Whenever the directors shall fall to fix such place, the meeting
shall be held at the principal office of the corporation in the State of
Florida.
-- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
-- NOTICE OR WAIVER OF NOTICE. Notice, signed by the Secretary or other
officer designated by the directors, of each meeting shall be given, stating the
place, date, and hour of the meeting. The notice of an annual meeting shall
state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken upon notice of the purpose or
purposes of the meeting) state the purpose or purposes. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by Chapter 608, Official Florida Statues. Except as otherwise provided by
Chapter 608, Official Florida Statutes, a copy of the notice of any meeting
shall be given, personally or by mail, not less than ten days nor more than
sixty days before the date of the meeting, unless the lapse of the prescribed
period of time shall have been waived, and directed to each stockholder at his
record address or at such other address which he may have furnished by request
in writing to the Secretary of the corporation. Notice by mail shall be deemed
to be given when deposited, with postage thereon prepaid, in the United States
mail. If a meeting is adjourned to another time, not more than thirty days
hence, and/or to another place, and if an announcement of the adjourned time
and/or place is made at the meeting, it shall not be necessary to give notice of
the adjourned meeting
2
<PAGE> 3
unless the directors, after adjournment, fix a new record date for the adjourned
meeting. If any stockholder shall transfer any of his stock after such notice,
the corporation may, but need not, furnish notice to the transferee or
transferees thereof. Notice need not be given to any stockholder who submits a
written waiver of notice signed by him before or after the time stated therein.
-- STOCK BOOK. The stock book or books prescribed by Section 608.39,
Official Florida Statutes shall be produced at any meeting of stockholders upon
the timely request of any stockholder.
-- CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting -- the Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in office
and present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman of the meeting shall appoint a secretary of
the meeting.
-- PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after eleven months from its date unless such
proxy provides for a longer period. In the event that a proxy shall designate
two or more persons to act as proxies, a majority such persons present at the
meeting, or, if only one be present, that one, shall have all of the powers
conferred by the proxy upon all the persons so designated unless the proxy shall
otherwise provide.
-- INSPECTORS. The directors, in advance of any meeting, may, but need not
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
-- QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
-- VOTING. Each share of stock shall entitle the holder thereof to one
vote. In the election of directors, a plurality of the votes cast shall elect.
Any other action shall be authorized by a majority of the votes cast except
where by law a different percentage of votes and/or a different exercise of
voting power is prescribed. In the election of directors, and for any other
action, voting need not be by ballot.
7. INFORMAL ACTION. When at least four-fifths of the stockholders shall be
present a meeting and shall sign a written consent thereto on the record of the
meeting, the acts of such meeting shall be as valid as if legally called and
notified.
3
<PAGE> 4
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business of the corporation shall be
managed and its corporate powers exercised by the Board of Directors of the
corporation. The Board of Directors shall have authority to fix the compensation
of the members thereof. The use of the phrase "whole board" herein refers to the
total number of directors which the corporation would have if there were no
vacancies.
2. QUALIFICATIONS AND NUMBER. At least one director must be a citizen of
the United States, and each director most be of full age. A director, however,
need not be a stockholder or a resident of the State of Florida. The first Board
of Directors shall consist of the number of persons fixed in the Articles of
Incorporation. Thereafter the number of directors constituting the whole Board
shall be at least one. Subject to the foregoing limitation and except for the
first Board of Directors, such number may be fixed from time to time by action
of the stockholder or, if the number is not fixed, the number shall be six. The
number of directors may be increased or decreased by action of the stockholders.
3. ELECTION AND TERM. The first Board of Directors shall hold office until
the first annual meeting of stockholders and until their successors are elected
and qualified or until their earlier resignation or removal. Thereafter,
directors who are elected at an annual meeting of stockholders, and directors
who are elected in the interim to fill vacancies and newly create directorships,
shall hold office until the next annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal. In the interim between annual meetings of stockholders or of special
meetings of stockholders called for the election of directors, newly created
directorships and any vacancies in the Board of Directors, including vacancies
resulting from the removal of directors for cause or without cause, which are
not filled at the meeting of stockholders effecting an increase in the number of
directors or a removal of one or more directors, may be filled by the action of
the remaining directors then in office, although less than a quorum, or by the
sole remaining director.
4. MEETINGS.
-- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the Directors may conveniently assemble.
-- PLACE. Meetings shall be held at such place within or without the State
of Florida as shall be fixed by the Board.
-- CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the direction
of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, of
the President, or of a majority of the directors in office.
-- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein.
-- QUORUM AND ACTION. Except as otherwise provided in these By-Laws a
majority of the whole Board shall constitute a quorum. A majority of the
directors present, whether or not a quorum is present, may adjourn a meeting to
another time and place. 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.
-- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for
cause or without cause by the stockholders. One or more of the directors may be
suspended by the Board of Directors pending a determination by the stockholders
that cause exists.
4
<PAGE> 5
6. EXECUTIVE COMMITTEE. Whenever its number consists of three or more, the
Board of Directors may designate an Executive Committee, which shall consist of
two or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of such committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any such committee or committees, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Such committee, to the extent provided in the
resolution of the Board, shall have and may exercise the powers and authority of
the Board of Directors.
7. INFORMAL ACTION. Any member or members of the Board of Directors or of
any committee designated by the Board, may participate in a meeting of the
Board, or any such committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Any action required or
permitted to be taken at any meeting of the Board of Directors or an Executive
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 signed by them, and
such writing or writings are filed in the minutes of proceedings of the Board or
committee prior to the taking of such action.
ARTICLE III
OFFICERS
1. General. The officers of the Corporation shall consist of a Chairman of
the Board, a President, a Secretary and a Treasurer, and may include one or more
Vice Chairmen of the Board, Vice Presidents (any one or more of whom the Board
of Directors may designate an Executive Vice President or a Senior Vice
President) Assistant Secretaries, Assistant Treasurers and other officers, with
such authority and duties as the Board of Directors may from time to time
determine. Each officer shall be elected by the Board of Directors and, except
as otherwise provided by these By-Laws, shall hold office until his successor
has been elected or appointed and qualified or until his earlier resignation or
removal. Any vacancy occurring in any office shall be filled by the Board of
Directors. Any two or more offices may, be held by the same person, except the
offices of President and Secretary. No officer other than the Chairman of the
Board need be a director. The Board may require any officer to give security for
the faithful performance of his duties.
2. Chairman of the Board. The Chairman of the Board shall be the chief
executive officer of the Corporation, and, subject to the direction of the Board
of Directors, shall have general control of its affairs and business. He shall
also have such other powers and duties as may be prescribed by the Board of
Directors from time to time. The Chairman of the Board shall, when present,
preside at all meetings of the shareholders and the Board of Directors.
3. President. The President shall, subject to the direction of the Board
of Directors and the Chairman of the Board, have active management of the
Corporation's affairs and business and shall have such other powers and duties
as may be prescribed by the Board of Directors from time to time.
4. Vice Presidents. Except as hereinafter provided, the Vice Presidents
shall have such powers and duties as are generally incident to that office and
such powers and duties as may be assigned to them by the Chairman of the Board,
the President or the Board of Directors.
The Board of Directors shall also have the power to appoint a class of Vice
Presidents who shall have such powers and duties with respect to the department
or departments to which their work relates as may be consistent with the
responsibility assigned to them by the Board of Directors, the Chairman of the
Board or the President. This class of Vice Presidents shall not otherwise have
the powers or duties ordinarily incident to such corporate office, and shall not
be considered corporate officers who may bind the Corporation except to the
extent specifically authorized by resolution of the Board of Directors. The
5
<PAGE> 6
official title of this class of Vice Presidents shall denote the department as
to which they have authority (e.g., Vice President -- Advertising).
5. Secretary. The Secretary shall keep the minutes of all proceedings of
the shareholders and the Board of Directors. He shall attend to the giving of
notices to the shareholders and directors, or other notices required by law or
by these By-Laws. He shall have custody of the seal of the Corporation and shall
affix such seal to deeds, contracts and other written instruments when duly
authorized. He shall have charge of the stock certificate book and stock ledger
and such other books and papers as the Board may direct. He shall have all such
powers and duties as are generally incident to the office of secretary and such
other powers and duties as may from time to time be assigned to him by the
Chairman of the Board, the President or the Board of Directors.
6. Treasurer. The Treasurer shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
Corporation and shall deposit the same in accordance with instructions of the
Board of Directors. He may receive and give receipts and acquittances for
payments made to the Corporation. He shall keep full and accurate accounts of
all moneys received and paid out on account of the Corporation. He shall have
all such powers and duties as are generally incident to the office of treasurer
and such other powers and duties as from time to time may be assigned to him by
the Chairman of the Board, the President or by the Board of Directors.
7. Compensation of Officers. Each officer shall receive such salary or
compensation as may be determined by the Board of Directors, and no officer
shall be prevented from receiving such compensation by reason of the fact that
he is also a director of the Corporation.
8. Resignation and Removal of Officers. Any officer may resign an any time
by giving written notice thereof to the President or to the Board of Directors,
and such resignation shall take effect at the time therein specified. Any
officer may be removed from office, with or without cause by vote of a majority
of the entire Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VI
STOCK BOOK
The corporation shall keep at its office in Florida or in the office of its
transfer agent wherever located, a book (or books where more than one kind,
class or series of stock is outstanding) to be known as the stock book,
containing the names alphabetically arranged, with the addresses of every
stockholder, showing the number of shares of each kind, class or series of stock
held of record by him, and where the stock book is kept in the office of the
transfer agent, the corporation shall keep at its office in Florida copies of
the stock lists prepared from said stock book and sent to it from time to time
by said transfer agent. The stock book or stock lists shall show the current
status; provided, if the transfer agent of the corporation be located elsewhere,
a reasonable time shall be allowed for transit of mail.
6
<PAGE> 7
ARTICLE VII
PRINCIPAL OFFICE AND RESIDENT AGENT
The location of the principal office of the corporation in the State of
Florida is 600 South East Coast Avenue, c/o Dino M. Gallo, Lantana 33460. The
name of the resident agent of the corporation in the State of Florida and the
address of the office, place of business or location of the corporation in the
State of Florida for the service of process on the corporation in the State of
Florida are as follows: Dino M. Gallo, 600 South East Coast Avenue, Lantana
33460.
ARTICLE VIII
CONTROL OVER BY-LAWS
The power to amend, alter, and repeal these By-Laws and to adopt new
By-Laws shall be vested in the Board of directors; provided, that the Board of
Directors may delegate such power, in whole or in part, to the stockholders; and
provided, further, that any By-Law, other than an initial By-Law, which provides
for the election of directors by classes for staggered terms shall be adopted by
the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the
By-Laws of NATIONAL ENQUIRER, INC., a Florida corporation, as in effect on the
date hereof.
WITNESS my hand and the seal of the corporation.
Dated:
--------------------------------------
Secretary of
NATIONAL ENQUIRER, INC.
7
<PAGE> 1
EXHIBIT 3.20
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF
NATIONAL DISTRIBUTION SERVICES, INC.
Under Section 241 of the Delaware General Corporation Law
The undersigned, the sole incorporator of National Distribution Services,
Inc. hereby certifies:
1. The name of the corporation is National Distribution Services, Inc.
2. The certificate of its incorporation was filed by the Secretary of State
on November 3, 1983.
3. The Certificate of Incorporation is amended to change the corporate
name. Paragraph one of the Certificate, which sets forth the name of the
corporation, is amended to read:
"1. The name of the corporation (hereinafter called the "Corporation")
is NDSI, INC.
4. The undersigned certifies that directors have not yet been elected and
that the Corporation has not received any payment for any of its stock.
5. The undersigned further certifies that the above amendment to the
Certificate of Incorporation was duly adopted by the sole incorporator in
accordance with the provisions of Section 241(b) of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, the undersigned sole incorporator has executed this
Certificate of Amendment of the Certificate of Incorporation on the 10th day of
January 1986.
/s/ SAMUEL R. NEWBORN
--------------------------------------
Samuel R. Newborn,
Sole Incorporator
7
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
NATIONAL DISTRIBUTION SERVICES, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "general Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"Corporation") is:
NATIONAL DISTRIBUTION SERVICES, INC.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is 306
South State Street, City of Dover, County of Kent; and the name of the
registered agent of the Corporation in the State of Delaware at such
address is United States Corporation Company.
THIRD: The nature of the business and of the purposes to be conducted
and promoted by the Corporation, which shall be in addition to the
authority of the Corporation to conduct any lawful business, to promote any
lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the
State of Delaware, is as follows:
To carry freight for hire; to receive and load all varieties of
commercial freight on board highway motor vehicles; to transport such
freight to various destinations throughout North America, and to buy,
sell, and otherwise deal in and with tractors and trailers suitable for
commercial trucking, and to maintain and repair the same; to sell and
distribute trucks and truck parts and accessories; to maintain a service
and repair department for trucks; and to do whatever may be necessary
and convenient to carry on such business and to accomplish such objects
as may be incident thereto; to engage in the buying and selling, at
wholesale andretail, of new and recapped tires of all kinds and
descriptions and the conducting of the general business of vulcanizing,
reinforcing, rebuilding, and repairing tires of all kinds and
descriptions, and such other and further objects as may be necessary and
incidental to the carrying on of such business, including the buying and
owning of the necessary tools and equipment for the business and the
buying, easing, holding, releasing, selling, and conveying the real
estate necessary or proper in connection with the business.
To carry on the business of public and private warehousing and all
the business necessarily or impliedly incidental thereto, and to further
carry on the business of general warehousing in all its several
branches; to construct, hire, purchase, operate, and maintain all or any
means or conveyances for the transportation to and from storage by land
or by water of any and all products, goods, wares, merchandise, or
manufactured articles; to issue certificates, warrants, and warehouse
receipts, negotiable or otherwise, to persons warehousing goods with the
company; to manufacture, sell, lease, rent, and trade in all goods and
things usually dealt in by warehousemen; to construct, purchase, take on
lease, or otherwise acquire any wharf, pier, dock, warehouse, cold
storage room, or otherwise premises deemed capable of being used
advantageously in connection with the business of the company, and
generally to carry on and undertake any and all business undertaking,
transaction, or operation commonly carried on or undertaken by
warehousemen.
To service retail outlets for magazines, newspapers, periodicals
and other printed matter; to act as a distributor or jobber for
magazines and periodicals of all kinds; to maintain and conduct a
service or services, or bureau or bureaus, for the collection,
transmission, sale, and disposal of printed and reproduced matter of any
kind and nature; to act as news, advertising, and general
representatives and agents for newspapers, magazines, and other
publications, and for persons,
<PAGE> 3
firms, and corporations, and to contract for and buy, sell, lease, or
otherwise acquire or dispose of or deal in advertising and news space,
and to make contracts and conduct operations of any kind or nature with
reference thereto.
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use
and otherwise deal in and with real or personal property, or any
interest therein, wherever situated, and to sell, convey, lease,
exchange, transfer or otherwise dispose of, or mortgage or pledge, all
or any of its property and assets, or any interest therein, wherever
situated.
To engage generally in the real estate business as principal,
agent, broker, and in any lawful capacity, and generally to take, lease,
purchase, or otherwise acquire, and to own, use, hold, sell, convey,
exchange, lease, mortgage, work, clear, improve, develop, divide, and
otherwise handle, manage, operate, deal in and dispose of real estate,
real property, lands, multiple-dwelling structures, houses, buildings
and other works and any interest or right therein; to take, lease,
purchase or otherwise acquire, and to own, use, hold, sell, convey,
exchange, hire, lease, pledge, mortgage, and otherwise handle, and deal
in and dispose of, as principal, agent, broker, and in any lawful
capacity, such personal property, chattels, chattels real, rights,
easements, privileges, choses in action, notes, bonds, mortgages, and
securities as may lawfully be acquired, held, or disposed of; and to
acquire, purchase, sell, assign, transfer, dispose of, and generally
deal in and with, as principal, agent, broker, and in any lawful
capacity, mortgages and other interest in real, personal, and mixed
properties; to carry on a general construction, contracting, building,
and realty management business as principal, agent, representative,
contractor, subcontractor, and in any other lawful capacity.
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in respect
of, and generally deal in and with, at wholesale and retail, as
principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor,
and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal, and mixed property of any and all kinds, together with
the components, resultants, and by-products thereof.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, turn to account, grant licenses and immunities in
respect of, manufacture under and to introduce, sell, assign, mortgage,
pledge or otherwise dispose of, and, in any manner deal with and
contract with reference to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trademarks, trade names,
trade symbols and other indications of origin and ownership granted
by or recognized under the laws of the United States of America, the
District of Columbia, any state or subdivision thereof, and any
commonwealth, territory, possession, dependency, colony, possession,
agency or instrumentality of the United States of America and of any
foreign country, and all rights connected therewith or appertaining
thereunto;
(c) franchises, licenses, grants and concessions.
To guarantee, purchase, take, receive, subscribe for, and otherwise
acquire, own, hold, use, and otherwise employ, sell, lease, exchange,
transfer, and otherwise dispose of, mortgage, lend, pledge, and
otherwise deal in and with, securities (which term, for the purpose of
this Article THIRD, includes, without limitation of the generality
thereof, any shares of stock, bonds,
2
<PAGE> 4
debentures, notes, mortgages, other obligations, and any certificates,
receipts or other instruments representing rights to receive, purchase
or subscribe for the same, or representing any other rights or interests
therein or in any property or assets) of any persons, domestic and
foreign firms, associations, and corporations, and by any government or
agency or instrumentality thereof; to make payment therefor in any
lawful manner; and, while owner of any such securities, to exercise any
and all rights, powers and privileges in respect thereof, including the
right to vote.
To make, enter into, perform and carry out contracts of every kind
and description with any person, firm, association, corporation or
government or agency or instrumentality thereof.
To acquire by purchase, exchange or otherwise, all, or any part of,
or any interest in, the properties, assets, business and good will of
any one or more persons, firms, associations or corporations heretofore
or hereafter engaged in any business for which a corporation may now or
hereafter be organized under the laws of the State of Delaware; to pay
for the same in cash, property or its own or other securities; to hold,
operate, reorganize, liquidate, sell or in any manner dispose of the
whole or any part thereof; an in connection therewith, to assume or
guarantee performance of any liabilities, obligations or contracts of
such persons, firms, associations or corporations, and to conduct the
whole or any part of any business thus acquired.
To lend money in furtherance of its corporate purposes and to
invest and reinvest its funds from time to time to such extent, to such
persons, firms, associations, corporations, governments or agencies or
instrumentalities thereof, and on such terms and on such security, if
any, as the Board of Directors of the Corporation may determine.
To make contracts of guaranty and suretyship of all kinds and
endorse or guarantee the payment of principal, interest or dividends
upon, and to guarantee the performance of sinking fund or other
obligations of, any securities, and to guarantee in any way permitted by
law the performance of any of the contracts or other undertakings in
which the Corporation may otherwise be or become interested, or any
persons, firm, association, corporation, government or agency or
instrumentality thereof, or of any other combination, organization or
entity whatsoever.
To borrow money without limit as to amount and at such rates of
interest as it may determine; from time to time to issue and sell its
own securities, including its shares of stock, notes, bonds, debentures,
and other obligations, in such amounts, on such terms and conditions,
for such purposes and for such prices, now or hereafter permitted by the
laws of the State of Delaware and by this certificate of incorporation,
as the Board of Directors of the Corporation may determine; and to
secure any of its obligations by mortgage, pledge or other encumbrance
of all or any of its property, franchises and income.
To be a promoter or manager of other corporations of any type or
kind; and to participate with others in any corporation, partnership,
limited partnership, joint venture, or other association of any kind, or
in any transaction, undertaking or arrangement which the Corporation
would have power to conduct by itself, whether or to such participation
involves sharing or delegation of control with or to others.
To draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments and
evidence of indebtedness whether secured by mortgage or otherwise, as
well as to secure the same by mortgage or otherwise, so far as may be
permitted by the laws of the State of Delaware.
To purchase, receive, take, reacquire or otherwise acquire, own and
hold, sell, lend, exchange, reissue, transfer or otherwise dispose of,
pledge, sue, cancel, and otherwise deal in and with its own shares and
its other securities from time to time to such an extent and in such
manner and upon such terms as the Board of Directors of the Corporation
shall determine; provided that the Corporation shall not use its funds
or property for the purpose of its own shares of capital stock when its
capital is impaired or when such use would cause any impairment of its
capital, except to the extent permitted by law.
3
<PAGE> 5
To organize, as an incorporator, or cause to be organized under the
laws of the State of Delaware, or of any other State of the United
States of America, or of the District of Columbia, or of any
commonwealth, territory, dependency, colony, possession, agency, or
instrumentality of the United States of America, or of any foreign
country, a corporation or corporations for the purpose of conducting and
promoting any business or purpose for which corporations may be
organized, and to dissolve, wind up, liquidate, merge or consolidate any
such corporation or corporations or to cause the same to be dissolved,
wound up, liquidated, merged or consolidated.
To conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both
within and without the State of Delaware, in any and all States of the
United States of America, in the District of Columbia, and in any or all
commonwealths, territories, dependencies, colonies, possessions,
agencies, or instrumentalities of the United States of America and of
foreign governments.
To promote and exercise all or any part of the foregoing purposes
and powers in any and all parts of the world, and to conduct its
business in all or any of its branches as principal, agent, broker,
factor, contractor, and in any other lawful capacity either alone or
through or in conjunction with any corporations, associations,
partnership, firms, trustees, syndicates, individuals, organizations,
and other entities in any part of the world, and, in conducting its
business and promoting any of its purposes, to maintain offices,
branches and agencies in any part of the world, to make and perform any
contracts and to do any acts and things, and to carry on any business,
and to exercise any powers and privileges suitable, convenient, or
proper for the conduct, promotion, and attainment of any of the business
and purposes therein specified or which at any time may be incidental
thereto or may appear conducive to or expedient for the accomplishment
of any of such business and purposes and which might be engaged in or
carried on by a corporation incorporated or organized under the General
Corporation Law of the State of Delaware, and to have and exercise all
of the powers conferred by the laws of the State of Delaware upon
corporations incorporated or organized under the General Corporation Law
of the State of Delaware.
The foregoing provisions of this Article THIRD shall be construed both as
purposes and powers and each as an independent purpose and power. The foregoing
enumeration of specific purposes and powers shall not be held to limit or
restrict in any many the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
Certificate of Incorporation; provided, that the Corporation shall not conduct
any business, promote any purpose, or exercise any power or privilege within or
without the State of Delaware which, under the laws thereof, the Corporation may
not lawfully conduct, promote, or exercise.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is Two Hundred (200), all of which are
without par value. All such shares are of one class and are Common Stock.
No holder of any of the shares of the stock of the Corporation,
whether now or hereafter authorized and issued, shall be entitled as of
right to purchase or subscribe for (1) any unissued stock of any class, or
(2) any additional shares of any class to be issued by reason of any
increase of the authorized capital stock of the Corporation of any class,
or (3) bonds, certificates of indebtedness, debentures or other securities
convertible into stock of the Corporation, or carrying any right to
purchase stock of any class, but any such unissued stock or such additional
authorized issue of any stock or of other securities convertible into
stock, or carrying any right to purchase stock, may be issued and disposed
of pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations and upon such terms as may be deemed advisable
by the Board of Directors in the exercise of its discretion.
4
<PAGE> 6
FIFTH: The name and the mailing address of the incorporator are as
follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Samuel R. Newborn................................ 598 Madison Avenue
New York, New York 10022
</TABLE>
SIXTH: The Corporation is to have perpetual existence.
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 section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions
of section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made, be binding on all
the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of this Corporation, as the case may be, and also on
this Corporation.
EIGHTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and
all of the expenses, liabilities or other matters referred to in or covered
by said section, and the indemnification provided for herein shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators
of such a person.
NINTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the
Corporation by this Certificate of Incorporation are granted subject to the
provisions of this Article NINTH.
IN WITNESS WHEREOF, I have executed this Certificate of Incorporation on
this 2nd day of November, 1983.
/s/ SAMUEL R. NEWBORN
--------------------------------------
Samuel R. Newborn
5
<PAGE> 1
Exhibit 3.21
BY-LAWS
OF
NDSI, INC.
-----------------------------------------------------
ARTICLE I.
OFFICES
The office of the Corporation shall be located in the City and
State designated in the Articles of Incorporation. The Corporation may also
maintain offices at such other places within or without the United States as the
Board of Directors may, from time to time, determine.
ARTICLE II.
MEETING OF SHAREHOLDERS
Section 1. Annual Meetings. The annual meeting of the
shareholders of the Corporation shall be held within five months after the close
of the fiscal year of the Corporation, for the purpose of electing directors,
and transacting such other business as may properly come before the meeting.
Section 2. Special Meetings. Special meetings of the
shareholders may be called at any time by the Board of Directors or by the
President, and shall be called by the President or the Secretary at the written
request of the holders of ten per cent (10%) of the shares then outstanding and
entitled to vote thereat, or as otherwise required under the provisions of the
Business Corporation Act.
Section 3. Place of Meetings. All meetings of shareholders
shall be held at the principal office of the Corporation, or at such other
places as shall be designated in the notices or waivers of notice of such
meetings.
By-Laws - 1
<PAGE> 2
Section 4. Notice of Meetings. (a) Except as otherwise
provided by Statute, written notice of each meeting of shareholders, whether
annual or special, stating the time when and place where it is to be held, shall
be served either personally or by mail, not less than ten or more than fifty
days before the meeting, upon each shareholder of record entitled to vote at
such meeting, and to any other shareholder to whom the giving of notice may be
required by law. Notice of a special meeting shall also state the purpose or
purposes for which the meeting is called, and shall indicate that it is being
issued by, or at the direction of, the person or persons calling the meeting.
If, at any meeting, action is proposed to be taken that would, if taken, entitle
shareholders to receive payment for their shares pursuant to Statute, the notice
of such meeting shall include a statement of that purpose and to that effect. If
mailed, such notice shall be directed to each such shareholder at his address,
as it appears on the records of the shareholders of the Corporation, unless he
shall have previously filed with the Secretary of the Corporation a written
request that notices intended for him be mailed to some other address, in which
case, it shall be mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who
may become a shareholder of record after the mailing of such notice and prior to
the meeting, or to any shareholder who attends such meeting, in person or by
proxy, or to any shareholder who, in person or by proxy, submits a signed waiver
of notice either before or after such meeting. Notice of any adjourned meeting
of shareholders need not be given, unless otherwise required by statute.
Section 5. Quorum. (a) Except as otherwise provided herein, or
by statute, or in the Certificate of Incorporation (such Certificate and any
amendments thereof being hereinafter collectively referred to as the
"Certificate of Incorporation"), at all meetings of shareholders of the
Corporation, the presence at the commencement of such meetings in person or by
proxy of shareholders holding of record a majority of the total number of shares
of the Corporation then issued and outstanding and entitled to vote, shall be
necessary and sufficient to constitute a quorum for the transaction of any
business. The withdrawal of any shareholder after the commencement of a meeting
shall have no effect on the existence of a quorum, after a quorum has been
established at such meeting.
By-Laws - 2
<PAGE> 3
(b) Despite the absence of a quorum at any annual or special
meeting of shareholders, the shareholders, by a majority of the votes cast by
the holders of shares entitled to vote thereon, may adjourn the meeting. At any
such adjourned meeting at which a quorum is present, any business may be
transacted at the meeting as originally called if a quorum had been present.
Section 6. Voting. (a) Except as otherwise provided by statute
or by the Certificate of Incorporation, any corporate action, other than the
election of directors, to be taken by vote of the shareholders, shall be
authorized by a majority of votes cast at a meeting of shareholders by the
holders of shares entitled to vote thereon.
(b) Except as otherwise provided by statute or by the
Certificate of Incorporation, at each meeting of shareholders, each holder of
record of stock of the Corporation entitled to vote thereat, shall be entitled
to one vote for each share of stock registered in his name on the books of the
Corporation.
(c) Each shareholder entitled to vote or to express consent or
dissent without a meeting, may do so by proxy; provided, however, that the
instrument authorizing such proxy to act shall have been executed in writing by
the shareholder himself, or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from the
date of its execution, unless the person executing it shall have specified
therein the length of time it is to continue in force. Such instrument shall be
exhibited to the Secretary at the meeting and shall be filed with the records of
the Corporation.
By-Laws - 3
<PAGE> 4
Section 7. Manner of Acting. (a) At all meetings of the Board
of Directors, each director present shall have one vote, irrespective of the
number of shares of stock, if any, which he may hold.
(b) Except as otherwise provided by statute, by the
Certificate of Incorporation, or by these By-Laws, the action of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the Board of Directors. Any action authorized, in writing, by all of the
directors entitled to vote thereon and filed with the minutes of the corporation
shall be the act of the Board of Directors with the same force and effect as if
the same had been passed by unanimous vote at a duly called meeting of the
Board.
Section 8. Vacancies. Any vacancy in the Board of Directors
occurring by reason of an increase in the number of directors, or by reason of
the death, resignation, disqualification, removal (unless a vacancy created by
the removal of a director by the shareholders shall be filled by the
shareholders at the meeting at which the removal was effected) or inability to
act of any director, or otherwise, shall be filled for the unexpired portion of
the term by a majority vote of the remaining directors, though less than a
quorum, at any regular meeting or special meeting of the Board of Directors
called for that purpose.
Section 9. Resignation. Any director may resign at any time by
giving written notice to the Board of Directors, the President or the Secretary
of the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors or
such
By-Laws - 4
<PAGE> 5
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
Section 10. Removal. Any director may be removed with or
without cause at any time by the affirmative vote of shareholders holding of
record in the aggregate at least a majority of the outstanding shares of the
Corporation at a special meeting of the shareholders called for that purpose,
and may be removed for cause by action of the Board.
Section 11. Salary. No stated salary shall be paid to
directors, as such, for their services, but by resolution of the Board of
Directors a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board; provided, however,
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
Section 12. Contracts. (a) No contract or other transaction
between this Corporation and any other Corporation shall be impaired, affected
or invalidated, nor shall any director be liable in any way by reason of the
fact that any one or more of the directors of this Corporation is or are
interested in, or is a director or officer, or are directors or officers of such
other Corporation, provided that such facts are disclosed or made known to the
Board of Directors.
(b) Any director, personally and individually, may be a party
to or may be interested in any contract or transaction of this Corporation, and
no director shall be liable in any way by reason of such interest, provided that
the fact of such interest be disclosed or made known to the Board of Directors,
and provided that the Board of Directors shall authorize, approve or ratify such
contract or transaction by the vote (not counting the vote of any such director)
of a majority of a quorum, notwithstanding the presence of any such director at
the meeting at which such action is taken. Such director or directors may be
counted in determining the presence of a quorum at such meeting. This Section
shall not be construed to impair or invalidate or in any way affect any contract
or other transaction which would otherwise be valid under the law (common,
statutory or otherwise) applicable thereto.
By-Laws - 5
<PAGE> 6
Section 13. Committees. The Board of Directors, by resolution
adopted by a majority of the entire Board, may from time to time designate from
among its members an executive committee and such other committees, and
alternate members thereof, as they may deem desirable, each consisting of three
or more members, with such powers and authority (to the extent permitted by law)
as may be provided in such resolution. Each such committee shall serve at the
pleasure of the Board.
ARTICLE IV.
OFFICERS
Section 1. Number, Qualifications, Election and Term of
Office. (a) The officers of the Corporation shall consist of a President, a
Secretary, a Treasurer, and such other officers, including a Chairman of the
Board of Directors, and one or more Vice Presidents as the Board of Directors
may from time to time deem advisable. Any officer other than the Chairman of the
Board of Directors may be, but is not required to be, a director of the
Corporation. Any two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the
Board of Directors at the regular annual meeting of the Board following the
annual meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of
the Board of Directors next succeeding his election, and until his successor
shall have been elected and qualified, or until his death, resignation or
removal.
Section 2. Resignation. Any officer may resign at any time by
giving written notice of such resignation to the Board of Directors, or to the
President or the Secretary of the Corporation. Unless otherwise specified in
such written notice, such resignation shall take effect upon receipt thereof by
the Board of Directors or by such officer, and the acceptance of such
resignation shall not be necessary to make it effective.
By-Laws - 6
<PAGE> 7
Section 3. Removal. Any officer may be removed, either with or
without cause, and a successor elected by a majority vote of the Board of
Directors at any time.
Section 4. Vacancies. A vacancy in any office by reason of
death, resignation, inability to act, disqualification, or any other cause, may
at any time be filled for the unexpired portion of the term by a majority vote
of the Board of Directors.
Section 5. Duties of Officers. Officers of the Corporation
shall, unless otherwise provided by the Board of Directors, each have such
powers and duties as generally pertain to their respective offices as well as
such powers and duties as may be set forth in these by-laws, or may from time to
time be specifically conferred or imposed by the Board of Directors. The
President shall be the chief executive officer of the Corporation.
Section 6. Sureties and Bonds. In case the Board of Directors
shall so require, any officer, employee or agent of the Corporation shall
execute to the Corporation a bond in such sum, and with such surety or sureties
as the Board of Directors may direct, conditioned upon the faithful performance
of his duties to the Corporation, including responsibility for negligence and
for the accounting for all property, funds or securities of the Corporation
which may come into his hands.
Section 7. Shares of Other Corporations. Whenever the
Corporation is the holder of shares of any other Corporation, any right or power
of the Corporation as such shareholder (including the attendance, acting and
voting at shareholders' meetings and execution of waivers, consents, proxies or
other instruments) may be exercised on behalf of the Corporation by the
President, any Vice President, or such other person as the Board of Directors
may authorize.
By-Laws - 7
<PAGE> 8
ARTICLE V.
SHARES OF STOCK
Section 1. Certificate of Stock. (a) The certificates
representing shares of the Corporation shall be in such form as shall be adopted
by the Board of Directors, and shall be numbered and registered in the order
issued. They shall bear the holder's name and the number of shares, and shall be
signed by (i) the Chairman of the Board or the President or a Vice President,
and (ii) the Secretary or Treasurer, or any Assistant Secretary or Assistant
Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until
the full amount of consideration therefor has been paid, except as otherwise
permitted by law.
(c) To the extent permitted by law, the Board of Directors may
authorize the issuance of certificates for fractions of a share which shall
entitle the holder to exercise voting rights, receive dividends and participate
in liquidating distributions, in proportion to the fractional holdings; or it
may authorize the payment in cash of the fair value of fractions of a share as
of the time when those entitled to receive such fractions are determined; or it
may authorize the issuance, subject to such conditions as may be permitted by
law, of scrip in registered or bearer form over the signature of an officer or
agent of the Corporation, exchangeable as therein provided for full shares, but
such scrip shall not entitle the holder to any rights of a shareholder, except
as therein provided.
Section 2. Lost or Destroyed Certificates. The holder of any
certificate representing shares of the Corporation shall immediately notify the
Corporation of any loss or destruction of the certificate representing the same.
The Corporation may issue a new certificate in the place of any certificate
theretofore issued by it, alleged to have been lost or destroyed. On production
of such evidence of loss or destruction as the Board of Directors in its
discretion may require, the Board of Directors may, in its discretion, require
the owner of the lost or destroyed certificate, or his legal representatives, to
give the Corporation a bond in such sum as the Board may direct, and with such
surety or sureties as may
By-Laws - 8
<PAGE> 9
be satisfactory to the Board, to indemnify the Corporation against any claims,
loss, liability or damage it may suffer on account of the issuance of the new
certificate. A new certificate may be issued without requiring any such evidence
or bond when, in the judgment of the Board of Directors, it is proper so to do.
Section 3. Transfers of Shares. (a) Transfers of shares of the
Corporation shall be made on the share records of the Corporation only by the
holder of record thereof, in person or by his duly authorized attorney, upon
surrender for cancellation of the certificate or certificates representing such
shares, with an assignment or power of transfer endorsed thereon or delivered
therewith, duly executed, with such proof of the authenticity of the signature
and of authority to transfer and of payment of transfer taxes as the Corporation
or its agents may require.
(b) The Corporation shall be entitled to treat the holder of
record of any share or shares as the absolute owner thereof for all purposes
and, accordingly, shall not be bound to recognize any legal, equitable or other
claim to, or interest in, such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
Section 4. Record Date. In lieu of closing the share records
of the Corporation, the Board of Directors may fix, in advance, a date not
exceeding fifty days, nor less than ten days, as the record date for the
determination of shareholders entitled to receive notice of, or to vote at, any
meeting of shareholders, or to consent to any proposal without a meeting, or for
the purpose of determining shareholders entitled to receive payment of any
dividends, or allotment of any rights, or for the purpose of any other action.
If no record date is fixed, the record date for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if no notice is given, the day on which the meeting is held; the
record date for determining shareholders for any other purpose shall be at the
close of business on the day on which the resolution of the directors relating
thereto is adopted. When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been
By-Laws - 9
<PAGE> 10
made as provided for herein, such determination shall apply to any adjournment
thereof, unless the directors fix a new record date for the adjourned meeting.
ARTICLE VI.
DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of
any funds available therefor, as often, in such amounts, and at such time or
times as the Board of Directors may determine.
ARTICLE VII.
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board
of Directors from time to time, subject to applicable law.
ARTICLE VIII.
CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be
approved from time to time by the Board of Directors.
ARTICLE IX.
AMENDMENTS
Section 1. By Shareholders. All by-laws of the Corporation
shall be subject to alteration or repeal, and new by-laws may be made, by the
affirmative vote of shareholders holding of record in the aggregate at least a
majority of the outstanding shares entitled to vote in the election of directors
at any annual or special meeting of shareholders, provided that the notice or
waiver
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<PAGE> 11
of notice of such meeting shall have summarized or set forth in full therein,
the proposed amendment.
Section 2. By Directors. The Board of Directors shall have
power to make, adopt alter, amend and repeal, from time to time, by-laws of the
Corporation; provided, however, that the shareholders entitled to vote with
respect thereto as in this Article IX above-provided may alter, amend or repeal
by-laws made by the Board of Directors, except that the Board of Directors shall
have no power to change the quorum for meetings of shareholders or of the Board
of Directors, or to change any provisions of the by-laws with respect to the
removal of directors or the filling of vacancies in the Board resulting from the
removal by the shareholders. If any by-law regulating an impending election of
directors is adopted, amended or repealed by the Board of Directors, there shall
be set forth in the notice of the next meeting of shareholders for the election
of directors, the by-law so adopted, amended or repealed, together with a
concise statement of the changes made.
ARTICLE X.
INDEMNITY
(a) Any person made a party to any action, suit or proceeding,
by reason of the fact that he, his testator or intestate representative is or
was a director, officer or employee of the Corporation, or of any Corporation in
which he served as such at the request of the Corporation, shall be indemnified
by the Corporation against the reasonable expenses, including attorney's fees,
actually and necessarily incurred by him in connection with the defense of such
action, suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding, or in connection with any appeal therein that such officer, director
or employee is liable for negligence or misconduct in the performance of his
duties.
(b) The foregoing right of indemnification shall not be deemed
exclusive of any other rights to which any officer or director or employee may
be entitled apart from the provisions of this section.
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<PAGE> 12
(c) The amount of indemnity to which any officer or any
director may be entitled shall be fixed by the Board of Directors, except that
in any case where there is no disinterested majority of the Board available, the
amount shall be fixed by arbitration pursuant to the then existing rules of the
American Arbitration Association.
The undersigned Incorporator certifies that he has adopted the
foregoing by-laws as the first by-laws of the Corporation.
Dated: as of November 5, 1983
/s/ Samuel R. Newborn
_________________________
Incorporator
Samuel R. Newborn
By-Laws - 12
<PAGE> 1
EXHIBIT 3.22
RESTATED CERTIFICATE OF INCORPORATION
OF
RETAIL MARKETING NETWORK, INC.
THE UNDERSIGNED, the sole incorporator of Retail Marketing Network, Inc., a
corporation organized and existing under the laws of the State of Delaware, does
hereby certify as follows:
(a) The name of the Corporation is Retail Marketing Network, Inc. (the
"Corporation"). The Corporation was formed under the name Electronic Retail
Marketing, Inc.
(b) The Certificate of Incorporation of the Corporation was filed with
the office of Secretary of State of Delaware on June 3, 1994 and
Certificates of Amendment thereto were filed with the office of Secretary
of State of Delaware respectively on June 3, 1994 and June 8, 1994.
(c) The Corporation has not received any payment for any of its stock.
(d) The amendment and the restatement of the Certificate of
Incorporation set forth herein have been duly adopted by the sole
incorporator in the manner prescribed by Sections 241 and 245 of the
General Corporation Law of the State of Delaware, no directors having been
named in the Certificate of Incorporation and no directors having been
elected.
(e) The Certificate of Incorporation of the Corporation as heretofore
amended is hereby amended and restated, to read in full, as follows:
RESTATED CERTIFICATE OF INCORPORATION
OF
RETAIL MARKETING NETWORK, INC.
THE UNDERSIGNED, constituting the sole incorporator of Retail Marketing
Network, Inc., a corporation organized and existing by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), pursuant to the
provisions of the General Corporation Law of the State of Delaware (the "GCL"),
intending to amend and restate in its entirety the Certificate of Incorporation
of the Corporation filed with the office of the Secretary of State of Delaware
on June 3, 1994 as amended by Certificates of Amendment filed with the office of
Secretary of State of Delaware, respectively, on June 3, 1994 and June 8, 1994,
pursuant to the provisions of Section 245 of the GCL, the amendments and the
restatement herein certified having been duly adopted by the sole incorporator
in the manner and by the vote prescribed by Sections 241 and 245 of the GCL, no
directors having been named in the certificate of incorporation and no directors
having been elected, and the Corporation not having received any payment for any
of its stock, does hereby certify, and does hereby amend the aforementioned
Certificate to read as follows:
FIRST: The name of the corporation is Retail Marketing Inc. (the
"Corporation").
SECOND: The address of the Corporation's registered office in the
State of Delaware is c/o United Corporate Services, Inc., 15 East North
Street, in the city of Dover, in the County of Kent, and the name of the
Corporation's registered agent at such address is United Corporate
Services, Inc.
THIRD: The purpose for which the Corporation is organized is to engage
in any lawful act or activity for which corporations may be organized under
the General Corporation Law of the State of Delaware.
<PAGE> 2
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,500 shares of common stock,
without par value.
FIFTH: Subject to the provisions of the General Corporation Law of the
State of Delaware, the number of Directors of the Corporation shall be
determined as provided by the By-Laws.
SIXTH: The Corporation shall indemnify and hold harmless any director,
officer, employee or agent of the Corporation from and against any and all
expenses and liabilities that may be imposed upon or incurred by him in
connection with, or as a result of, any proceeding in which he may become
involved, as a party or otherwise, by reason of the fact that he is or was
such a director, officer, employee or agent of the Corporation, whether or
not he continues to be such at the time such expenses and liabilities shall
have been imposed or incurred, to the extent permitted by the laws of the
State of Delaware, as they may be amended from time to time.
SEVENTH: No person who is or was at any time a director of the
Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
person as a director; provided, however, that, unless and except to the
extent otherwise permitted from time to time by applicable law, the
provisions of this Article SEVENTH shall not eliminate or limit the
liability of a director (i) for breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for any act or omission by the
director which is not in good faith or which involves intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit.
No amendment to or repeal of this Article SEVENTH 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 act or omission of such director
occurring prior to such amendment or repeal.
EIGHTH: In furtherance and not in limitation of the general powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized to make, alter or repeal the By-Laws of the
Corporation, except as specifically stated therein.
NINTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this Corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
this Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions
of Section 279 of Title 8 of the Delaware Code, order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in
such manner as the said Court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as a consequence of such compromise or arrangement, the
said compromise or arrangement and the said reorganization shall, if
sanctioned by the Court to which the said application has been made, be
binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may
be, and also on this Corporation.
TENTH: Except as otherwise required by the laws of the State of
Delaware, the stockholders and Directors shall have the power to hold their
meetings and to keep the books, documents and papers of the Corporation
outside of the State of Delaware, and the Corporation shall have the power
to have one or more offices within or without the State of Delaware, at
such places as may be from time to time designated by the By-Laws or by
resolution of the stockholders or Directors. Elections of Directors need
not be by ballot unless the By-Laws of the Corporation shall so provide.
2
<PAGE> 3
ELEVENTH: Subject to Article TWELFTH hereof, the Corporation reserves
the right to amend, alter, change or repeal any provision contained in this
Restated 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.
TWELFTH: Notwithstanding any other provision of this Restated
Certificate of Incorporation or the By-Laws of the Corporation, and in
addition to any other vote required by law, this Restated Certificate of
Incorporation or the By-Laws of the Corporation, the affirmative vote of
the holders of at least eighty-five percent (85%) of the outstanding shares
of the capital stock of the Corporation shall be required to take any
action to approve or adopt any and all amendments to this Restated
Certificate of Incorporation and to the By-Laws of the Corporation, and
such affirmative vote shall be required notwithstanding the fact that no
vote may be required, or that some lesser percentage may be specified, by
law.
THIRTEENTH: The name and address of the incorporator is Ray A. Barr,
10 Bank Street, White Plains, New York 10606.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this 28th
day of June, 1994.
/s/ RAY A. BARR
--------------------------------------
Ray A. Barr
Sole Incorporator
3
<PAGE> 1
EXHIBIT 3.23
RETAIL MARKETING NETWORK, INC.
BY-LAWS
ARTICLE I
OFFICES
The registered office of the Corporation shall be in the City of Dover,
County of Kent, State of Delaware.
The Corporation may also have offices at such other places, both within and
without the State of Delaware, as may from time to time be designated by the
Board of Directors.
ARTICLE II
BOOKS
The books and records of the Corporation may be kept (except as otherwise
provided by the laws of the State of Delaware) outside of the State of Delaware
and at such place or places as may from time to time be designated by the Board
of Directors.
ARTICLE III
STOCKHOLDERS
Section 1. Annual Meetings. The annual meeting of the stockholders of the
Corporation for the election of Directors and the transaction of such other
business as may properly come before said meeting shall be held at the principal
business office of the Corporation or at such other place or places either
within or without the State of Delaware as may be designated by the Board of
Directors and stated in the notice of the meeting, on the first Monday of June
in each year, if not a legal holiday, and, if a legal holiday, then on the next
day not a legal holiday, at 1:00 o'clock in the afternoon.
Written notice of the place designated for the annual meeting of the
stockholders of the Corporation shall be delivered personally or mailed to each
stockholder entitled to vote thereat not less than ten (10) and not more than
sixty (60) days prior to said meeting, but at any meeting at which all
stockholders shall be present, or of which all stockholders not present have
waived notice in writing, the giving of notice as above described may be
dispensed with. If mailed, said notice shall be directed to each stockholder at
his address as the same appears on the stock ledger of the Corporation unless he
shall have filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which case it shall
be mailed to the address designated in such request.
Section 2. Special Meetings. Special meetings of the stockholders of the
Corporation shall be held whenever called in the manner required by the laws of
the State of Delaware for purposes as to which there are special statutory
provisions, and for other purposes whenever called by resolution of the Board of
Directors, or by the Chairman of the Board, the President, or by the holders of
a majority of the outstanding shares of capital stock of the Corporation the
holders of which are entitled to vote on matters that are to be voted on at such
meeting. Any such special meeting of stockholders may be held at the principal
business office of the Corporation or at such other place or places, either
within or without the State of Delaware, as may be specified in the notice
thereof. Business transacted at any special meeting of stockholders of the
Corporation shall be limited to the purposes stated in the notice thereof.
Except as otherwise expressly required by the laws of the State of
Delaware, written notice of each special meeting, stating the day, hour and
place, and in general terms the business to be transacted thereat, shall be
delivered personally or mailed to each stockholder entitled to vote thereat not
less than
<PAGE> 2
ten (10) days and not more than sixty (60) days before the meeting. If mailed,
said notice shall be directed to each stockholder at his address as the same
appears on the stock ledger of the Corporation unless he shall have filed with
the Secretary of the Corporation a written request that notices intended for him
be mailed to some other address, in which case it shall be mailed to the address
designated in said request. At any special meeting at which all stockholders
shall be present, or of which all stockholders not present have waived notice in
writing, the giving of notice as above described may be dispensed with.
Section 3. List of Stockholders. The officer of the Corporation who shall
have 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 said 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 (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.
Section 4. Quorum. At any meeting of the stockholders of the Corporation,
except as otherwise expressly provided by the laws of the State of Delaware, the
Certificate of Incorporation or these By-Laws, there must be present, either in
person or by proxy, in order to constitute a quorum, stockholders owning a
majority of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote at said meeting. At any meeting of stockholders at
which a quorum is not present, the holders of, or proxies for, a majority of the
stock which is represented at such meeting, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than thirty (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 entitled to
vote the meeting.
Section 5. Organization. The President shall call to order meetings of the
stockholders and shall act as chairman of such meetings. The Board of Directors
or the stockholders may appoint any stockholder or any other Director or officer
of the Corporation to act as chairman of any meeting in the absence of the
Chairman of the Board and the President. The Secretary of the Corporation shall
act as secretary of all meetings of the stockholders, but in the absence of the
Secretary the presiding officer may appoint any other person to act as secretary
of any meeting.
Section 6. Voting. Except as otherwise provided in the Certificate of
Incorporation or these By-Laws, each stockholder of record of the Corporation
shall, at every meeting of the stockholders of the Corporation, be entitled to
one (1) vote for each share of stock standing in his name on the books of the
Corporation on any matter on which he is entitled to vote, and such votes may be
cast either in person or by proxy, appointed by an instrument in writing,
subscribed by such stockholder or by his duly authorized attorney, and filed
with the Secretary before being voted on, but no proxy shall be voted after
three (3) years from its date, unless said proxy provides for a longer period.
If the Certificate of Incorporation provides for more or less than one (1) vote
for any share of capital stock of the Corporation, on any matter, then any and
every reference in these By-Laws to a majority or other proportion of capital
stock shall refer to such majority or other proportion of the votes of such
stock.
The vote on all elections of Directors and on any other questions before
the meeting need not be by ballot, except upon demand of any stockholder. When a
quorum is present at any meeting of the stockholders of the Corporation, the
vote of the holders of a majority of the capital stock entitled to vote at such
meeting and present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which, under any
provision of the laws of the State of
2
<PAGE> 3
Delaware or of the Certificate of Incorporation, a different vote is required in
which case such provision shall govern and control the decision of such
question.
Section 7. Consent. Except as otherwise provided by the Certificate of
Incorporation, whenever the vote of the stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provision of the laws of the State of Delaware or of the Certificate of
Incorporation, such corporate action 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 capital stock of
the Corporation 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 thereto in writing.
Section 8. Judges. At every meeting of the stockholders of the Corporation
at which a vote by ballot is taken, the polls shall be opened and closed, the
proxies and ballots shall be received and taken in charge, and all questions
touching the qualifications of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by, two (2) judges. Said
judges shall be appointed by the Board of Directors before the meeting, or, if
no such appointment shall have been made, by the presiding officer of the
meeting. If for any reason any of the judges previously appointed shall fail to
attend or refuse or be unable to serve, judges in place of any so failing to
attend, or refusing or unable to service, shall be appointed in like manner.
ARTICLE IV
DIRECTORS
Section 1. Number, Election and Term of Office. The business and affairs
of the Corporation shall be managed by the Board of Directors. The number of
Directors which shall constitute the whole Board shall be five (5). The number
of Directors may be fixed from time to time by vote of the stockholders or of
the Board of Directors, at any regular or special meeting, subject to the
provisions of the Certificate of Incorporation. Directors need not be
stockholders. Directors shall be elected at the annual meeting of the
stockholders of the Corporation, except as provided in Section 2 of this
Article, to serve until the next annual meeting of stockholders and until their
respective successors are duly elected and have qualified.
In addition to the powers by these By-Laws expressly conferred upon them,
the Board may exercise all such powers of the Corporation as are not by the laws
of the State of Delaware, the Certificate of Incorporation or these By-Laws
required to be exercised or done by the stockholders.
Section 2. Vacancies and Newly Created Directorships. Except as
hereinafter provided, any vacancy in the office of a Director occurring for any
reason other than the removal of a Director pursuant to Section 3 of this
Article, and any newly created Directorship resulting from any increase in the
authorized number of Directors, may be filled by a majority of the Directors
then in office or by a sole remaining Director. In the event that any vacancy in
the office of a Director occurs as a result of the removal of a Director
pursuant to Section 3 of this Article, or in the event that vacancies occur
contemporaneously in the offices of all of the Directors, such vacancy or
vacancies shall be filled by the stockholders of the Corporation at a meeting of
stockholders called for the purpose. Directors chosen or elected as aforesaid
shall hold office until the next annual meeting of stockholders and until their
respective successors are duly elected and have qualified.
Section 3. Removals. At any meeting of stockholders of the Corporation
called for the purpose, the holders of a majority of the shares of capital stock
of the Corporation entitled to vote at such meeting may remove from office, with
or without cause, any or all of the Directors.
Section 4. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and place, either within or without the
State of Delaware, as shall from time to time be determined by resolution of the
Board.
3
<PAGE> 4
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President or any two Directors
on notice given to each Director, and such meetings shall be held at the
principal business office of the Corporation or at such other place or places,
either within or without the State of Delaware, as shall be specified in the
notices thereof.
Section 6. Annual Meetings. The first meeting of each newly elected Board
of Directors shall be held as soon as practicable after each annual election of
Directors and on the same day, at the same place at which regular meetings of
the Board of Directors are held, or at such other time and place as may be
provided by resolution of the Board. Such meeting may be held at any other time
or place which shall be specified in a notice given, as hereinafter provided,
for special meetings of the Board of Directors.
Section 7. Notice. Notice of any meeting of the Board of Directors
requiring notice shall be given to each Director by mailing the same at least
seven (7) days, or by telegraphing the same at least four (4) days, before the
time fixed for the meeting. Attendance of a Director at a meeting shall
constitute waiver of notice of such meeting, except when such Director attends
such meeting for the express purpose of objecting, at the beginning of such
meeting, to the transaction of any business because such meeting is not lawfully
called or convened.
Section 8. Quorum. At all meetings of the Board of Directors, the presence
of one-half or more of the Directors constituting the Board shall constitute a
quorum for the transaction of business. Except as may be otherwise specifically
provided by the laws of the State of Delaware, the Certificate of Incorporation
or these By-Laws, the affirmative vote of a majority of the Directors present at
the time of such vote shall be the act of the Board of Directors if a quorum is
present. 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. The Chairman of the Board shall call to order meetings of the
directors and-shall act as chairman of such meetings.
Section 9. Consent. 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 may be taken without a meeting, if all
members of the Board consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board.
Section 10. Telephonic Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of Directors
may participate in a meeting of the board by means of conference telephone or
similar communications equipment by means of which all persons participating in
such meeting can hear each other, and participation in a meeting pursuant to
this Section 10 shall constitute presence in person at such meeting.
Section 11. Compensation of Directors. Directors, as such, shall not
receive any stated salary for their services, but, by resolution of the Board, a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the Board; provided that nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 12. Resignations. Any Director of the Corporation may resign at
any time by giving written notice to the Board of Directors or to the Chairman
of the Board, the President or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein, or, if the time be
not specified, upon receipt thereof; and unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective.
ARTICLE V
OFFICERS
Section 1. Number, Election and Term of Office. The officers of the
Corporation shall be a President, an Executive Vice President, one or more Vice
Presidents, a Secretary and a Treasurer, and
4
<PAGE> 5
may, at the discretion of the Board of Directors include any other officers. The
officers of the Corporation shall be elected annually by the Board of Directors
at its meeting held immediately after the annual meeting of the stockholders,
and shall hold their respective offices until their successors are duly elected
and have qualified. Any number of offices may be held by the same person. The
Board of Directors may from time to time appoint such other officers and agents
as the interest of the Corporation may require and may fix their duties and
terms of office.
Section 2. President. The President shall be the chief executive officer
of the Corporation and shall have, subject to the provisions of these By-Laws,
general supervision of the offices of the Corporation and general and active
control of all its business. He shall see that all orders and resolutions of the
Board of Directors and the shareholders are carried into effect. He shall have
the general authority to execute bonds, deeds, and contracts in the name of the
Corporation and affix the corporate seal thereto; to sign stock certificates; to
cause the employment or appointment of such employees and agents of the
Corporation as the proper conduct of operations may require, and to fix their
compensation, subject to the provisions of these By-Laws; to remove or suspend
any employee or agent who shall have been employed or appointed under his
authority or under authority of an officer subordinate to him; and in general,
to exercise all the powers and authority usually appertaining to the chief
executive officer of a corporation.
Section 3. Executive Vice President. The Executive Vice President shall
perform such duties as President or the Board of Directors shall require. The
Executive Vice President shall, during the absence or incapacity of the
President, assume and perform his duties.
Section 4. Vice Presidents. The Vice Presidents shall perform such duties
as the President, the Executive Vice President or the Board of Directors shall
require. The Vice Presidents shall, during the absence or incapacity of the
Executive Vice President, assume and perform his duties.
Section 5. Secretary. The Secretary may sign all certificates of stock of
the Corporation. He shall record all the proceedings of the meetings of the
Board of Directors and of the stockholders of the Corporation in books to be
kept for that purpose. He shall have custody of the seal of the Corporation and
may affix the same to any instrument requiring such seal when authorized by the
Board of Directors, and when so affixed he may attest the same by his signature.
He shall keep the transfer books, in which all transfers of the capital stock of
the Corporation shall be registered, and the stock books which shall contain the
names and addresses of all holders of the capital stock of the Corporation and
the number of shares held by each; and he shall keep such stock and transfer
books open daily during business hours to the inspection of every stockholder
and for transfer of stock. He shall notify the Directors and stockholders of
their respective meetings as required by law or by these By-Laws, and shall
perform such other duties as may be required by law or by these By-Laws, or
which may be assigned to him from time to time by the Board of Directors.
Section 6. Treasurer. The Treasurer shall have charge of the funds and
securities of the Corporation. He may sign all certificates of stock. He shall
keep full and accurate accounts of all receipts and disbursements of the
Corporation in books belonging to the Corporation and shall deposit all monies;
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the corporation as may be ordered by the Board, and shall
render to the President or the Directors, whenever they may require it, an
account of all his transactions as Treasurer and an account of the business and
financial position of the Corporation.
Section 7. Assistant Treasurers. The Assistant Treasurers shall, during
the absence or incapacity of the Treasurer, assume and perform all functions and
duties which the Treasurer might lawfully do if present and not under any
incapacity.
Section 8. Treasurer's Bond. The Treasurer and Assistant Treasurers shall,
if required so to do by the Board of Directors, each give a bond (which shall be
renewed every six (6) years) in such sum and with such surety or sureties as the
Board of Directors may require.
5
<PAGE> 6
Section 9. Transfer of Duties. The Board of Directors in its absolute
discretion may transfer the power and duties, in whole or in part, of any
officer to any other officer, or persons, notwithstanding the provisions of
these By-Laws, except as otherwise provided by the laws of the State of
Delaware.
Section 10. Vacancies. If the office of President, Executive Vice
President, Vice President, Secretary or Treasurer, or of any other officer or
agent becomes vacant for any reason, the Board of Directors may choose a
successor to hold office for the unexpired term.
Section 11. Removals. At any meeting of the Board of Directors called for
the purpose, any officer or agent of the Corporation may be removed from office,
with or without cause, by the affirmative vote of a majority of the entire Board
of Directors.
Section 12. Compensation of Officers. The officers shall receive such
salary or compensation as may be determined by the Board of Directors.
Section 13. Resignations. Any officer or agent of the Corporation may
resign at any time by giving written notice to the Board of Directors or to the
Chairman of the Board, the President or the Secretary of the Corporation. Any
such resignation shall take effect at the time specified therein or, if the time
be not specified, upon receipt thereof; and unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective.
ARTICLE VI
CONTRACTS, CHECKS AND NOTES
Section 1. Contracts. Unless the Board of Directors shall otherwise
specifically direct, all contracts of the Corporation shall be executed in the
name of the Corporation by the President or a Vice President.
Section 2. Checks and Notes. All checks, drafts, bills of exchange and
promissory notes and other negotiable instruments of the Corporation shall be
signed by such officers or agents of the Corporation as may be designated by the
Board of Directors.
ARTICLE VII
Stocks
Section 1. Certificates of Stock. The certificates for shares of the stock
of the Corporation shall be in such form, not inconsistent with the Certificate
of Incorporation, as shall be prepared or approved by the Board of Directors.
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 President, the Executive
Vice President, or any Vice President, and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary certifying the number of
shares owned by him and the date of issue; and no certificate shall be valid
unless so signed. All certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued. Where a certificate
is countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the corporation or its employee, any
other signature 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 he were such officer, transfer agent or
registrar at the date of issue. All certificates surrendered to the Corporation
shall be canceled and, except in the cases of lost or destroyed certificates, no
new certificates shall be issued until the former certificates for the same
number of shares of the same class of stock shall have been surrendered and
canceled.
Section 2. Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
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<PAGE> 7
ARTICLE VIII
REGISTERED STOCKHOLDERS
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly, shall
not be bound to recognize any equitable or other claim to, or interest in, such
share or shares 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 the
State of Delaware.
ARTICLE IX
LOST CERTIFICATES
Any person claiming a certificate of stock to be lost or destroyed shall
make an affidavit or affirmation of the fact and advertise the same in such
manner as the Board of Directors may require, and the Board of Directors may, in
its discretion, require the owner of the lost or destroyed certificate, or his
legal representative, to give the Corporation a bond in a sum sufficient, in the
opinion of the Board of Directors, to indemnify the Corporation against any
claim that may be made against it on account of the alleged loss of any such
certificate. A new certificate of the same tenor and for the same number of
shares as the one alleged to be lost or destroyed may be issued without
requiring any bond when, in the judgment of the Directors, it is proper so to
do.
ARTICLE X
FIXING OF RECORD DATE
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or to
receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change, conversion or
exchange of 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 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. A determination 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.
ARTICLE XI
DIVIDENDS
Subject to the relevant provisions of the Certificate of Incorporation,
dividends upon the capital stock of the Corporation may be declared by the Board
of Directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property, or in shares of the capital stock 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 sums as the Directors from time to
time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the Corporation, or for such other purpose as the Directors
shall think conducive to the interest of the Corporation, and the Directors may
modify or abolish any such reserve in the manner in which it was created.
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<PAGE> 8
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice whatever is required to be given by statute or under
the provisions of the Certificate of Incorporation or these By-Laws, a waiver
thereof in writing signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be equivalent thereto.
ARTICLE XIII
SEAL
The corporate seal of the Corporation shall have inscribed thereon the name
of the Corporation, the year of its organization and the words "Corporate Seal
of Delaware."
ARTICLE XIV
AMENDMENTS
Subject to the provisions of the Certificate of Incorporation, and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these By-Laws and to adopt new By-Laws may be exercised by the Board of
Directors or by the stockholders; provided, however, that any such amendment
shall be adopted in accordance with the Organization Agreement dated as of June
30, 1994 of the Corporation.
8
<PAGE> 1
EXHIBIT 3.24
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VIDEO DIGEST, INC.
The undersigned corporation, in order to amend its Certificate of
Incorporation, hereby certifies as follows:
First: The name of the corporation is:
VIDEO DIGEST, INC.
Second: The corporation hereby amends its Certificate of Incorporation
as follows:
Paragraph FIRST of the Certificate of Incorporation, relating to
the corporate title of the corporation, is hereby amended to read as
follows:
"FIRST: The name of the corporation is
STAR EDITORIAL, INC."
Third: The amendment affected herein was authorized by the consent in
writing, setting forth the action so taken, unanimously signed by the
holders of all the outstanding shares entitled to vote thereon pursuant to
Sections 228 and 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that the
statements made herein are true under the penalties of perjury, this
twenty-second day of June, 1990.
VIDEO DIGEST INC.
/s/ MANYARD RABINOWITZ
--------------------------------------
MANYARD RABINOWITZ, Vice-President
ATTEST:
/s/ ANNA BLANCO
- ---------------------------------------------------------
ANNA BLANCO, Ass't. Secretary
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
VIDEO DIGEST, INC.
FIRST: The name of the corporation is:
VIDEO DIGEST, INC.
SECOND: The address of its registered office in the State of Delaware is
4305 Lancaster Pike, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is Corporation Service Company.
THIRD: The nature of the business of purpose to be conducted or promoted
is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To conduct a general publishing business, and, in connection
therewith, to engage in writing, editing, printing, publishing,
distributing and dealing in one or more magazines, periodicals, circulars,
letters, pamphlets, advertising, data bases and information products of
every kind.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is two hundred (200) shares of common stock, all of
which are without par value. All such shares are of one class.
FIFTH: The name and mailing address of the incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Jerome S. Traum.......................................... Janklow & Traum 598
Madison Avenue New York,
New York 10022
</TABLE>
SIXTH: The corporation is to have perpetual existence.
SEVENTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for further
definition, limitation and regulation of the powers of the corporation and its
directors and stockholders:
(1) The number of directors of the corporation shall be such as from
time to time shall be fixed by, or in the manner provided in, the by-laws.
Election of directors need not be by ballot unless the by-laws so provide.
(2) The Board of Directors shall have power without the assent or vote
of the stockholders to make, alter, amend, change, add to or repeal the
by-laws of the corporation.
(3) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate, and to any
by-laws from time to time made by the directors or stockholders; provided,
however, that no by-laws so made shall invalidate any prior act of the
directors which would have been valid if such by-law had not been made.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the
<PAGE> 3
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 court directs. If a majority in number representing three-fourths
in value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this Corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders, of
this corporation, as the case may be, and also on this corporation.
NINTH: No director shall have any personal liability to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director
other than liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of this Title, or (iv) for any transaction from which the director
derived and improper personal benefit.
TENTH: The corporation shall, to the full extent permitted by Section 145
of the Delaware General Corporation Law, as amended from time to time, indemnify
all persons whom it my indemnify pursuant thereto.
ELEVENTH: 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 statue, and all rights conferred upon
stockholders herein are granted subject to this reservation.
The undersigned, the incorporator hereinbefore named, for the purpose of
forming a corporation pursuant to the General Corporation Law of the State 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 8th day of August, 1986.
/s/ JEROME S. TRAUM
--------------------------------------
Jerome S. Traum
<TABLE>
<S> <C>
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss.:
</TABLE>
BE IT REMEMBERED that on this 8th day of August, A.D. 1986, personally came
before me, a notary public for the State of New York, JEROME S. TRAUM, the party
to the foregoing Certificate of Incorporation, known to me personally to be
such, and acknowledge the said certificate to be his act and deed and that the
facts therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/ SAMUEL R. NEWBORN
--------------------------------------
Notary Public
(Notarial Seal)
2
<PAGE> 1
EXHIBIT 3.25
BY-LAWS
OF
VIDEO DIGEST, INC.
(A DELAWARE CORPORATION)
------------------------
ARTICLE 1
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 VIDEO DIGEST, INC.
1.7 "Directors" means directors of the Corporation.
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
determined in accordance with Section 141(b) of the General Corporation Law and
Section 3.2 of the By-Laws.
1.14 "Treasurer" means the Treasurer of the Corporation.
1.15 "Vice President" means a Vice President of the Corporation.
1.16 "Whole Board" means the total number of directors of the Corporation.
<PAGE> 2
ARTICLE 2
STOCKHOLDERS
2.1 Place of Meetings. Every meeting of stockholders shall be held at the
office of the Corporation or at such other place within or without the State of
Delaware as 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 May or June 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
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 as 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 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 for the purpose of determining stockholders 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 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 those specified in 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
Section 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
2
<PAGE> 3
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 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 the
Certificate of Incorporation of 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.
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 germaine 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 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
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.
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Every stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy. 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 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.
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 Incorporation, 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 are 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.
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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. 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 one
or more 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 by action 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 other reason, including the removal of directors without cause, may be
filled by vote of a majority of the directors then in office, although less than
a quorum, or by a sole remaining director, 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. Subject to the provisions of Section 141(k) of
the General Corporation Law, any or all of the directors may be removed with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors.
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 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 meeting, 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 contained in this
section 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
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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
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 filed 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 shall be held
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
need not state the purpose 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 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 member 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 a 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 all 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 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
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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 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 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.
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 by so notifying the
Board or the President or the Secretary in writing. 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.
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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 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 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, the Vice President 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 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 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 the books 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 rights 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
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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 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 and advances may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness 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 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 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.
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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 attorney 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.
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 agent 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.
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 share 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 impose 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 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;
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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 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 between the Corporation and each director and officer
who serves in such capacity at any time while this Article 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 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 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
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 Section 8.1 and 8.2 of the
By-laws or under Section 145 of the General Corporation Law of 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 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, a record
containing the names and addresses of
11
<PAGE> 12
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, microphotography, 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.
ARTICLE 10
SEAL
The Board may adopt a corporate seal which shall be in 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
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed 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 director. The By-laws may be adopted, by the Board. 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.
12
<PAGE> 1
EXHIBIT 3.26
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
FAIRVIEW REAL ESTATE, INC.
UNDER SECTION 607.187 OF THE FLORIDA
GENERAL CORPORATION ACT
The undersigned, being the Vice President and Assistant Secretary of
Fairview Real Estate, Inc., a Florida corporation, for the purpose of amending
the Articles of Incorporation, do hereby certify:
FIRST: That the name of the corporation is
FAIRVIEW REAL ESTATE, INC.
SECOND: That Article 1 of the corporation's Articles of Incorporation,
which Article states: "The name of the corporation (hereinafter the
"Corporation") is Fairview Real Estate, Inc.", has been amended so as to
read, in full, as follows:
The name of the corporation (hereinafter the "Corporation") is:
SOM Publishing, Inc.
THIRD: That the foregoing amendment was duly adopted by unanimous
consent of the sole Shareholder of the Corporation on the 9th day of
August, 1991.
IN WITNESS WHEREOF, we have hereunto set our hands this 9th day of August,
1991.
SOM Publishing, Inc.
by: /s/
------------------------------------
Vice President
/s/ LINDA FARLEY
--------------------------------------
Assistant Secretary
<TABLE>
<S> <C>
STATE OF FLORIDA )
COUNTY OF PALM BEACH ) ss.:
</TABLE>
Before me, the undersigned authority, personally appeared Maynard
Kabinowitz/Linda Farley, to me known and known to me to be V.P. & Asst. Sec'y of
SOM Publishing Inc., a Florida corporation, and one of the officers who executed
the foregoing Articles of Amendment on behalf of said corporation for the
purposes expressed therein.
Witness my hand and official seal this 13th day of August, 1991.
/s/
--------------------------------------
(Notary Public)
(Notarial Seal)
<PAGE> 2
ARTICLES OF AMENDMENT OF THE
ARTICLES OF INCORPORATION OF
THE MEDIUM CORPORATION
UNDER SECTION 607.187 OF
THE FLORIDA GENERAL CORPORATION ACT
We, the undersigned, the President and the Secretary of The Medium
Corporation, hereby certify as follows:
1. The name of the Corporation is The Medium Corporation.
2. The Certificate of Incorporation was filed by the Secretary of
State of Florida on December 31, 1970.
3. The Articles of Incorporation are hereby amended by deleting
Article FIRST and substituting therefor the following new Article FIRST:
FIRST: The name of the corporation (hereinafter the "Corporation")
is Fairview Real Estate, Inc.
4. The Amendment of the Articles of Incorporation was authorized by a
unanimous written consent signed by the holder of all the issued and
outstanding shares of the Corporation, which unanimous written consent set
forth the Amendment of Article FIRST of the Articles of Incorporation.
IN WITNESS WHEREOF, we have executed these Articles of Amendment on the 9
day of July, 1984.
/s/ IAIN CALDER
--------------------------------------
Iain Calder, President
/s/ GUY GALIARDO
--------------------------------------
Guy Galiardo, Secretary
<TABLE>
<S> <C>
STATE OF FLORIDA D
COUNTY OF PALM BEACH C ss.:
</TABLE>
The forgoing instrument was acknowledged before me this 9(th) day of July,
1984 by Guy Galiardo, the Secretary of The Medium Corporation, a Florida
corporation on behalf of the Corporation.
/s/ DEANNA VALENTINE
--------------------------------------
Notary Public
(Notarial Seal)
<PAGE> 3
CERTIFICATE OF INCORPORATION
We, the undersigned, hereby associate ourselves together for the purpose of
becoming a corporation under the laws of the State of Florida, by and under the
provisions of the Statutes of the State of Florida, providing for the formation,
liability, rights, privileges and immunities of a corporation for profit.
ARTICLE I
The name of this corporation shall be:
THE MEDIUM CORPORATION
ARTICLE II
GENERAL NATURE OF BUSINESS
The general nature of the business and the objects and purposes proposed to
be transacted and carried on are to do any and all of the things herein
mentioned, as fully and to the same extent as natural persons might or could do,
viz.:
(a) To take, acquire, buy, hold, own, maintain, work, develop,
construct, sell, convey, lease, mortgage, exchange, improve and otherwise
deal in and dispose of real estate and real property, including apartments
therein, both furnished and unfurnished, and all other kinds of property of
whatsoever nature, whether real, personal or mixed, or any interests or
rights therein without limits as to amounts; to buy, sell, assign, convey,
and cancel liens upon personal property and real estate of every kind and
nature whatsoever; to act as broker or agent for the purchase, sale,
leasing and management of real estate, and the negotiating of loans; in
behalf of others to purchase or otherwise acquire, and to sell, let, or
otherwise dispose of and deal in, real and personal property of every
description; to draw, accept, endorse, discount and deliver bills of
exchange, promissory notes, bonds, debentures, and other negotiable
instruments of whatsoever nature, secure the same by mortgage on its
property or otherwise to issue on commission, subscribe for, take, acquire,
hold, exchange and deal in shares, stocks, bonds, obligations or securities
of any government or authority, individuals or corporations.
(b) To carry on the business of a holding company and to purchase and
acquire any mercantile or commercial business, trade or enterprise
permitted by the Laws of the State of Florida, and to own, hold, operate,
maintain, use, sell or otherwise dispose of the same. To enter into or
engage in any such business, trade or enterprise.
(c) To engage in the business of transporting persons and property for
hire by motor vehicle, aircraft, watercraft, and other means of conveyance,
as a common carrier or otherwise, and to acquire, own, operate, lease and
dispose of like businesses.
(d) Generally to make and perform contracts of any kind and
description and for the purpose of attaining any of the objectives of the
corporation; to do and perform any other act or thing, and to exercise any
and all powers which a co-partnership or natural person could do and
exercise, and which are now or hereinafter may be authorized by law, and
generally to do and perform any and all things necessary or incident to the
performing and carrying out of the powers hereinabove specifically
delineated or implied.
ARTICLE III
CAPITAL STOCK
The maximum number of shares of capital stock which may be issued by this
corporation is Fifty Thousand (50,000) shares with $0.01 par value, all of which
shall be common stock and shall be fully
<PAGE> 4
paid and non-assessable. All such stock shall be payable in cash, property,
labor, or services at a just valuation to be fixed by the Board of Directors at
a meeting called for that purpose.
ARTICLE IV
AMOUNT OF CAPITAL WITH WHICH TO BEGIN BUSINESS
The amount of capital with which this corporation shall begin business is
FIVE HUNDRED DOLLARS ($500.00) capital money paid in.
ARTICLE V
The Post Office address of the principal place of business of said
corporation shall be 200 Flaglor Court Building, West Palm Beach, Palm Beach
County, Florida, with the privilege of having branch offices at any other place
within or without the State of Florida.
ARTICLE VI
The number of directors of this corporation shall be not less than three
(3) and not more than nine (9).
ARTICLE VII
This corporation shall have perpetual existence.
ARTICLE VIII
The names and Post Office addresses of the first Board of Directors of this
corporation who shall hold office for the first year, or until their successors
are elected, are:
J.A. PLISCO, 624 Shore Road, North Palm Beach, Florida
SHIRLEY POTTER, 425 - 29th Street, West Palm Beach, Florida
MARJORIE D. SHEFFIELD, 812 - 35th Street, West Palm Beach, Florida
ARTICLE IX
The name and Post Office Address of each subscriber, and the number of
shares of stock each agrees to take are:
<TABLE>
<CAPTION>
NAME SHARES ADDRESS
- ---- ------ -------
<S> <C> <C>
J. A. PLISCO........................................ 49,983 624 Shore Road
North Palm Beach,
Florida
SHIRLEY POTTER...................................... 1 425 - 29th Street
West Palm Beach, Florida
MARJORIE D. SHEFFIELD............................... 1 812 - 35th Street
West Palm Beach, Florida
</TABLE>
ARTICLE X
Stockholders of this corporation may enter into such stockholders' and
trustees' agreements as they may see fit wherein and whereby such stockholders
may limit their voting rights by virtue of such stockholders' and trustees'
agreements.
2
<PAGE> 5
IN WITNESS of the foregoing, we have hereunto set our hands and seals and
acknowledged to be filed in the Office of the Secretary of the State the
foregoing Certificate of Incorporation, this 30th day of December, 1970.
/s/ J. A. PLISCO (SEAL)
--------------------------------------
J. A. Plisco
/s/ SHIRLEY POTTER (SEAL)
--------------------------------------
Shirley Potter
/s/ MARJORIE S. SHEFFIELD (SEAL)
--------------------------------------
Marjorie S. Sheffield
<TABLE>
<S> <C>
STATE OF FLORIDA )
COUNTY OF PALM BEACH ) ss:
</TABLE>
BEFORE ME, the undersigned authority, authorized to administer oaths and
take acknowledgements, personally appeared J. A. PLISCO, SHIRLEY POTTER and
MARJORIE D. SHEFFIELD, to us well known to be the persons who executed the
foregoing Certificate of Incorporation, and they acknowledged before me that
they signed the same for the purposes therein stated.
WITNESS my hand and official seal at West Palm Beach, Palm Beach County,
Florida, this 30th day of December, 1970.
/s/ JUDITH A. DONNER
--------------------------------------
Notary Public, State of Florida at
Large
<TABLE>
<C> <S>
(NOTARIAL SEAL)
</TABLE>
3
<PAGE> 1
Exhibit 3.27
BY-LAWS
OF
THE MEDIUM CORPORATION
ARTICLE I
OFFICES
The office of the Corporation shall be located in the City,
County and State designated in the Certificate of Incorporation. The Corporation
may also maintain offices at such other places within or without the United
States as the Board of Directors may, from time to time, determine.
ARTICLE II
MEETING OF SHAREHOLDERS
Section 1 Annual Meetings:
The annual meeting of the shareholders of the Corporation
shall be held within five months after the close of the fiscal year of the
Corporation, for the purpose of electing directors, and transacting such other
business as may properly come before the meeting.
Section 2 Special Meetings:
Special meetings of the shareholders may be called at any time
by the Board of Directors or by the President, and shall be called by the
President or the Secretary at the written request of the holders of twenty-five
per cent (25%) of the shares then outstanding and entitled to vote thereat, or
as otherwise required by law.
Section 3 Place of Meetings:
All meetings of shareholders shall be held at the principal
office of the Corporation, or at such other places as shall be designated in the
notices or waivers of notice of such meetings.
<PAGE> 2
2
Section 4 Notice of Meetings:
(a) Except as otherwise provided by Statute, written notice of
each meeting of shareholders, whether annual or special, stating the time when
and place where it is to be held, shall be served either personally or by mail,
not less than ten or more than fifty days before the meeting, upon each
shareholder of record entitled to vote at such meeting, and to any other
shareholder to whom the giving of notice may be required by law. Notice of a
special meeting shall also state the purpose or purposes for which the meeting
is called, and shall indicate that it is being issued by, or at the direction
of, the person or persons calling the meeting. If, at any meeting, action is
proposed to be taken that would, if taken, entitle shareholders to receive
payment for their shares pursuant to Statute, the notice of such meeting shall
include a statement of that purpose and to that effect. If mailed, such notice
shall be directed to each such shareholder at his address, as it appears on the
records of the shareholders of the Corporation, unless he shall have previously
filed with the Secretary of the Corporation a written request that notices
intended for him be mailed to some other address, in which case, it shall be
mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who
may become a shareholder of record after the mailing of such notice and prior to
the meeting, or to any shareholder who attends such meeting, in person or by
proxy, or to any shareholder who, in person or by proxy, submits a signed waiver
of notice either before or after such meeting. Notice of any adjourned meeting
of shareholders need not be given, unless otherwise required by statute.
Section 5 Quorum::
(a) Except as otherwise provided herein, or by statute, or in
the Certificate of Incorporation (such Certificate and any amendments thereof
being hereinafter collectively referred to as the "Certificate of
Incorporation"), at all meetings of shareholders of the Corporation, the
presence at the commencement of such meetings in person or by proxy of
shareholders holding of record a majority of the total number of shares of the
Corporation then issued and outstanding and entitled to vote, shall be necessary
and sufficient to constitute a quorum for the transaction of any business. The
withdrawal of any shareholder after the commencement of a meeting shall have no
effect on the existence of a quorum, after a quorum has been established at such
meeting.
<PAGE> 3
3
(b) Despite the absence of a quorum at any annual or special
meeting of shareholders, the shareholders, by a majority of the votes cast by
the holders of shares entitled to vote thereon, may adjourn the meeting. At any
such adjourned meeting at which a quorum is present, any business may be
transacted at the meeting as originally called if a quorum had been present.
Section 6 Voting:
(a) Except as otherwise provided by statute or by the
Certificate of Incorporation, any corporate action, other than the election of
directors, to be taken by vote of the shareholders, shall be authorized by a
majority of votes cast at a meeting of shareholders by the holders of shares
entitled to vote thereon.
(b) Except as otherwise provided by statute or by the
Certificate of Incorporation, at each meeting of shareholders, each holder of
record of stock of the Corporation entitled to vote thereat, shall be entitled
to one vote for each share of stock registered in his name on the books of the
Corporation.
(c) Each shareholder entitled to vote or to express consent or
dissent without a meeting, may do so by proxy; provided, however, that the
instrument authorizing such proxy to act shall have been executed in writing by
the shareholder himself or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from the
date of its execution, unless the person executing it have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
(d) Any resolution in writing, signed by all of the
shareholders entitled to vote thereon, shall be and constitute action by such
shareholders to the effect therein expressed, with the same force and effect as
if the same had been duly passed by unanimous vote at a duly called meeting of
shareholders and such resolution so signed shall be inserted in the Minute Book
of the Corporation under its proper date.
<PAGE> 4
4
ARTICLE III
BOARD OF DIRECTORS
Section 1 Number, Election and Term of Office:
(a) The number of the directors of the Corporation shall
be ( ), unless and until otherwise determined by vote of a majority of
the entire Board of Directors. The number of Directors shall not be less than
three, unless all of the outstanding shares are owned beneficially and of record
by less than three shareholders, in which event the number of directors shall
not be less than the number of shareholders permitted by statute.
(b) Except as may otherwise be provided herein or in the
Certificate of Incorporation, the members of the Board of Directors of the
Corporation, who need not be shareholders, shall be elected by a majority of the
votes cast at a meeting of shareholders, by the holders of shares, present in
person or by proxy, entitled to vote in the election.
(c) Each director shall hold office until the annual meeting
of the shareholders next succeeding his election, and until his successor is
elected and qualified, or until his prior death, resignation or removal.
Section 2 Duties and Powers:
The Board of Directors shall be responsible for the control
and management of the affairs, property and interests of the Corporation, and
may exercise all powers of the Corporation, except as are in the Certificate of
Incorporation or by statute expressly conferred upon or reserved to the
shareholders.
Section 3 Annual and Regular Meetings; Notice:
(a) A regular annual meeting of the Board of Directors shall
be held immediately following the annual meeting of the shareholders, at the
place of such annual meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by
resolution for the holding of other regular meetings of the Board of Directors,
and may fix time and place thereof.
(c) Notice of any regular meeting of the Board of Directors
shall not be required to be given and, if given, need not specify the purpose of
the meeting; provided, however, that in case the Board of Directors shall fix or
change the time or
<PAGE> 5
5
place of any regular meeting, notice of such action shall be given to each
director who shall not have been present at the meeting at which such action was
taken within the time limited, and in the manner set forth in paragraph (b)
Section 4 of this Article III, with respect to special meetings, unless such
notice shall be waived in the manner set forth in paragraph (c) of such Section
4.
Section 4 Special Meetings; Notice:
(a) Special meetings of the Board of Directors shall be held
whenever called by the President or by one of the directors, at such time and
place as may be specified in the respective notices or waivers of notice
thereof.
(b) Except as otherwise required by statute, notice of special
meetings shall be mailed directly to each director, addressed to him at his
residence or usual place of business, at least two (2) days before the day on
which the meeting is to be held, or shall be sent to him at such place by
telegram, radio or cable, or shall be delivered to him personally or given to
him orally, not later than the day before the day on which the meeting is to be
held. A notice, or waiver of notice, except as required by Section 8 of this
Article III, need not specify the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be
given to any director who shall attend such meeting without protesting prior
thereto or at its commencement, the lack of notice to him, or who submits a
signed waiver of notice, whether before or after the meeting. Notice of any
adjourned meeting shall not be required to be given.
Section 5 Chairman:
At all meetings of the Board of Directors, the Chairman of the
Board, if any and if present, shall preside. If there shall be no Chairman, or
he shall be absent, then the President shall preside, and in his absence, a
Chairman chosen by the directors shall preside.
Section 6 Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of
a majority of the entire Board shall be necessary and sufficient to constitute a
quorum for the transaction of business, except as otherwise provided by law, by
the Certificate of Incorporation, or by these By-Laws.
<PAGE> 6
6
(b) A majority of the directors present at the time any place
of any regular or special meeting, although less than a quorum, may adjourn the
same from time to time without notice, until a quorum shall be present.
Section 7 Manner of Acting:
(a) At all meetings of the Board of Directors, each director
present shall have one vote, irrespective of the number of shares of sock, if
any, which he may hold.
(b) Except as otherwise provided by statute, by the
Certificate of Incorporation, or by these By-Laws, the action of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the Board of Directors. Any action authorized, in writing, by all of the
directors entitled to vote thereon and filed with the minutes of a corporation
shall be the act of the Board of Directors with the same force and effect as if
the same had been passed by unanimous vote at a duly called meeting of the
Board.
Section 8 Vacancies:
Any vacancy in the Board of Directors occurring by reason of
an increase in the number of directors, or by reason of the death, resignation,
disqualification, removal (unless a vacancy created by the removal of a director
by the shareholders shall be filled by the shareholders at the meeting at which
the removal was effected) or inability to act of any director, or otherwise,
shall be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 9 Resignation:
Any director may resign at any time by giving written notice to the
Board of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 10 Removal:
Any director may be removed with or without cause at any time
by the affirmative vote of shareholders holding of record in the aggregate at
least a majority of the outstanding shares of the Corporation at a special
meeting of the
<PAGE> 7
7
shareholders called for that purpose, and may be removed for cause by action of
the Board.
Section 11 Salary:
No stated salary shall be paid to directors, as such, for
their services, but by resolution of the Board of Directors a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board; provided, however, that nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 12 Contracts:
(a) No contract or other transaction between this Corporation
and any other Corporation shall be impaired, affected or invalidated, nor shall
any director be liable in any way by reason of the fact that any one or more of
the directors of this Corporation is or are interested in, or is a director or
officer, or are directors or officers of such other Corporation, provided that
such facts are disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party
to or may be interested in any contract or transaction of this Corporation, and
no director shall be liable in any way by reason of such interest, provided that
the fact of such interest be disclosed or made known to the Board of Directors,
and provided that the Board of Directors shall authorize, approve or ratify such
contract or transaction by the vote (not counting the vote of any such director)
of a majority of a quorum, notwithstanding the presence of any such director at
the meeting at which such action is taken. Such director or directors may be
counted in determining the presence of a quorum at such meeting. This Section
shall not be construed to impair or invalidate or in any way affect any contract
or other transaction which would otherwise be valid under the law (common,
statutory or otherwise) applicable thereto.
Section 13 Committees:
The Board of Directors, by resolution adopted by a majority of
the entire Board, may from time to time designate from among its members an
executive committee and such other committees, and alternate members thereof, as
they may deem desirable, each consisting of three or more members, with such
powers and authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
<PAGE> 8
8
ARTICLE IV
OFFICERS
Section 1 Number, Qualifications, Election and Term of
Office:
(a) The officers of the Corporation shall consist of a
President, a Secretary, a Treasurer, and such other officers, including a
Chairman of the Board of Directors, and one or more Vice Presidents as the Board
of Directors may from time to time deem advisable. Any officer other than the
Chairman of the Board of Directors may be, but is not required to be, a director
of the Corporation. Any two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the
Board of Directors at the regular annual meeting of the Board following the
annual meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of
the Board of Directors next succeeding his election, and until his successor
shall have been elected and qualified, or until his death, resignation or
removal.
Section 2 Resignation:
Any officer may resign at any time by giving written notice of
such resignation to the Board of Directors, or to the President or the Secretary
of the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors or
by such officer, and the acceptance of such resignation shall not be necessary
to make it effective.
Section 3 Removal:
Any officer may be removed, either with or without cause, and a
successor elected by a majority vote of the Board of Directors at any time.
Section 4 Vacancies:
A vacancy in any office by reason of death, resignation,
inability to act, disqualification, or any other cause, may at any time be
filled for the unexpired portion of the term by a majority vote of the Board of
Directors.
<PAGE> 9
9
Section 5 Duties of Officers:
Officers of the Corporation shall, unless otherwise provided
by the Board of Directors, each have such powers and duties as generally pertain
to their respective offices as well as such powers and duties as may be set
forth in these by-laws, or may from time to time be specifically conferred or
imposed by the Board of Directors. The President shall be the chief executive
officer of the Corporation.
Section 6 Sureties and Bonds:
In case the Board of Directors shall so require, any officer,
employee or agent of the Corporation shall execute to the Corporation a bond in
such sum, and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his duties to the Corporation,
including responsibility for negligence and for the accounting for all property,
funds or securities of the Corporation which may come into his hands.
Section 7 Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other
Corporation, any right or power of the Corporation as such shareholder
(including the attendance, acting and voting at shareholders' meetings and
execution of waivers, consents, proxies or other instruments) may be exercised
on behalf of the Corporation by the President, any Vice President, or such other
person as the Board of Directors may authorize.
ARTICLE V
SHARES OF STOCK
Section 1 Certificate of Stock:
(a) The certificates representing shares of the Corporation
shall be in such form as shall be adopted by the Board of Directors, and shall
be numbered and registered in the order issued. They shall bear the holder's
name and the number of shares, and shall be signed by (i) the Chairman of the
Board or the President or a Vice President, and (ii) the Secretary or Treasurer,
or any Assistant Secretary or Assistant Treasurer, and shall bear the corporate
seal.
(b) No certificate representing shares shall be issued until
the full amount of consideration therefor has been paid, except as otherwise
permitted by law.
<PAGE> 10
10
(c) To the extent permitted by law, the Board of Directors may
authorize the issuance of certificates for fractions of a share which shall
entitle the holder to exercise voting rights, receive dividends and participate
in liquidating distributions, in proportion to the fractional holdings; or it
may authorize the payment in cash of the fair value of fractions of a share as
of the time when those entitled to receive such fractions are determined; or it
may authorize the issuance, subject to such conditions as may be permitted by
law, of scrip in registered or bearer form over the signature of an officer or
agent of the Corporation, exchangeable as therein provided for full shares, but
such scrip shall not entitle the holder to any rights of a shareholder, except
as therein provided.
Section 2 Lost or Destroyed Certificates:
The holder of any certificate representing shares of the
Corporation shall immediately notify the Corporation of any loss or destruction
of the certificate representing the same. The Corporation may issue a new
certificate in the place of any certificate theretofore issued by it, alleged to
have been lost or destroyed. On production of such evidence of loss or
destruction as the Board of Directors in its discretion may require, the Board
of Directors may, in its discretion, require the owner of the lost or destroyed
certificate, or his legal representative to give the Corporation a bond in such
sum as the Board may direct, and with such surety or sureties as may be
satisfactory to the Board, to indemnify the Corporation against any claims,
loss, liability or damage it may suffer on account of the issuance of the new
certificate. A new certificate may be issued without requiring any such evidence
or bond when, in the judgment of the Board of Directors, it is proper so to do.
Section 3 Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on
the share records of the Corporation only by the holder of record thereof, in
person or by his duly authorized attorney, upon surrender for cancellation of
the certificate or certificates representing such shares, with an assignment or
power of transfer endorsed thereon or delivered therewith, duly executed, with
such proof of the authenticity of the signature and of authority to transfer and
of payment of transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of
record of any share or shares as the absolute owner thereof for all purposes
and, accordingly, shall not be bound to recognize any legal, equitable or other
claim to, or interest in, such share or shares on the part of any other person,
whether or
<PAGE> 11
11
not it shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 Record Date:
In lieu of closing the share records of the Corporation, the
Board of Directors may fix, in advance, a date not exceeding fifty days, nor
less than ten days, as the record date for the determination of shareholders
entitled to receive notice of, or to vote at, any meeting of shareholders, or to
consent to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or allotment of any
rights, or for the purpose of any other action. If no record date is fixed, the
record date for the determination of shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if no notice is given, the
day on which the meeting is held; the record date for determining shareholders
for any other purpose shall be at the close of business on the day on which the
resolution of the directors relating thereto is adopted. When a determination of
shareholders of record entitled to notice of or to vote at any meeting of
shareholders has been made as provided for herein, such determination shall
apply to any adjournment thereof, unless the directors fix a new record date for
the adjourned meeting.
ARTICLE VI
DIVIDENDS
Subject to applicable law, dividends may be declared and paid
out of any funds available therefor, as often, in such amounts, and at such time
or times as the Board of Directors may determine.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board
of Directors from time to time, subject to applicable law.
<PAGE> 12
12
ARTICLE VIII
CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be
approved from time to time by the Board of Directors.
ARTICLE IX
AMENDMENTS
Section 1 By Shareholders:
All by-laws of the Corporation shall be subject to alteration
or repeal, and new by-laws may be made, by the affirmative vote of shareholders
holding of record in the aggregate at least a majority of the outstanding shares
entitled to vote in the election of directors at any annual or special meeting
of shareholders, provided that the notice or waiver of notice of such meeting
shall have summarized or set forth in full therein the proposed amendment.
Section 2 By Directors:
The Board of Directors shall have power to make, adopt, alter,
amend and repeal, from time to time, by-laws of the Corporation; provided,
however, that the shareholders entitled to vote with respect thereto as in this
Article IX above-provided may alter, amend or repeal by-laws made by the Board
of Directors, except that the Board of Directors shall have no power to change
the quorum for meetings of shareholders or of the Board of Directors, or to
change any provisions of the by-laws with respect to the removal of directors or
the filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors,
the by-law so adopted, amended or repealed, together with a concise statement of
the changes made.
ARTICLE X
INDEMNITY
(a) Any person made a party to any action, suit or proceeding,
by reason of the fact that he, his testator or intestate representative is or
was a director, officer or employee of the Corporation, or of any Corporation in
which he
<PAGE> 13
13
served as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding, or in connection with any appeal therein that such officer, director
or employee is liable for negligence or misconduct in the performance of his
duties.
(b) The foregoing right of indemnification shall not be deemed
exclusive of any other rights to which any officer or director or employee may
be entitled apart from the provisions of this section.
(c) The amount of indemnity to which any officer or any
director may be entitled shall be fixed by the Board of Directors, except that
in any case where there is no disinterested majority of the Board available, the
amount shall be fixed by arbitration pursuant to the then existing rules of the
American Arbitration Association.
<PAGE> 1
EXHIBIT 3.28
ARTICLES OF INCORPORATION
OF
WEEKLY WORLD NEWS, INC.
The undersigned incorporator, for the purpose of establishing a corporation
under the provisions and subject to the requirements of the Florida General
Corporation Act, does hereby certify as follows:
FIRST: The name of the corporation is WEEKLY WORLD NEWS, INC.
(hereinafter called the "Corporation").
SECOND: The duration of the Corporation is to be perpetual.
THIRD: The general purposes for which the Corporation is initially
organized are as follows:
To design, create, prepare, make, edit, sell, obtain copyrights in
and for, obtain, receive, grant, transfer and assign options, rights,
franchises, and royalties in respect of, license the use of, market,
distribute, syndicate, furnish, and generally deal in and with, as
principal, agent, broker, distributor, or in any other lawful capacity,
any and all kinds of printed and reproduced matter, magazines,
newspapers, books, pamphlets and other publications of every kind,
nature, and description, and to do everything necessary, useful, or
convenient in furtherance thereof.
To conduct in all its branches, a general lithographing, printing,
publishing, paper products, stationary, bookbinding, engraving,
photoengraving, duplicating, offsetting, processing, facsimile, and
image, color, line, word and shadow reproduction, artists' supplies, and
mail-order business, and, without limiting the generality of any of the
purposes herein contained, to edit, print, bind, buy, sell, publish and
generally deal in books, pamphlets and other publications of every kind,
nature and description. To design, manufacture, buy, sell, import,
export, distribute, use, license the use of, prepare, produce and
generally deal in and with, whether as principal, agent, jobber,
distributor, broker, licensor, licensee, or otherwise, any and all
equipment, apparatus, machinery, devices, plants, facilities, improved
and unimproved real, personal and mixed properties, and materials and
supplies, used or useful in or about such business and related
businesses.
To collect, assemble, compile, edit, prepare, buy, sell, license
the use of as licensor and licensee, acquire, receive, grant, assign,
and transfer options, copyrights, and other rights in respect of,
distribute, syndicate, disseminate, publish, print and circulate in
books, brochures, leaflets, pamphlets, and other printed and reproduced
media, broadcast by radio, record, and reproduce by platter, disc, wire
and tape recording, television, telecast, facsimile, sound, image, and
other lawful methods, means, devices, and techniques, whether now or
hereafter devised, discovered, invented, improved, or developed, and
generally deal in and with in any lawful capacity, information,
techniques, critiques, analyses, charts, outlines, sketches, paintings,
drawings, sculptures, suggestions, guidance, advice, and items of
interest in the field of the fine arts.
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in respect
of, and generally deal in and with, at wholesale and retail, as
principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor,
and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal, and mixed property of any and all kinds, together with
the components, resultants, and by-products thereof; to acquire by
purchase or otherwise own, hold, lease, mortgage, sell, or otherwise
dispose of, erect, construct, make, alter, enlarge, improve, and to aid
or subscribe toward the construction, acquisition or improvement of any
factories, shops, storehouses, buildings, and commercial and retail
establishments of every character, including all
<PAGE> 2
equipment, fixtures, machinery, implements and supplies necessary, or
incidental to, or connected with, any of the purposes or business of the
corporation; and generally to perform any and all acts connected
therewith or arising therefrom or incidental thereto, and all acts
proper or necessary for the purpose of the business.
To engage generally in the real estate business as principal,
agent, broker, and in any lawful capacity, and generally to take, lease,
purchase, or otherwise acquire, and to own, use, hold, sell, convey,
exchange, lease, mortgage, work, clear, improve, develop, divide, and
otherwise handle, manage, operate, deal in and dispose of real estate,
real property, lands, multiple-dwelling structures, houses, buildings
and their works and any interest or right therein; to take, lease,
purchase or otherwise acquire, and to own, use, hold, sell, convey,
exchange, hire, lease, pledge, mortgage, and otherwise handle, and deal
in and dispose of, as principal, agent, broker, and in any lawful
capacity, such personal property, chattels, chattels real, rights,
easements, privileges, choses in action, notes, bonds, mortgages, and
securities as may lawfully be acquired, held, or disposed of; and to
acquire, purchase, sell, assign, transfer, dispose of, and generally
deal in and with, as principal, agent, broker, and in any lawful
capacity, mortgages and other interests in real, personal, and mixed
properties; to carry on a general construction, contracting, building,
and realty management business as principal, agent, representative,
contractor, subcontractor, and in any other lawful capacity.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, turn to account, grant licenses and immunities in
respect of, manufacture under and to introduce, sell, assign, mortgage,
pledge or otherwise dispose of, and, in any manner deal with and
contract with reference to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks, trade symbols
and other indications of origin and ownership granted by or
recognized under the laws of the United States of America or of any
state or subdivision thereof, or of any foreign country or
subdivision thereof, and all rights connected therewith or
appertaining thereunto;
(c) franchises, licenses, grants and concessions.
To transact any or all lawful business for which corporations may
be incorporated under the Florida General Corporation Act.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is Ten (10) shares of Common Stock of the par value
of One Hundred ($100.00) Dollars each.
FIFTH: The street address of the initial registered office of the
Corporation is 600 South East Coast Avenue, Lantana, Florida 33464 and the
name of its initial registered agent at such address is Dino M. Gallo.
2
<PAGE> 3
SIXTH: The number of directors constituting the initial Board of
Directors of the Corporation is five, and the names and addresses of the
persons who are to serve as members thereof are as follows:
<TABLE>
<CAPTION>
NAME POST OFFICE ADDRESS
- ---- -------------------
<S> <C>
Henry E. Bowes............................... 11158 Beach Club Point
North Palm Beach, Florida 33408
Iain Calder.................................. 401 N.W. 18th Street
Del Ray Beach, Florida 33444
Meyer Kimmel................................. 758 Caffrey Avenue
Far Rockaway, New York 11691
Harry C. Moore............................... Beloit Corporation
Beloit, Wisconsin 53511
Generoso Pope, Jr............................ 1370 South Ocean Boulevard
Manalapan, Florida 33460
</TABLE>
SEVENTH: The name and address of the Incorporator is as follows:
<TABLE>
<S> <C>
NAME POST OFFICE ADDRESS
- ---- -------------------------------
Jerome S. Traum.............................. 375 Park Avenue
New York, New York 10022
</TABLE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 15th day of March, 1979.
/s/ JEROME S. TRAUM
--------------------------------------
Jerome S. Traum
ACCEPTANCE BY REGISTERED AGENT
/s/ DINO M. GALLO
--------------------------------------
Dino M. Gallo
3
<PAGE> 4
<TABLE>
<S> <C>
STATE OF NEW YORK D
COUNTY OF NEW YORK C ss.:
</TABLE>
BE IT REMEMBERED that personally appeared before me, a Notary Public in and
for the County and State aforesaid, Jerome S. Traum, the incorporator who
executed the foregoing Articles of Incorporation, known to me personally to be
such, and did acknowledge the same to be his voluntary act and deed, and that
the facts therein stated are true and correct.
GIVEN under my hand and seal of office this 15th day of March, 1979.
/s/ ARTHUR M. KLEBANOFF
--------------------------------------
Notary Public
(Notarial Seal)
4
<PAGE> 1
EXHIBIT 3.29
BY-LAWS
OF
WEEKLY WORLD NEWS, INC.
(A FLORIDA CORPORATION)
ARTICLE I
OFFICES
The office of the Corporation shall be located in the City, County and
State designated in the Certificate of Incorporation. The Corporation may also
maintain offices at such other places within or without the United States as the
Board of Directors may, from time to time, determine.
ARTICLE II
MEETING OF SHAREHOLDERS
Section 1 -- Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held
within five months after the close of the fiscal year of the Corporation, for
the purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2 -- Special Meetings:
Special meetings of the shareholders may be called at any time by the Board
of Directors or by the President, or by the written request of the holders of
twenty-five percent (25%) of the shares then outstanding and entitled to vote or
as otherwise required by law.
Section 3 -- Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
Section 4 -- Notice of Meetings:
(a) Except as otherwise provided by statute, written notice stating the
place, day and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) nor more than fifty (50) days before the date of the meeting,
either personally or by first class mail, by or at the direction of the
president, the secretary, or the officer or persons calling the meeting to each
shareholder of record entitled to vote at such meeting.
The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by Chapter 607,
Official Florida Statutes. Notice by mail shall be deemed to be given when
deposited, with postage thereon prepaid, in the United States mail.
(b) If a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken. Any business may be transacted at the adjourned meeting
that might have been transacted on the original date of the meeting. If,
however, after the adjournment the board fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given in
compliance with subsection (a) of this section to each shareholder of record on
the new record date entitled to vote at such meeting.
<PAGE> 2
(c) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by statute.
Section 5 -- Quorum:
(a) Except as otherwise provided herein, or by statute, or in the
Certificate of Incorporation (such Certificate and any amendments thereof being
hereinafter collectively referred to as the "Certificate of Incorporation"), at
all meetings of shareholders of the Corporation, the presence at the
commencement of such meetings in person or by proxy of shareholders holding of
record a majority of the total number of shares of the Corporation then issued
and outstanding and entitled to vote, shall be necessary and sufficient to
constitute a quorum for the transaction of any business. The withdrawal of any
shareholder after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called if a quorum had been present.
Section 6 -- Voting:
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors, to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent
without a meeting, may do so by proxy; provided, however, that the instrument
authorizing such proxy to act shall have been executed in writing by the
shareholder himself, or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from the
date of its execution, unless the person executing it shall have specified
therein the length of time it is to continue in force. Such instrument shall be
exhibited to the Secretary at the meeting and shall be filed with the records of
the Corporation.
Section 7 -- Conduct of the Meeting:
Meetings of the stockholders shall be presided over by one of the following
officers in the order of seniority and if present and acting -- the Chairman of
the Board, if any, the Vice-Chairman of the Board, if any, the President, a
Vice-President, or, if none of the foregoing is in office and present and
acting, by a chairman to be chosen by the stockholders. The Secretary of the
corporation, or in his absence, an Assistant Secretary, shall act as secretary
of every meeting, but if neither the Secretary nor an Assistant Secretary is
present the Chairman of the meeting shall appoint a secretary of the meeting.
Section 8 -- Informal Action:
When at least four-fifths of the stockholders shall be present at a meeting
and shall sign a written consent thereto on the record of the meeting, the acts
of such meeting shall be as valid as if legally called and notified.
2
<PAGE> 3
ARTICLE III
BOARD OF DIRECTORS
Section 1 -- Number, Election and Term of Office:
(a) At least one director must be a citizen of the United States, and each
director must be of full age. A director, however, need not be a stockholder or
a resident of the State of Florida. The first Board of Directors shall consist
of the number of persons fixed in the Articles of Incorporation. Thereafter the
number of directors constituting the whole Board shall be at least one. Subject
to the foregoing limitation and except for the first Board of Directors, such
number may be fixed from time to time by action of the stockholders, or, if the
number is not fixed, the number shall be five. The number of directors may be
increased or decreased by action of the stockholders.
(b) The first Board of Directors shall hold office until the first annual
meeting of stockholders and until their successors are elected and qualified or
until their earlier resignation or removal. Thereafter, directors who are
elected at an annual meeting of stockholders, and directors who are elected in
the interim to fill vacancies and newly created directorships, shall hold office
until the next annual meeting of stockholders and until their successors are
elected and qualified or until their earlier resignation or removal. In the
interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors, newly created directorships
and any vacancies in the Board of Directors, including vacancies resulting from
the removal of directors for cause or without cause, which are not filled at the
meeting of stockholders effecting an increase in the number of directors or a
removal of one or more directors, may be filled by the action of the remaining
directors then in office, although less than a quorum, or by the sole remaining
director.
(c) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a plurality of the votes cast at a
meeting of shareholders, by the holders of shares, present in person or by
proxy, entitled to vote in the election.
Section 2 -- Duties and Powers:
The Board of Directors shall be responsible for the control and management
of the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholder.
Section 3 -- Annual and Regular Meetings; Notice:
(a) A regular annual meeting of the Board of Directors shall be held
immediately following the annual meeting of the shareholders within or without
the State of Florida as shall be fixed by the Board. The Board of Directors,
from time to time, may provide by resolution for the holding of other regular
meetings of the Board of Directors, and may fix the time and place thereof.
(b) No notice shall be required for regular meetings for which the time and
place have been fixed. Written, oral, or any other mode of notice of the time
and place shall be given for special meetings in sufficient time for the
convenient assembly of the directors thereat. Notice need not be given to any
director or to any member of a committee of directors who submits a written
waiver of notice signed by him before or after the time stated therein or who
attends the meeting even though he had no official notice.
Section 4 -- Chairman:
The Chairman of the Board, if any and if present and acting, shall preside
at all meetings. Otherwise, the Vice-Chairman of the Board, if any and if
present and acting, or the President, if present and acting, or any other
director chosen by the Board, shall preside.
3
<PAGE> 4
Section 5 -- Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a majority
of the entire Board shall be necessary and sufficient to constitute a quorum for
the transaction of business, except as otherwise provided by law, by the
Certificate of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn the same
from time to time without notice, until a quorum shall be present.
Section 6 -- Manner of Acting:
(a) At all meetings of the Board of Directors, each director present shall
have one vote, irrespective of the number of shares of stock, if any, which he
may hold.
(b) Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Any action required or permitted to be taken at any
meeting of the Board of Directors or an Executive 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 signed by them, and such writing or writings are
filed in the minutes of proceedings of the Board or committee prior to the
taking of such action.
Section 7 -- Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase in
the number of directors, or by reason of the death, resignation,
disqualification, removal (unless a vacancy created by the removal of a director
by the shareholders shall be filled by the shareholders at the meeting at which
the removal was effected) or inability to act of any director, or otherwise,
shall be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 8 -- Resignation:
Any director may resign at any time by giving written notice to the Board
of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 9 -- Removal:
Any director may be removed with or without cause at any time by the
affirmative vote of shareholders holding of record in the aggregate at least a
majority of the outstanding shares of the Corporation at a special meeting of
the shareholders called for that purpose, and may be removed for cause by action
of the Board.
Section 10 -- Executive Committee:
Whenever the Board of Directors consists of three or more, the Board may
designate an Executive Committee, which shall consist of two or more of the
directors of the corporation. The Board may designate one or more directors as
alternate members of such committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of
any member of any such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Such committee, to the extent provided in the resolution of the Board,
shall have and may
4
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exercise the powers and authority of the Board of Directors. The Executive
Committee may exercise the authority of the Board of Directors to the extent
permitted by law.
ARTICLE IV
OFFICERS
Section 1 -- Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a
Secretary, a Treasurer, and such other officers, including a Chairman of the
Board of Directors, and one or more Vice President as the Board of Directors may
from time to time deem advisable. Any officer other than the Chairman of the
Board of Directors may be, but is not required to be, a director of the
Corporation. Any two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the annual
meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.
Section 2 -- Resignation:
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors, or to the President or the Secretary of
the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors or
by such officer, and the acceptance of such resignation shall not be necessary
to make it effective.
Section 3 -- Removal:
Any officer may be removed, either with or without cause, and a successor
elected by a majority vote of the Board of Directors at any time.
Section 4 -- Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by a majority vote of the Board of Directors.
Section 5 -- Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board
of Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these by-laws, or may from time to time be specifically conferred or imposed by
the Board of Directors. The President shall be the chief executive officer of
the Corporation.
Section 6 -- Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee or
agent of the Corporation shall execute to the Corporation a bond in such sum,
and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his duties to the Corporation,
including responsibility for negligence and for the accounting for all property,
funds or securities of the Corporation which may come into his hands.
5
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Section 7 -- Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other Corporation,
any right or power of the Corporation as such shareholder (including the
attendance, acting and voting at shareholders' meetings and execution of
waivers, consents, proxies or other instruments) may be exercised on behalf of
the Corporation by the President, any Vice President, or such other person as
the Board of Directors may authorize.
ARTICLE V
SHARES OF STOCK
Section 1 -- Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in
such form as shall be adopted by the Board of Directors, and shall be numbered
and registered in the order issued. They shall bear the holder's name and the
number of shares, and shall be signed by (i) the Chairman of the Board or the
President or a Vice President, and (ii) the Secretary or Treasurer, or any
Assistant Secretary or Assistant Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until the full
amount of consideration therefor has been paid, except as otherwise permitted by
law.
(c) To the extent permitted by law, the Board of Directors may authorize
the issuance of certificates for fractions of a share which shall entitle the
holder to exercise voting rights, receive dividends and participate in
liquidating distributions, in proportion to the fractional holdings; or it may
authorize the payment in cash of the fair value of fractions of a share as of
the time when those entitled to receive such fractions are determined; or it may
authorize the issuance, subject to such conditions as may be permitted by law,
of scrip in registered or bearer form over the signature of an officer or agent
of the Corporation, exchangeable as therein provided for full shares, but such
scrip shall not entitle the holder to any rights of a shareholder, except as
therein provided.
Section 2 -- Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate may
be issued without requiring any such evidence or bond when, in the judgment of
the Board of Directors, it is proper so to do.
Section 3 -- Transfers of Shares:
(a) Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfers of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the corporation or with a transfer agent or a registrar, if
any, and on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposes and, accordingly,
shall not be bound to recognize any legal,
6
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equitable or other claim to, or interest in, such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise expressly provided by law.
Section 4 -- Record Date:
In lieu of closing the share records of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding fifty days, nor less than
ten days, as the record date for the determination of shareholders entitled to
receive notice of, or to vote at, any meeting of shareholders, or to consent to
any proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividends, or allotment of any rights, or for
the purpose of any other action. If no record date is fixed, the record date for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of shareholders
of record entitled to notice of or to vote at any meeting of shareholders has
been made as provided for herein, such determination shall apply to any
adjournment thereof, unless the directors fix a new record date for the
adjourned meeting.
ARTICLE VI
DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any
funds available therefor, as often, in such amounts, and at such time or times
as the Board of Directors may determine.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors
from time to time, subject to applicable law.
ARTICLE VIII
CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from
time to time by the Board of Directors.
ARTICLE IX
AMENDMENTS
Section 1 -- By Shareholders:
All by-laws of the Corporation shall be subject to alteration or repeal,
and new by-laws may be made, by the affirmative vote of shareholders holding of
record in the aggregate at least a majority of the outstanding shares entitled
to vote in the election of directors at any annual or special meeting of
shareholders, provided that the notice or waiver of notice of such meeting shall
have summarized or set forth in full therein, the proposed amendment.
Section 2 -- By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and
repeal, from time to time, by-laws of the Corporation; provided, however, that
the shareholders entitled to vote with respect thereto
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<PAGE> 8
as in this Article IX above-provided may alter, amend or repeal by-laws made by
the Board of Directors, except that the Board of Directors shall have no power
to change the quorum for meetings of shareholders or of the Board of Directors,
or to change any provisions of the by-laws with respect to the removal of
directors or the filling of vacancies in the Board resulting from the removal by
the shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors,
the by-law so adopted, amended or repealed, together with a concise statement of
the changes made.
ARTICLE X
INDEMNITY
(a) Any person made a party to any action, suit or proceeding, by reason of
the fact that he, his testator or intestate representative is or was a director,
officer or employee of the Corporation, or of any Corporation in which he served
as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding, or in connection with any appeal therein that such officer, director
or employee is liable for negligence or misconduct in the performance of his
duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which any officer or director or employee may be entitled
apart from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be
entitled shall be fixed by the Board of Directors, except that in any case where
there is no disinterested majority of the Board available, the amount shall be
fixed by arbitration pursuant to the then existing rules of the American
Arbitration Association.
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Exhibit 4.1
AMERICAN MEDIA OPERATIONS, INC.
10 1/4% Senior Subordinated Notes due 2009
---------
INDENTURE
Dated as of May 7, 1999
---------
THE CHASE MANHATTAN BANK,
as Trustee
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions............................................................. 1
SECTION 1.02. Other Definitions....................................................... 20
SECTION 1.03. Incorporation by Reference of Trust Indenture Act....................... 20
SECTION 1.04. Rules of Construction................................................... 21
ARTICLE 2
THE NOTES
SECTION 2.01. Form and Dating......................................................... 21
SECTION 2.02. Execution and Authentication............................................ 22
SECTION 2.03. Registrar and Paying Agent.............................................. 22
SECTION 2.04. Paying Agent to Hold Money in Trust..................................... 23
SECTION 2.05. Holder Lists............................................................ 23
SECTION 2.06. Transfer and Exchange................................................... 23
SECTION 2.07. Replacement Notes....................................................... 24
SECTION 2.08. Outstanding Notes....................................................... 25
SECTION 2.09. Temporary Notes......................................................... 25
SECTION 2.10. Cancelation............................................................. 25
SECTION 2.11. Defaulted Interest...................................................... 25
SECTION 2.12. CUSIP and ISIN Numbers.................................................. 26
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee...................................................... 26
SECTION 3.02. Selection of Notes To Be Redeemed....................................... 26
SECTION 3.03. Notice of Redemption.................................................... 26
SECTION 3.04. Effect of Notice of Redemption.......................................... 27
SECTION 3.05. Deposit of Redemption Price............................................. 27
SECTION 3.06. Notes Redeemed in Part.................................................. 27
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ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Notes........................................................ 28
SECTION 4.02. SEC Reports............................................................. 28
SECTION 4.03. Limitation on Indebtedness.............................................. 28
SECTION 4.04 Limitation on Restricted Payments....................................... 31
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.............................................. 36
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock...................... 36
SECTION 4.07. Limitation on Transactions with Affiliates.............................. 39
SECTION 4.08. Change of Control....................................................... 40
SECTION 4.09. Compliance Certificate.................................................. 41
SECTION 4.10. Further Instruments and Acts............................................ 42
SECTION 4.11. Future Note Guarantors.................................................. 42
SECTION 4.12. Limitation on Lines of Business......................................... 42
SECTION 4.13. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries.............................................. 42
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. When Company May Merge or Transfer Assets............................... 42
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default....................................................... 44
SECTION 6.02. Acceleration............................................................ 45
SECTION 6.03. Other Remedies.......................................................... 46
SECTION 6.04. Waiver of Past Defaults................................................. 46
SECTION 6.05. Control by Majority..................................................... 46
SECTION 6.06. Limitation on Suits..................................................... 46
SECTION 6.07. Rights of Holders to Receive Payment.................................... 47
SECTION 6.08. Collection Suit by Trustee.............................................. 47
SECTION 6.09. Trustee May File Proofs of Claim........................................ 47
SECTION 6.10. Priorities.............................................................. 47
SECTION 6.11. Undertaking for Costs................................................... 48
SECTION 6.12. Waiver of Stay of Extension Laws........................................ 48
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ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee....................................................... 48
SECTION 7.02. Rights of Trustee....................................................... 49
SECTION 7.03. Individual Rights of Trustee............................................ 50
SECTION 7.04. Trustee's Disclaimer.................................................... 50
SECTION 7.05. Notice of Defaults...................................................... 50
SECTION 7.06. Reports by Trustee to Holders........................................... 51
SECTION 7.07. Compensation and Indemnity.............................................. 51
SECTION 7.08. Replacement of Trustee.................................................. 52
SECTION 7.09. Successor Trustee by Merger............................................. 52
SECTION 7.10. Eligibility; Disqualification........................................... 53
SECTION 7.11. Preferential Collection of Claims Against Company....................... 53
ARTICLE 8
DISCHARGE OF INDENTURE, DEFEASANCE
SECTION 8.01. Discharge of Liability on Notes; Defeasance............................. 53
SECTION 8.02. Conditions to Defeasance................................................ 54
SECTION 8.03. Application of Trust Money.............................................. 55
SECTION 8.04. Repayment to Company.................................................... 55
SECTION 8.05. Indemnity for Government Obligations.................................... 56
SECTION 8.06. Reinstatement........................................................... 56
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders.............................................. 56
SECTION 9.02. With Consent of Holders................................................. 57
SECTION 9.03. Compliance with Trust Indenture Act..................................... 58
SECTION 9.04. Revocation and Effect of Consents and Waivers........................... 58
SECTION 9.05. Notation on or Exchange of Notes........................................ 58
SECTION 9.06. Trustee To Sign Amendments.............................................. 59
SECTION 9.07. Payment for Consent..................................................... 59
ARTICLE 10
SUBORDINATION
SECTION 10.01. Agreement to Subordinate................................................ 59
SECTION 10.02. Liquidation, Dissolution, Bankruptcy.................................... 59
SECTION 10.03. Default on Senior Indebtedness.......................................... 60
SECTION 10.04. Acceleration of Payment of Notes........................................ 61
SECTION 10.05. When Distribution Must Be Paid Over..................................... 61
SECTION 10.06. Subrogation............................................................. 61
SECTION 10.07. Relative Rights......................................................... 61
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SECTION 10.08. Subrogation May Not Be Impaired by Company.............................. 61
SECTION 10.09. Rights of Trustee and Paying Agent...................................... 62
SECTION 10.10. Distribution or Notice to Representative................................ 62
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit
Right to Accelerate.................................................. 62
SECTION 10.12. Trust Moneys Not Subordinated........................................... 62
SECTION 10.13. Trustee Entitled To Rely................................................ 62
SECTION 10.14. Trustee to Effectuate Subordination..................................... 63
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness........................................................ 63
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions............................................. 63
ARTICLE 11
NOTE GUARANTEES
SECTION 11.01. Note Guarantees......................................................... 63
SECTION 11.02. Limitation on Liability................................................. 65
SECTION 11.03. Successors and Assigns.................................................. 66
SECTION 11.04. No Waiver............................................................... 66
SECTION 11.05. Modification............................................................ 66
SECTION 11.06. Execution of Supplemental Indenture for Future
Note Guarantors...................................................... 66
SECTION 11.07. Non-Impairment.......................................................... 67
ARTICLE 12
SUBORDINATION OF THE NOTE GUARANTEES
SECTION 12.01. Agreement To Subordinate................................................ 67
SECTION 12.02. Liquidation, Dissolution, Bankruptcy.................................... 67
SECTION 12.03. Default on Designated Senior Indebtedness of a
Note Guarantor....................................................... 68
SECTION 12.04. Demand for Payment...................................................... 69
SECTION 12.05. When Distribution Must Be Paid Over..................................... 69
SECTION 12.06. Subrogation............................................................. 69
SECTION 12.07. Relative Rights......................................................... 69
SECTION 12.08. Subordination May Not Be Impaired by a Note
Guarantor............................................................ 69
SECTION 12.09. Rights of Trustee and Paying Agent...................................... 70
SECTION 12.10. Distribution or Notice to Representative................................ 70
SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit
Right To Accelerate.................................................. 70
SECTION 12.12. Trustee Entitled to Rely................................................ 70
SECTION 12.13. Trustee To Effectuate Subordination..................................... 71
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SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness
of a Note Guarantor.................................................. 71
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Note Guarantor on Subordination
Provisions.......................................................... 71
SECTION 12.16. Defeasance.............................................................. 71
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls............................................ 71
SECTION 13.02. Notices................................................................. 72
SECTION 13.03. Communication of Holders with Other Holders............................. 72
SECTION 13.04. Certificate and Opinion as to Conditions Precedent...................... 72
SECTION 13.05. Statements Required in Certificate or Opinion........................... 72
SECTION 13.06. When Notes Disregarded.................................................. 73
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar............................ 73
SECTION 13.08. Legal Holidays.......................................................... 73
SECTION 13.09. Governing Law........................................................... 73
SECTION 13.10. No Recourse Against Others.............................................. 73
SECTION 13.11. Successors.............................................................. 74
SECTION 13.12. Multiple Originals...................................................... 74
SECTION 13.13. Table of Contents; Headings............................................. 74
Appendix A - Provisions Relating to Initial Notes,
Private Exchange Notes and Exchange Notes
Exhibit A - Form of Initial Note
Exhibit B - Form of Exchange Note
Exhibit C - Form of Supplemental Indenture
Exhibit D - Form of Transferee Letter of Representation
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INDENTURE dated as of May 7, 1999, among
American Media Operations, Inc., a Delaware
corporation (the "Company"), National Enquirer,
Inc., a Florida corporation, Star Editorial, Inc., a
Delaware corporation, SOM Publishing, Inc., a
Florida corporation, Weekly World News, Inc., a
Florida corporation, Country Weekly, Inc., a
Delaware corporation, Distribution Services, Inc., a
Delaware corporation, Fairview Printing, Inc., a
Florida corporation, NDSI, Inc., a Delaware
corporation, Biocide, Inc., a Delaware corporation,
Health Xtra, Inc., a Florida corporation, Retail
Marketing Network, Inc., a Delaware corporation,
American Media Marketing, Inc., a Florida
corporation, and Marketing Services, Inc., a
Delaware corporation (collectively, the "Note
Guarantors"), and The Chase Manhattan Bank, a New
York banking corporation, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of (a) the
Company's 10 1/4% Senior Subordinated Notes due 2009 issued on the date hereof
(the "Initial Notes"), (b) if and when issued as provided in the Registration
Agreement (as defined in Appendix A hereto (the "Appendix")), the Company's 10
1/4% Senior Subordinated Notes due 2009 issued in the Registered Exchange Offer
(as defined in the Appendix) in exchange for any Initial Notes (the "Exchange
Notes") and (c) if and when issued as provided in the Registration Agreement,
the Private Exchange Notes (as defined in the Appendix, and together with the
Initial Notes and any Exchange Notes issued hereunder, the "Notes") issued in
the Private Exchange (as defined in the Appendix). Except as otherwise provided
herein, the Notes shall be limited to $250,000,000 in aggregate principal
amount outstanding.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Additional Assets" means (a) any property or assets (other
than Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Permitted Business; (b) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary; or (c) Capital Stock
constituting a minority interest in any Person that at such time is a
Restricted Subsidiary; PROVIDED, HOWEVER, that any such Restricted Subsidiary
described in clauses (b) or (c) above is primarily engaged in a Permitted
Business.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Sections 4.06 and 4.07 only, "Affiliate" shall also
mean any beneficial owner of shares representing 10% or more of the total
<PAGE> 8
2
voting power of the Voting Stock (on a fully diluted basis) of the Company or
Holdings or of rights or warrants to purchase such Voting Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (a) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (b) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary or (c)
any other assets of the Company or any Restricted Subsidiary outside of the
ordinary course of business of the Company or such Restricted Subsidiary; other
than, in the case of (a), (b) and (c) above, (i) a disposition by a Restricted
Subsidiary to the Company or by the Company or a Restricted Subsidiary to a
Note Guarantor, (ii) any sale of Capital Stock in, or Indebtedness or other
securities of, an Unrestricted Subsidiary, (iii) transactions permitted under
Section 5.01(a), (iv) an issuance of Capital Stock by a Restricted Subsidiary
of the Company to the Company or to a Restricted Subsidiary, (v) for purposes
of Section 4.06 only, a disposition subject to Section 4.04, (vi) any Permitted
Asset Swap and (vii) any disposition of assets with a Fair Market Value of not
more than $500,000.
"Attributable Debt" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Notes, compounded annually) of
the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (a) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or scheduled redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment, by (b) the sum
of all such payments.
"Bank Indebtedness" means any and all amounts payable under
or in respect of the Credit Agreement and any Refinancing Indebtedness with
respect thereto, as amended from time to time, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of the Board
of Directors of the Company.
"Business Day" means each day which is not a Legal Holiday.
<PAGE> 9
3
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be prepaid
by the lessee without payment of a penalty.
"Change of Control" means the occurrence of any of the
following events:
(a) prior to the earlier to occur of (i) the first public
offering of common stock of Holdings or (ii) the first public offering
of common stock of the Company, the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of a majority in the aggregate
of the total voting power of the Voting Stock of the Company or
Holdings, whether as a result of issuance of securities of Holdings or
the Company, any merger, consolidation, liquidation or dissolution of
Holdings or the Company, any direct or indirect transfer of securities
by any Permitted Holder or otherwise (for purposes of this clause (a)
and clause (b) below, the Permitted Holders shall be deemed to
beneficially own any Voting Stock of an entity (the "specified
entity") held by any other entity (the "parent entity") so long as the
Permitted Holders beneficially own (as so defined), directly or
indirectly, in the aggregate a majority of the voting power of the
Voting Stock of the parent entity);
(b) (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than one or more Permitted
Holders, is or becomes the beneficial owner (as defined in clause (a)
above, except that for purposes of this clause (b) such person shall
be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the Voting
Stock of the Company or Holdings and (ii) the Permitted Holders
"beneficially own" (as defined in clause (a) above), directly or
indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company or Holdings than such other
person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the
board of directors of the Company or Holdings, as the case may be (for
the purposes of this clause (b), such other person shall be deemed to
beneficially own any Voting Stock of a specified entity held by a
parent entity, if such other person is the beneficial owner (as
defined in this clause (b)), directly or indirectly, of more than 35%
of the voting power of the Voting Stock of such parent entity and the
Permitted Holders "beneficially own" (as defined in clause (a) above),
directly or indirectly, in the aggregate a lesser percentage of the
voting power of the Voting Stock of
<PAGE> 10
4
such parent entity and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent entity);
(c) during any period of two consecutive years, individuals
who at the beginning of such period constituted the board of directors
of the Company or Holdings, as the case may be (together with any new
directors whose election by such board of directors of the Company or
Holdings, as the case may be, or whose nomination for election by the
shareholders of the Company or Holdings, as the case may be, was
approved by a vote of 66 2/3% of the directors of the Company or
Holdings, as the case may be, then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of directors of the
Company or Holdings, as the case may be, then in office;
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company or Holdings;
(e) the merger or consolidation of the Company or Holdings
with or into another Person or the merger of another Person with or
into the Company or Holdings, or the sale of all or substantially all
the assets of the Company or Holdings to another Person (other than a
Person that is controlled by the Permitted Holders), and, in the case
of any such merger or consolidation, the securities of the Company or
Holdings that are outstanding immediately prior to such transaction
and which represent 100% of the aggregate voting power of the Voting
Stock of the Company or Holdings are changed into or exchanged for
cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving Person or transferee that
represent immediately after such transaction, at least a majority of
the aggregate voting power of the Voting Stock of the surviving Person
or transferee; or
(f) Evercore no longer has the direct or indirect power to
appoint or to approve the appointment of a majority of the managers of
(or other individuals comprising) the board of managers or other
governing body of EMP Group L.L.C.
"Closing Date" means the date of this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Consolidated Restricted
Subsidiaries, plus, to the extent Incurred by the Company and its Restricted
Subsidiaries in such period but not included in such interest expense, (a)
interest expense attributable to Capitalized Lease Obligations
<PAGE> 11
5
and the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction, (b) amortization of debt discount and debt issuance
costs, (c) capitalized interest, (d) noncash interest expense, (e) commissions,
discounts and other fees and charges attributable to letters of credit and
bankers' acceptance financing, (f) interest accruing on any Indebtedness of any
other Person to the extent such Indebtedness is Guaranteed by the Company or
any Restricted Subsidiary, (g) net costs associated with Hedging Obligations,
(h) dividends in respect of all Disqualified Stock of the Company and all
Preferred Stock of any of the Restricted Subsidiaries of the Company, to the
extent held by Persons other than the Company or a Wholly Owned Subsidiary, (i)
interest Incurred in connection with investments in discontinued operations and
(j) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust. Notwithstanding anything to the
contrary contained herein, commissions, discounts, yield and other fees and
charges Incurred in connection with any transaction pursuant to which the
Company or any Subsidiary of the Company may sell, convey or otherwise transfer
or grant a security interest in any accounts receivable or related assets shall
be included in Consolidated Interest Expense.
"Consolidated Net Income" means, for any period, the net
income of the Company and its Consolidated Subsidiaries for such period;
PROVIDED, HOWEVER, that there shall not be included in such Consolidated Net
Income:
(a) any net income of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that (i) subject to
the limitations contained in clause (d) below, the Company's equity in
the net income of any such Person for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company
or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution made to a
Restricted Subsidiary, to the limitations contained in clause (c)
below) and (ii) the Company's equity in a net loss of any such Person
for such period shall be included in determining such Consolidated Net
Income to the extent such loss has been funded with cash from the
Company or a Restricted Subsidiary;
(b) any net income (or loss) of any Person acquired by the
Company or a Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition;
(c) any net income (or loss) of any Restricted Subsidiary
(other than any Note Guarantor) if such Restricted Subsidiary is
subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (i)
subject to the limitations contained in clause (d) below, the
Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution made to another
Restricted Subsidiary, to the limitation contained in this clause) and
(ii) the Company's
<PAGE> 12
6
equity in a net loss of any such Restricted Subsidiary for such period
shall be included in determining such Consolidated Net Income;
(d) any gain (loss) realized upon the sale or other
disposition of any asset of the Company or its Consolidated
Subsidiaries (including pursuant to any Sale/Leaseback Transaction)
that is not sold or otherwise disposed of in the ordinary course of
business and any gain (loss) realized upon the sale or other
disposition of any Capital Stock of any Person;
(e) any extraordinary gain or loss; and
(f) the cumulative effect of a change in accounting
principles.
"Consolidation" means the consolidation of the amounts of
each of the Restricted Subsidiaries with those of the Company in accordance
with GAAP consistently applied; PROVIDED, HOWEVER, that "Consolidation" shall
not include consolidation of the accounts of any Unrestricted Subsidiary, but
the interest of the Company or any Restricted Subsidiary in an Unrestricted
Subsidiary shall be accounted for as an investment. The term "Consolidated" has
a correlative meaning.
"Credit Agreement" means the credit agreement dated as of May
7, 1999, initially among Holdings, the Company, the lenders thereunder and The
Chase Manhattan Bank, as administrative agent for such lenders, as amended,
restated, supplemented, waived, replaced (whether or not upon termination),
restructured, repaid, refunded, refinanced or otherwise modified from time to
time including any agreement extending the maturity thereof or otherwise
restructuring all or any portion of the Indebtedness under such agreement or
increasing the amount loaned thereunder or altering the maturity thereof.
"Currency Agreement" means with respect to any Person any
foreign exchange contract, currency swap agreements or other similar agreement
or arrangement to which such Person is a party or of which it is a beneficiary.
"Default" means any event which is, or after notice or
passage of time or both would be, an Event of Default.
"Designated Noncash Consideration" means the Fair Market
Value of noncash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Disposition that is so designated as
Designated Noncash Consideration pursuant to an Officers' Certificate, setting
forth the basis of such valuation, less the amount of Temporary Cash
Investments received in connection with a subsequent sale of such Designated
Noncash Consideration.
"Designated Senior Indebtedness" of the Company means (a) the
Bank Indebtedness and (b) any other Senior Indebtedness of the Company that, at
the date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $10.0 million and is specifically designated by the
Company in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of this Indenture. "Designated
Senior Indebtedness" of a Note Guarantor has a correlative meaning.
<PAGE> 13
7
"Disqualified Stock" means, with respect to any Person, 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 exercisable) or upon the
happening of any event (a) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (b) is convertible or exchangeable for
Indebtedness or Disqualified Stock (excluding Capital Stock convertible or
exchangeable solely at the option of the Company or a Restricted Subsidiary;
PROVIDED that any such conversion or exchange shall be deemed an Incurrence of
Indebtedness or an issuance of Disqualified Stock, as applicable) or (c) is
redeemable at the option of the holder thereof, in whole or in part, in the
case of each of clauses (a), (b) and (c) on or prior to 91 days after the
Stated Maturity of the Notes; PROVIDED, HOWEVER, that any Capital Stock that
would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to 91 days after the Stated Maturity of the Notes shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are not more favorable to the
holders of such Capital Stock than the provisions of Sections 4.06 and 4.08;
PROVIDED, HOWEVER, that only the portion of Capital Stock which so matures or
is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such date shall be
deemed to be Disqualified Stock; PROVIDED FURTHER, HOWEVER, that if such
Capital Stock is issued to any employee or to any plan for the benefit of
employees of the Company or its Subsidiaries or by any such plan to such
employees, such Capital Stock shall not constitute Disqualified Stock solely
because it may be required to be repurchased by the Company in order to satisfy
applicable statutory or regulatory obligations or as a result of such
employee's termination, death or disability.
"EBITDA" for any period means the Consolidated Net Income for
such period, plus, without duplication, the following to the extent deducted in
calculating such Consolidated Net Income: (a) Consolidated income tax expense,
(b) Consolidated Interest Expense, (c) Consolidated depreciation expense, (d)
Consolidated amortization expense (excluding amortization expense attributable
to a prepaid cash item that was paid in a prior period), (e) any nonrecurring
expenses or charges related to any Equity Offering, Permitted Investment,
acquisition or Indebtedness permitted to be incurred by this Indenture (whether
or not successful) (including fees, expenses or charges related to the
Transactions, including the Make-Whole Payments), (f) the amount of any annual
monitoring fees paid to Evercore in an amount not to exceed $750,000 during any
fiscal year, (g) any severance expenses related to the Transactions or
make-whole or similar payments or any corporate relocation expenses arising
from the relocation of the Company or such Restricted Subsidiary from any of
the facilities in which they are located on the Closing Date, in each case
Incurred or made within eighteen months after the Closing Date in an amount,
taken together with all other amounts under this clause (g), not to exceed $3.0
million in the aggregate, and (h) any other noncash charges reducing
Consolidated Net Income for such period (excluding any such charge which
consists of or requires an accrual of, or cash reserve for, any anticipated
cash charges for any prior or in any future period). Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization and non-cash charges of, a Restricted Subsidiary
of the Company shall be added to Consolidated Net Income to compute EBITDA only
to the extent (and in the same proportion) that the net income of such
Restricted Subsidiary was included in calculating Consolidated Net Income;
PROVIDED, HOWEVER, that with respect to any Restricted Subsidiary other than a
Note Guarantor, such amount shall be added to Consolidated Net Income to
compute
<PAGE> 14
8
EBITDA only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
"Equity Offering" means any public or private sale of common
stock or Preferred Stock of the Company or Holdings (other than Disqualified
Stock), other than public offerings with respect to the Company's or Holdings's
common stock registered on Form S-8 or other issuances upon exercise of options
by employees of the Company or any of its Restricted Subsidiaries.
"Evercore" means Evercore Capital Partners L.P., a Delaware
limited partnership, and its Affiliates.
"Exchange Act" means the Securities Exchange Act of 1934.
"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 whom is under undue pressure or compulsion to complete the
transaction. For purposes of (a) Section 4.04(a) (iv) (3)(B), (b) the
definition of "Permitted Asset Swap" and (c) calculating the Fair Market Value
of Designated Noncash Consideration, the Fair Market Value of property or
assets other than cash which involves (i) an aggregate amount in excess of $2.0
million, shall be set forth in a resolution approved by at least a majority of
the Board of Directors and (ii) an aggregate amount in excess of $10.0 million,
shall have been determined in writing by a nationally recognized appraisal or
investment banking firm. For all other purposes of this Indenture, Fair Market
Value shall be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of the Board of
Directors.
"GAAP" means generally accepted accounting principles in the
United States as in effect as of the Closing Date, including those set forth in
(a) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (b) statements and
pronouncements of the Financial Accounting Standards Board, (c) such other
statements by such other entities as approved by a significant segment of the
accounting profession and (d) unless otherwise indicated, all ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (b) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); PROVIDED, HOWEVER, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary
<PAGE> 15
9
course of business. The term "Guarantee" used as a verb has a corresponding
meaning. The term "Guarantor" shall mean any Person Guaranteeing any
obligation.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" means the Person in whose name a Note is registered
on the Registrar's books.
"Holdings" means the parent of the Company, American Media,
Inc., a Delaware corporation, until a successor replaces it and, thereafter,
means the successor.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Person at the time it becomes a Subsidiary. The term "Incurrence" when
used as a noun shall have a correlative meaning. The accretion of principal of
a non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication),
(a) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money;
(b) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(c) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement
obligations with respect thereto);
(d) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services (except Trade Payables),
which purchase price is due more than six months after the date of
placing such property in service or taking delivery and title thereto
or the completion of such services;
(e) all Capitalized Lease Obligations and all Attributable
Debt of such Person;
(f) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of such Person, any Preferred
Stock (but excluding, in each case, any accrued dividends);
(g) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed
by such Person; PROVIDED, HOWEVER, that the amount of Indebtedness of
such Person shall be the lesser of (i) the Fair Market Value of such
asset at such date of determination and (ii) the amount of such
Indebtedness of such other Persons;
<PAGE> 16
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(h) Hedging Obligations of such Person;
(i) to the extent not otherwise included, the amount then
outstanding (I.E., advanced, and received by, and available for use
by, such Person) under any receivables financing (as set forth in the
books and records of such Person and confirmed by the agent, trustee
or other representative of the institution or group providing such
receivables financing); and
(j) all obligations of the type referred to in clauses (a)
through (i) of other Persons and all dividends of other Persons for
the payment of which, in either case, such Person is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise,
including by means of any Guarantee.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and
the maximum liability, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Rate Agreement" means with respect to any Person
any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or is a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or other extension of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person; PROVIDED that
(a) Hedging Obligations entered into in the ordinary course of business and in
compliance with this Indenture, (b) endorsements of negotiable instruments and
documents in the ordinary course of business and (c) an acquisition of assets,
Capital Stock or other securities by the Company for consideration consisting
exclusively of Capital Stock (other than Disqualified Stock) of the Company
shall not be deemed to be an Investment. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04:
(a) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the Fair Market
Value of the net assets of any Subsidiary of the Company at the time
that such Subsidiary is designated an Unrestricted Subsidiary;
PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have
a permanent "Investment" in an Unrestricted Subsidiary in an amount
(if positive) equal to
<PAGE> 17
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(i) the Company's "Investment" in such Subsidiary at
the time of such redesignation less
(ii) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the Fair Market Value
of the net assets of such Subsidiary at the time of such
redesignation; and
(b) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its Fair Market Value at the time of
such transfer.
"Leverage Ratio" as of any date of determination means the
ratio of:
(a) Total Consolidated Indebtedness as of the date of
determination to
(b) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at the end of the most
recent fiscal quarter for which financial statements are available;
PROVIDED, HOWEVER, that
(i) if the Company or any Restricted Subsidiary has
Incurred any Indebtedness since the beginning of such period
that remains outstanding on such date of determination or if
the transaction giving rise to the need to calculate the
Leverage Ratio is an Incurrence of Indebtedness, EBITDA and,
for the purpose of calculating EBITDA, Consolidated Interest
Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such
period and the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period,
(ii) if the Company or any Restricted Subsidiary has
repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of such period or if any
Indebtedness is to be repaid, repurchased, defeased or
otherwise discharged (in each case other than Indebtedness
Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been
replaced) on the date of the transaction giving rise to the
need to calculate the Leverage Ratio, EBITDA and, for the
purpose of calculating EBITDA, Consolidated Interest Expense
for such period shall be calculated on a pro forma basis as
if such discharge had occurred on the first day of such
period and as if the Company or such Restricted Subsidiary
has not earned the interest income actually earned during
such period in respect of cash or Temporary Cash Investments
used to repay, repurchase, defease or otherwise discharge
such Indebtedness,
(iii) if since the beginning of such period the
Company or any Restricted Subsidiary shall have made any
Asset Disposition, EBITDA for such period shall be reduced by
an amount equal to EBITDA (if positive) directly attributable
to the assets that are the subject of such Asset
<PAGE> 18
12
Disposition for such period or increased by an amount equal
to EBITDA (if negative) directly attributable thereto for
such period and, for the purpose of calculating EBITDA,
Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company
and its continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the Capital
Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale),
(iv) if since the beginning of such period the
Company or any Restricted Subsidiary (by merger or otherwise)
shall have made an Investment in any Restricted Subsidiary
(or any Person that becomes a Restricted Subsidiary) or an
acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA
and, for the purpose of calculating EBITDA, Consolidated
Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of
any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period, and
(v) if since the beginning of such period any Person
(that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset
Disposition or any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (iii) or
(iv) above if made by the Company or a Restricted Subsidiary
during such period, EBITDA and, for the purpose of
calculating EBITDA, Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect
thereto as if such Asset Disposition, Investment or
acquisition of assets occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and
the amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting Officer of
the Company. Any such pro forma calculations may include operating expense
reductions for such period resulting from the acquisition which is being given
pro forma effect that (a) would be permitted pursuant to Article XI of
Regulation S-X under the Securities Act or (b) have been realized or for which
the steps necessary for realization have been taken or are reasonably expected
to be taken within six months following any such acquisition, including the
execution or termination of any contracts, the termination of any personnel or
the closing (or approval by the Board of Directors of any closing) of any
facility, as applicable, PROVIDED that, in either case, such adjustments are
set forth in an Officers' Certificate signed by the Company's chief
<PAGE> 19
13
financial officer and another Officer which states (i) the amount of such
adjustment or adjustments, (ii) that such adjustment or adjustments are based
on the reasonable good faith beliefs of the Officers executing such Officers'
Certificate at the time of such execution and (iii) that any related Incurrence
of Indebtedness is permitted pursuant to this Indenture. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term as at the
date of determination in excess of twelve months).
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"liquidated damages" means any liquidated damages payable
under the Registration Agreement.
"Make-Whole Payments" means payments in the aggregate of
approximately $4.0 million that David J. Pecker, under his employment agreement
with EMP Group L.L.C., as in effect on the Closing Date (which agreement shall
be assumed by Holdings in the Merger), is entitled to in connection with the
compensation he forfeited upon termination of his employment with Hachette
Filipacchi Magazines, Inc., a portion of which became payable upon Mr. Pecker's
termination of employment on March 31, 1999 and the remaining portion of which
shall be payable on April 15, 2000.
"Merger" means the merger of EMP Acquisition Corp., a company
formed by Evercore, with and into Holdings pursuant to an Agreement and Plan of
Merger dated as of February 16, 1999. Holdings will be the surviving
corporation of the Merger.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to the properties or assets that are
the subject of such Asset Disposition or received in any other noncash form)
therefrom, in each case net of (a) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (b) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which must by
its terms, or in order to obtain a necessary consent to such Asset Disposition,
or by applicable law be repaid out of the proceeds from such Asset Disposition,
(c) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (d) appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in
<PAGE> 20
14
such Asset Disposition and retained by the Company or any Restricted Subsidiary
after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Note Guarantee" means each Guarantee of the obligations with
respect to the Notes issued by any Person pursuant to the terms of this
Indenture.
"Note Guarantor" means any Person that has issued a Note
Guarantee.
"Notes" means the Notes issued under this Indenture.
"Officer" means the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company. An "Officer" of a
Note Guarantor has a correlative meaning.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or a Note Guarantor, as applicable, or the Trustee.
"Permitted Asset Swap" means any one or more transactions in
which the Company or any Restricted Subsidiary exchanges assets (other than the
trademarks or other assets related to the publication titled NATIONAL ENQUIRER
or the publication titled STAR) for consideration consisting of (a) assets used
or useful in a Permitted Business and (b) any cash or Temporary Cash
Investments (PROVIDED that such cash or Temporary Cash investments will be
considered Net Available Cash from an Asset Disposition); PROVIDED, HOWEVER,
that the Fair Market Value of the assets received by the Company or such
Restricted Subsidiary in such exchange, together with the amount of any cash or
Temporary Cash Investments also received in such exchange, shall be at least
equal to the Fair Market Value of the assets exchanged by the Company or such
Restricted Subsidiary.
"Permitted Business" means any business engaged in by the
Company or any Restricted Subsidiary on the Closing Date and any Related
Business.
"Permitted Holders" means EMP Group L.L.C. and any Person
acting in the capacity of an underwriter in connection with a public or private
offering of the Company's or Holdings' Capital Stock.
"Permitted Investment" means
(a) an Investment by the Company or any Restricted Subsidiary
in the Company, a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary;
PROVIDED, HOWEVER, that the primary business of such Restricted
Subsidiary is a Permitted Business;
<PAGE> 21
15
(b) an Investment by the Company or any Restricted Subsidiary
in another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted
Subsidiary; PROVIDED, HOWEVER, that such Person's primary business is
a Permitted Business;
(c) an Investment by the Company or any Restricted Subsidiary
in Temporary Cash Investments;
(d) receivables owing to the Company or any Restricted
Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
PROVIDED, HOWEVER, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted
Subsidiary deems reasonable under the circumstances;
(e) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the
ordinary course of business;
(f) loans or advances to employees of the Company or such
Restricted Subsidiary made in the ordinary course of business not
exceeding $5 million in the aggregate outstanding at any time;
(g) an Investment by the Company or any Restricted Subsidiary
in stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments;
(h) an Investment by the Company or any Restricted Subsidiary
in any Person to the extent such Investment represents the noncash
portion of the consideration received for an Asset Disposition that
was made pursuant to and in compliance with Section 4.06;
(i) any Investment existing on the Closing Date;
(j) Guarantees (including the Note Guarantees) of
Indebtedness permitted under this Indenture; and
(k) without duplication, any Investment in any Person, the
amount of which, together with all other Investments in other Persons
made pursuant to this clause (k), does not exceed $25.0 million in the
aggregate at any time outstanding.
"Permitted Junior Securities" shall mean debt or equity
securities of the Company or any successor corporation issued pursuant to a
plan of reorganization or readjustment of the Company that are subordinated to
the payment of all then outstanding Senior Indebtedness of the Company at least
to the same extent that the Notes are subordinated to the payment of all Senior
Indebtedness of the Company on the Closing Date, so long as to the extent that
any Senior Indebtedness of the Company outstanding on the date of consummation
of any such plan of reorganization or readjustment is not paid in full in cash
or Cash Equivalents on such date, the holders of
<PAGE> 22
16
any such Senior Indebtedness not so paid in full in cash have consented to the
terms of such plan or reorganization or readjustment. "Permitted Junior
Securities" of a Note Guarantor has a correlative meaning.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) that
is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"principal" of a Note means the principal of the Note plus
the premium, if any, payable on the Note which is due or overdue or is to
become due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness (a)
consisting of the deferred purchase price of an asset, conditional sale
obligations, obligations under any title retention agreement and other purchase
money obligations, in each case where the maturity of such Indebtedness does
not exceed the anticipated useful life of the asset being financed, and (b)
incurred to finance the acquisition by the Company or a Restricted Subsidiary
of such asset, including additions and improvements; PROVIDED, HOWEVER, that
such Indebtedness is incurred within 180 days after the acquisition by the
Company or such Restricted Subsidiary of such asset.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is
Incurred to refund, refinance, replace, renew, repay or extend (including
pursuant to any defeasance or discharge mechanism) any Indebtedness of the
Company or any Restricted Subsidiary existing on the Closing Date or Incurred
in compliance with this Indenture including Indebtedness of the Company that
Refinances Refinancing Indebtedness; PROVIDED, HOWEVER, that (a) the
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (b) the Refinancing Indebtedness
has an Average Life at the time such Refinancing Indebtedness is Incurred that
is equal to or greater than the Average Life of the Indebtedness being
refinanced, (c) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate issue
price), plus costs related to the issuance of such Refinancing Indebtedness,
that is equal to or less than the aggregate principal amount (or if issued with
original issue discount, the aggregate accreted value) then outstanding of the
Indebtedness being Refinanced and (d) if the Indebtedness being Refinanced is
subordinated in right of payment to the Notes, such Refinancing Indebtedness is
subordinated in right of payment to the Notes at least to the same extent as
the Indebtedness being Refinanced; PROVIDED FURTHER, HOWEVER, that Refinancing
Indebtedness shall not include (i) Indebtedness of a Restricted Subsidiary
other than a
<PAGE> 23
17
Note Guarantor that Refinances Indebtedness of the Company or (ii) Indebtedness
of the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Closing Date.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by the Company or a Restricted
Subsidiary whereby the Company or a Restricted Subsidiary transfers such
property to a Person and the Company or such Restricted Subsidiary leases it
from such Person, other than leases between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien. "Secured Indebtedness" of a Note Guarantor has a correlative
meaning.
"Securities Act" means the Securities Act of 1933.
"Senior Indebtedness" of the Company or any Note Guarantor
means the principal of, premium (if any) and accrued and unpaid interest on
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization of the Company or any Note Guarantor,
regardless of whether or not a claim for post-filing interest is allowed in
such proceedings) and fees and other amounts owing in respect of, Bank
Indebtedness and all other Indebtedness of the Company or any Note Guarantor,
whether outstanding on the Closing Date or thereafter Incurred, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is provided that such obligations are not superior, or are
subordinated, in right of payment to the Notes or such Note Guarantor's Note
Guarantee; PROVIDED, HOWEVER, that Senior Indebtedness shall not include (a)
any obligation of the Company to any Subsidiary of the Company or of such Note
Guarantor to the Company or any other Subsidiary of the Company, (b) any
liability for Federal, state, local or other taxes owed or owing by the Company
or such Note Guarantor, (c) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (d) any Indebtedness or
obligation of the Company or such Note Guarantor (and any accrued and unpaid
interest in respect thereof) that by its terms is subordinate or junior in any
respect to any other Indebtedness or obligation of the Company or such Note
Guarantor, including any Senior Subordinated Indebtedness and any Subordinated
Obligations, (e) any obligations with respect to any Capital Stock or (f) any
Indebtedness Incurred in violation of this Indenture.
<PAGE> 24
18
"Senior Subordinated Indebtedness" of the Company means the
Notes and any other Indebtedness of the Company that specifically provides that
such Indebtedness is to rank PARI PASSU with the Notes in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness. "Senior
Subordinated Indebtedness" of a Note Guarantor has a correlative meaning.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Closing Date or thereafter Incurred) that
is subordinate or junior in right of payment to the Notes pursuant to a written
agreement. "Subordinated Obligation" of a Note Guarantor has a correlative
meaning.
"Subsidiary" of any Person means any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (a) such Person,
(b) such Person and one or more Subsidiaries of such Person or (c) one or more
Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (a)
any investment in direct obligations of the United States or any agency thereof
or obligations Guaranteed by the United States or any agency thereof, (b)
investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued by
a bank or trust company that is organized under the laws of the United States,
any state thereof or any foreign country recognized by the United States having
capital, surplus and undivided profits aggregating in excess of $250,000,000
(or the foreign currency equivalent thereof) and whose long-term debt is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act), (c) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (a) above
entered into with a bank meeting the qualifications described in clause (b)
above, (d) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of the Company) organized and in existence under the laws of the United States
or any foreign country recognized by the United States with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard
and Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc.
("S&P"), and (e) investments in securities with maturities of six months or
less from the date of
<PAGE> 25
19
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, or by any political subdivision or taxing authority
thereof, and rated at least "A" by S&P or "A" by Moody's Investors Service,
Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the Closing Date.
"Total Assets" means the total Consolidated assets of the
Company and its Restricted Subsidiaries, as shown on the most recent balance
sheet of the Company.
"Total Consolidated Indebtedness" means the aggregate amount
of all Indebtedness of the Company and its Restricted Subsidiaries, outstanding
as of the date of determination, determined on a Consolidated basis, after
giving effect to any Incurrence of Indebtedness and the application of the
proceeds therefrom giving rise to such determination.
"Trade Payables" means, with respect to any Person, any
accounts payable or any indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person arising in the ordinary course of
business in connection with the acquisition of goods or services.
"Transactions" has the meaning assigned thereto in the
Offering Memorandum relating to the issuance of the Notes dated April 30, 1999.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the
President or any other officer or assistant officer of the Trustee assigned by
the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (a) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (b) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness
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, HOWEVER, that either (i) the Subsidiary to be so
designated has total Consolidated assets of $1,000 or less or (ii) if such
Subsidiary has Consolidated assets greater than $1,000, then such designation
would be permitted under Section 4.04. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED, HOWEVER, that
immediately after giving effect to such designation (1) the Company could Incur
$1.00 of additional Indebtedness under Section 4.03(a) and (2) no Default shall
have occurred and be continuing. Any such designation of a Subsidiary as a
Restricted Subsidiary or Unrestricted Subsidiary by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee
<PAGE> 26
20
a copy of the resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States (including any agency or instrumentality thereof) for the payment
of which the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of
the Company all the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
- ---- -----------
<S> <C>
"Affiliate Transaction".......................................................... 4.07(a)
"Bankruptcy Law"................................................................. 6.01
"Blockage Notice"................................................................ 10.03
"covenant defeasance option"..................................................... 8.01(b)
"Custodian"...................................................................... 6.01
"Event of Default"............................................................... 6.01
"Exchange Offer Registration Statement".......................................... Appendix
"Guarantee Blockage Notice"...................................................... 12.03
"Guarantee Payment Blockage Period".............................................. 12.03
"Issue Date"..................................................................... Appendix
"legal defeasance option"........................................................ 8.01(b)
"Legal Holiday".................................................................. 13.08
"Offer".......................................................................... 4.06(b)
"Offer Amount"................................................................... 4.06(c)(2)
"Offer Period"................................................................... 4.06(c)(2)
"pay the Notes".................................................................. 10.03
"pay the Guarantees"............................................................. 12.03
"Paying Agent"................................................................... 2.03
"Payment Blockage Period"........................................................ 10.03
"protected purchaser"............................................................ 2.07
"Purchase Date".................................................................. 4.06(c)(i)
"Registered Exchange Offer":..................................................... Appendix
"Registrar"...................................................................... 2.03
"Registered Exchange Offer"...................................................... Appendix
"Registration Agreement"......................................................... Appendix
"Shelf Registration Statement"................................................... Appendix
"Successor Company".............................................................. 5.01(a)
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE
ACT. This Indenture is subject to the mandatory provisions of the TIA, which
are incorporated by reference in and made a part of this Indenture. The
following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes and the Note
Guarantees.
"indenture security holder" means a Holder.
<PAGE> 27
21
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, the
Note Guarantors and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any non-interest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING. Provisions relating to the
Initial Notes, the Private Exchange Notes and the Exchange Notes are set forth
in the Appendix, which is hereby incorporated in and expressly made a part of
this Indenture. The (a) Initial Notes and the Trustee's certificate of
authentication and (b) Private Exchange Notes and the Trustee's certificate of
authentication shall each be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture.
The Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated in
<PAGE> 28
22
and expressly made a part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company or any Note Guarantor is subject, if any, or usage (provided
that any such notation, legend or endorsement is in a form acceptable to the
Company). Each Note shall be dated the date of its authentication. The Notes
shall be issuable only in registered form without interest coupons and only in
denominations of $1,000 and integral multiples thereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION. One Officer shall
sign the Notes for the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note, the Note shall be
valid nevertheless.
A Note shall not be valid until an authorized officer or
authorized signatory of the Trustee manually signs the certificate of
authentication on the Note. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall authenticate and make available for
delivery Notes as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Notes. Any such appointment shall
be evidenced by an instrument signed by a Trust Officer, a copy of which shall
be furnished to the Company. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as
any Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall
maintain an office or agency where Notes may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where Notes
may be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may have
one or more co-registrars and one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent, and the term "Registrar"
includes any co-registrars. The Company initially appoints the Trustee's
corporate trust office at 1201 Main Street, 18th Floor,
<PAGE> 29
23
Dallas, Texas 75202 as (a) Registrar and Paying Agent in connection with the
Notes and (b) the Notes Custodian (as defined in the Appendix) with respect to
the Global Notes (as defined in the Appendix).
The Company shall enter into an appropriate agency agreement
with any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically organized Wholly Owned Subsidiaries may act
as Paying Agent or Registrar.
The Company may remove any Registrar or Paying Agent upon
written notice to such Registrar or Paying Agent and to the Trustee; PROVIDED,
HOWEVER, that no such removal shall become effective until (a) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered
into by the Company and such successor Registrar or Paying Agent, as the case
may be, and delivered to the Trustee or (b) notification to the Trustee that
the Trustee shall serve as Registrar or Paying Agent until the appointment of a
successor in accordance with clause (a). The Registrar or Paying Agent may
resign at any time upon written notice to the Company and the Trustee.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to
each due date of the principal and interest on any Note, the Company shall
deposit with the Paying Agent (or if the Company or a Subsidiary is acting as
Paying Agent, segregate and hold in trust for the benefit of the Persons
entitled thereto) a sum sufficient to pay such principal and interest when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Notes and shall notify the Trustee
of any default by the Company in making any such payment, and shall at any time
during the continuance of any such default, upon the written request of the
Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying
Agent. If the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders. If the Trustee is not the Registrar,
the Company shall furnish, or cause the Registrar to furnish, to the Trustee,
in writing at least five Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of Holders.
SECTION 2.06. TRANSFER AND EXCHANGE. The Notes shall be
issued in registered form and shall be transferable only upon the surrender of
a Note for registration of transfer and in compliance with the Appendix. When a
Note is presented
<PAGE> 30
24
to the Registrar with a request to register a transfer, the Registrar shall
register the transfer as requested if its requirements therefor are met. When
Notes are presented to the Registrar with a request to exchange them for an
equal principal amount of Notes of other denominations, the Registrar shall
make the exchange as requested if same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's request. The Company may
require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant to
this Section. The Company shall not be required to make and the Registrar need
not register transfers or exchanges of Notes selected for redemption (except,
in the case of Notes to be redeemed in part, the portion thereof not to be
redeemed) or any Notes for a period of 15 days before a selection of Notes to
be redeemed.
Prior to the due presentation for registration of transfer of
any Note, the Company, the Note Guarantors, the Trustee, the Paying Agent, and
the Registrar may deem and treat the Person in whose name a Note is registered
as the absolute owner of such Note for the purpose of receiving payment of
principal of and (subject to paragraph 2 of the Notes) interest, if any, on
such Note and for all other purposes whatsoever, whether or not such Note is
overdue, and none of the Company, any Note Guarantor, the Trustee, the Paying
Agent, or the Registrar shall be affected by notice to the contrary.
Any Holder of a Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interest in such Global Note
may be effected only through a book-entry system maintained by (a) the Holder
of such Global Note (or its agent) or (b) any Holder of a beneficial interest
in such Global Note, and that ownership of a beneficial interest in such Global
Note shall be required to be reflected in a book entry.
All Notes issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be entitled
to the same benefits under this Indenture as the Notes surrendered upon such
transfer or exchange.
SECTION 2.07. REPLACEMENT NOTES. If a mutilated Note is
surrendered to the Registrar or if the Holder of a Note claims that the Note
has been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Note if the requirements of Section
8-405 of the Uniform Commercial Code are met, such that the Holder (a)
satisfies the Company or the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (b) makes such
request to the Company or the Trustee prior to the Note being acquired by a
protected purchaser as defined in Section 8-303 of the Uniform Commercial Code
(a "protected purchaser") and (c) satisfies any other reasonable requirements
of the Trustee. If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Trustee to protect
the Company, the Trustee, the Paying Agent and the Registrar from any loss that
any of them may suffer if a Note is replaced. The Company and the Trustee may
charge the Holder for their expenses in replacing a Note. In the event any such
mutilated, lost, destroyed or wrongfully taken Note has become or is about to
become due and payable, the Company in its discretion may pay such Note instead
of issuing a new Note in replacement thereof.
<PAGE> 31
25
Every replacement Note is an additional obligation of the
Company.
The provisions of this Section 2.07 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, lost, destroyed or wrongfully taken
Notes.
SECTION 2.08. OUTSTANDING NOTES. Notes outstanding at any
time are all Notes authenticated by the Trustee except for those canceled by
it, those delivered to it for cancelation and those described in this Section
as not outstanding. Subject to Section 13.06, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Note is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest and liquidated damages payable on
that date with respect to the Notes (or portions thereof) to be redeemed or
maturing, as the case may be, and the Paying Agent is not prohibited from
paying such money to the Holders of Notes on that date pursuant to the terms of
this Indenture, then on and after that date such Notes (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. TEMPORARY NOTES. In the event that Definitive
Notes (as defined in the Appendix) are to be issued under the terms of this
Indenture, until such Definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of Definitive Notes but may have variations
that the Company considers appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate Definitive Notes and deliver them in exchange for temporary Notes
upon surrender of such temporary Notes at the office or agency of the Company,
without charge to the Holder.
SECTION 2.10. CANCELATION. The Company at any time may
deliver Notes to the Trustee for cancelation. The Registrar and the Paying
Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Notes surrendered for registration of transfer, exchange,
payment or cancelation and shall dispose of canceled Notes in accordance with
its customary procedures or deliver canceled Notes to the Company pursuant to
written direction by an Officer. The Company may not issue new Notes to replace
Notes it has redeemed, paid or delivered to the Trustee for cancelation. The
Trustee shall not authenticate Notes in place of canceled Notes other than
pursuant to the terms of this Indenture.
SECTION 2.11. DEFAULTED INTEREST. If the Company defaults in
a payment of interest on the Notes, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the Persons who
are Holders on a subsequent special record date. The Company shall fix or cause
to be fixed any such special record date and payment date to the reasonable
satisfaction of the Trustee and shall promptly
<PAGE> 32
26
mail or cause to be mailed to each Holder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP AND ISIN NUMBERS. The Company in issuing
the Notes may use "CUSIP" and/or "ISIN" numbers (if then generally in use) and,
if so, the Trustee shall use "CUSIP" and/or "ISIN" numbers in notices of
redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption
and that reliance may be placed only on the other identification numbers
printed on the Notes, and any such redemption shall not be affected by any
defect in or omission of such numbers.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to
redeem Notes pursuant to paragraph 5 of the Notes, it shall notify the Trustee
in writing of the redemption date and the principal amount of Notes to be
redeemed.
The Company shall give each notice to the Trustee provided
for in this Section at least 60 days before the redemption date unless the
Trustee consents to a shorter period. Such notice shall be accompanied by an
Officers' Certificate and an Opinion of Counsel from the Company to the effect
that such redemption shall comply with the conditions herein. Any such notice
may be canceled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. If fewer
than all the Notes are to be redeemed, the Trustee shall select the Notes to be
redeemed pro rata or by lot or by a method that the Trustee in its sole
discretion shall deem to be fair and appropriate. The Trustee shall make the
selection from outstanding Notes not previously called for redemption. The
Trustee may select for redemption portions of the principal of Notes that have
denominations larger than $1,000. Notes and portions of them the Trustee
selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions
of this Indenture that apply to Notes called for redemption also apply to
portions of Notes called for redemption. The Trustee shall notify the Company
promptly of the Notes or portions of Notes to be redeemed.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not
more than 60 days before a date for redemption of Notes, the Company shall mail
a notice of redemption by first-class mail to each Holder of Notes to be
redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price and the amount of accrued interest
to the redemption date;
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(c) the name and address of the Paying Agent;
(d) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(e) if fewer than all the outstanding Notes are to be
redeemed, the certificate numbers and principal amounts of the
particular Notes to be redeemed;
(f) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Notes (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date;
(g) the CUSIP and/or ISIN number, if any, printed on the
Notes being redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP and/or ISIN number, if any, listed in such
notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense. In such
event, the Company shall provide the Trustee with the information required by
this Section.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Notes shall be paid at the redemption price
stated in the notice, plus accrued interest and liquidated damages, if any, to
the redemption date; PROVIDED, HOWEVER, that if the redemption date is after a
regular record date and on or prior to the interest payment date, the accrued
interest and liquidated damages, if any, shall be payable to the Holder of the
redeemed Notes registered on the relevant record date. Failure to give notice
or any defect in the notice to any Holder shall not affect the validity of the
notice to any other Holder.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to 10:00
a.m. on the redemption date, the Company shall deposit with the Paying Agent
(or, if the Company or a Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest and liquidated damages, if any, on all Notes to be redeemed on that
date other than Notes or portions of Notes called for redemption that have been
delivered by the Company to the Trustee for cancelation. On and after the
redemption date, interest shall cease to accrue on Notes or portions thereof
called for redemption so long as the Company has deposited with the Paying
Agent funds sufficient to pay the principal of, plus accrued and unpaid
interest and liquidated damages (if any) on, the Notes to be redeemed, unless
the Paying Agent is prohibited from making such payment pursuant to the terms
of this Indenture.
SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a
Note that is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
<PAGE> 34
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ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES. The Company shall promptly
pay the principal of and interest on the Notes on the dates and in the manner
provided in the Notes and in this Indenture. Principal and interest shall be
considered paid on the date due if on such date the Trustee or the Paying Agent
holds in accordance with this Indenture money sufficient to pay all principal
and interest then due and the Trustee or the Paying Agent, as the case may be,
is not prohibited from paying such money to the Holders on that date pursuant
to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Notes, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC REPORTS. Notwithstanding that the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC, and provide the Trustee and
Holders and prospective Holders (upon request) within 15 days after it files
them with the SEC, copies of its annual report and the information, documents
and other reports that are specified in Section 13 and 15(d) of the Exchange
Act; PROVIDED, HOWEVER, the Company shall not be so obligated to file such
reports with the SEC if the SEC does not permit such filing, in which event the
Company shall make available such information to the Trustee, Holders and
prospective Holders (upon request) within 15 days after the time the Company
would be required to file such information with the SEC if it were subject to
Section 13 or 15(d) of the Exchange Act. Notwithstanding the foregoing, such
requirements shall be deemed satisfied prior to the commencement of the
Registered Exchange Offer (as defined in the Appendix) or the effectiveness of
the Shelf Registration Statement (as defined in the Appendix) by the filing
with the SEC of the Exchange Offer Registration Statement (as defined in the
Appendix) and/or Shelf Registration Statement, and any amendments thereto, with
such financial information that satisfies Regulation S-X of the Securities Act.
The Company also shall comply with the other provisions of TIA Section 314(a).
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur, directly
or indirectly, any Indebtedness; PROVIDED, HOWEVER, that the Company or any
Note Guarantor may Incur Indebtedness if on the date of such Incurrence and
after giving effect thereto, the Leverage Ratio would be less than (i) 6.5:1 if
Incurred on or prior to June 30, 2001 and (ii) 6.25:1 if Incurred thereafter.
(b) Notwithstanding Section 4.03(a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Bank Indebtedness Incurred in an aggregate principal
amount not to exceed $400.0 million at any one time outstanding less
the aggregate amount of all mandatory prepayments, repayments,
redemptions or purchases of principal of such Indebtedness made
pursuant to Section 4.06;
<PAGE> 35
29
(ii) Indebtedness of the Company owed to and held by any
Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed
to and held by the Company or any Restricted Subsidiary; PROVIDED,
HOWEVER, that (1) any subsequent issuance or transfer of any Capital
Stock or any other event that results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of any such Indebtedness (except to the Company or a
Restricted Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the issuer thereof, (2) if the
Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
obligations with respect to the Notes, (3) if a Restricted Subsidiary
is the obligor, any such Indebtedness is made pursuant to an
intercompany note and (4) if a Note Guarantor is the obligor, such
Indebtedness is subordinated in right of payment to the Note Guarantee
of such Note Guarantor;
(iii) Indebtedness (1) represented by the Notes and the Note
Guarantees, (2) outstanding on the Closing Date (other than the
Indebtedness described in clauses (i) and (ii) above), (3) consisting
of Refinancing Indebtedness Incurred in respect of any Indebtedness
described in this clause (iii) (including Refinancing Indebtedness) or
Section 4.03(a) and (4) consisting of Guarantees by the Company or any
Note Guarantor of any Indebtedness permitted hereunder; PROVIDED that
if such Indebtedness is by its express terms subordinated in right of
payment to the Notes or a Note Guarantee of a Note Guarantor, as
applicable, any such Guarantee with respect to such Indebtedness shall
be subordinated in right of payment to the Notes or such Note
Guarantor's Note Guarantee substantially to the same extent as such
Indebtedness is subordinated to the Notes or the Note Guarantee, as
applicable;
(iv) (1) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Subsidiary of or was otherwise acquired by the
Company); PROVIDED, HOWEVER, that on the date that such Restricted
Subsidiary is acquired by the Company, the Company would have been
able to Incur $1.00 of additional Indebtedness pursuant to Section
4.03(a) after giving effect to the Incurrence of such Indebtedness
pursuant to this clause (iv) and (2) Refinancing Indebtedness Incurred
by a Restricted Subsidiary in respect of Indebtedness Incurred by such
Restricted Subsidiary pursuant to this clause (iv);
(v) Indebtedness (including Capitalized Lease Obligations)
Incurred by the Company or any Note Guarantor, to finance the
purchase, lease or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets) in an aggregate
principal amount which, when aggregated with the principal amount of
all other Indebtedness then outstanding and Incurred pursuant to this
clause (v) and including all Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness Incurred pursuant
to this clause (v) does not exceed 2% of Total Assets;
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30
(vi) Indebtedness incurred by the Company or any of its
Restricted Subsidiaries constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of
business, including letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with
respect to reimbursement type obligations regarding workers'
compensation claims; PROVIDED, HOWEVER, that upon the drawing of such
letters of credit or the Incurrence of such Indebtedness, such
obligations are reimbursed within 30 days following such drawing or
Incurrence;
(vii) Indebtedness arising from agreements of the Company or
a Restricted Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, Incurred or
assumed in connection with the disposition of any business, assets or
a Subsidiary of the Company in accordance with the terms of this
Indenture, other than Guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or a
Subsidiary of the Company for the purpose of financing such
acquisition; PROVIDED, HOWEVER, that (1) such Indebtedness is not
reflected on the balance sheet of the Company or any Restricted
Subsidiary (contingent obligations referred to in a footnote to
financial statements and not otherwise reflected on the balance sheet
shall not be deemed to be reflected on such balance sheet for purposes
of this clause (1)) and (2) the maximum assumable liability in respect
of all such Indebtedness shall at no time exceed the gross proceeds
including the Fair Market Value of noncash proceeds (such Fair Market
Value of such noncash proceeds being measured at the time received and
without giving effect to any subsequent changes in value) actually
received by the Company and its Restricted Subsidiaries in connection
with such disposition;
(viii) Hedging Obligations that are Incurred in the ordinary
course of business (but in any event excluding Hedging Obligations
entered into for speculative purposes); PROVIDED, HOWEVER, that such
Hedging Obligations do not increase the Indebtedness of the Company
outstanding at any time other than as a result of fluctuations in
interest rates or currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(ix) Obligations in respect of performance and surety bonds
and completion guarantees that are Incurred by the Company or any
Restricted Subsidiary in the ordinary course of business;
(x) Indebtedness arising from honoring by a bank or other
financial institution of a check, draft or similar instrument (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 five Business Days; and
(xi) Indebtedness (other than Indebtedness permitted to be
Incurred pursuant to Section 4.03(a) or any other clause of this
Section 4.03(b)) in an aggregate principal amount on the date of
Incurrence that, when added to all other Indebtedness Incurred
pursuant to this clause (xi) and then outstanding, shall not exceed
$25.0 million (it being understood that any Indebtedness incurred
pursuant to this clause (xi) shall cease to be deemed to be Incurred
or outstanding for purposes hereof but shall be deemed Incurred for
purposes of Section 4.03(a)
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31
from and after the first date on which the Company could have Incurred
such Indebtedness under Section 4.03(a) without reliance on this
clause (xi)).
(c) Notwithstanding the foregoing, the Company shall not
Incur any Indebtedness pursuant to Section 4.03(b) above if the proceeds
thereof are used, directly or indirectly, to repay, prepay, redeem, defease,
retire, refund or refinance any Subordinated Obligations unless such
Indebtedness shall be subordinated to the Notes to at least the same extent as
such Subordinated Obligations. The Company shall not Incur any Indebtedness if
such Indebtedness is subordinate or junior in ranking in any respect to any
Senior Indebtedness unless such Indebtedness is Senior Subordinated
Indebtedness or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness. In addition, the Company shall not Incur any Secured
Indebtedness which is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Notes equally and ratably
with (or on a senior basis to, in the case of Indebtedness subordinated in
right of payment to the Notes) such Secured Indebtedness for so long as such
Secured Indebtedness is secured by a Lien. A Note Guarantor shall not Incur any
Indebtedness if such Indebtedness is by its terms expressly subordinate or
junior in ranking in any respect to any Senior Indebtedness of such Note
Guarantor unless such Indebtedness is Senior Subordinated Indebtedness of such
Note Guarantor or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness of such Note Guarantor. In addition, a Note Guarantor
shall not Incur any Secured Indebtedness that is not Senior Indebtedness of
such Note Guarantor unless contemporaneously therewith effective provision is
made to secure the Note Guarantee of such Note Guarantor equally and ratably
with (or on a senior basis to, in the case of Indebtedness subordinated in
right of payment to such Note Guarantee) such Secured Indebtedness for as long
as such Secured Indebtedness is secured by a Lien.
(d) Notwithstanding any other provision of this Section 4.03,
the maximum amount of Indebtedness that the Company or any Restricted
Subsidiary may Incur pursuant to this Section shall not be deemed to be
exceeded solely as a result of fluctuations in the exchange rates of
currencies. For purposes of determining the outstanding principal amount of any
particular Indebtedness Incurred pursuant to this Section 4.03, (i)
Indebtedness Incurred pursuant to the Credit Agreement prior to or on the
Closing Date shall be treated as Incurred pursuant to Section 4.03(b)(i), (ii)
Indebtedness permitted by this Section 4.03 need not be permitted solely by
reference to one provision permitting such Indebtedness but may be permitted in
part by one such provision and in part by one or more other provisions of this
Section permitting such Indebtedness and (iii) in the event that Indebtedness
meets the criteria of more than one of the types of Indebtedness described in
this Section, the Company, in its sole discretion, shall classify such
Indebtedness and only be required to include the amount of such Indebtedness in
one of such clauses.
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or similar payment to the direct
or indirect holders of its Capital Stock except dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to the Company or another Restricted
Subsidiary (and, if such Restricted Subsidiary has shareholders other than the
Company or other Restricted Subsidiaries, to its other shareholders on a pro
rata
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32
basis), (ii) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of Holdings, the Company or any Restricted Subsidiary held by
Persons other than the Company or another Restricted Subsidiary, (iii)
purchase, repurchase, redeem, defease or otherwise acquire or retire for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Subordinated Obligations (other than the purchase, repurchase or
other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of acquisition and other than
Indebtedness described in Section 4.03(b)(ii)) or (iv) make any Investment
(other than a Permitted Investment) in any Person (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition,
retirement or Investment being herein referred to as a "Restricted Payment") if
at the time the Company or such Restricted Subsidiary makes such Restricted
Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (including, if the amount so expended is
other than in cash, the Fair Market Value of such Restricted Payments)
declared or made subsequent to the Closing Date would exceed the sum
of, without duplication:
(A) (x) 100% of EBITDA accrued during the period
(treated as one accounting period) from the beginning of the
fiscal quarter immediately following the fiscal quarter
during which the Closing Date occurs to the end of the most
recent fiscal quarter ending prior to the date of such
Restricted Payment for which financial statements are
available (or, in case such EBITDA during such period is a
deficit minus 100% of such deficit), minus (y) 150% of
Consolidated Interest Expense accrued during the period
(treated as one accounting period) from the beginning of the
fiscal quarter immediately following the fiscal quarter
during which the Closing Date occurs to the end of the most
recent fiscal quarter ending prior to the date of such
Restricted Payment for which financial statements are
available;
(B) the aggregate Net Cash Proceeds and the Fair
Market Value of property or assets used or useful in a
Permitted Business, in each case received by the Company from
capital contributions or the issue or sale of its Capital
Stock (other than Disqualified Stock) subsequent to the
Closing Date (other than an issuance or sale to (x) a
Subsidiary of the Company or (y) an employee stock ownership
plan or other trust established by the Company or any of its
Subsidiaries to the extent such sale is financed by loans
from or from Indebtedness Guaranteed by the Company unless
such loans or Indebtedness have been repaid with cash on or
prior to the date of determination);
(C) the amount by which Indebtedness of the Company
or its Restricted Subsidiaries is reduced on the Company's
balance sheet upon
<PAGE> 39
33
the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Closing Date of any Indebtedness
of the Company or its Restricted Subsidiaries issued after
the Closing Date which is convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash or the Fair Market Value of
other property distributed by the Company or any Restricted
Subsidiary upon such conversion or exchange);
(D) 100% of the aggregate amount received in cash
from (x) the sale or other disposition (other than to the
Company or a Restricted Subsidiary) of Investments (other
than Permitted Investments) ("Restricted Investments") made
by the Company and its Restricted Subsidiaries after the
Closing Date and from repurchases and redemptions of such
Restricted Investments from the Company and its Restricted
Subsidiaries by any Person (other than the Company or any of
its Subsidiaries or Affiliates) and from repayments of loans
or advances which constituted Restricted Investments or (y)
the sale (other than to the Company or a Subsidiary or an
Affiliate) of the Capital Stock of an Unrestricted
Subsidiary, in an amount not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously
made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments; PROVIDED,
HOWEVER, that no amount will be included in this clause (D)
to the extent it is already included in Consolidated Net
Income; and
(E) the amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from (x)
payments of dividends, repayments of the principal of loans
or advances or other transfers of assets to the Company or
any Restricted Subsidiary from Unrestricted Subsidiaries or
(y) the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in
the definition of "Investment") not to exceed, in the case of
any Unrestricted Subsidiary, the amount of Investments
previously made by the Company or any Restricted Subsidiary
in such Unrestricted Subsidiary, which amount was included in
the calculation of the amount of Restricted Payments;
PROVIDED, HOWEVER, that no amount will be included in this
clause (E) to the extent it is already included in
Consolidated Net Income.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase, repurchase, retirement or other acquisition
or retirement for value of Capital Stock or Subordinated Obligations
of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to
a Subsidiary of the Company or an employee stock ownership plan or
other trust established by the Company or any of its Subsidiaries to
the extent such sale is financed by loans from or from Indebtedness
guaranteed by the Company unless such loans or Indebtedness have been
repaid with cash on or prior to the date of determination); PROVIDED,
HOWEVER, that (1) such Restricted Payment shall be excluded in
subsequent
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34
calculations of the amount of Restricted Payments and (2) the Net Cash
Proceeds from such sale applied in the manner set forth in this clause
(i) shall be excluded from the calculation of amounts under of Section
4.04(a)(iv)(3)(B);
(ii) any purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value of Subordinated Obligations
of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of the Company that is
permitted to be Incurred pursuant to Section 4.03; PROVIDED, HOWEVER,
that such purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded in subsequent
calculations of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations
from Net Available Cash to the extent permitted by Section 4.06;
PROVIDED, HOWEVER, that such purchase or redemption shall be excluded
in subsequent calculations of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section 4.04; PROVIDED, HOWEVER, that such
dividend shall be included in subsequent calculations of the amount of
Restricted Payments;
(v) the repurchase or other acquisition of shares of, or
options to purchase shares of, Capital Stock of the Company or any of
its Subsidiaries from employees, former employees, directors or former
directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including
employment agreements) or plans (or amendments thereto) approved by
the Board of Directors under which such individuals purchase or sell
or are granted the option to purchase or sell, shares of such common
stock; PROVIDED, HOWEVER, that the aggregate amount of such
repurchases or acquisitions in any fiscal year of the Company shall
not exceed, together with the aggregate amount of all payments made
under Section 4.04(b)(vi)(3) during such fiscal year, in the aggregate
$5.0 million, up to a maximum aggregate amount, together with the
aggregate amount of all payments made under Section 4.04(b)(vi)(3), of
$10.0 million during the term of this Indenture; PROVIDED FURTHER,
HOWEVER, that such repurchases and other acquisitions shall be
included in subsequent calculations of the amount of Restricted
Payments; or
(vi) the payment of dividends, other distributions or other
amounts by the Company for the purposes set forth in clauses (1)
through (4) below; PROVIDED, HOWEVER, that such dividend, distribution
or amount set forth in clauses (1) through (4) shall be included in
subsequent calculations of the amount of Restricted Payments for the
purposes of Section 4.04(a):
(1) to Holdings in amounts equal to the amounts
required for Holdings to pay franchise taxes and other fees
required to maintain its corporate existence and provide for
other operating costs of up to $2.0 million per fiscal year;
<PAGE> 41
35
(2) to Holdings in amounts equal to amounts required
for Holdings to pay federal, state and local income taxes to
the extent such income taxes are attributable to the income
of the Company and its Restricted Subsidiaries (and, to the
extent of amounts actually received from its Unrestricted
Subsidiaries, in amounts required to pay such taxes to the
extent attributable to the income of such Unrestricted
Subsidiaries);
(3) to Holdings in amounts equal to amounts expended
by Holdings to repurchase Capital Stock of Holdings owned by
former employees of the Company or its Subsidiaries or their
assigns, estates and heirs; PROVIDED, HOWEVER, that the
aggregate amount paid, loaned or advanced to Holdings
pursuant to this clause (3) in any fiscal year of the Company
shall not exceed, together with the aggregate amount of all
payments made pursuant to Section 4.04 (b)(v) during such
fiscal year, in the aggregate, $5.0 million, up to a maximum
aggregate amount, together with the aggregate amount of all
payments made under Section 4.04(b)(v), of $10.0 million
during the term of this Indenture, plus any amounts
contributed by Holdings to the Company as a result of resales
of such repurchased shares of Capital Stock; and
(4) to Holdings in amounts required to pay the
annual monitoring fee to Evercore; PROVIDED, HOWEVER, that
the aggregate amount paid, loaned or delivered to Holdings
pursuant to this clause (4) shall not, in the aggregate,
exceed $750,000 per fiscal year;
(vii) the payment of dividends on the Company's common stock
(or the payment of dividends to Holdings to fund the payment by
Holdings of dividends on Holdings' common stock) following the first
public offering of common stock of the Company or Holdings, as the
case may be, after the Closing Date, of up to 6% per annum of the net
proceeds received by the Company or contributed to the Company by
Holdings from such public offering; PROVIDED, HOWEVER, that (1) the
aggregate amount of all such dividends shall not exceed the aggregate
amount of net proceeds received by the Company or contributed to the
Company by Holdings from such public offering, (2) at the time of, and
after giving effect to, any payment permitted under this clause (vii),
no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof and (3) any such payment shall
be included in subsequent calculations of the amount of Restricted
Payments;
(viii) the declaration and payment of dividends or
distributions to holders of any class or series of Disqualified Stock
of the Company or any of its Restricted Subsidiaries issued or
Incurred in accordance with Section 4.03; PROVIDED, HOWEVER, that such
payments shall be excluded in subsequent calculations of the amount of
Restricted Payments; or
(ix) other Restricted Payments in an aggregate amount not to
exceed $20.0 million; PROVIDED, HOWEVER, that at the time of, and
after giving effect to, any payment permitted under this clause (ix),
no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and PROVIDED FURTHER that any
such payment shall be included in subsequent calculations of the
amount of Restricted Payments.
<PAGE> 42
36
SECTION 4.05. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS
FROM RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or restriction on the ability of
any Restricted Subsidiary to (a) pay dividends or make any other distributions
on its Capital Stock or pay any Indebtedness or other obligations owed to the
Company or any of its Restricted Subsidiaries, (b) make any loans or advances
to the Company or any of its Restricted Subsidiaries or (c) transfer any of its
property or assets to the Company or any of its Restricted Subsidiaries,
except:
(i) any encumbrance or restriction pursuant to applicable law
or an agreement in effect at or entered into on the Closing Date;
(ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary prior to the date
on which such Restricted Subsidiary was acquired by the Company (other
than Indebtedness Incurred as consideration in, in contemplation of,
or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was otherwise acquired by the Company) and
outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (i) or (ii) of this Section 4.05 or
this clause (iii) or contained in any amendment to an agreement
referred to in clause (i) or (ii) of this Section 4.05 or this clause
(iii); PROVIDED, HOWEVER, that the encumbrances and restrictions
contained in any such Refinancing agreement or amendment are no less
favor able, in the aggregate, to the Holders than the encumbrances and
restrictions contained in such predecessor agreements;
(iv) in the case of clause (c), any encumbrance or
restriction (1) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a
lease, license or similar contract or (2) contained in security
agreements securing Indebtedness of a Restricted Subsidiary to the
extent such encumbrance or restriction restricts the transfer of the
property subject to such security agreements;
(v) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition; and
(vi) in the case of clause (c), any encumbrance or
restriction pursuant to any agreement relating to Purchase Money
Indebtedness that is Incurred subsequent to the Closing Date in
compliance with Section 4.03.
SECTION 4.06. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY
STOCK. (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration (including by way of relief from,
or by any other Person assuming sole
<PAGE> 43
37
responsibility for, any liabilities, contingent or otherwise) at the time of
such Asset Disposition at least equal to the Fair Market Value of the shares
and assets subject to such Asset Disposition, (ii) at least 80% of the
consideration thereof received by the Company or such Restricted Subsidiary is
in the form of cash or Temporary Cash Investments; PROVIDED that the amount of
(1) any liabilities (as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet or in the notes thereto) of the Company or any
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes), that are assumed by the transferee of any such
assets (PROVIDED that the Company or such Restricted Subsidiary is released
from all liability with respect thereto), (2) any securities received by the
Company or such Restricted Subsidiary from such transferee that are converted
by the Company or such Restricted Subsidiary into cash (to the extent of the
cash received) within 90 days following the closing of such Asset Disposition
and (3) any Designated Noncash Consideration received by the Company or any of
its Restricted Subsidiaries in such Asset Disposition having an aggregate Fair
Market Value, taken together with all other Designated Noncash Consideration
received pursuant to this clause (3) that is at that time outstanding, not to
exceed the greater of (A) $25.0 million or (B) 3% of Total Assets at time of
receipt of such Designated Noncash Consideration (with the Fair Market Value of
each item of Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in value), shall be
deemed to be cash for purposes of this provision and for no other purpose; and
(iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as the
case may be) (1) FIRST, (A) to the extent the Company elects (or is required by
the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior
Indebtedness of the Company or Indebtedness (other than any Disqualified Stock)
of a Restricted Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company and other than Preferred Stock) or (B)
to the extent the Company or such Restricted Subsidiary elects, to acquire
Additional Assets (including by means of an Investment in Additional Assets by
a Restricted Subsidiary with Net Available Cash received by the Company or
another Restricted Subsidiary), in the case of each of clauses (A) and (B),
within one year after the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (2) SECOND, to the extent of the balance of
such Net Available Cash after application in accordance with clause (1), to
make an Offer to purchase the Notes pursuant to and subject to the conditions
of Section 4.06(b); PROVIDED, HOWEVER, that if the Company elects (or is
required by the terms of any Senior Subordinated Indebtedness), such Offer may
be made ratably to purchase the Notes and other Senior Subordinated
Indebtedness of the Company; and (3) THIRD, to the extent of the balance of
such Net Available Cash after application in accordance with clauses (1) and
(2), for any general corporate purpose permitted pursuant to the terms of this
Indenture; PROVIDED, HOWEVER that in connection with any prepayment, repayment
or purchase of Indebtedness pursuant to clause (1) (A) or (2) above, the
Company or such Restricted Subsidiary shall retire such Indebtedness and shall
cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 4.06, the Company and
the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this Section 4.06(a) except to the extent that the
aggregate Net Available Cash from all Asset Dispositions that is not applied in
accordance with this Section 4.06 (a) exceeds $5.0 million.
(b) In the event of an Asset Disposition that requires the
purchase of Notes (and other Senior Subordinated Indebtedness) pursuant to
Section 4.06(a)(iii)(2),
<PAGE> 44
38
the Company shall be required to purchase Notes (and other Senior Subordinated
Indebtedness) tendered pursuant to an offer by the Company for the Notes (and
other Senior Subordinated Indebtedness) (the "Offer") at a purchase price of
100% of their principal amount plus accrued and unpaid interest and liquidated
damages, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date) in accordance with the procedures (including prorating
in the event of oversubscription) set forth in Section 4.06(c). If the
aggregate purchase price of Notes (and other Senior Subordinated Indebtedness)
tendered pursuant to the Offer is less than the Net Available Cash allotted to
the purchase of the Notes (and other Senior Subordinated Indebtedness), the
Company may apply the remaining Net Available Cash for any general corporate
purpose permitted pursuant to the terms of this Indenture. The Company shall
not be required to make an Offer for Notes (and other Senior Subordinated
Indebtedness) pursuant to this Section 4.06 if the Net Available Cash available
therefor (after application of the proceeds as provided in Section
4.06(a)(iii)(1)) is less than $10.0 million for any particular Asset
Disposition (which lesser amount shall be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c) (i) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Notes purchased by the
Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum shall
include (1) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than
Current Reports describing Asset Dispositions otherwise described in the
offering materials (or corresponding successor reports), (2) a description of
material developments in the Company's business subsequent to the date of the
latest of such reports, and (3) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender Notes
pursuant to the Offer, together with the address referred to in clause (iii).
(ii) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided above, the Company shall deliver
to the Trustee an Officers' Certificate as to (1) the amount of the Offer (the
"Offer Amount"), (2) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (3) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) an amount equal to the Offer Amount to be invested in Temporary Cash
Investments and to be held for payment in accordance with the provi sions of
this Section. Upon the expiration of the period for which the Offer remains
open (the "Offer Period"), the Company shall deliver to the Trustee for
cancelation the Notes or portions thereof that have been properly tendered to
and are to be accepted by the
<PAGE> 45
39
Company. The Trustee (or the Paying Agent, if not the Trustee) shall, on the
date of purchase, mail or deliver payment to each tendering Holder in the
amount of the purchase price. In the event that the Offer Amount delivered by
the Company to the Trustee is greater than the purchase price of the Notes (and
other Senior Subordinated Indebtedness) tendered, the Trustee shall deliver the
excess to the Company immediately after the expiration of the Offer Period for
application in accordance with this Section 4.06.
(iii) Holders electing to have a Note purchased shall be
required to surrender the Note, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business Day
prior to the Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note which
was delivered by the Holder for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased. If at the expiration of
the Offer Period the aggregate principal amount of Notes and any other Senior
Subordinated Indebtedness included in the Offer surrendered by holders thereof
exceeds the Offer Amount, the Company shall select the Notes and other Senior
Subordinated Indebtedness to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only Notes and
other Senior Subordinated Indebtedness in denominations of $1,000, or integral
multiples thereof, shall be purchased). Holders whose Notes are purchased only
in part will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
(iv) At the time the Company delivers Notes to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Notes are to be accepted by the Company
pursuant to and in accordance with the terms of this Section. A Note shall be
deemed to have been accepted for purchase at the time the Trustee, directly or
through an agent, mails or delivers payment therefor to the surrendering
Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to this
Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.07. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into or conduct any transaction or series of
related transactions (including, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Company (an
"Affiliate Transaction") unless such Affiliate Transaction is on terms (i) that
are no less favorable to the Company or such Restricted Subsidiary, as the case
may be, than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate, (ii) that, in
the event such Affiliate Transaction involves an aggregate amount in excess of
$2.0 million, (1) are set forth in writing and (2) have been approved by a
majority of the members of the Board of Directors having no personal stake in
such Affiliate
<PAGE> 46
40
Transaction and (iii) that, in the event such Affiliate Transaction involves an
amount in excess of $10.0 million, have been determined in writing by a
nationally recognized appraisal or investment banking firm to be fair, from a
financial standpoint, to the Company and its Restricted Subsidiaries or not
materially less favorable than those that might reasonably have been obtained
in an arm's-length transaction.
(b) The provisions of Section 4.07(a) shall not prohibit (i)
any Restricted Payment permitted to be paid pursuant to Section 4.04, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors, (iii) the
grant of stock options or similar rights to employees and directors of the
Company pursuant to plans approved by the Board of Directors, (iv) loans or
advances to employees of the Company or any of its Restricted Subsidiaries in
the ordinary course of business not in excess of $5.0 million in the aggregate
outstanding at any one time, (v) the payment of reasonable fees to directors of
the Company and its Subsidiaries who are not employees of the Company or its
Subsidiaries, or (vi) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries.
SECTION 4.08. CHANGE OF CONTROL. (a) Upon a Change of
Control, each Holder shall have the right to require the Company to repurchase
all or any part of such Holder's Notes at a purchase price in cash equal to
101% of the principal amount thereof plus accrued and unpaid interest and
liquidated damages, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in accordance with the terms contemplated in
Section 4.08(b); PROVIDED, HOWEVER, that notwithstanding the occurrence of a
Change of Control, the Company shall not be obligated to purchase the Notes
pursuant to this Section 4.08 in the event that it has exercised its right to
redeem all the Notes under paragraph 5 of the Notes. In the event that at the
time of such Change of Control the terms of the Bank Indebtedness restrict or
prohibit the repurchase of Notes pursuant to this Section 4.08, then prior to
the mailing of the notice to Holders provided for in Section 4.08(b) below but
in any event within 30 days following any Change of Control, the Company shall
(i) repay in full all Bank Indebtedness or offer to repay in full all Bank
Indebtedness and repay the Bank Indebtedness of each lender who has accepted
such offer or (ii) obtain the requisite consent under the agreements governing
the Bank Indebtedness to permit the repurchase of the Notes as provided for in
Section 4.08(b).
(b) Within 30 days following any Change of Control (except as
provided in the proviso to the first sentence of Section 4.08(a)), the Company
shall mail a notice to each Holder with a copy to the Trustee (the "Change of
Control Offer") stating:
(i) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase all or a
portion of such Holder's Notes at a purchase price in cash equal to
101% of the principal amount thereof, plus accrued and unpaid interest
and liquidated damages, if any, to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date);
(ii) the circumstances and relevant facts and financial
information regarding such Change of Control;
<PAGE> 47
41
(iii) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(iv) the instructions determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Notes purchased.
(c) Holders electing to have a Note purchased shall be
required to surrender the Note, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business Day
prior to the purchase date a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note which
was delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Note purchased. Holders whose Notes are
purchased only in part will be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered.
(d) On the purchase date, all Notes purchased by the Company
under this Section shall be delivered to the Trustee for cancelation, and the
Company shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in Section 4.08(b) applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
(f) At the time the Company delivers Notes to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Notes are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.08. A Note shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(g) Prior to any Change of Control Offer, the Company shall
deliver to the Trustee an Officers' Certificate stating that all conditions
precedent contained herein to the right of the Company to make such offer have
been complied with.
(h) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to this
Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.09. COMPLIANCE CERTIFICATE. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and
<PAGE> 48
42
whether or not the signers know of any Default that occurred during such
period. If they do, the certificate shall describe the Default, its status and
what action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with Section 314(a)(4) of the TIA.
SECTION 4.10. FURTHER INSTRUMENTS AND ACTS. Upon request of
the Trustee, the Company shall execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. FUTURE NOTE GUARANTORS. The Company shall cause
each domestic Restricted Subsidiary organized or acquired after the date hereof
to become a Note Guarantor, and, execute and deliver to the Trustee a
supplemental indenture substantially in the form of Exhibit C pursuant to which
such Restricted Subsidiary shall Guarantee payment of the Notes.
SECTION 4.12. LIMITATION ON LINES OF BUSINESS. The Company
shall not, and shall not permit any Restricted Subsidiary to, engage in any
business, other than a Permitted Business.
SECTION 4.13. LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL
STOCK OF RESTRICTED SUBSIDIARIES. The Company shall not sell or otherwise
dispose of any shares of Capital Stock of a Restricted Subsidiary, and shall
not permit any Restricted Subsidiary, directly or indirectly, to issue or sell
or otherwise dispose of any shares of its Capital Stock except: (a) to the
Company or a Restricted Subsidiary; or (b) if, immediately after giving effect
to such issuance or sale, such Restricted Subsidiary would continue to be a
Restricted Subsidiary or if, immediately after giving effect to such issuance
or sale, such Restricted Subsidiary would no longer be a Restricted Subsidiary
and the Investment of the Company in such Person after giving effect to such
issuance or sale would have been permitted to be made under Section 4.04 if
made on the date of such issuance or sale (and such Investment shall be deemed
to be an Investment made for the purpose of Section 4.04). The proceeds of any
sale of such Capital Stock permitted hereby shall be treated as Net Available
Cash from an Asset Disposition and shall be applied in accordance with Section
4.06.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. (a) WHEN COMPANY MAY MERGE OR TRANSFER ASSETS.
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized and existing
under the laws of the United States, any State thereof or the District
of Columbia and the Successor Company (if not the Company) shall
expressly assume, by a supplemental indenture hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Notes and this Indenture;
<PAGE> 49
43
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction
as having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a); and
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but
the predecessor Company in the case of a conveyance, transfer or lease of all
or substantially all its assets shall not be released from the obligation to
pay the principal of and interest on the Notes.
(b) The Company shall not permit any Note Guarantor to
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all of its assets to any Person unless: (i) the resulting,
surviving or transferee Person will be a corporation organized and existing
under the laws of the United States, any State thereof or the District of
Columbia, and such Person (if not such Note Guarantor) shall expressly assume,
by a supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of such Note Guarantor under
its Note Guarantee; (ii) immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the resulting,
surviving or transferee Person as a result of such transaction as having been
Incurred by such Person at the time of such transaction), no Default shall have
occurred and be continuing; and (iii) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture; PROVIDED, HOWEVER, that the foregoing shall not
apply to any such consolidation or merger with or into, or conveyance, transfer
or lease to, any Person if the resulting, surviving or transferee Person shall
not be a Subsidiary of the Company and the other terms of this Indenture,
including Section 4.06, are complied with.
(c) Notwithstanding the foregoing, (i) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (ii) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another jurisdiction to realize tax or other benefits.
<PAGE> 50
44
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs
if:
(a) the Company defaults in any payment of interest on any
Note when the same becomes due and payable, whether or not such
payment shall be prohibited by Article 10, and such default continues
for a period of 30 days;
(b) the Company defaults in the payment of the principal of
any Note when the same becomes due and payable at its Stated Maturity,
upon required redemption or repurchase, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article 10;
(c) the Company or any Note Guarantor fails to comply with
Section 5.01;
(d) the Company fails to comply with Section 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12 or 4.13 (other than a failure
to purchase Notes when required under Section 4.06 or 4.08) and such
failure continues for 30 days after the notice specified below;
(e) the Company or any Note Guarantor fails to comply with
any of its agreements in the Notes or this Indenture (other than those
referred to in (a), (b), (c) or (d) above) and such failure continues
for 60 days after the notice specified below;
(f) Indebtedness of the Company or any Restricted Subsidiary
is not paid within any applicable grace period after final maturity or
the acceleration by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $10.0
million or its foreign currency equivalent at the time and such
failure continues for 10 days after the notice specified below;
(g) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief
against it in an involuntary case;
(iii) consents to the appointment of a Custodian of
it or for any substantial part of its property; or
(iv) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(h) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
<PAGE> 51
45
(i) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(iii) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(i) any judgment or decree for the payment of money in excess
of $10.0 million or its foreign currency equivalent (net of any
amounts with respect to which a reputable and creditworthy insurance
company has acknowledged liability in writing) is rendered against the
Company or any Restricted Subsidiary and either (A) an enforcement
proceeding has been commenced by any creditor upon such judgment or
decree or (B) there is a period of 60 days following the entry of such
judgment or decree during which such judgment or decree is not
discharged, waived or the execution thereof stayed; or
(j) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms thereof) or any Note Guarantor or
Person acting by or on behalf of such Note Guarantor denies or
disaffirms its obligations under this Indenture or any Note Guarantee
and such Default continues for 10 days after the notice specified
below.
The foregoing shall constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, UNITED STATES CODE,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (d), (e), (f) or (j) above is not an
Event of Default until the Trustee notifies the Company or the Holders of at
least 25% in principal amount of the outstanding Notes notify the Company and
the Trustee of the Default and the Company or the Note Guarantor, as
applicable, does not cure such Default within the time specified after receipt
of such notice. Such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days
after the occurrence thereof, written notice in the form of an Officers'
Certificate of any event which with the giving of notice or the lapse of time
would become an Event of Default, its status and what action the Company is
taking or proposes to take with respect thereto.
SECTION 6.02. ACCELERATION. If an Event of Default (other
than an Event of Default specified in Section 6.01(g) or (h) with respect to
the Company) occurs
<PAGE> 52
46
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the outstanding Notes by notice to the Company
and the Trustee, may declare the principal of and accrued but unpaid interest
on all the Notes to be due and payable. Upon such a declaration, such principal
and interest shall be due and payable immediately. If an Event of Default
specified in Section 6.01(g) or (h) with respect to the Company occurs, the
principal of and interest on all the 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 Holders. The Holders of a majority in principal amount of
the Notes by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a
majority in principal amount of the Notes by notice to the Trustee may waive an
existing Default and its consequences except (a) a Default in the payment of
the principal of or interest on a Note, (b) a Default arising from the failure
to redeem or purchase any Note when required pursuant to the terms of this
Indenture or (c) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Holder affected. When a Default
is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority
in principal amount of the Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Section 7.01, that the Trustee determines is unduly prejudicial
to the rights of other Holders or would involve the Trustee in personal
liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
SECTION 6.06. LIMITATION ON SUITS. Except to enforce the
right to receive payment of principal, premium (if any) or interest when due,
no Holder may pursue any remedy with respect to this Indenture or the Notes
unless:
<PAGE> 53
47
(a) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(b) the Holders of at least 25% in principal amount of the
Notes then outstanding make a written request to the Trustee to pursue
the remedy;
(c) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(e) the Holders of a majority in principal amount of the
Notes then outstanding do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights
of another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and liquidated damages and interest on the
Notes held by such Holder, on or after the respective due dates expressed or
provided for in the Notes, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company and any other obligor on the Notes for the whole amount
then due and owing (together with interest on overdue principal and (to the
extent lawful) on any unpaid interest at the rate provided for in the Notes)
and the amounts provided for in Section 7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Holders allowed
in any judicial proceedings relative to the Company, any Subsidiary or Note
Guarantor, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses, disburse
ments and advances of the Trustee, its agents and its counsel, and any other
amounts due the Trustee under Section 7.07.
SECTION 6.10. PRIORITIES. If the Trustee collects any money
or property pursuant to this Article 6, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
<PAGE> 54
48
SECOND: to holders of Senior Indebtedness of the Company to
the extent required by Article 10 and to holders of Senior
Indebtedness of the Note Guarantors to the extent required by Article
12;
THIRD: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, and any liquidated damages without
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, any liquidated damages and
interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section. At least 15 days before such
record date, the Trustee shall mail to each Holder and the Company a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in principal amount of the Notes.
SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. Neither the
Company nor any Note Guarantor (to the extent it may lawfully do so) shall at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company and each Note Guarantor (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the exe cution of
every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
<PAGE> 55
49
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05; and
(iv) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers, if it shall have reasonable grounds to
believe that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
<PAGE> 56
50
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority in principal amount of the Notes at
the time outstanding, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, any Note Guarantee or the Notes, it shall not be accountable
for the Company's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Company or any Note Guarantor in this
Indenture or in any document issued in connection with the sale of the Notes or
in the Notes other than the Trustee's certificate of authentication. The
Trustee shall not be charged with knowledge of any Default or Event of Default
under Sections 6.01(c), (d), (e), (f), (i) or (j) or of the identity of any
Significant Subsidiary unless either (a) a Trust Officer shall have actual
knowledge thereof or (b) the Trustee shall have notice thereof in accordance
with Section 13.02 hereof from the Company, any Note Guarantor or any Holder.
SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Holder notice of the Default within the earlier of 90 days after it occurs or
30 days after it is known to a Trust Officer or written notice of it is
received by the Trustee. Except in the case of a Default in payment of
principal of, premium, if any, or interest on any Note (including payments
pursuant to the redemption provisions of such Note), the Trustee may withhold
the notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Holders.
<PAGE> 57
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as
practicable after each March 15 beginning with the March 15 following the date
of this Indenture, and in any event prior to May 15 in each year, the Trustee
shall mail to each Holder a brief report dated as of such March 15 that
complies with Section 313(a) of the TIA if and to the extent required thereby.
The Trustee shall also comply with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each stock exchange (if any) on which the Notes
are listed. The Company agrees to notify promptly the Trustee whenever the
Notes become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company and each Note Guarantor, jointly and severally shall
indemnify the Trustee against any and all loss, liability or expense (including
reasonable attorneys' fees) incurred by or in connection with the
administration of this trust and the performance of its duties hereunder. The
Trustee shall notify the Company of any claim for which it may seek indemnity
promptly upon obtaining actual knowledge thereof; PROVIDED, HOWEVER, that any
failure so to notify the Company shall not relieve the Company or any Note
Guarantor of its indemnity obligations hereunder. The Company shall defend the
claim and the indemnified party shall provide reasonable cooperation at the
Company's expense in the defense. Such indemnified parties may have separate
counsel and the Company and the Note Guarantors, as applicable shall pay the
fees and expenses of such counsel; PROVIDED, HOWEVER, that the Company shall
not be required to pay such fees and expenses if it assumes such indemnified
parties' defense and, in such indemnified parties' reasonable judgment, there
is no conflict of interest between the Company and the Note Guarantors, as
applicable, and such parties in connection with such defense. The Company need
not reimburse any expense or indemnify against any loss, liability or expense
incurred by an indemnified party through such party's own wilful misconduct,
negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any liquidated damages on particular Notes.
The Company's payment obligations pursuant to this Section
shall survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(g) or (h) with respect to the
Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
<PAGE> 58
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SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount of the Notes may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Notes and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b), any Holder
who has been a bona fide Holder of a Note for at least six months may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the
<PAGE> 59
53
Trustee may adopt the certificate of authentication of any predecessor trustee,
and deliver such Notes so authenticated; and in case at that time any of the
Notes shall not have been authenticated, any successor to the Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The Trustee
shall have a combined capital and surplus of at least $100,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b) subject to its right to apply for a stay of its
duty to resign under the penultimate paragraph of TIA Section 310(b); PROVIDED,
HOWEVER, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE.
(a) When (i) all outstanding Notes (other than Notes replaced or paid pursuant
to Section 2.07) have been canceled or delivered to the Trustee for cancelation
or (ii) all outstanding Notes have become due and payable, whether at maturity
or as a result of the mailing of a notice of redemption pursuant to Article 3
hereof, and the Company irrevocably deposits with the Trustee funds in an
amount sufficient or U.S. Government Obligations, the principal of and interest
on which will be sufficient, or a combination thereof sufficient, in the
written opinion of a nationally recognized firm of independent public
accountants delivered to the Trustee (which delivery shall only be required if
U.S. Government Obligations have been so deposited) to pay principal of and
interest on the outstanding Notes when due at maturity or upon redemption,
including interest thereon to maturity or such redemption date (other than
Notes replaced or paid pursuant to Section 2.07), and if in either case the
Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 8.01(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers' Certificate and an Opinion of
Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all of its obligations under the Notes and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12 and 4.13 and the operation
of Section 5.01(a)(iii), 6.01(d), 6.01(f), 6.01(g) (with respect to Significant
Subsidiaries of the Company only), 6.01(h) (with respect to Significant
Subsidiaries of the Company only) and 6.01(i) ("covenant defeasance
<PAGE> 60
54
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option. In the event that the
Company terminates all of its obligations under the Notes and this Indenture by
exercising its legal defeasance option, the obligations under the Note
Guarantees shall each be terminated simultaneously with the termination of such
obligations.
If the Company exercises its legal defeasance option, payment
of the Notes may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Notes may not
be accelerated because of an Event of Default specified in Section 6.01(d),
6.01(f), 6.01(g) (with respect to Significant Subsidiaries of the Company
only), 6.01(h) (with respect to Significant Subsidiaries of the Company only)
or 6.01(i) or because of the failure of the Company to comply with clause
Section 5.01(a)(iii).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07, 7.08 and in
this Article 8 shall survive until the Notes have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04, 8.05 and 8.06
shall survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(a) the Company irrevocably deposits in trust with the
Trustee money in an amount sufficient or U.S. Government Obligations,
the principal of and interest on which will be sufficient, or a
combination thereof sufficient, to pay the principal, premium (if any)
and interest on the Notes when due at maturity or redemption, as the
case may be, including interest thereon to maturity or such redemption
date;
(b) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the pay ments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and
interest when due on all the Notes to maturity or redemption, as the
case may be;
(c) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(g) or (h) with
respect to the Company occurs which is continuing at the end of the
period;
(d) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(e) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
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(f) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders will not recognize income,
gain or loss for Federal income tax purposes as a result of such
deposit and 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 deposit and defeasance had not occurred;
(g) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders will not recognize income, gain or loss
for Federal income tax purposes as a result of such deposit and
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 deposit and covenant defeasance had not
occurred; and
(h) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Notes as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Notes at a future date in
accordance with Article 3.
SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Notes. Money and
securities so held in trust are not subject to Article 10 or 12.
SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any money or
U.S. Government Obligations held by it as provided in this Article which, in
the written opinion of a nationally recognized firm of independent public
accountants delivered to the Trustee (which delivery shall only be required if
U.S. Government Obligations have been so deposited), are in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent discharge or defeasance in accordance with this Article.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal or interest that remains unclaimed
for two years, and, thereafter, Holders entitled to the money must look to the
Company for payment as general creditors and the Trustee and the Paying Agent
shall have no further liability with respect to such monies.
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SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to this Article 8 until such time as the Trustee or
Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; PROVIDED, HOWEVER, that, if the
Company has made any payment of interest on or principal of any Notes because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, the
Note Guarantors and the Trustee may amend this Indenture or the Notes without
notice to or consent of any Holder:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to comply with Article 5;
(c) to provide for uncertificated Notes in addition to or in
place of certificated Notes; PROVIDED, HOWEVER, that the
uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Notes are described in Section 163(f)(2)(B) of the Code;
(d) to make any change in Article 10 or Article 12 that would
limit or terminate the benefits available to any holder of Senior
Indebtedness (or Representatives therefor) under Article 10 or Article
12;
(e) to add additional Guarantees with respect to the Notes or
to secure the Notes;
(f) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(g) to comply with any requirement of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA;
(h) to make any change that does not adversely affect the
rights of any Holder; or
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(i) to provide for the issuance of the Exchange Notes or
Private Exchange Notes, which shall have terms substantially identical
in all material respects to the Initial Notes (except that the
transfer restrictions contained in the Initial Notes shall be modified
or eliminated, as appropriate), and which shall be treated, together
with any outstanding Initial Notes, as a single issue of securities.
An amendment under this Section 9.01 may not make any change
that adversely affects the rights under Article 10 or Article 12 of any holder
of Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment.
However, the failure to give such notice to all Holders, or any defect therein,
shall not impair or affect the validity of an amendment under this Section.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, the Note
Guarantors and the Trustee may amend this Indenture or the Notes without notice
to any Holder but with the written consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange for the Notes). However,
without the consent of each Holder affected, an amendment may not:
(a) reduce the amount of Notes whose Holders must consent to
an amendment;
(b) reduce the rate of or extend the time for payment of
interest or any liquidated damages on any Note;
(c) reduce the principal of or extend the Stated Maturity of
any Note;
(d) reduce the premium payable upon the redemption of any
Note or change the time at which any Note may be redeemed in
accordance with Article 3 and paragraph 5 of the Notes.
(e) make any Note payable in money other than that stated in
the Note;
(f) make any change in Article 10 or Article 12 that
adversely affects the rights of any Holder under Article 10 or Article
12;
(g) impair the right of any Holder to receive payment of
principal of, and interest or any liquidated damages on, such Holder's
Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Notes;
(h) make any change in Section 6.04 or 6.07 or the second
sentence of this
Section 9.02; or
(i) modify the Note Guarantees in any manner adverse to the
Holders.
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It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 may not make any change
that adversely affects the rights under Article 10 or Article 12 of any holder
of Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every
amendment to this Indenture or the Notes shall comply with the TIA as then in
effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS.
A consent to an amendment or a waiver by a Holder of a Note shall bind the
Holder and every subsequent Holder of that Note or portion of the Note that
evidences the same debt as the consenting Holder's Note, even if notation of
the consent or waiver is not made on the Note. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Note or
portion of the Note if the Trustee receives the notice of revocation before the
date on which the Trustee receives an Officers' Certificate from the Company
certifying that the requisite number of consents have been received. After an
amendment or waiver becomes effective, it shall bind every Holder. An amendment
or waiver becomes effective upon the (a) receipt by the Company or the Trustee
of the requisite number of consents, (b) satisfaction of conditions to
effectiveness as set forth in this Indenture and any indenture supplemental
hereto containing such amendment or waiver and (c) execution of such amendment
or waiver (or supplemental indenture) by the Company and the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to give their consent
or take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. If an
amendment changes the terms of a Note, the Trustee may require the Holder of
the Note to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note regarding the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms. Failure to make the appropriate notation or to
issue a new Note shall not affect the validity of such amendment.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture and
that such amendment is the legal, valid and binding obligation of the Company
and the Note Guarantors enforceable against them in accordance with its terms,
subject to customary exceptions, and complies with the provisions hereof
(including Section 9.03).
SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor
any Affiliate of the Company shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to any
Holder for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of this Indenture or the Notes unless such
consideration is offered to be paid to all Holders that so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating
to such consent, waiver or agreement.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE. The Company agrees,
and each Holder by accepting a Note agrees, that the Indebtedness evidenced by
the Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment in full of all Senior
Indebtedness of the Company and that the subordination is for the benefit of
and enforceable by the holders of such Senior Indebtedness. The Notes shall in
all respects rank PARI PASSU with all other Senior Subordinated Indebtedness of
the Company and shall rank senior to all existing and future Subordinated
Obligations of the Company and only Indebtedness of the Company that is Senior
Indebtedness of the Company shall rank senior to the Notes in accordance with
the provisions set forth herein. For purposes of this Article 10, the
Indebtedness evidenced by the Notes shall be deemed to include the liquidated
damages payable pursuant to the provisions set forth in the Notes and the
Registration Agreement. All provisions of this Article 10 shall be subject to
Section 10.12.
SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(a) the holders of Senior Indebtedness of the Company shall
be entitled to receive payment in full of such Senior Indebtedness
before Holders shall be entitled to receive any payment of principal
of or interest on the Notes; and
(b) until such Senior Indebtedness of the Company is paid in
full, any payment or distribution to which Holders would be entitled
but for this Article 10
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shall be made to holders of such Senior Indebtedness as their
interests may appear (except that Holders may receive and retain (i)
Permitted Junior Securities and (ii) payments made from the trust
described in Section 8.02 so long as, on the date or dates the
respective amounts were paid into the trust, such payments were made
with respect to the Notes without violating this Article 10); if a
distribution is made to Holders that due to this Article 10 should not
have been made to them, such Holders will be required to hold it in
trust for the holders of Senior Indebtedness of the Company and pay it
over to them as their interests may appear.
SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS. The Company
may not pay principal of, premium (if any) or interest on the Notes or make any
deposit pursuant to Article 8 and may not otherwise repurchase, redeem or
otherwise retire any Notes (except that Holders may receive and retain
Permitted Junior Securities and payments made from the trust described in
Section 8.02) (collectively, "pay the Notes") if (a) any Designated Senior
Indebtedness of the Company is not paid when due or (b) any other default on
such Designated Senior Indebtedness occurs and the maturity of such Designated
Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, (i) the default has been cured or waived and any such acceleration
has been rescinded or (ii) such Designated Senior Indebtedness has been paid in
full; PROVIDED, HOWEVER, that the Company may pay the Notes without regard to
the foregoing if the Company and the Trustee receive written notice approving
such payment from the Representative of such Designated Senior Indebtedness
with respect to which either of the events set forth in clause (a) or (b) of
this sentence has occurred and is continuing. During the continuance of any
default (other than a default described in clause (a) or (b) of the preceding
sentence) with respect to any Designated Senior Indebtedness of the Company
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company
may not pay the Notes for a period (a "Payment Blockage Period") commencing
upon the receipt by the Trustee (with a copy to the Company) of written notice
(a "Blockage Notice") of such default from the Representative of such
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (a) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (b) by
repayment in full of such Designated Senior Indebtedness or (c) because no
defaults are continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section 10.03), unless the holders of such Designated
Senior Indebtedness or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, the Company
may resume payments on the Notes after the end of such Payment Blockage Period,
including any missed payments. Not more than one Blockage Notice may be given
in any consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness during such period; PROVIDED,
HOWEVER, that if any Blockage Notice within such 360-day period is given by or
on behalf of any holders of Designated Senior Indebtedness of the Company other
than the Bank Indebtedness, the Representative of the Bank Indebtedness may
give another Blockage Notice within such period; PROVIDED FURTHER, HOWEVER,
that in no event may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period. For purposes of this Section 10.03, no default or event
of default that existed or was continuing on the date of the
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commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not
within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
SECTION 10.04. ACCELERATION OF PAYMENT OF NOTES. If payment
of the Notes is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
of the Company (or their Representative) of the acceleration; PROVIDED,
HOWEVER, that, in the case of the Trustee, the Trustee shall have received
written notice from the Company or a Representative identifying such Designated
Senior Indebtedness, on which notice the Trustee shall be entitled to
conclusively rely. If any Designated Senior Indebtedness of the Company is
outstanding, the Company may not pay the Notes until five Business Days after
such holders or the Representative of such Designated Senior Indebtedness
receive notice of such acceleration and, thereafter, may pay the Notes only if
this Article 10 otherwise permits payment at that time.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a
distribution is made to Holders that because of this Article 10 should not have
been made to them, the Holders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness of the Company and pay it over to them
as their interests may appear.
SECTION 10.06. SUBROGATION. After all Senior Indebtedness of
the Company is paid in full and until the Notes are paid in full, Holders shall
be subrogated to the rights of holders of such Senior Indebtedness to receive
distributions applicable to Senior Indebtedness of the Company. A distribution
made under this Article 10 to holders of such Senior Indebtedness of the
Company which otherwise would have been made to Holders is not, as between the
Company and Holders, a payment by the Company on such Senior Indebtedness.
SECTION 10.07. RELATIVE RIGHTS. This Article 10 defines the
relative rights of Holders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on and liquidated damages in respect of, the
Notes in accordance with their terms; or
(2) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Holders.
SECTION 10.08. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or by its failure to comply with this
Indenture.
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SECTION 10.09. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Notes and shall not be charged with knowledge of the existence
of facts that would prohibit the making of any such payments unless, not less
than two Business Days prior to the date of such payment, a Trust Officer of
the Trustee receives notice satisfactory to it that payments may not be made
under this Article 10. The Company, the Registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness of the Company may give the
notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness of the
Company has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it
were not Trustee. The Registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 10 with respect to any Senior Indebtedness of the Company which may at
any time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07 or any other section
of this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their Representative (if any).
SECTION 10.11. ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR
LIMIT RIGHT TO ACCELERATE. The failure to make a payment pursuant to the Notes
by reason of any provision in this Article 10 shall not be construed as
preventing the occurrence of a Default. Nothing in this Article 10 shall have
any effect on the right of the Holders or the Trustee to accelerate the
maturity of the Notes.
SECTION 10.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Notes shall not be subordinated
to the prior payment of any Senior Indebtedness of the Company or subject to
the restrictions set forth in this Article 10, and none of the Holders shall be
obligated to pay over any such amount to the Company or any holder of Senior
Indebtedness of the Company or any other creditor of the Company.
SECTION 10.13. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Holders shall be
entitled to rely (a) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
10.02 are pending, (b) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Holders or (c) upon the Representatives for the holders of Senior Indebtedness
of the Company for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 10. In the event that the
Trustee determines, in good faith, that evidence is
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required with respect to the right of any Person as a holder of Senior
Indebtedness of the Company to participate in any payment or distribution
pursuant to this Article 10, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article 10, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial deter mination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 10.
SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Holder by accepting a Note authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of the Company as provided in this Article 10 and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Holders or the
Company or any other Person, money or assets to which any holders of Senior
Indebtedness of the Company shall be entitled by virtue of this Article 10 or
otherwise.
SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
SUBORDINATION PROVISIONS. Each Holder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE 11
NOTE GUARANTEES
SECTION 11.01. NOTE GUARANTEES. Each Note Guarantor hereby
jointly and severally irrevocably and unconditionally Guarantees, as a primary
obligor and not merely as a surety, to each Holder and to the Trustee and its
successors and assigns (a) the full and punctual payment when due, whether at
Stated Maturity, by acceleration, by redemption or otherwise, of all
obligations of the Company under this Indenture (including obligations to the
Trustee) and the Notes, whether for payment of principal of, interest on or
liquidated damages in respect of the Notes and all other monetary obligations
of the Company under this Indenture and the Notes and (b) the full and punctual
performance within applicable grace periods of all other obligations of the
Company whether for fees, expenses, indemnification or otherwise under this
Indenture and the Notes (all the foregoing being hereinafter collectively
called the "Guaranteed Obligations"). Each Note Guarantor further agrees that
the Guaranteed Obligations may
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be extended or renewed, in whole or in part, without notice or further assent
from each such Note Guarantor, and that each such Note Guarantor shall remain
bound under this Article 11 notwithstanding any extension or renewal of any
Guaranteed Obligation.
Each Note Guarantor waives presentation to, demand of payment
from and protest to the Company of any of the Guaranteed Obligations and also
waives notice of protest for nonpayment. Each Note Guarantor waives notice of
any default under the Notes or the Guaranteed Obligations. The obligations of
each Note Guarantor hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the Notes
or any other agreement or otherwise; (b) any extension or renewal of any
thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Notes or any other agreement; (d)
the release of any security held by any Holder or the Trustee for the
Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee
to exercise any right or remedy against any other guarantor of the Guaranteed
Obligations; or (f) any change in the ownership of such Note Guarantor, except
as provided in Section 11.02(b).
Each Note Guarantor hereby waives any right to which it may
be entitled to have its obligations hereunder divided among the Note
Guarantors, such that such Note Guarantor's obligations would be less than the
full amount claimed. Each Note Guarantor hereby waives any right to which it
may be entitled to have the assets of the Company first be used and depleted as
payment of the Company's or such Note Guarantor's obligations hereunder prior
to any amounts being claimed from or paid by such Note Guarantor hereunder.
Each Note Guarantor hereby waives any right to which it may be entitled to
require that the Company be sued prior to an action being initiated against
such Note Guarantor.
Each Note Guarantor further agrees that its Note Guarantee
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Guaranteed Obligations.
The Note Guarantee of each Note Guarantor is, to the extent
and in the manner set forth in Article 12, subordinated and subject in right of
payment to the prior payment in full of the principal of and premium, if any,
and interest on all Senior Indebtedness of the relevant Note Guarantor and is
made subject to such provisions of this Indenture.
Except as expressly set forth in Sections 8.01(b), 11.02 and
11.06, the obligations of each Note Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall
not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Note Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Notes or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, wilful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing
<PAGE> 71
65
which may or might in any manner or to any extent vary the risk of any Note
Guarantor or would otherwise operate as a discharge of any Note Guarantor as a
matter of law or equity.
Each Note Guarantor agrees that its Note Guarantee is a
continuing Guarantee and shall remain in full force and effect until payment in
full of all the Guaranteed Obligations. Each Note Guarantor further agrees that
its Note Guarantee herein shall continue to be effective or be reinstated, as
the case may be, if at any time payment, or any part thereof, of principal of
or interest on any Guaranteed Obligation is rescinded or must otherwise be
restored by any Holder or the Trustee upon the bankruptcy or reorganization of
the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Note Guarantor by virtue hereof, upon the failure of the Company to pay the
principal of or interest on any Guaranteed Obligation when and as the same
shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Guaranteed Obligation, each
Note Guarantor hereby promises to and shall, upon receipt of written demand by
the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the
Trustee an amount equal to the sum of (a) the unpaid principal amount of such
Guaranteed Obligations, (b) accrued and unpaid interest on such Guaranteed
Obligations (but only to the extent not prohibited by law) and (c) all other
monetary obligations of the Company to the Holders and the Trustee.
Each Note Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
Guaranteed Obligations guaranteed hereby until payment in full of all
Guaranteed Obligations and all obligations to which the Guaranteed Obligations
are subordinated as provided in Article 12. Each Note Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (a) the maturity of the Guaranteed Obligations guaranteed hereby
may be accelerated as provided in Article 6 for the purposes of any Note
Guarantee herein, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Guaranteed Obligations
guaranteed hereby, and (b) in the event of any declaration of acceleration of
such Guaranteed Obligations as provided in Article 6, such Guaranteed
Obligations (whether or not due and payable) shall forthwith become due and
payable by such Note Guarantor for the purposes of this Section 11.01.
Each Note Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section 11.01.
Upon request of the Trustee, each Note Guarantor shall
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
this Indenture.
SECTION 11.02. LIMITATION ON LIABILITY. (a) Any term or
provision of this Indenture to the contrary notwithstanding, the maximum
aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Note
Guarantor shall not exceed the maximum amount that can be hereby Guaranteed
without rendering this Indenture, as it relates to such Note Guarantor,
voidable under applicable law relating to fraudulent
<PAGE> 72
66
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
(b) A Note Guarantee as to any Note Guarantor shall terminate
and be of no further force or effect and such Note Guarantor shall be deemed to
be released from all obligations under this Article 11 upon (i) the merger or
consolidation of such Note Guarantor with or into any Person other than the
Company or a Subsidiary or Affiliate of the Company where such Note Guarantor
is not the surviving entity of such consolidation or merger or (ii) the sale or
transfer by the Company or any Subsidiary of the Company of the Capital Stock
of such Note Guarantor (or by any other Person as a result of a foreclosure of
any Lien on such Capital Stock securing Senior Indebtedness), where, after such
sale or transfer, such Note Guarantor is no longer a Subsidiary of the Company;
PROVIDED, HOWEVER, that each such merger, consolidation, sale or transfer by
the Company or such Subsidiary or Affiliate (1) shall comply with this
Indenture, including the provisions of Section 4.06 or (2) in the case of a
sale or transfer as a result of a foreclosure of any Lien securing Senior
Indebtedness by the holder of such Lien, the net proceeds therefrom shall be
applied in compliance with the terms of this Indenture that would apply to a
sale thereof by the Company. At the request of the Company, the Trustee shall
execute and deliver an appropriate instrument evidencing such release (in the
form provided by the Company).
SECTION 11.03. SUCCESSORS AND ASSIGNS. This Article 11 shall
be binding upon each Note Guarantor and its successors and assigns and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Notes shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 11.04. NO WAIVER. Neither a failure nor a delay on
the part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 11 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege. The rights, remedies and benefits of the Trustee
and the Holders herein expressly specified are cumulative and not exclusive of
any other rights, remedies or benefits which either may have under this Article
11 at law, in equity, by statute or otherwise.
SECTION 11.05. MODIFICATION. No modification, amendment or
waiver of any provision of this Article 11, nor the consent to any departure by
any Note Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Note Guarantor in any case shall entitle
such Note Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
SECTION 11.06. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE
NOTE GUARANTORS. Each Subsidiary which is required to become a Note Guarantor
pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit C hereto pursuant to which such
Subsidiary shall become a Note Guarantor under this Article 11 and shall
guarantee the Guaranteed Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the
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Company shall deliver to the Trustee an Opinion of Counsel and an Officers'
Certificate to the effect that such supplemental indenture has been duly
authorized, executed and delivered by such Subsidiary and that, subject to the
application of bankruptcy, insolvency, moratorium, fraudulent conveyance or
transfer and other similar laws relating to creditors' rights generally and to
the principles of equity, whether considered in a proceeding at law or in
equity, the Note Guarantee of such Note Guarantor is a legal, valid and binding
obligation of such Note Guarantor, enforceable against such Note Guarantor in
accordance with its terms and to such other matters as the Trustee may
reasonably request.
SECTION 11.07. NON-IMPAIRMENT. The failure to endorse a Note
Guarantee on any Note shall not affect or impair the validity thereof.
ARTICLE 12
SUBORDINATION OF THE NOTE GUARANTEES
SECTION 12.01. AGREEMENT TO SUBORDINATE. Each Note Guarantor
agrees, and each Holder by accepting a Note agrees, that the obligations of a
Note Guarantor hereunder are subordinated in right of payment, to the extent
and in the manner provided in this Article 12, to the prior payment in full of
all Senior Indebtedness of such Note Guarantor and that the subordination is
for the benefit of and enforceable by the holders of such Senior Indebtedness
of such Note Guarantor. The obligations hereunder with respect to a Note
Guarantor shall in all respects rank PARI PASSU with all other Senior
Subordinated Indebtedness of such Note Guarantor and shall rank senior to all
existing and future Subordinated Obligations of such Note Guarantor; and only
Indebtedness of such Note Guarantor that is Senior Indebtedness of such Note
Guarantor shall rank senior to the obligations of such Note Guarantor in
accordance with the provisions set forth herein.
SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any
payment or distribution of the assets of a Note Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of such Note
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to such Note Guarantor or its property:
(a) the holders of Senior Indebtedness of such Note Guarantor
shall be entitled to receive payment in full of such Senior
Indebtedness before Holders shall be entitled to receive any payment
pursuant to any Guaranteed Obligations from such Note Guarantor; and
(b) until such Senior Indebtedness of such Note Guarantor is
paid in full, any payment or distribution to which Holders would be
entitled but for this Article 12 shall be made to holders of such
Senior Indebtedness as their respective interests may appear, (except
that Holders may receive and retain (i) Permitted Junior Securities
and (ii) payments made from the trust described in Section 8.02 so
long as, on the date or dates the respective amounts were paid into
the trust, such payments were made with respect to the Note Guarantees
without violating this Article 12); if a distribution is made to
Holders that due to this Article 12 should not have been made to them,
such Holders shall be required
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to hold it in trust for the holders of Senior Indebtedness of such
Note Guarantor and pay it over to them as their interests may appear.
SECTION 12.03. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS OF A
NOTE GUARANTOR. A Note Guarantor may not make any payment pursuant to any of
the Guaranteed Obligations or repurchase, redeem or otherwise retire any Notes
(except that Holders may receive and retain Permitted Junior Securities and
payments made from the trust described in Section 8.02) (collectively, "pay its
Guarantee") if (a) any Designated Senior Indebtedness of such Note Guarantor is
not paid when due or (b) any other default on Designated Senior Indebtedness of
such Note Guarantor occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms unless, in either
case, (i) the default has been cured or waived and any such acceleration has
been rescinded or (ii) such Designated Senior Indebtedness has been paid in
full; PROVIDED, HOWEVER, that such Note Guarantor may pay its Guarantee without
regard to the foregoing if such Note Guarantor and the Trustee receive written
notice approving such payment from the Representative of the holders of such
Designated Senior Indebtedness with respect to which either of the events in
clause (a) or (b) of this sentence has occurred and is continuing. During the
continuance of any default (other than a default described in clause (a) or (b)
of the preceding sentence) with respect to any Designated Senior Indebtedness
of a Note Guarantor pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
such Note Guarantor may not pay its Guarantee for a period (a "Guarantee
Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to such Note Guarantor and the Company) of written notice (a "Guarantee
Blockage Notice") of such default from the Representative of the holders of
such Designated Senior Indebtedness of such Note Guarantor specifying an
election to effect a Guarantee Payment Blockage Period and ending 179 days
thereafter (or earlier if such Guarantee Payment Blockage Period is terminated
(a) by written notice to the Trustee (with a copy to such Note Guarantor and
the Company) from the Person or Persons who gave such Guarantee Blockage
Notice, (b) by repayment in full of such Designated Senior Indebtedness or (c)
because no defaults are continuing). Notwithstanding the provisions described
in the immediately preceding sentence (but subject to the provisions contained
in the first sentence of this Section 12.03), unless the holders of such
Designated Senior Indebtedness or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, such Note
Guarantor may resume to paying its Guarantee after such Guarantee Payment
Blockage Period, including any missed payments. Not more than one Guarantee
Blockage Notice may be given with respect to a Note Guarantor in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of such Note Guarantor during such period;
PROVIDED, HOWEVER, that if any Guarantee Blockage Notice within such 360-day
period is given by or on behalf of any holders of Designated Senior
Indebtedness of such Note Guarantor other than the Bank Indebtedness, the
Representative of the Bank Indebtedness may give another Guarantee Blockage
Notice within such period; PROVIDED FURTHER, HOWEVER, that in no event may the
total number of days during which any Guarantee Payment Blockage Period or
Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period. For purposes of this Section 12.03, no default or event
of default that existed or was continuing on the date of the commencement of
any Guarantee Payment Blockage Period with respect to the Designated Senior
Indebtedness initiating such Guarantee Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Guarantee Payment
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Blockage Period by the Representative of such Designated Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such default or
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
SECTION 12.04. DEMAND FOR PAYMENT. If payment of the Notes is
accelerated because of an Event of Default and a demand for payment is made on
a Note Guarantor pursuant to Article 11, such Note Guarantor or the Trustee
shall promptly notify the holders of the Designated Senior Indebtedness of such
Note Guarantor (or the Representative of such holders) of such demand;
PROVIDED, HOWEVER, that, in the case of the Trustee, the Trustee shall have
received written notice from the Company, such Note Guarantor or a
Representative identifying such Designated Senior Indebtedness, on which notice
the Trustee shall be entitled to conclusively rely. If any Designated Senior
Indebtedness of such Note Guarantor is outstanding, such Note Guarantor may not
pay its Guarantee until five Business Days after such holders or the
Representative of the holders of the Designated Senior Indebtedness of such
Note Guarantor receive notice of such demand and, thereafter, may pay its
Guarantee only if this Article 12 otherwise permits payment at that time.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a
payment or distribution is made to Holders that because of this Article 12
should not have been made to them, the Holders who receive the payment or
distribution shall hold such payment or distribution in trust for holders of
the Senior Indebtedness of the relevant Note Guarantor and pay it over to them
as their respective interests may appear.
SECTION 12.06. SUBROGATION. After all Senior Indebtedness of
a Note Guarantor is paid in full and until the Notes are paid in full, Holders
shall be subrogated to the rights of holders of Senior Indebtedness of such
Note Guarantor to receive distributions applicable to Senior Indebtedness of
such Note Guarantor. A distribution made under this Article 12 to holders of
Senior Indebtedness of such Note Guarantor which otherwise would have been made
to Holders is not, as between such Note Guarantor and Holders, a payment by
such Note Guarantor on Senior Indebtedness of such Note Guarantor.
SECTION 12.07. RELATIVE RIGHTS. This Article 12 defines the
relative rights of Holders and holders of Senior Indebtedness of a Note
Guarantor. Nothing in this Indenture shall:
(1) impair, as between a Note Guarantor and Holders, the
obligation of a Note Guarantor which is absolute and unconditional, to
make payments with respect to the Guaranteed Obligations to the extent
set forth in Article 11; or
(2) prevent the Trustee or any Holder from exercising its
available remedies upon a default by a Note Guarantor under its
obligations with respect to the Guaranteed Obligations, subject to the
rights of holders of Senior Indebtedness of such Note Guarantor to
receive distributions otherwise payable to Holders.
SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A NOTE
GUARANTOR. No right of any holder of Senior Indebtedness of a Note Guarantor to
enforce the subordination of the obligations of such Note Guarantor hereunder
shall be impaired
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by any act or failure to act by such Note Guarantor or by its failure to comply
with this Indenture.
SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding Section 12.03, the Trustee or the Paying Agent may continue to
make payments on the Notes and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article 12. A Note Guarantor, the Registrar or co-registrar,
the Paying Agent, a Representative or a holder of Senior Indebtedness of a Note
Guarantor may give the notice; PROVIDED, HOWEVER, that if an issue of Senior
Indebtedness of a Note Guarantor has a Representative, only the Representative
may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of a Note Guarantor with the same rights it would have if
it were not Trustee. The Registrar and co-registrar and the Paying Agent may do
the same with like rights. The Trustee shall be entitled to all the rights set
forth in this Article 12 with respect to any Senior Indebtedness of a Note
Guarantor which may at any time be held by it, to the same extent as any other
holder of Senior Indebtedness of such Note Guarantor; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article 12 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07 or any other section of this Indenture.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of a Note Guarantor, the distribution may be made and the notice
given to their Representative (if any).
SECTION 12.11. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR
LIMIT RIGHT TO ACCELERATE. The failure of a Note Guarantor to make a payment on
any of its obligations by reason of any provision in this Article 12 shall not
be construed as preventing the occurrence of a default by such Note Guarantor
under such obligations. Nothing in this Article 12 shall have any effect on the
right of the Holders or the Trustee to make a demand for payment on a Note
Guarantor pursuant to Article 11.
SECTION 12.12. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Holders shall be
entitled to rely (a) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
12.02 are pending, (b) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Holders or (c) upon the Representatives for the holders of Senior Indebtedness
of a Note Guarantor for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness of a Note Guarantor and other Indebtedness of a Note Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
12. In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness of a Note Guarantor to participate in any payment or distribution
pursuant to this Article 12, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness of such
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Note Guarantor held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 12, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 12.
SECTION 12.13. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Holder by accepting a Note authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of each of the Note Guarantors as provided in this Article 12 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS OF A NOTE GUARANTOR. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of a Note Guarantor and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Holders or the relevant Note Guarantor or any other Person, money
or assets to which any holders of Senior Indebtedness of such Note Guarantor
shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF
A NOTE GUARANTOR ON SUBORDINATION PROVISIONS. Each Holder by accepting a Note
acknowledges and agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness of a Note Guarantor, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Notes, to acquire and
continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
SECTION 12.16. DEFEASANCE. The terms of this Article 12 shall
not apply to payments from money or the proceeds of U.S. Government Obligations
held in trust by the Trustee for the payment of principal of and interest on
the Notes pursuant to the provisions described in Section 8.03.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of TIA Sections 310 to 318, inclusive,
such imposed duties or incorporated provision shall control.
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SECTION 13.02. NOTICES. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
American Media Operations, Inc.
600 East Coast Avenue
Lantana, Florida 33464-0002
Attention of: Chief Financial Officer
if to the Trustee:
The Chase Manhattan Bank
3800 Colonnade Parkway
Birmingham, AL 35243
Attention of: Corporate Trust Department
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be
mailed, first class mail, to the Holder at the Holder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if
so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. COMMUNICATION OF HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(a) an Officers' Certificate in form reasonably satisfactory
to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(b) an Opinion of Counsel in form reasonably satisfactory to
the Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture (other than pursuant to Section 4.09)
shall include:
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(a) a statement that the individual making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. WHEN NOTES DISREGARDED. In determining whether
the Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Company, any Note Guarantor or
by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any Note Guarantor shall
be disregarded and deemed not to be outstanding, except that, for the purpose
of determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which the Trustee knows are so owned
shall be so disregarded. Subject to the foregoing, only Notes outstanding at
the time shall be considered in any such determination.
SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.
The Trustee may make reasonable rules for action by or a meeting of Holders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08. LEGAL HOLIDAYS. A "Legal Holiday" is a
Saturday, a Sunday or other day on which banking institutions are not required
by law or by regulation to be open in the State of New York. If a payment date
is a Legal Holiday, payment shall be made on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
If a regular record date is a Legal Holiday, the record date shall not be
affected.
SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 13.10. NO RECOURSE AGAINST OTHERS. A director,
officer, employee or stockholder, as such, of the Company or any Note Guarantor
shall not have any liability for any obligations of the Company or such Note
Guarantor under the Notes or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Note, each Holder shall waive and release all such lia bility. The waiver and
release shall be part of the consideration for the issue of the Notes.
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SECTION 13.11. SUCCESSORS. All agreements of the Company and
each Note Guarantor in this Indenture and the Notes shall bind its successors.
All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12. MULTIPLE ORIGINALS. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 13.13. TABLE OF CONTENTS; HEADINGS. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
On behalf of
AMERICAN MEDIA OPERATIONS, INC.,
NATIONAL ENQUIRER, INC., STAR
EDITORIAL, INC., SOM PUBLISHING,
INC., WEEKLY WORLD NEWS, INC.,
COUNTRY WEEKLY, INC., DISTRIBUTION
SERVICES, INC., FAIRVIEW PRINTING,
INC., NDSI, INC., HEALTH XTRA,
INC., RETAIL MARKETING NETWORK,
INC., BIOCIDE, INC., AMERICAN MEDIA
MARKETING, INC., and MARKETING
SERVICES, INC.,
By /s/ Peter A. Nelson
---------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and CFO
THE CHASE MANHATTAN BANK, as Trustee
By /s/ Roy Wessinger
---------------------------------
Name: Roy Wessinger
Title: Authorized Signatory
<PAGE> 82
APPENDIX A
PROVISIONS RELATING TO INITIAL NOTES,
PRIVATE EXCHANGE NOTES
AND EXCHANGE NOTES
1. DEFINITIONS
1.1 DEFINITIONS
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Applicable Procedures" means, with respect to any transfer
or transaction involving a Regulation S Global Note or beneficial interest
therein, the rules and procedures of the Depositary for such Global Note,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedel Bank, S.A., or any successor securities
clearing agency.
"Definitive Note" means a certificated Initial Note, Private
Exchange Note or Exchange Note (bearing the Restricted Notes Legend if the
transfer of such Note is restricted by applicable law) that does not include
the Global Notes Legend.
"Depositary" means The Depository Trust Company, its nominees
and their respective successors.
"Euroclear" means the Euroclear Clearance System or any
successor securities clearing agency.
"Exchange Offer Registration Statement" means a registration
statement filed by the Company with the SEC in connection with a Registered
Exchange Offer.
"Global Notes Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"IAI" means an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchaser" means Chase Securities Inc.
"Issue Date" means the date on which the Initial Notes are
originally issued.
"Private Exchange" means an offer by the Company, pursuant to
the Registration Agreement, to issue and deliver to certain purchasers, in
exchange for the Initial Notes held by such purchasers as part of their initial
distribution, a like aggregate principal amount of Private Exchange Notes.
"Private Exchange Notes" means the Notes of the Company
issued in exchange for Initial Notes pursuant to this Indenture in connection
with the Private Exchange pursuant to the Registration Agreement.
<PAGE> 83
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"Purchase Agreement" means the Purchase Agreement dated April
30, 1999, among the Company, the Note Guarantors and the Initial Purchaser.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to the Registration Agreement, to certain Holders of Initial Notes, to
issue and deliver to such Holders, in exchange for their Initial Notes, a like
aggregate principal amount of Exchange Notes registered under the Securities
Act.
"Registration Agreement" means the Exchange and Registration
Rights Agreement dated May 7, 1999, among the Company, the Note Guarantors and
the Initial Purchaser.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Notes" means all Initial Notes offered and sold
outside the United States in reliance on Regulation S.
"Restricted Period", with respect to any Notes, means the
period of 40 consecutive days beginning on and including the later of (a) the
day on which such Notes are first offered to persons other than distributors
(as defined in Regulation S under the Securities Act) in reliance on Regulation
S, notice of which day shall be promptly given by the Company to the Trustee,
and (b) the Issue Date with respect to such Notes.
"Restricted Notes Legend" means the legend set forth in
Section 2.3(e)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Notes" means all Initial Notes offered and sold to
QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as
amended.
"Notes Custodian" means the custodian with respect to a
Global Note (as appointed by the Depositary) or any successor person thereto,
who shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement
filed by the Company in connection with the offer and sale of Initial Notes
pursuant to the Registration Agreement.
"Transfer Restricted Notes" means Definitive Notes and any
other Notes that bear or are required to bear the Restricted Notes Legend.
<PAGE> 84
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1.2 OTHER DEFINITIONS
Term: Defined in Section:
----- -------------------
"Agent Members".....................................................2.1(b)
"IAI Global Note"...................................................2.1(a)
"Global Note".......................................................2.1(a)
"Regulation S Global Note"..........................................2.1(a)
"Rule 144A Global Note".............................................2.1(a)
2. THE NOTES
2.1 FORM AND DATING
The Initial Notes issued on the date hereof shall be (a)
offered and sold by the Company pursuant to the Purchase Agreement and (b)
resold, initially only to (i) QIBs in reliance on Rule 144A and (ii) Persons
other than U.S. Persons (as defined in Regulation S) in reliance on Regulation
S. Such Initial Notes may thereafter be transferred to, among others, QIBs,
purchasers in reliance on Regulation S and, except as set forth below, IAIs in
accordance with Rule 501.
(a) GLOBAL NOTES. Rule 144A Notes shall be issued initially
in the form of one or more permanent global Notes in definitive, fully
registered form (collectively, the "Rule 144A Global Note") and Regulation S
Notes shall be issued initially in the form of one or more global Notes
(collectively, the "Regulation S Global Note"), in each case without interest
coupons and bearing the Global Notes Legend and Restricted Notes Legend, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with the Notes Custodian, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Company and authenticated by
the Trustee as provided in this Indenture. One or more global securities in
definitive, fully registered form without interest coupons and bearing the
Global Notes Legend and the Restricted Notes Legend (collectively, the "IAI
Global Note") shall also be issued on the Closing Date, deposited with the
Notes Custodian, and registered in the name of the Depositary or a nominee of
the Depositary, duly executed by the Company and authenticated by the Trustee
as provided in this Indenture to accommodate transfers of beneficial interests
in the Notes to IAIs subsequent to the initial distribution. Beneficial
ownership interests in the Regulation S Global Note shall not be exchangeable
for interests in the Rule 144A Global Note, the IAI Global Note or any other
Note without a Restricted Notes Legend until the expiration of the Restricted
Period. The Rule 144A Global Note, the IAI Global Note and the Regulation S
Global Note are each referred to herein as a "Global Note" and are collectively
referred to herein as "Global Notes"; PROVIDED, that the term "Global Note"
when used in Sections 2.1(b) (third paragraph), 2.1(c), 2.3(g)(i), 2.3(h)(i)
and 2.4 shall also include any Note in global form issued in connection with a
Registered Exchange Offer or Private Exchange. The aggregate principal amount
of the Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee and on the schedules thereto as hereinafter provided.
(b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply
only to a Global Note deposited with or on behalf of the Depositary.
<PAGE> 85
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The Company shall execute and the Trustee shall, in
accordance with this Section 2.1(b) and Section 2.2 and pursuant to an order of
the Company signed by one Officer, authenticate and deliver initially one or
more Global Notes that (i) shall be registered in the name of the Depositary
for such Global Note or Global Notes or the nominee of such Depositary and (ii)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions or held by the Trustee as Notes Custodian.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depositary or by the Trustee as Notes
Custodian or under such Global Note, and the Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Note for all purposes whatsoever. Notwith
standing the foregoing, nothing herein shall prevent the Company, the Trustee
or any agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of
a holder of a beneficial interest in any Global Note.
(c) DEFINITIVE NOTES. Except as provided in Section 2.3 or
2.4, owners of beneficial interests in Global Notes shall not be entitled to
receive physical delivery of certificated Notes.
2.2 AUTHENTICATION. The Trustee shall authenticate and make available
for delivery upon a written order of the Company signed by one Officer (a)
Initial Notes for original issue on the date hereof in an aggregate principal
amount of $250,000,000, (b) the (i) Exchange Notes for issue only in a
Registered Exchange Offer and (ii) Private Exchange Notes for issue only in the
Private Exchange, in the case of each of (i) and (ii) pursuant to the
Registration Agreement and for a like principal amount of Initial Notes
exchanged pursuant thereto. Such order shall specify the amount of the Notes to
be authenticated, the date on which the original issue of Notes is to be
authenticated and whether the Notes are to be Initial Notes, Exchange Notes or
Private Exchange Notes. The aggregate principal amount of Notes outstanding at
any time may not exceed $250,000,000 except as provided in Sections 2.07 and
2.08 of this Indenture.
2.3 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF DEFINITIVE
NOTES. When Definitive Notes are presented to the Registrar with a request:
(i) to register the transfer of such Definitive Notes; or
(ii) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; PROVIDED, HOWEVER,
that the Definitive Notes surrendered for transfer or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing; and
<PAGE> 86
5
(2) in the case of Initial Notes, are accompanied by the
following additional information and documents, as applicable:
(A) if such Definitive Notes are being delivered to
the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect (in the form set forth on the reverse
side of the Initial Note); or
(B) if such Definitive Notes are being transferred
to the Company, a certification to that effect (in the form
set forth on the reverse side of the Initial Note); or
(C) if such Definitive Notes are being transferred
pursuant to an exemption from registration in accordance with
Rule 144 under the Securities Act or in reliance upon another
exemption from the registration requirements of the
Securities Act, (i) a certification to that effect (in the
form set forth on the reverse side of the Initial Note) and
(ii) if the Company so requests, an opinion of counsel or
other evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the legend set
forth in Section 2.3(e)(i).
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE NOTE FOR A
BENEFICIAL INTEREST IN A GLOBAL NOTE. A Definitive Note may not be exchanged
for a beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by a written instrument of transfer in form
reasonably satisfactory to the Company and the Registrar, together with:
(i) certification (in the form set forth on the reverse side
of the Initial Note) that such Definitive Note is being transferred
(A) to a QIB in accordance with Rule 144A, (B) to an IAI that has
furnished to the Trustee a signed letter substantially in the form of
Exhibit D or (C) outside the United States in an offshore transaction
within the meaning of Regulation S and in compliance with Rule 904
under the Securities Act; and
(ii) written instructions directing the Trustee to make, or
to direct the Notes Custodian to make, an adjustment on its books and
records with respect to such Global Note to reflect an increase in the
aggregate principal amount of the Notes represented by the Global
Note, such instructions to contain information regarding the
Depositary account to be credited with such increase,
then the Trustee shall cancel such Definitive Note and cause, or direct the
Notes Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Notes Custodian, the
aggregate principal amount of Notes represented by the Global Note to be
increased by the aggregate principal amount of the Definitive Note to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global Note equal
to the principal amount of the Definitive Note so canceled. If no Global Notes
are then outstanding and the Global Note has not been previously exchanged for
certificated securities pursuant to Section 2.4, the Company shall issue and
the Trustee shall authenticate, upon written order of the Company in the form
of an Officers' Certificate, a new Global Note in the appropriate principal
amount.
<PAGE> 87
6
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. (i) The transfer
and exchange of Global Notes or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. A transferor of a beneficial interest in a Global Note
shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Note or
another Global Note and such account shall be credited in accordance with such
order with a beneficial interest in the applicable Global Note and the account
of the Person making the transfer shall be debited by an amount equal to the
beneficial interest in the Global Note being transferred. Transfers by an owner
of a beneficial interest in the Rule 144A Global Note or the IAI Global Note to
a transferee who takes delivery of such interest through the Regulation S
Global Note, whether before or after the expiration of the Restricted Period,
shall be made only upon receipt by the Trustee of a certification from the
transferor in the form provided on the reverse side of the Initial Note to the
effect that such transfer is being made in accordance with Regulation S or (if
available) Rule 144 under the Securities Act and that, if such transfer is
being made prior to the expiration of the Restricted Period, the interest
transferred shall be held immediately thereafter through Euroclear or Cedel. In
the case of a transfer of a beneficial interest in either the Regulation S
Global Note or the Rule 144A Global Note for an interest in the IAI Global
Note, the transferee must furnish a signed letter substantially in the form of
Exhibit D to the Trustee.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Note to a beneficial interest in another Global Note, the
Registrar shall reflect on its books and records the date and an increase in
the principal amount of the Global Note to which such interest is being
transferred in an amount equal to the principal amount of the interest to be so
transferred, and the Registrar shall reflect on its books and records the date
and a corresponding decrease in the principal amount of Global Note from which
such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary.
(iv) In the event that a Global Note is exchanged for Definitive Notes
pursuant to Section 2.4 prior to the consummation of the Registered Exchange
Offer or the effectiveness of the Shelf Registration Statement with respect to
such Notes, such Notes may be exchanged only in accordance with such procedures
as are substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse side of the
Initial Notes intended to ensure that such transfers comply with Rule 144A,
Regulation S or such other applicable exemption from registration under the
Securities Act, as the case may be) and such other procedures as may from time
to time be adopted by the Company.
(d) RESTRICTIONS ON TRANSFER OF REGULATION S GLOBAL NOTE. (i)
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Note may only be held through Euroclear or Cedel. During the Restricted
Period, beneficial ownership interests in the Regulation S Global Note may only
be sold, pledged or transferred through Euroclear or Cedel in accordance with
the Applicable Procedures and only (1) to the
<PAGE> 88
7
Company, (2) so long as such security is eligible for resale pursuant to Rule
144A, to a person whom the selling holder reasonably believes is a QIB that
purchases for its own account or for the account of a QIB to whom notice is
given that the resale, pledge or transfer is being made in reliance on Rule
144A, (3) in an offshore transaction in accordance with Regulation S, (4)
pursuant to an exemption from registration under the Securities Act provided by
Rule 144 (if applicable) under the Securities Act, (5) to an IAI purchasing for
its own account, or for the account of such an IAI, in a minimum principal
amount of Notes of $250,000 or (6) pursuant to an effective registration
statement under the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States. Prior to the
expiration of the Restricted Period, transfers by an owner of a beneficial
interest in the Regulation S Global Note to a transferee who takes delivery of
such interest through the Rule 144A Global Note or the IAI Global Note shall be
made only in accordance with Applicable Procedures and upon receipt by the
Trustee of a written certification from the transferor of the beneficial
interest substantially in the form provided on the reverse side of the Initial
Note to the effect that such transfer is being made to (A) a QIB within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or
(B) an IAI purchasing for its own account, or for the account of such an IAI,
in a minimum principal amount of the Notes of $250,000. Such written
certification shall no longer be required after the expiration of the
Restricted Period. In the case of a transfer of a beneficial interest in the
Regulation S Global Note for an interest in the IAI Global Note, the transferee
must furnish a signed letter substantially in the form of Exhibit D to the
Trustee.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Note shall be
transferable in accordance with applicable law and the other terms of
this Indenture.
(e) LEGEND.
(i) Except as permitted by the following paragraphs (ii),
(iii) or (iv), each Note certificate evidencing the Global Notes and
the Definitive Notes (and all Notes issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the
following form (each defined term in the legend being defined as such
for purposes of the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A
<PAGE> 89
8
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"),
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED
INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE."
Each Definitive Note shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Note
that is a Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Note for a Definitive
Note that does not bear the legends set forth above and rescind any
restriction on the transfer of such Transfer Restricted Note if the
Holder certifies in writing to the Registrar that its request for such
exchange was made in reliance on Rule 144 (such certification to be in
the form set forth on the reverse side of the Initial Note).
(iii) After a transfer of any Initial Notes or Private
Exchange Notes during the period of the effectiveness of a Shelf
Registration Statement with respect to such Initial Notes or Private
Exchange Notes, as the case may be, all requirements pertaining to the
Restricted Notes Legend on such Initial Notes or such Private Exchange
Notes shall cease to apply and the requirements that any such Initial
Notes or such Private Exchange Notes be issued in global form shall
continue to apply.
<PAGE> 90
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(iv) Upon the consummation of a Registered Exchange Offer
with respect to the Initial Notes pursuant to which Holders of such
Initial Notes are offered Exchange Notes in exchange for their Initial
Notes, all requirements pertaining to Initial Notes that Initial Notes
be issued in global form shall continue to apply, and Exchange Notes
in global form without the Restricted Notes Legend shall be available
to Holders that exchange such Initial Notes in such Registered
Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect
to the Initial Notes pursuant to which Holders of such Initial Notes
are offered Private Exchange Notes in exchange for their Initial
Notes, all requirements pertaining to such Initial Notes that Initial
Notes be issued in global form shall continue to apply, and Private
Exchange Notes in global form with the Restricted Notes Legend shall
be available to Holders that exchange such Initial Notes in such
Private Exchange.
(vi) Upon a sale or transfer after the expiration of the
Restricted Period of any Initial Note acquired pursuant to Regulation
S, all requirements that such Initial Note bear the Restricted Notes
Legend shall cease to apply and the requirements requiring any such
Initial Note be issued in global form shall continue to apply.
(f) CANCELATION OR ADJUSTMENT OF GLOBAL NOTE. At such time as
all beneficial interests in a Global Note have either been exchanged for
Definitive Notes, transferred, redeemed, repurchased or canceled, such Global
Note shall be returned by the Depositary to the Trustee for cancelation or
retained and canceled by the Trustee. At any time prior to such cancelation, if
any beneficial interest in a Global Note is exchanged for Definitive Notes,
transferred in exchange for an interest in another Global Note, redeemed,
repurchased or canceled, the principal amount of Notes represented by such
Global Note shall be reduced and an adjustment shall be made on the books and
records of the Trustee (if it is then the Notes Custodian for such Global Note)
with respect to such Global Note, by the Trustee or the Notes Custodian, to
reflect such reduction.
(g) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
NOTES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate, Definitive
Notes and Global Notes at the Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge
payable upon exchanges or transfer pursuant to Sections 2.09, 3.06,
4.06, 4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of
transfer of any Note, the Company, the Trustee, the Paying Agent or
the Registrar may deem and treat the person in whose name a Note is
registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note is overdue,
and none of the Company, the Trustee, the Paying Agent or the
Registrar shall be affected by notice to the contrary.
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(iv) All Notes issued upon any transfer or exchange pursuant
to the terms of this Indenture shall evidence the same debt and shall
be entitled to the same benefits under this Indenture as the Notes
surrendered upon such transfer or exchange.
(h) NO OBLIGATION OF THE TRUSTEE.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Note, a member of, or a participant
in the Depositary or any other Person with respect to the accuracy of
the records of the Depositary or its nominee or of any participant or
member thereof, with respect to any ownership interest in the Notes or
with respect to the delivery to any participant, member, beneficial
owner or other Person (other than the Depositary) of any notice
(including any notice of redemption or repurchase) or the payment of
any amount, under or with respect to such Notes. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Notes shall be given or made only to the
registered Holders (which shall be the Depositary or its nominee in
the case of a Global Note). The rights of beneficial owners in any
Global Note shall be exercised only through the Depositary subject to
the applicable rules and procedures of the Depositary. The Trustee may
rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants
and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Inden ture or under applicable law with
respect to any transfer of any interest in any Note (including any
transfers between or among Depositary participants, members or
beneficial owners in any Global Note) other than to require delivery
of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by,
the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
2.4 DEFINITIVE NOTES
(a) A Global Note deposited with the Depositary or with the
Trustee as Notes Custodian pursuant to Section 2.1 or issued in connection with
a Registered Exchange Offer or Private Exchange shall be transferred to the
beneficial owners thereof in the form of Definitive Notes in an aggregate
principal amount equal to the principal amount of such Global Note, in exchange
for such Global Note, only if such transfer complies with Section 2.3 and (i)
the Depositary notifies the Company that it is unwilling or unable to continue
as a Depositary for such Global Note or if at any time the Depositary ceases to
be a "clearing agency" registered under the Exchange Act, and a successor
depositary is not appointed by the Company within 90 days of such notice or
after the Company becomes aware of such cessation, or (ii) an Event of Default
has occurred and is continuing or (iii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
certificated Notes under this Indenture.
(b) Any Global Note that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Note, an equal
<PAGE> 92
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aggregate principal amount of Definitive Notes of authorized denominations. Any
portion of a Global Note transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depositary shall
direct. Any certificated Initial Note in the form of a Definitive Note
delivered in exchange for an interest in the Global Note shall, except as
otherwise provided by Section 2.3(e), bear the Restricted Notes Legend.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Note may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.
(d) In the event of the occurrence of any of the events
specified in Section 2.4(a)(i), (ii) or (iii), the Company shall promptly make
available to the Trustee a reasonable supply of Definitive Notes in fully
registered form without interest coupons.
<PAGE> 93
EXHIBIT A
FORM OF FACE OF INITIAL NOTE AND PRIVATE EXCHANGE NOTE
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Notes Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S
<PAGE> 94
2
UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
Each Definitive Note shall bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS
SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.
<PAGE> 95
No. [ ] $[__________]
10 1/4% Senior Subordinated Note due 2009
CUSIP No. [______]
[ISIN No: [ ]]
American Media Operations, Inc., a Delaware corporation,
promises to pay to [ ], or registered assigns, the principal sum
[of $ ] [listed on the Schedule of Increases or Decreases in Global Note
attached hereto](1) on May 1, 2009.
Interest Payment Dates: May 1 and November 1.
Record Dates: April 15 and October 15.
- --------
(1) Use the Schedule of Increases and Decreases language if Note is in global
form.
<PAGE> 96
2
Additional provisions of this Note are set forth on the other
side of this Note.
IN WITNESS WHEREOF, the parties have caused this instrument
to be duly executed.
AMERICAN MEDIA OPERATIONS, INC.,
By
-------------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Notes referred
to in the Indenture.
By:
--------------------------------------
Authorized [Officer] [Signatory]
- -------------------
*/ If the Note is to be issued in global form, add the Global Notes Legend and
the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL NOTES -
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE".
<PAGE> 97
3
FORM OF REVERSE SIDE OF INITIAL NOTE AND PRIVATE EXCHANGE NOTE
10 1/4% Senior Subordinated Note due 2009
1. INTEREST
(a) American Media Operations, Inc., a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
interest on the principal amount of this Note at the rate per annum shown above
until the principal hereof is paid or duly provided for. The Company shall pay
interest semiannually on May 1 and November 1 of each year. Interest on the
Notes shall accrue from the most recent date to which interest has been paid or
duly provided for, or, if no interest has been paid or duly provided for, from
May 7, 1999. Interest shall be computed on the basis of a 360-day year or
twelve 30-day months.
(b) LIQUIDATED DAMAGES. The holder of this Note is entitled
to the benefits of an Exchange and Registration Rights Agreement, dated as of
May 7, 1999, among the Company, National Enquirer, Inc., Star Editorial, Inc.,
SOM Publishing, Inc., Weekly World News, Inc., Country Weekly, Inc., Fairview
Printing, Inc., NDSI, Inc., Health Xtra, Inc., Retail Marketing Network, Inc.,
Biocide, Inc., American Media Marketing, Inc. and Marketing Services, Inc., as
guarantors (the "Note Guarantors"), and the Initial Purchaser named therein
(the "Registration Agreement"). Capitalized terms used in this paragraph (b)
but not defined herein have the meanings assigned to them in the Registration
Agreement. If (i) the Shelf Registration Statement or the Exchange Offer
Registration Statement, as applicable under the Registration Agreement, is not
filed with the Commission on or prior to 105 days after the Issue Date, (ii)
the Shelf Registration Statement or the Exchange Offer Registration Statement,
as the case may be, is not declared effective within 165 days after the Issue
Date, (iii) the Registered Exchange Offer is not consummated on or prior to 195
days after the Issue Date, or (iv) the Shelf Registration Statement is filed
and declared effective within 195 days after the Issue Date but shall
thereafter cease to be effective (at any time that the Company is obligated to
maintain the effectiveness thereof) without being succeeded within 90 days by
an additional Registration Statement filed and declared effective (each such
event referred to in clauses (i) through (iv), a "Registration Default"), the
Company shall pay liquidated damages to each holder of Transfer Restricted
Notes, during the period of such Registration Default, in an amount equal to
$0.192 per week per $1,000 principal amount of the Notes constituting Transfer
Restricted Notes held by such holder until the applicable Registration
Statement is filed or declared effective, the Registered Exchange Offer is
consummated or the Shelf Registration Statement again becomes effective, as the
case may be. All accrued liquidated damages shall be paid to holders in the
same manner as interest payments on the Notes on semi-annual payment dates
which correspond to interest payment dates for the Notes. Following the cure of
all Registration Defaults, the accrual of liquidated damages shall cease. The
Trustee shall have no responsibility with respect to the determination of the
amount of any such liquidated damages. For purposes of the foregoing, "Transfer
Restricted Notes" means (i) each Initial Note until the date on which such
Initial Note has been exchanged for a freely transferable Exchange Note in the
Registered Exchange Offer, (ii) each Initial Note or Private Exchange Note
until the date on which such Initial Note or Private Exchange Note has been
effectively registered under the Securities Act and disposed of in accordance
with a Shelf Registration Statement or (iii) each Initial Note or Private
Exchange Note until the date on which such Initial Note or Private Exchange
<PAGE> 98
4
Note is distributed to the public pursuant to Rule 144 under the Securities Act
or is saleable pursuant to Rule 144(k) under the Securities Act.
2. METHOD OF PAYMENT
The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are registered holders of Notes at the close of
business on the April 15 or October 15 next preceding the interest payment date
even if Notes are canceled after the record date and on or before the interest
payment date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company shall pay principal, premium, liquidated
damages and interest in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts. Payments in
respect of the Notes represented by a Global Note (including principal,
premium, liquidated damages and interest) shall be made by wire transfer of
immediately available funds to the accounts specified by The Depository Trust
Company. The Company shall make all payments in respect of a certificated Note
(including principal, premium and interest), by mailing a check to the
registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on
the Notes may also be made, in the case of a Holder of at least $1,000,000
aggregate principal amount of Notes, by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, The Chase Manhattan Bank, a New York banking
corporation (the "Trustee"), shall act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Notes under an Indenture dated as of
May 7, 1999 (the "Indenture"), among the Company, the Note Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Notes are subject to all terms and
provisions of the Indenture, and Holders are referred to the Indenture and the
TIA for a statement of such terms and provisions.
The Notes are senior subordinated unsecured obligations of
the Company limited to $250,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Note is one of the
Initial Notes referred to in the Indenture issued in an aggregate principal
amount of $250,000,000. The Notes include the Initial Notes and any Exchange
Notes and Private Exchange Notes issued in exchange for Initial Notes. The
Initial Notes, the Exchange Notes and the Private Exchange Notes are treated as
a single class of securities under the Indenture. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other
<PAGE> 99
5
things, make certain Investments and other Restricted Payments, pay dividends
and other distributions, incur Indebtedness, enter into consensual restrictions
upon the payment of certain dividends and distributions by such Restricted
Subsidiaries, issue or sell shares of capital stock of such Restricted
Subsidiaries, enter into or permit certain transactions with Affiliates, sell
assets and enter into new lines of business. The Indenture also imposes
limitations on the ability of the Company to consolidate or merge with or into
any other Person or convey, transfer or lease all or substantially all of the
property of the Company.
To guarantee the due and punctual payment of the principal
and interest on the Notes and all other amounts payable by the Company under
the Indenture and the Notes when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of
the Notes and the Indenture, the Note Guarantors have jointly and severally
unconditionally guaranteed the Guaranteed Obligations on a senior subordinated
basis pursuant to the terms of the Indenture.
5. OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the Notes
shall not be redeemable at the option of the Company prior to May 1, 2004.
Thereafter, the Notes shall be redeemable at the option of the Company, in
whole or in part, on not less than 30 nor more than 60 days' prior notice, at
the following redemption prices (expressed as percentages of principal amount),
plus accrued and unpaid interest and liquidated damages thereon, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on May 1 of the years set forth
below:
REDEMPTION
YEAR PRICE
---- ----------
2004 105.125%
2005 103.417%
2006 101.708%
2007 and thereafter 100.000%
In addition, prior to May 1, 2002, the Company may on one or
more occasions, also redeem up to a maximum of 35% of the original aggregate
principal amount of the Notes with the Net Cash Proceeds of one or more Equity
Offerings (a) by the Company or (b) by Holdings to the extent the Net Cash
Proceeds thereof are contributed to the Company or used to purchase Capital
Stock (other than Disqualified Stock) of the Company from the Company, at a
redemption price equal to 110.25% of the principal amount thereof, plus accrued
and unpaid interest and liquidated damages thereon, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); PROVIDED, HOWEVER,
that after giving effect to any such redemption, at least 65% of the original
aggregate principal amount of the Notes remains outstanding. Any such
redemption shall be made within 60 days of such Equity Offering upon not less
than 30 nor more than 60 days' notice mailed to each holder of Notes being
redeemed and otherwise in accordance with the procedures set forth in the
Indenture.
<PAGE> 100
6
6. SINKING FUND
The Notes are not subject to any sinking fund.
7. NOTICE OF REDEMPTION
Notice of redemption shall be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Notes to be redeemed at his or her registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and liquidated damages, if any, on all Notes (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Notes (or
such portions thereof) called for redemption.
8. REPURCHASE OF NOTES AT THE OPTION OF HOLDERS UPON CHANGE OF CONTROL
Upon a Change of Control, any Holder of Notes will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Notes of such Holder at a purchase
price equal to 101% of the principal amount of the Notes to be repurchased plus
accrued and unpaid interest and liquidated damages, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date that is on
or prior to the date of purchase) as provided in, and subject to the terms of,
the Indenture.
In accordance with Section 4.06 of the Indenture, the Company
will be required to offer to purchase Notes upon the occurrence of certain
events.
9. SUBORDINATION
The Notes are subordinated to Senior Indebtedness, as defined
in the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Notes may be paid. The Company and each Note Guarantor
agrees, and each Holder by accepting a Note agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give it
effect and appoints the Trustee as attorney-in-fact for such purpose.
10. DENOMINATIONS; TRANSFER; EXCHANGE
The Notes are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Notes in accordance with the Indenture. Upon any transfer or exchange,
the Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes
required by law or permitted by the Indenture. The Regis trar need not register
the transfer of or exchange any Notes selected for redemption (except, in the
case of a Note to be redeemed in part, the portion of the Note not to be
redeemed) or to transfer or exchange any Notes for a period of 15 days prior to
a selection of Notes to be redeemed.
<PAGE> 101
7
11. PERSONS DEEMED OWNERS
Except as provided in paragraph 2 hereof, the registered
Holder of this Note may be treated as the owner of it for all purposes.
12. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its written request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.
13. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Notes and the Indenture if
the Company deposits with the Trustee money or U.S. Government Obligations for
the payment of principal and interest on the Notes to redemption or maturity,
as the case may be.
14. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (a)
the Indenture or the Notes may be amended without prior notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Notes and (b) any default may be waived
with the written consent of the Holders of at least a majority in principal
amount of the outstanding Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Notes, the Company and the
Trustee may amend the Indenture or the Notes (a) to cure any ambiguity,
omission, defect or inconsistency; (b) to comply with Article 5 of the
Indenture; (c) to provide for uncertificated Notes in addition to or in place
of certificated Notes; (d) to add Note Guarantees with respect to the Notes;
(e) to secure the Notes; (f) to add additional covenants or to surrender rights
and powers conferred on the Company; (g) to comply with the requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
TIA; (h) to make any change that does not adversely affect the rights of any
Holder; (i) to make any change in the subordination provisions of the Indenture
that would limit or terminate the benefits available to any holder of Senior
Indebtedness of the Company (or any representative thereof) under such
subordination provisions; or (j) to provide for the issuance of the Exchange
Notes or Private Exchange Notes.
15. DEFAULTS AND REMEDIES
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company) and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Notes may declare the principal of and
accrued but unpaid interest on all the Notes to be due and payable. If an Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization of the Company occurs, the principal of and interest on all the
Notes shall become immediately due and payable without any declaration or other
act on the part of the
<PAGE> 102
8
Trustee or any Holders. Under certain circumstances, the Holders of a majority
in principal amount of the outstanding Notes may rescind any such acceleration
with respect to the Notes and its consequences.
If an Event of Default occurs and is continuing, the Trustee
shall be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense and certain other conditions are complied with. Except to
enforce the right to receive payment of principal, premium (if any) or interest
when due, no Holder may pursue any remedy with respect to the Indenture or the
Notes unless (a) such Holder has previously given the Trustee notice that an
Event of Default is continuing, (b) Holders of at least 25% in principal amount
of the outstanding Notes have requested the Trustee in writing to pursue the
remedy, (c) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense, (d) the Trustee has not
complied with such request within 60 days after the receipt of the request and
the offer of security or indemnity and (e) the Holders of a majority in
principal amount of the outstanding Notes have not given the Trustee a
direction inconsistent with such request within such 60-day period. Subject to
certain restrictions, the Holders of a majority in principal amount of the
outstanding Notes are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
16. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the TIA, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it
were not Trustee.
17. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the
Company or any Note Guarantor shall not have any liability for any obligations
of the Company under the Notes or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Note, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.
18. AUTHENTICATION
This Note shall not be valid until an authorized officer or
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Note.
<PAGE> 103
9
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a Holder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. GOVERNING LAW
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP [AND ISIN] NUMBERS
The Company has caused CUSIP [and ISIN] numbers to be printed
on the Notes and has directed the Trustee to use CUSIP [and ISIN] numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY HOLDER OF NOTES UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN
IT THE TEXT OF THIS NOTE.
<PAGE> 104
10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Note on the books of
the Company. The agent may substitute another to act for him.
- ------------------------------------------------------------
Date: ________________ Your Signature: _____________________
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this Note.
<PAGE> 105
11
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Notes held in (check
applicable space) ____ book-entry or _____ definitive form by the undersigned.
The undersigned (check one box below):
/ / has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a
Note or Notes in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its
beneficial interest in such Global Note (or the portion thereof
indicated above);
/ / has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with any transfer of any of the Notes evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Notes are
being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / to the Registrar for registration in the name of
the Holder, without transfer
(3) / / pursuant to an effective registration statement
under the Securities Act of 1933; or
(4) / / inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933) that purchases for its
own account or for the account of a qualified
institutional buyer to whom notice is given that
such transfer is being made in reliance on Rule
144A, in each case pursuant to and in compliance
with Rule 144A under the Securities Act of 1933; or
(5) / / outside the United States in an offshore
transaction within the meaning of Regulation S under
the Securities Act in compliance with Rule 904 under
the Securities Act of 1933 and such Note shall be
held immediately after the transfer through
Euroclear and Cedel until the expiration of the
Restricted Period (as defined in the Indenture); or
(6) / / to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933) that has furnished to the
Trustee a signed letter containing certain
representations and agreements; or
(7) / / pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
<PAGE> 106
12
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of
any Person other than the registered holder thereof; PROVIDED,
HOWEVER, that if box (5), (6) or (7) is checked, the Trustee may
require, prior to registering any such transfer of the Notes, such
legal opinions, certifications and other information as the Company
has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933.
______________________________________
Your Signature
Signature Guarantee:
Date: _________________________ ______________________________________
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
____________________________________________________________
TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: ________________ ___________________________________
NOTICE: To be executed by
an executive officer
<PAGE> 107
13
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The initial principal amount of this Global Note is $[ ]. The
following increases or decreases in this Global Note have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Date of Principal Amount of this Principal Amount of this Global Note following such officer or signatory of
Exchange Global Note Global Note decrease or increase Trustee or Notes Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 108
14
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY
THE COMPANY PURSUANT TO SECTION 4.06 (ASSET DISPOSITION) OR 4.08 (CHANGE OF
CONTROL) OF THE INDENTURE, CHECK THE BOX:
ASSET DISPOSITION / / CHANGE OF CONTROL / /
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS NOTE
PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.06 OR 4.08 OF THE INDENTURE,
STATE THE AMOUNT ($1,000 OR AN INTEGRAL MULTIPLE THEREOF):
$
DATE: __________________ YOUR SIGNATURE: ________________________
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE NOTE)
SIGNATURE GUARANTEE:__________________________________________________________
SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A
RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR OTHER
SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE
<PAGE> 109
EXHIBIT B
FORM OF FACE OF EXCHANGE NOTE
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
<PAGE> 110
2
No. $__________
10 1/4% Senior Subordinated Note due 2009
CUSIP No. ______
[ISIN No._____]
American Media Operations, Inc., a Delaware corporation,
promises to pay to [ ], or registered assigns, the principal sum
[of $ ] [listed on the Schedule of Increases or Decreases in Global Note
attached hereto](2) on May 1, 2009.
Interest Payment Dates: May 1 and November 1.
Record Dates: April 15 and October 15.
- --------
(2) Use the Schedule of Increases and Decreases language if Note is in global
form.
<PAGE> 111
3
Additional provisions of this Note are set forth on the other
side of this Note.
IN WITNESS WHEREOF, the parties have caused this instrument
to be duly executed.
AMERICAN MEDIA OPERATIONS, INC.,
By
-----------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Notes referred
to in the Indenture.
By
-----------------------------------
Authorized [Officer] [Signatory]
- ------------------------
*/ If the Note is to be issued in global form, add the Global Notes Legend and
the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL NOTES -
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE".
<PAGE> 112
4
FORM OF REVERSE SIDE OF EXCHANGE NOTE
10 1/4% Senior Subordinated Note due 2009
1. INTEREST.
American Media Operations, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on
the principal amount of this Note at the rate per annum shown above until the
principal hereof is paid or duly provided for. The Company shall pay interest
semiannually on May 1 and November 1 of each year. Interest on the Notes shall
accrue from the most recent date to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for, from May 7,
1999. Interest shall be computed on the basis of a 360-day year or twelve
30-day months.
2. METHOD OF PAYMENT
The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are registered holders of Notes at the close of
business on the April 15 or October 15 next preceding the interest payment date
even if Notes are canceled after the record date and on or before the interest
payment date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company shall pay principal, premium and interest in
money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of the
Notes represented by a Global Note (including principal, premium and interest)
shall be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments
in respect of a certificated Note (including principal, premium and interest),
by mailing a check to the registered address of each Holder thereof; PROVIDED,
HOWEVER, that payments on the Notes may also be made, in the case of a Holder
of at least $1,000,000 aggregate principal amount of Notes, by wire transfer to
a U.S. dollar account maintained by the payee with a bank in the United States
if such Holder elects pay ment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later
than 30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, The Chase Manhattan Bank, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Notes under an Indenture dated as of
May 7, 1999 (the "Indenture"), among the Company, the Note Guarantors (as
defined in the Indenture) and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect
on the date of the Indenture (the "TIA"). Terms defined in the Indenture
<PAGE> 113
5
and not defined herein have the meanings ascribed thereto in the Indenture. The
Notes are subject to all terms and provisions of the Indenture, and Holders are
referred to the Indenture and the TIA for a statement of such terms and
provisions.
The Notes are senior subordinated unsecured obligations of
the Company limited to $250,000,000 aggregate principal amount at any one time
outstanding, of which $250,000,000 in aggregate principal amount will be
initially issued on the Closing Date. This Note is one of the Exchange Notes
referred to in the Indenture. The Notes include the Initial Notes and any
Exchange Notes and Private Exchange Notes issued in exchange for the Initial
Notes pursuant to the Indenture. The Initial Notes, the Exchange Notes and the
Private Exchange Notes are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into consensual restrictions upon the
payment of certain dividends and distributions by such Restricted Subsidiaries,
issue or sell shares of capital stock of such Restricted Subsidiaries, enter
into or permit certain transactions with Affiliates, sell assets and enter into
new lines of business. The Indenture also imposes limitations on the ability of
the Company to consolidate or merge with or into any other Person or convey,
transfer or lease all or substantially all of the property of the Company.
To guarantee the due and punctual payment of the principal
and interest, if any, on the Notes and all other amounts payable by the Company
under the Indenture and the Notes when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Notes and the Indenture, the Note Guarantors have, jointly and
severally, unconditionally guaranteed the Guaranteed Obligations on a senior
basis subordinated pursuant to the terms of the Indenture.
5. OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the Notes
shall not be redeemable at the option of the Company prior to May 1, 2004.
Thereafter, the Notes shall be redeemable at the option of the Company, in
whole or in part, on not less than 30 nor more than 60 days' prior notice, at
the following redemption prices (expressed as percentages of principal amount),
plus accrued and unpaid interest and liquidated damages thereon, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on May 1, of the years set forth
below:
REDEMPTION
YEAR PRICE
---- ----------
2004 105.125%
2005 103.417%
2006 101.708%
2007 and thereafter 100.000%
In addition, prior to May 1, 2002, the Company may, on one or
more occasions, also redeem up to a maximum of 35% of the original aggregate
principal amount of the Notes with the Net Cash Proceeds of one or more Equity
Offerings (a) by the Company or (b) by Holdings to the extent the Net Cash
Proceeds thereof are contributed to
<PAGE> 114
6
the Company or used to purchase Capital Stock (other than Disqualified Stock)
of the Company from the Company, at a redemption price equal to 110.25% of the
principal amount thereof, plus accrued and unpaid interest and liquidated
damages thereon, if any, to the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date); PROVIDED, HOWEVER, that after giving effect to
any such redemption, at least 65% of the original aggregate principal amount of
the Notes remains outstanding. Any such redemption shall be made within 60 days
of such Equity Offering upon not less than 30 nor more than 60 days' notice
mailed to each holder of Notes being redeemed and otherwise in accordance with
the procedures set forth in the Indenture.
6. SINKING FUND
The Notes are not subject to any sinking fund.
7. NOTICE OF REDEMPTION
Notice of redemption shall be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Notes to be redeemed at his or her registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and liquidated damages, if any, on all Notes (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Notes (or
such portions thereof) called for redemption.
8. REPURCHASE OF NOTES AT THE OPTION OF HOLDERS UPON CHANGE OF CONTROL
Upon a Change of Control, any Holder of Notes will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Notes of such Holder at a purchase
price equal to 101% of the principal amount of the Notes to be repurchased plus
accrued and unpaid interest and liquidated damages, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date that is on
or prior to the date of purchase) as provided in, and subject to the terms of,
the Indenture.
In accordance with Section 4.06 of the Indenture, the Company
will be required to offer to purchase Notes upon the occurrence of certain
events.
9. SUBORDINATION
The Notes are subordinated to Senior Indebtedness, as defined
in the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Notes may be paid. The Company and each Note Guarantor
agrees, and each Holder by accepting a Note agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give it
effect and appoints the Trustee as attorney-in-fact for such purpose.
<PAGE> 115
7
10. DENOMINATIONS; TRANSFER; EXCHANGE
The Notes are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Notes in accordance with the Indenture. Upon any transfer or exchange,
the Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes
required by law or permitted by the Indenture. The Regis trar need not register
the transfer of or exchange any Notes selected for redemption (except, in the
case of a Note to be redeemed in part, the portion of the Note not to be
redeemed) or to transfer or exchange any Notes for a period of 15 days prior to
a selection of Notes to be redeemed or 15 days before an interest payment date.
11. PERSONS DEEMED OWNERS
Except as provided in paragraph 2 hereof, the registered
Holder of this Note may be treated as the owner of it for all purposes.
12. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its written request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.
13. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Notes and the Indenture if
the Company deposits with the Trustee money or U.S. Government Obligations for
the payment of principal and interest on the Notes to redemption or maturity,
as the case may be.
14. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (a)
the Indenture or the Notes may be amended without prior notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Notes and (b) any default may be waived
with the written consent of the Holders of at least a majority in principal
amount of the outstanding Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Notes, the Company and the
Trustee may amend the Indenture or the Notes (a) to cure any ambiguity,
omission, defect or inconsistency; (b) to comply with Article 5 of the
Indenture; (c) to provide for uncertificated Notes in addition to or in place
of certificated Notes; (d) to add Note Guarantees with respect to the Notes;
(e) to secure the Notes; (f) to add additional covenants or to surrender rights
and powers conferred on the Company; (g) to comply with the requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
TIA; (h) to make any change that does not adversely affect the rights of any
Holder; (i) to make any change in the subordination provisions of the Indenture
that would limit or terminate the benefits available to any holder of Senior
Indebtedness of the Company (or any representative thereof) under such
subordination provisions; or (j) to provide for the issuance of the Exchange
Notes, or Private Exchange Notes.
<PAGE> 116
8
15. DEFAULTS AND REMEDIES
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company) and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Notes may declare the principal of and
accrued but unpaid interest on all the Notes to be due and payable. If an Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization of the Company occurs, the principal of and interest on all the
Notes shall become immediately due and payable without any declaration or other
act on the part of the Trustee or any Holders. Under certain circumstances, the
Holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration with respect to the Notes and its consequences.
If an Event of Default occurs and is continuing, the Trustee
shall be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense and certain other conditions are complied with. Except to
enforce the right to receive payment of principal, premium (if any) or interest
when due, no Holder may pursue any remedy with respect to the Indenture or the
Notes unless (a) such Holder has previously given the Trustee notice that an
Event of Default is continuing, (b) Holders of at least 25% in principal amount
of the outstanding Notes have requested the Trustee in writing to pursue the
remedy, (c) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense, (d) the Trustee has not
complied with such request within 60 days after the receipt of the request and
the offer of security or indemnity and (e) the Holders of a majority in
principal amount of the outstanding Notes have not given the Trustee a
direction inconsistent with such request within such 60-day period. Subject to
certain restrictions, the Holders of a majority in principal amount of the
outstanding Notes are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
16. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the TIA, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it
were not Trustee.
17. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the
Company or any Note Guarantor shall not have any liability for any obligations
of the Company under the Notes or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Note, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.
<PAGE> 117
9
18. AUTHENTICATION
This Note shall not be valid until an authorized officer or
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Note.
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a Holder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. GOVERNING LAW
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP [AND ISIN] NUMBERS
The Company has caused CUSIP [and ISIN] numbers to be printed
on the Notes and has directed the Trustee to use CUSIP [and ISIN] numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY HOLDER OF NOTES UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN
IT THE TEXT OF THIS NOTE.
<PAGE> 118
10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Note on the books of the
Company. The agent may substitute another to act for him.
- ------------------------------------------------------------
Date: ________________ Your Signature: _____________________
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this Note. Signature
must be guaranteed by a participant in a recognized signature guaranty
medallion program or other signature guarantor acceptable to the Trustee.
<PAGE> 119
11
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The initial principal amount of this Global Note is $[ ]. The
following increases or decreases in this Global Note have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Date of Principal Amount of this Principal Amount of this Global Note following such officer or signatory of
Exchange Global Note Global Note decrease or increase Trustee or Notes Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 120
12
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.06 (ASSET DISPOSITION) OR 4.08 (CHANGE OF
CONTROL) OF THE INDENTURE, CHECK THE BOX:
ASSET DISPOSITION / / CHANGE OF CONTROL / /
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS NOTE
PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.06 OR 4.08 OF THE INDENTURE,
STATE THE AMOUNT ($1,000 OR AN INTEGRAL MULTIPLE THEREOF):
$
DATE: __________________ YOUR SIGNATURE: __________________
(SIGN EXACTLY AS YOUR NAME APPEARS
ON THE OTHER SIDE OF THE NOTE)
SIGNATURE GUARANTEE:_______________________________________
SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A
RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR OTHER
SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE.
<PAGE> 121
EXHIBIT C
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture") dated as of , among [GUARANTOR]
(the "New Guarantor"), a subsidiary of AMERICAN
MEDIA OPERATIONS, INC. (or its successor), a
Delaware corporation (the "Company"), National
Enquirer, Inc., Star Editorial, Inc., SOM
Publishing, Inc., Weekly World News, Inc., Country
Weekly, Inc., Distribution Services, Inc., Fairview
Printing, Inc., NDSI, Inc., Health Xtra, Inc.,
Retail Marketing Network, Inc., Biocide, Inc.,
American Media Marketing, Inc. and Marketing
Services, Inc., as guarantors (the "Existing
Guarantors"), and THE CHASE MANHATTAN BANK, a New
York banking corporation, as trustee under the
indenture referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company and Existing Guarantors has heretofore
executed and delivered to the Trustee an Indenture (the "Indenture") dated as
of May 7, 1999, providing for the issuance of an aggregate principal amount of
up to $250,000,000 of 10 1/4% Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS Section 4.11 of the Indenture provides that under
certain circumstances the Company is required to cause the New Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Guarantor shall unconditionally guarantee all the Company's obligations
under the Notes pursuant to a Note Guarantee on the terms and conditions set
forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the
Trustee, the Company and the Existing Guarantors are authorized to execute and
deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the New Guarantor, the Company, the Existing Guarantors and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Notes as follows:
1. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees,
jointly and severally with all the Existing Guarantors, to unconditionally
guarantee the Company's obligations under the Notes on the terms and subject to
the conditions set forth in Articles 11 and 12 of the Indenture and to be bound
by all other applicable provisions of the Indenture and the Notes.
2. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF
INDENTURE. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Notes heretofore or
hereafter authenticated and delivered shall be bound hereby.
<PAGE> 122
2
3. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
4. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental
Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR],
By
------------------------------------
Name:
Title:
AMERICAN MEDIA OPERATIONS, INC.,
By
------------------------------------
Name:
Title:
NATIONAL ENQUIRER, INC.,
By
------------------------------------
Name:
Title:
STAR EDITORIAL, INC.,
By
------------------------------------
Name:
Title:
<PAGE> 123
3
SOM PUBLISHING, INC.,
By
------------------------------------
Name:
Title:
WEEKLY WORLD NEWS, INC.,
By
------------------------------------
Name:
Title:
COUNTRY WEEKLY, INC.,
By
------------------------------------
Name:
Title:
DISTRIBUTION SERVICES, INC.,
By
------------------------------------
Name:
Title:
FAIRVIEW PRINTING, INC.,
By
------------------------------------
Name:
Title:
NDSI, INC.,
By
------------------------------------
Name:
Title:
HEALTH XTRA, INC.,
By
------------------------------------
Name:
Title:
RETAIL MARKETING NETWORK, INC.,
By
------------------------------------
Name:
Title:
<PAGE> 124
4
BIOCIDE, INC.,
By
------------------------------------
Name:
Title:
AMERICAN MEDIA MARKETING, INC.,
By
------------------------------------
Name:
Title:
MARKETING SERVICES, INC.,
By
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee,
By
------------------------------------
Name:
Title:
<PAGE> 125
EXHIBIT D
Form of
Transferee Letter of Representation
American Media Operations, Inc.
c/o The Chase Manhattan Bank
1201 Main Street, 18th Floor
Dallas, Texas 75202
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ] principal
amount of the 10 1/4% Senior Subordinated Notes due 2009 (the "Notes") of
American Media Operations, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of the new
beneficial owner as follows:
Name:________________________
Address:_____________________
Taxpayer ID Number:__________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such
an institutional "accredited investor" at least $250,000 principal amount of
the Notes, and we are acquiring the Notes not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the Notes,
and we invest in or purchase securities similar to the Notes in the normal
course of our business. We, and any accounts for which we are acting, are each
able to bear the economic risk of our or its investment.
2. We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted
in the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Notes to offer, sell or otherwise
transfer such Notes prior to the date that is two years after the later of the
date of original issue and the last date on which the Company or any affiliate
of the Company was the owner of such Notes (or any predecessor thereto) (the
"Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to
a registration statement that has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under
the Securities Act ("Rule 144A"), to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that is purchasing for
its own account or for the account of a QIB and to whom notice is given that
the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes of
$250,000, or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times
<PAGE> 126
2
within our or their control and in compliance with any applicable state
securities laws. The foregoing restrictions on resale will not apply subsequent
to the Resale Restriction Termination Date. If any resale or other transfer of
the Notes is proposed to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act and that it is acquiring such Notes for
investment purposes and not for distribution in violation of the Securities
Act. Each purchaser acknowledges that the Company and the Trustee reserve the
right prior to the offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Notes pursuant to clause (d), (e) or (f)
above to require the delivery of an opinion of counsel, certifications or other
information satisfactory to the Company and the Trustee.
TRANSFEREE:_______________________,
By:________________________________
<PAGE> 1
Exhibit 4.2
AMERICAN MEDIA OPERATIONS, INC.
$250,000,000
10 1/4% SENIOR SUBORDINATED NOTES DUE 2009
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
May 7, 1999
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
American Media Operations, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to Chase Securities Inc. ("CSI" or the
"INITIAL PURCHASER"), upon the terms and subject to the conditions set forth in
a purchase agreement dated April 30, 1999 (the "PURCHASE AGREEMENT"),
$250,000,000 aggregate principal amount of its 10 1/4% Senior Subordinated
Notes due 2009 (the "SECURITIES") to be jointly and severally guaranteed on a
senior subordinated basis by certain of the Company's subsidiaries signatory
hereto (the "Note Guarantors"). Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Purchase Agreement.
As an inducement to the Initial Purchaser to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchaser thereunder, the Company and the Note Guarantors agree with
the Initial Purchaser, for the benefit of the holders (including the Initial
Purchaser) of the Securities, the Exchange Securities (as defined herein) and
the Private Exchange Securities (as defined herein) (collectively, the
"HOLDERS"), as follows:
1. REGISTERED EXCHANGE OFFER. The Company and the Note
Guarantors shall (a) prepare and, not later than 105 days following the date of
original issuance of the Securities (the "ISSUE DATE"), file with the
Commission a registration statement (the "EXCHANGE OFFER REGISTRATION
STATEMENT") on an appropriate form under the Securities Act with respect to a
proposed offer to the Holders of the Securities (the "REGISTERED EXCHANGE
OFFER") to issue and deliver to such Holders, in exchange for the Securities, a
like aggregate principal amount of debt securities of the Company (the
"EXCHANGE SECURITIES") that are identical in all material respects to the
Securities, except for the transfer restrictions relating to the Securities,
(b) use their reasonable best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act no later than 165 days
after the Issue Date and the Registered Exchange Offer to be consummated no
later than 195 days after the Issue Date and (c) keep the Exchange Offer
Registration Statement effective for not less than 20 business days (or longer,
if required by applicable law) after the date on which notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "EXCHANGE
OFFER REGISTRATION PERIOD"). The Exchange Securities will be issued under the
Indenture or an indenture (the "EXCHANGE SECURITIES INDENTURE") among the
Company, the Note Guarantors and the Trustee or such other bank or trust
company that is reasonably satisfactory to the Initial Purchaser, as trustee
(the "EXCHANGE SECURITIES TRUSTEE"), such indenture to be identical in all
material respects to the Indenture, except for the transfer restrictions
relating to the Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer,
it being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for Exchange Securities (assuming that such
Holder (a) is not an affiliate of the Company or an Exchanging Dealer (as
defined herein) not complying with the requirements of the next sentence, (b)
is not the Initial Purchaser holding Securities that have, or that are
reasonably likely to have, the status of an
<PAGE> 2
2
unsold allotment in an initial distribution, (c) acquires the Exchange
Securities in the ordinary course of such Holder's business and (d) has no
arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Company, the Note Guarantors, the
Initial Purchaser and each Exchanging Dealer acknowledge that, pursuant to
current interpretations by the Commission's staff of Section 5 of the
Securities Act, each Holder that is a broker-dealer electing to exchange
Securities, acquired for its own account as a result of market-making
activities or other trading activities, for Exchange Securities (an "EXCHANGING
DEALER"), is required to deliver a prospectus containing substantially the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Securities received
by such Exchanging Dealer pursuant to the Registered Exchange Offer.
If, prior to the consummation of the Registered Exchange
Offer, any Holder holds any Securities acquired by it that have, or that are
reasonably likely to be determined to have, the status of an unsold allotment
in an initial distribution, or any Holder is not entitled to participate in the
Registered Exchange Offer, the Company shall, upon the request of any such
Holder, simultaneously with the delivery of the Exchange Securities in the
Registered Exchange Offer, issue and deliver to any such Holder, in exchange
for the Securities held by such Holder (the "PRIVATE EXCHANGE"), a like
aggregate principal amount of debt securities of the Company (the "PRIVATE
EXCHANGE SECURITIES") that are identical in all material respects to the
Exchange Securities, except for the transfer restrictions relating to such
Private Exchange Securities. The Private Exchange Securities will be issued
under the same indenture as the Exchange Securities, and the Company shall use
its reasonable best efforts to cause the Private Exchange Securities to bear
the same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company
shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date on
which notice of the Registered Exchange Offer is mailed to the
Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City
of New York;
(d) permit Holders to withdraw tendered Securities at any
time prior to the close of business, New York City time, on the last
business day on which the Registered Exchange Offer shall remain open;
and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered
Exchange Offer and any Private Exchange, as the case may be, the Company shall:
(a) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;
(b) deliver to the Trustee for cancelation all Securities so
accepted for exchange; and
<PAGE> 3
3
(c) cause the Trustee or the Exchange Securities Trustee, as
the case may be, promptly to authenticate and deliver to each Holder,
Exchange Securities or Private Exchange Securities, as the case may
be, equal in principal amount to the Securities of such Holder so
accepted for exchange.
The Company and the Note Guarantors shall use their
reasonable best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the prospectus contained therein in order
to permit such prospectus to be used by all persons subject to the prospectus
delivery requirements of the Securities Act for such period of time as such
persons must comply with such requirements in order to resell the Exchange
Securities; PROVIDED that (a) in the case where such prospectus and any
amendment or supplement thereto must be delivered by an Exchanging Dealer, such
period shall be the lesser of 180 days and the date on which all Exchanging
Dealers have sold all Exchange Securities held by them and (b) the Company
shall make such prospectus and any amendment or supplement thereto available to
any broker-dealer for use in connection with any resale of any Exchange
Securities for a period of not less than 180 days after the consummation of the
Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the
case may be, shall provide that the Securities, the Exchange Securities and the
Private Exchange Securities shall vote and consent together on all matters as
one class and that none of the Securities, the Exchange Securities or the
Private Exchange Securities will have the right to vote or consent as a
separate class on any matter.
Interest on each Exchange Security and Private Exchange
Security issued pursuant to the Registered Exchange Offer and in the Private
Exchange will accrue from the last interest payment date on which interest was
paid on the Securities surrendered in exchange therefor or, if no interest has
been paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (a) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(b) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act and (c) such Holder is not an
affiliate of the Company or, if it is such an affiliate, such Holder will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company and
the Note Guarantors will ensure that (a) any Exchange Offer Registration
Statement and any amendment thereto and any prospectus forming part thereof and
any supplement thereto complies in all material respects with the Securities
Act and the rules and regulations of the Commission thereunder, (b) any
Exchange Offer Registration Statement and any amendment thereto does not, when
it becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (c) any prospectus forming part of any
Exchange Offer Registration Statement, and any supplement to such prospectus,
does not, as of the consummation of the Registered Exchange Offer, include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
2. SHELF REGISTRATION. If (a) because of any change in law or
applicable interpretations thereof by the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (b) any Securities validly tendered pursuant to the Registered
Exchange Offer are not exchanged for Exchange Securities within 195 days after
the Issue Date, or (c) the Initial Purchaser so requests with respect to
Securities or Private Exchange Securities not eligible to be exchanged for
Exchange Securities in the Registered Exchange Offer and held by it following
the consummation of the Registered
<PAGE> 4
4
Exchange Offer, or (d) any applicable law or interpretations do not permit any
Holder to participate in the Registered Exchange Offer, or (e) any Holder that
participates in the Registered Exchange Offer does not receive freely
transferable Exchange Securities in exchange for tendered Securities, or (f)
the Company so elects, then the following provisions shall apply:
(a) The Company and the Note Guarantors shall use their
reasonable best efforts to file as promptly as practicable (but in no
event more than 45 days after so required or requested pursuant to
this Section 2) with the Commission, and thereafter shall use their
reasonable best efforts to cause to be declared effective, a shelf
registration statement on an appropriate form under the Securities Act
relating to the offer and sale of the Transfer Restricted Securities
(as defined below) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in such
registration statement (hereafter, a "SHELF REGISTRATION STATEMENT"
and, together with any Exchange Offer Registration Statement, a
"REGISTRATION STATEMENT").
(b) The Company and the Note Guarantors shall use their
reasonable best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the prospectus forming part
thereof to be used by Holders of Transfer Restricted Securities for a
period ending on the earlier of (i) two years from the Issue Date or
such shorter period that will terminate when all the Transfer
Restricted Securities covered by the Shelf Registration Statement have
been sold pursuant thereto and (ii) the date on which the Securities
become eligible for resale without volume restrictions pursuant to
Rule 144 under the Securities Act (in any such case, such period being
called the "SHELF REGISTRATION PERIOD"). The Company and the Note
Guarantors shall be deemed not to have used their reasonable best
efforts to keep the Shelf Registration Statement effective during the
requisite period if any of them voluntarily take any action that would
result in Holders of Transfer Restricted Securities covered thereby
not being able to offer and sell such Transfer Restricted Securities
during that period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions hereof, the Company
and the Note Guarantors will ensure that (i) any Shelf Registration
Statement and any amendment thereto and any prospectus forming part
thereof and any supplement thereto complies in all material respects
with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Shelf Registration Statement and any
amendment thereto (in either case, other than with respect to
information included therein in reliance upon or in conformity with
written information furnished to the Company by or on behalf of any
Holder specifically for use therein (the "HOLDERS' INFORMATION")) does
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any prospectus forming
part of any Shelf Registration Statement, and any supplement to such
prospectus (in either case, other than with respect to Holders'
Information), does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
3. LIQUIDATED DAMAGES. (a) The parties hereto agree that the
Holders of Transfer Restricted Securities will suffer damages if the Company
and the Note Guarantors fail to fulfill their obligations under Section 1 or
Section 2, as applicable, and that it would not be feasible to ascertain the
extent of such damages. Accordingly, if (i) the applicable Registration
Statement is not filed with the Commission on or prior to 105 days after the
Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, is not declared effective within
165 days after the Issue Date (or in the case of a Shelf Registration Statement
required to be filed in response to a change in law or the applicable
interpretations of Commission's staff, if later, within 60 days after
publication of the change in law or interpretation), (iii) the Registered
Exchange Offer is not consummated on or prior to 195 days after the Issue Date,
or (iv) the Shelf Registration Statement is filed and declared effective within
<PAGE> 5
5
165 days after the Issue Date (or in the case of a Shelf Registration Statement
required to be filed in response to a change in law or the applicable
interpretations of Commission's staff, if later, within 60 days after
publication of the change in law or interpretation) but shall thereafter cease
to be effective (at any time that the Company and the Note Guarantors are
obligated to maintain the effectiveness thereof) without being succeeded within
90 days by an additional Registration Statement filed and declared effective
(each such event referred to in clauses (i) through (iv), a "REGISTRATION
DEFAULT"), the Company and the Note Guarantors will be jointly and severally
obligated to pay liquidated damages to each Holder of Transfer Restricted
Securities, during the period of one or more such Registration Defaults, in an
amount equal to $ 0.192 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder until (1) the applicable Registration
Statement is filed, (2) the Exchange Offer Registration Statement is declared
effective and the Registered Exchange Offer is consummated, (3) the Shelf
Registration Statement is declared effective or (4) the Shelf Registration
Statement again becomes effective, as the case may be. Following the cure of
all Registration Defaults, the accrual of liquidated damages will cease. As
used herein, the term "TRANSFER RESTRICTED SECURITIES" means (i) each Security
until the date on which such Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) each
Security or Private Exchange Security until the date on which it has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) each Security or Private
Exchange Security until the date on which it is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act. Notwithstanding anything to the contrary in
this Section 3(a), the Company shall not be required to pay liquidated damages
to a Holder of Transfer Restricted Securities if such Holder failed to comply
with its obligations to make the representations set forth in the second to
last paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent
under the Indenture immediately upon the happening of each and every
Registration Default. The Company and the Note Guarantors shall pay the
liquidated damages due on the Transfer Restricted Securities by depositing with
the Paying Agent (which may not be the Company for these purposes), in trust,
for the benefit of the Holders thereof, prior to 10:00 a.m., New York City
time, on the next interest payment date specified by the Indenture and the
Securities, sums sufficient to pay the liquidated damages then due. The
liquidated damages due shall be payable on each interest payment date specified
by the Indenture and the Securities to the record holder entitled to receive
the interest payment to be made on such date. Each obligation to pay liquidated
damages shall be deemed to accrue from and including the date of the applicable
Registration Default.
(c) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by Holders of
Transfer Restricted Securities by reason of the failure of (i) the Shelf
Registration Statement or the Exchange Offer Registration Statement to be
filed, (ii) the Shelf Registration Statement to remain effective or (iii) the
Exchange Offer Registration Statement to be declared effective and the
Registered Exchange Offer to be consummated, in each case to the extent
required by this Agreement.
4. REGISTRATION PROCEDURES. In connection with any
Registration Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to the Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement,
if any, to the prospectus included therein and shall use its
reasonable best efforts to reflect in each such document, when so
filed with the Commission, such comments as the Initial Purchaser may
reasonably propose; (ii) include the information set forth in Annex A
hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section
and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a
<PAGE> 6
6
part of the Exchange Offer Registration Statement, and include the
information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and (iii) if
requested by any Initial Purchaser, include the information required
by Items 507 or 508 of Regulation S-K, as applicable, in the
prospectus forming a part of the Exchange Offer Registration
Statement.
(b) The Company shall advise the Initial Purchaser, each
Exchanging Dealer and the Holders (if applicable) and, if requested by
any such person, confirm such advice in writing (which advice pursuant
to clauses (ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have
been made):
(i) when any Registration Statement and any
amendment thereto has been filed with the Commission and when
such Registration Statement or any post-effective amendment
thereto has become effective;
(ii) of any request by the Commission for
amendments or supplements to any Registration Statement or
the prospectus included therein or for additional
information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that
purpose;
(iv) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Securities, the Exchange Securities or
the Private Exchange Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such
purpose; and
(v) of the happening of any event that requires the
making of any changes in any Registration Statement or the
prospectus included therein in order that the statements
therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading.
(c) The Company and the Note Guarantors will make every
reasonable effort to obtain the withdrawal at the earliest possible
time of any order suspending the effectiveness of any Registration
Statement.
(d) The Company will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf
Registration Statement, without charge, at least one conformed copy of
such Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules and, if any such
Holder so requests in writing, all exhibits thereto (including those,
if any, incorporated by reference).
(e) The Company will, during the Shelf Registration Period,
promptly deliver to each Holder of Transfer Restricted Securities
included within the coverage of any Shelf Registration Statement,
without charge, as many copies of the prospectus (including each
preliminary prospectus) included in such Shelf Registration Statement
and any amendment or supplement thereto as such Holder may reasonably
request; and the Company consents to the use of such prospectus or any
amendment or supplement thereto by each of the selling Holders of
Transfer Restricted Securities in connection with the offer and sale
of the Transfer Restricted Securities covered by such prospectus or
any amendment or supplement thereto.
<PAGE> 7
7
(f) The Company will furnish to the Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without
charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including
financial statements and schedules and, if the Initial Purchaser or
Exchanging Dealer or any such Holder so requests in writing, all
exhibits thereto (including those, if any, incorporated by reference).
(g) The Company will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly
deliver to the Initial Purchaser, each Exchanging Dealer and such
other persons that are required to deliver a prospectus following the
Registered Exchange Offer, without charge, as many copies of the final
prospectus included in the Exchange Offer Registration Statement or
the Shelf Registration Statement and any amendment or supplement
thereto as the Initial Purchaser, such Exchanging Dealer or other
persons may reasonably request; and the Company and the Note
Guarantors consent to the use of such prospectus or any amendment or
supplement thereto by the Initial Purchaser, such Exchanging Dealer or
other persons, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement,
the Company and the Note Guarantors will use their reasonable best
efforts to register or qualify, or cooperate with the Holders of
Securities, Exchange Securities or Private Exchange Securities
included therein and their respective counsel in connection with the
registration or qualification of, such Securities, Exchange Securities
or Private Exchange Securities for offer and sale under the securities
or blue sky laws of such jurisdictions as any such Holder reasonably
requests in writing and do any and all other acts or things necessary
or advisable to enable the offer and sale in such jurisdictions of the
Securities, Exchange Securities or Private Exchange Securities covered
by such Registration Statement; PROVIDED that the Company and the Note
Guarantors will not be required to qualify generally to do business in
any jurisdiction where they are not then so qualified or to take any
action which would subject them to general service of process or to
taxation in any such jurisdiction where they are not then so subject.
(i) The Company and the Note Guarantors will cooperate with
the Holders of Securities, Exchange Securities or Private Exchange
Securities to facilitate the timely preparation and delivery of
certificates representing Securities, Exchange Securities or Private
Exchange Securities to be sold pursuant to any Registration Statement
free of any restrictive legends and in such denominations and
registered in such names as the Holders thereof may request in writing
prior to sales of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v)
occurs during the period for which the Company and the Note Guarantors
are required to maintain an effective Registration Statement, the
Company and the Note Guarantors will promptly prepare and file with
the Commission a post-effective amendment to the Registration
Statement or a supplement to the related prospectus or file any other
required document so that, as thereafter delivered to purchasers of
the Securities, Exchange Securities or Private Exchange Securities
from a Holder, the prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for
the Securities, the Exchange Securities and the Private Exchange
Securities, as the case may be, and provide the applicable trustee
with printed certificates for the Securities, the Exchange Securities
or the Private Exchange Securities, as the case may be, in a form
eligible for deposit with The Depository Trust Company.
<PAGE> 8
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(l) The Company and the Note Guarantors will comply with all
applicable rules and regulations of the Commission and the Company
will make generally available to its security holders as soon as
practicable after the effective date of the applicable Registration
Statement an earning statement satisfying the provisions of Section
11(a) of the Securities Act; PROVIDED that in no event shall such
earning statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the applicable Registration
Statement, which statement shall cover such 12-month period.
(m) The Company and the Note Guarantors will cause the
Indenture or the Exchange Securities Indenture, as the case may be, to
be qualified under the Trust Indenture Act as required by applicable
law in a timely manner.
(n) The Company may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration
Statement to furnish to the Company such information concerning the
Holder and the distribution of such Transfer Restricted Securities as
the Company may from time to time reasonably require for inclusion in
such Shelf Registration Statement, and the Company may exclude from
such registration the Transfer Restricted Securities of any Holder
that fails to furnish such information within a reasonable time after
receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder
of Transfer Restricted Securities to be registered pursuant thereto
agrees by acquisition of such Transfer Restricted Securities that,
upon receipt of any notice from the Company pursuant to Section
4(b)(ii) through (v), such Holder will discontinue disposition of such
Transfer Restricted Securities until such Holder's receipt of copies
of the supplemental or amended prospectus contemplated by Section 4(j)
or until advised in writing (the "ADVICE") by the Company that the use
of the applicable prospectus may be resumed. If the Company shall give
any notice under Section 4(b)(ii) through (v) during the period that
the Company is required to maintain an effective Registration
Statement (the "EFFECTIVENESS PERIOD"), such Effectiveness Period
shall be extended by the number of days during such period from and
including the date of the giving of such notice to and including the
date when each seller of Transfer Restricted Securities covered by
such Registration Statement shall have received (i) the copies of the
supplemental or amended prospectus contemplated by Section 4(j) (if an
amended or supplemental prospectus is required) or (ii) the Advice (if
no amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company
and the Note Guarantors shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form)
and take all such other action, if any, as Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and
Private Exchange Securities being sold or the managing underwriters
(if any) shall reasonably request in order to facilitate any
disposition of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company
shall (i) make reasonably available for inspection by a representative
of, and Special Counsel (as defined below) acting for, Holders of a
majority in aggregate principal amount of the Securities, Exchange
Securities and Private Exchange Securities being sold and any
underwriter participating in any disposition of Securities, Exchange
Securities or Private Exchange Securities pursuant to such Shelf
Registration Statement, all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries and (ii) use its reasonable best efforts to have its
officers, directors, employees, accountants and counsel supply all
relevant information reasonably requested by such representative,
Special Counsel or any such underwriter (an "INSPECTOR") in connection
with such Shelf Registration Statement.
<PAGE> 9
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(r) In the case of a Shelf Registration Statement, the Company
shall, if requested by Holders of a majority in aggregate principal
amount of the Securities, Exchange Securities and Private Exchange
Securities being sold, their Special Counsel or the managing
underwriters (if any) in connection with such Shelf Registration
Statement, use its reasonable best efforts to cause (i) its counsel to
deliver an opinion relating to the Shelf Registration Statement and
the Securities, Exchange Securities or Private Exchange Securities, as
applicable, in customary form, (ii) its officers to execute and
deliver all customary documents and certificates requested by Holders
of a majority in aggregate principal amount of the Securities,
Exchange Securities and Private Exchange Securities being sold, their
Special Counsel or the managing underwriters (if any) and (iii) its
independent public accountants to provide a comfort letter or letters
in customary form, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
5. REGISTRATION EXPENSES. The Company and the Note Guarantors
will jointly and severally bear all expenses incurred in connection with the
performance of its obligations under Sections 1, 2, 3 and 4 and the Company
will reimburse the Initial Purchaser and the Holders for the reasonable fees
and disbursements of one firm of attorneys (in addition to any local counsel)
chosen by the Holders of a majority in aggregate principal amount of the
Securities, the Exchange Securities and the Private Exchange Securities to be
sold pursuant to each Registration Statement (the "SPECIAL COUNSEL") acting for
the Initial Purchaser or Holders in connection therewith.
6. INDEMNIFICATION. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by the Initial Purchaser or Exchanging Dealer, as
applicable, the Company and the Note Guarantors shall jointly and severally
indemnify and hold harmless each Holder (including, without limitation, the
Initial Purchaser or such Exchanging Dealer), its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls such Holder within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 6 and
Section 7 as a Holder) from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of Securities, Exchange Securities or Private Exchange Securities),
to which that Holder may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder promptly
upon demand for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that the Company and the Note Guarantors shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of, or is based upon, an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with any Holders' Information; and PROVIDED, FURTHER, that with
respect to any such untrue statement in or omission from any related
preliminary prospectus, the indemnity agreement contained in this Section 6(a)
shall not inure to the benefit of any Holder from whom the person asserting any
such loss, claim, damage, liability or action received Securities, Exchange
Securities or Private Exchange Securities to the extent that such loss, claim,
damage, liability or action of or with respect to such Holder results from the
fact that both (A) a copy of the final prospectus was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities,
Exchange Securities or Private Exchange Securities to such person and (B) the
untrue statement in or omission from the related preliminary prospectus was
corrected in the final prospectus unless, in either case, such
<PAGE> 10
10
failure to deliver the final prospectus was a result of non-compliance by the
Company with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each
Holder shall indemnify and hold harmless the Company, its affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
6(b) and Section 7 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any Holders'
Information furnished to the Company by such Holder, and shall reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that no such Holder shall be liable for any indemnity claims hereunder in
excess of the amount of net proceeds received by such Holder from the sale of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 6(a) or 6(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
PROVIDED, HOWEVER, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 6 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and PROVIDED, FURTHER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 6. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than the reasonable costs of investigation;
PROVIDED, HOWEVER, that an indemnified party shall have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel for the indemnified party will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based upon advice of counsel to the indemnified
party) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict exists (based upon
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in
connection with any
<PAGE> 11
11
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate firm
of attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 6(a) and 6(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
7. CONTRIBUTION. If the indemnification provided for in
Section 6 is unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company from the offering and
sale of the Securities, on the one hand, and a Holder with respect to the sale
by such Holder of Securities, Exchange Securities or Private Exchange
Securities, on the other, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Note Guarantors, on the one
hand, and such Holder, on the other, with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Note Guarantors, on the one
hand, and a Holder, on the other, with respect to such offering and such sale
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) received by or on behalf
of the Company as set forth in the table on the cover of the Offering
Memorandum, on the one hand, bear to the total proceeds received by such Holder
with respect to its sale of Securities, Exchange Securities or Private Exchange
Securities, on the other. The relative fault 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 the Company and the Note Guarantors or information supplied by the
Company and the Note Guarantors, on the one hand, or to any Holders'
Information supplied by such Holder, on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7
were to be determined by PRO RATA allocation or by any other method of
allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 7 shall be deemed to include, for purposes of
this Section 7, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending or preparing to
defend any such action or claim. Notwithstanding the provisions of this Section
7, an indemnifying party that is a Holder of Securities, Exchange Securities or
Private Exchange Securities shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities, Exchange
Securities or Private Exchange Securities sold by such indemnifying party to
any purchaser exceeds the amount of any damages which such indemnifying party
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
<PAGE> 12
12
8. RULES 144 AND 144A. The Company shall use its reasonable
best efforts to file the reports required to be filed by it under the
Securities Act and the Exchange Act in a timely manner and, if at any time the
Company is not required to file such reports, it will, upon the written request
of any Holder of Transfer Restricted Securities, make publicly available other
information so long as necessary to permit sales of such Holder's securities
pursuant to Rules 144 and 144A. The Company and the Note Guarantors covenant
that they will take such further action as any Holder of Transfer Restricted
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Transfer Restricted Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including, without limitation, the requirements
of Rule 144A(d)(4)). Upon the written request of any Holder of Transfer
Restricted Securities, the Company and the Note Guarantors shall deliver to
such Holder a written statement as to whether they have complied with such
requirements. Notwithstanding the foregoing, nothing in this Section 8 shall be
deemed to require the Company to register any of its securities pursuant to the
Exchange Act.
9. UNDERWRITTEN REGISTRATIONS. If any of the Transfer
Restricted Securities covered by any Shelf Registration Statement are to be
sold in an underwritten offering, the investment banker or investment bankers
and manager or managers that will administer the offering will be selected by
the Holders of a majority in aggregate principal amount of such Transfer
Restricted Securities included in such offering, subject to the consent of the
Company (which shall not be unreasonably withheld or delayed), and such Holders
shall be responsible for all underwriting commissions and discounts in
connection therewith.
No person may participate in any underwritten registration
hereunder unless such person (a) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities, taken as a single class. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) NOTICES. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telecopier or air courier guaranteeing next-day delivery:
(i) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 10(b), which address initially is, with respect to each
Holder, the address of such Holder maintained by the Registrar under
the Indenture, with a copy in like manner to Chase Securities Inc.;
(ii) if to the Initial Purchaser, initially at its address
set forth in the Purchase Agreement; and
(iii) if to the Company, initially at the address of the
Company set forth in the Purchase Agreement.
<PAGE> 13
13
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the
recipient's telecopier machine, if sent by telecopier.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Company and its successors and assigns.
(d) COUNTERPARTS. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopier) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) DEFINITION OF TERMS. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
(f) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
(h) REMEDIES. In the event of a breach by the Company, any
Note Guarantor or by any Holder of any of their obligations under this
Agreement, each Holder, the Company or any Note Guarantor, as the case may be,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages (other than the recovery of damages for a breach by the
Company or any Note Guarantor of its obligations under Sections 1 or 2 hereof
for which liquidated damages have been paid pursuant to Section 3 hereof), will
be entitled to specific performance of its rights under this Agreement. The
Company, the Note Guarantors and each Holder agree that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by
each such person of any of the provisions of this Agreement and hereby further
agree that, in the event of any action for specific performance in respect of
such breach, each such person shall waive the defense that a remedy at law
would be adequate.
(i) NO INCONSISTENT AGREEMENTS. The Company and each Note
Guarantor represents, warrants and agrees that (i) it has not entered into,
shall not, on or after the date of this Agreement, enter into any agreement
that is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof, (ii) it has not previously
entered into any agreement which remains in effect granting any registration
rights with respect to any of its debt securities to any person and (iii) (with
respect to the Company) without limiting the generality of the foregoing,
without the written consent of the Holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities, it shall not
grant to any person the right to request the Company to register any debt
securities of the Company under the Securities Act unless the rights so granted
are not in conflict or inconsistent with the provisions of this Agreement.
(j) NO PIGGYBACK ON REGISTRATIONS. Neither the Company nor any
of its security holders (other than the Holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Company in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.
<PAGE> 14
14
(k) SEVERABILITY. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
<PAGE> 15
15
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Note Guarantors and the Initial Purchaser.
Very truly yours,
AMERICAN MEDIA OPERATIONS, INC.,
NATIONAL ENQUIRER, INC., STAR
EDITORIAL, INC., SOM PUBLISHING,
INC., WEEKLY WORLD NEWS, INC.,
COUNTRY WEEKLY, INC., DISTRIBUTION
SERVICES, INC., FAIRVIEW PRINTING,
INC., NDSI, INC., HEALTH XTRA,
INC., RETAIL MARKETING NETWORK,
INC., BIOCIDE, INC., AMERICAN MEDIA
MARKETING, INC., and MARKETING
SERVICES, INC.,
By /s/ Peter A. Nelson
---------------------------------
Name: Peter A. Nelson
Title: Executive Vice President
and CFO
Accepted:
CHASE SECURITIES INC.
By /s/ Joe Purcell
------------------------------------
Authorized Signatory
<PAGE> 16
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
Expiration Date (as defined herein), it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution".
<PAGE> 17
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution".
<PAGE> 18
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Securities where such Securities were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that, for a period of 180 days after the Expiration
Date, it will make this prospectus, as amended or supplemented, available to
any broker-dealer for use in connection with any such resale. In addition,
until [ ], 1999, all dealers effecting transactions in the Exchange Securities
may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at 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 or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Registered Exchange Offer (including the expenses of
one counsel for the Holders of the Securities) other than commissions or
concessions of any broker-dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
<PAGE> 19
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF
ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; 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.
<PAGE> 1
EXHIBIT 4.3
CONFORMED COPY
===============================================================================
CREDIT AGREEMENT
dated as of
May 7, 1999
among
AMERICAN MEDIA, INC.,
AMERICAN MEDIA OPERATIONS, INC.,
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
---------------------------
CHASE SECURITIES INC.,
as Arranger
===============================================================================
[CSM Ref. No. 6700-719]
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.......................................... 1
SECTION 1.02. Classification of Loans and Borrowings................. 31
SECTION 1.03. Terms Generally........................................ 31
SECTION 1.04. Accounting Terms; GAAP; Treatment
of Unrestricted Subsidiaries.......................... 32
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments............................................ 33
SECTION 2.02. Loans and Borrowings................................... 33
SECTION 2.03. Requests for Borrowings................................ 34
SECTION 2.04. Swingline Loans........................................ 35
SECTION 2.05. Letters of Credit...................................... 37
SECTION 2.06. Funding of Borrowings ................................. 42
SECTION 2.07. Interest Elections .................................... 43
SECTION 2.08. Termination and Reduction of Commitments .............. 45
SECTION 2.09. Repayment of Loans; Evidence of Debt .................. 45
SECTION 2.10. Amortization of Term Loans ............................ 46
SECTION 2.11. Prepayment of Loans ................................... 48
SECTION 2.12. Fees .................................................. 51
SECTION 2.13. Interest .............................................. 52
SECTION 2.14. Alternate Rate of Interest ............................ 53
SECTION 2.15. Increased Costs ....................................... 54
SECTION 2.16. Break Funding Payments ................................ 55
SECTION 2.17. Taxes ................................................. 56
SECTION 2.18. Payments Generally; Pro Rata Treatment;
Sharing of Setoffs .................................. 58
SECTION 2.19. Mitigation Obligations; Replacement of Lenders ........ 60
i
<PAGE> 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers .................................. 61
SECTION 3.02. Authorization; Enforceability ......................... 61
SECTION 3.03. Governmental Approvals; No Conflicts .................. 62
SECTION 3.04. Financial Condition; No Material Adverse Change....... 62
SECTION 3.05. Properties ............................................ 63
SECTION 3.06. Litigation and Environmental Matters................... 64
SECTION 3.07. Compliance with Laws and Agreements ................... 64
SECTION 3.08. Investment and Holding Company Status ................. 65
SECTION 3.09. Taxes ................................................. 65
SECTION 3.10. ERISA ................................................. 65
SECTION 3.11. Disclosure ............................................ 65
SECTION 3.12. Subsidiaries .......................................... 66
SECTION 3.13. Insurance ............................................. 66
SECTION 3.14. Labor Matters ......................................... 66
SECTION 3.15. Solvency .............................................. 67
SECTION 3.16. Senior Indebtedness ................................... 67
SECTION 3.17. Year 2000 ............................................. 67
SECTION 3.18. Security Documents .................................... 67
SECTION 3.19. Merger ................................................ 69
SECTION 3.20. Capitalization of Holdings ............................ 69
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date ........................................ 69
SECTION 4.02. Each Credit Event ..................................... 74
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information ............ 75
SECTION 5.02. Notices of Material Events ............................ 77
SECTION 5.03. Information Regarding Collateral ...................... 78
SECTION 5.04. Existence; Conduct of Business ........................ 78
SECTION 5.05. Payment of Obligations ................................ 79
SECTION 5.06. Maintenance of Properties ............................. 79
SECTION 5.07. Insurance ............................................. 79
SECTION 5.08. Casualty and Condemnation ............................. 79
ii
<PAGE> 4
SECTION 5.09. Books and Records; Inspection and
Audit Rights ........................................ 80
SECTION 5.10. Compliance with Laws .................................. 80
SECTION 5.11. Use of Proceeds and Letters of Credit ................. 80
SECTION 5.12. Additional Subsidiaries ............................... 80
SECTION 5.13 Further Assurances .................................... 81
SECTION 5.14. Interest Rate Protection .............................. 82
SECTION 5.15. Redemption of Existing Notes .......................... 82
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Indebtedness; Certain Equity Securities ............... 82
SECTION 6.02. Liens ................................................. 84
SECTION 6.03. Fundamental Changes ................................... 85
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions .......................... 87
SECTION 6.05 Asset Sales ........................................... 90
SECTION 6.06. Sale and Leaseback Transactions ....................... 90
SECTION 6.07. Hedging Agreements .................................... 91
SECTION 6.08. Restricted Payments; Certain Payments
of Indebtedness ...................................... 91
SECTION 6.09. Transactions with Affiliates .......................... 93
SECTION 6.10. Restrictive Agreements ................................ 93
SECTION 6.11. Amendment of Material Documents ....................... 94
SECTION 6.12. Leverage Ratio ........................................ 94
SECTION 6.13. Senior Leverage Ratio ................................. 95
SECTION 6.14. Consolidated Interest Expense Coverage Ratio .......... 95
SECTION 6.15. Consolidated Fixed Charge Coverage Ratio .............. 96
SECTION 6.16. Capital Expenditures .................................. 97
ARTICLE VII
EVENTS OF DEFAULT ..................................... 97
ARTICLE VIII
THE AGENTS ............................................ 101
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices ............................................... 103
SECTION 9.02. Waivers; Amendments ................................... 104
iii
<PAGE> 5
SECTION 9.03. Expenses; Indemnity; Damage Waiver .................... 106
SECTION 9.04. Successors and Assigns ................................ 108
SECTION 9.05. Survival .............................................. 111
SECTION 9.06. Counterparts; Integration; Effectiveness .............. 112
SECTION 9.07. Severability .......................................... 112
SECTION 9.08. Right of Setoff ....................................... 112
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process .................................. 113
SECTION 9.10. WAIVER OF JURY TRIAL .................................. 114
SECTION 9.11. Headings .............................................. 114
SECTION 9.12. Confidentiality ....................................... 114
SECTION 9.13. Interest Rate Limitation .............................. 114
SCHEDULES:
Schedule 1.01(a) -- Mortgaged Property
Schedule 2.01 -- Commitments
Schedule 3.05(b) -- Intellectual Property
Schedule 3.05(c) -- Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 3.18(d) -- Mortgaged Property Filing Offices
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Investments
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Borrower's Counsel
Exhibit B-2 -- Form of Opinion of Local Counsel
Exhibit C -- Form of Guarantee Agreement
Exhibit D -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E -- Form of Pledge Agreement
Exhibit F -- Form of Security Agreement
iv
<PAGE> 6
CREDIT AGREEMENT dated as of May 7, 1999,
among AMERICAN MEDIA INC., AMERICAN MEDIA
OPERATIONS, INC., the LENDERS party hereto, and THE
CHASE MANHATTAN BANK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Alternate Base Rate.
"ACQUISITION" means the Merger and the other transactions
contemplated by the Merger Agreement and the other Acquisition Documents.
"ACQUISITION DOCUMENTS" means the Merger Agreement and the
LLC Agreement.
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"ADMINISTRATIVE AGENT" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"AFFILIATE" means, with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
<PAGE> 7
2
"ALTERNATE BASE RATE" means, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"APPLICABLE PERCENTAGE" means, with respect to any Revolving
Lender, the percentage of the total Revolving Commitments represented by such
Lender's Revolving Commitment. If the Revolving Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the
Revolving Commitments most recently in effect, giving effect to any
assignments.
"APPLICABLE RATE" means, for any day (a) with respect to any
Tranche B Term Loan, (i) 2.50% per annum, in the case of an ABR Loan, or (ii)
3.50% per annum, in the case of a Eurodollar Loan, and (b) with respect to any
ABR Loan or Eurodollar Loan that is a Revolving Loan or a Tranche A Term Loan
or any ABR Loan that is a Swingline Loan, or with respect to the commitment
fees payable hereunder, as the case may be, the applicable rate per annum set
forth below under the caption "ABR Spread", "Eurodollar Spread" or "Commitment
Fee Rate", as the case may be, based upon the Leverage Ratio as of the most
recent determination date; PROVIDED that until the date that is six months
after the Effective Date the "Applicable Rate" for purposes of clause (b) shall
be the applicable rate per annum set forth below in Category 1:
<TABLE>
<CAPTION>
ABR Eurodollar Commitment Fee
Leverage Ratio: Spread Spread Rate
--------------- ------ ---------- ---------------
<S> <C> <C> <C>
CATEGORY 1 2.00% 3.00% 0.50%
----------
Greater than or equal to 5.50
to 1.00
- ---------------------------------------------------------------------------------------
CATEGORY 2 1.75% 2.75% 0.50%
----------
Less than 5.50 to 1.00 but
greater than or equal to 5.00
to 1.00
- ---------------------------------------------------------------------------------------
CATEGORY 3 1.50% 2.50% 0.50%
----------
Less than 5.00 to 1.00 but
greater than or equal to 4.50
to 1.00
- ---------------------------------------------------------------------------------------
CATEGORY 4 1.25% 2.25% 0.50%
----------
Less than 4.50 to 1.00 but
greater than or equal to 4.00
to 1.00
- ---------------------------------------------------------------------------------------
CATEGORY 5 1.00% 2.00% 0.375%
----------
Less than 4.00 to 1.00 but
greater than or equal to 3.50
to 1.00
- ---------------------------------------------------------------------------------------
CATEGORY 6 0.75% 1.75% 0.375%
----------
Less than 3.50 to 1.00
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
3
For purposes of the foregoing, (i) the Leverage Ratio shall
be determined as of the end of each fiscal quarter of the Borrower's fiscal
year based upon the Borrower's consolidated financial statements delivered
pursuant to Section 5.01(a) or (b) and (ii) each change in the Applicable Rate
resulting from a change in the Leverage Ratio shall be effective during the
period commencing on and including the date of delivery to the Administrative
Agent of such consolidated financial statements indicating such change and
ending on the date immediately preceding the effective date of the next such
change; PROVIDED that the Leverage Ratio shall be deemed to be in Category 1
(A) at any time that an Event of Default has occurred and is continuing or (B)
at the option of the Administrative Agent or at the request of the Required
Lenders if the Borrower fails to deliver the consolidated financial statements
required to be delivered by it pursuant to Section 5.01(a) or (b) during the
period from the expiration of the time for delivery thereof until such
consolidated financial statements are delivered.
"ASSESSMENT RATE" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; PROVIDED that if, as a result of
any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and
acceptance entered into by a Lender and an assignee (with the consent of any
party whose consent is required by Section 9.04), and accepted by the
Administrative Agent, in the form of Exhibit A or any other form approved by
the Administrative Agent.
"BASE CD RATE" means the sum of (a) the Three-Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"BOARD" means the Board of Governors of the Federal Reserve
System of the United States of America.
"BORROWER" means American Media Operations, Inc., a Delaware
corporation.
<PAGE> 9
4
"BORROWING" means (a) Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans,
as to which a single Interest Period is in effect, or (b) a Swingline Loan.
"BORROWING REQUEST" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"BUSINESS DAY" means any day that is not a Saturday, Sunday
or other day on which commercial banks in New York City are authorized or
required by law to remain closed; PROVIDED that, when used in connection with a
Eurodollar Loan, the term "BUSINESS DAY" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"CAPITAL EXPENDITURES" means, for any period, (a) the
additions to property, plant and equipment and other capital expenditures of
the Borrower and its Restricted Subsidiaries that are (or would be) set forth
in a consolidated statement of cash flows of the Borrower and its Restricted
Subsidiaries for such period prepared in accordance with GAAP and (b) Capital
Lease Obligations incurred by the Borrower and its Restricted Subsidiaries
during such period.
"CAPITAL LEASE OBLIGATIONS" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CHANGE IN CONTROL" means:
(a)(i) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person other than Holdings of any
Equity Interest in the Borrower (other than up to 20% of the common
stock of the Borrower held by Persons other than Holdings in
accordance with Section 6.03(e)), (ii) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the board of directors of Holdings (together with any new
directors whose election by such board of directors of Holdings or
whose nomination for election by the stockholders of Holdings was
<PAGE> 10
5
approved by a vote of at least 66-2/3% of the directors of Holdings
then still in office who were either directors at the beginning of
such period or whose nomination for election was previously so
approved) ceasing for any reason to constitute a majority of the board
of directors of Holdings, or (iii) the occurrence of a "Change of
Control", as defined in the Subordinated Debt Documents or the
Holdings Discount Notes Documents;
(b) prior to the first public offering of common Equity
Interests of Holdings, EMP Group L.L.C. ceasing to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of a majority in the aggregate of the total
voting power of the voting Equity Interests of Holdings, whether as a
result of issuance of securities of Holdings, any merger,
consolidation, liquidation or dissolution of Holdings, any direct or
indirect transfer of securities by EMP Group L.L.C. or otherwise (for
purposes of this clause (b) and clause (c) below, EMP Group L.L.C.
shall be deemed to beneficially own any voting Equity Interests of an
entity (the "specified entity") held by any other entity (the
"Holdings entity") so long as EMP Group L.L.C. beneficially owns (as
so defined), directly or indirectly, in the aggregate a majority of
the voting power of the voting Equity Interests of the Holdings
entity);
(c)(i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than EMP Group L.L.C., being or
becoming the beneficial owner (as defined in clause (b) above, except
that for purposes of this clause (c) such person shall be deemed to
have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than
30% of the total voting power of the voting Equity Interests of
Holdings and (ii) EMP Group L.L.C. "beneficially owning" (as defined
in clause (b) above), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the voting Equity
Interests of Holdings than such other person and not having the right
or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of
Holdings (for the purposes of this clause (c), such other person shall
<PAGE> 11
6
be deemed to beneficially own any voting Equity Interests of a
specified entity held by a Holdings entity, if such other person is
the beneficial owner (as defined in this clause (c)), directly or
indirectly, of more than 30% of the voting power of the voting Equity
Interests of such Holdings entity and EMP Group L.L.C. "beneficially
owns" (as defined in clause (b) above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the voting Equity
Interests of such Holdings entity and does not have the right or
ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such Holdings
entity); or
(d) Evercore no longer having the direct or indirect power to
appoint a majority of the managers of (or other individuals
comprising) the board of managers or other governing body of EMP Group
L.L.C.
"CHANGE IN LAW" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of
such Lender or by such Lender's or the Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"CLASS", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans, Tranche A Term Loans, Tranche B Term Loans or Swingline Loans
and, when used in reference to any Commitment, refers to whether such
Commitment is a Revolving Commitment, Tranche A Commitment or Tranche B
Commitment.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL" means any and all "Collateral", as defined in
any applicable Security Document.
"COLLATERAL AGENT" means the "Collateral Agent", as defined
in the Security Agreement.
"COMMITMENT" means a Revolving Commitment, Tranche A
Commitment or Tranche B Commitment, or any combination thereof (as the context
requires).
<PAGE> 12
7
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net
Income for such period (adjusted to exclude any extraordinary losses, charges
or gains and to exclude any gain or loss recognized in connection with the sale
of any assets outside the ordinary course of business), PLUS, without
duplication and to the extent deducted from revenues in determining
Consolidated Net Income, the sum of (a) the aggregate amount of interest
expense for such period, (b) the aggregate amount of income tax expense for
such period, (c) all amounts attributable to depreciation, amortization and
other noncash charges (excluding any such charge that (i) consists of or
requires an accrual of, or cash reserve for, any anticipated cash changes for
any prior or in any future period or (ii) consists of a writedown or writeoff
of any current assets) for such period, including the amortization of debt
discounts and deferred financing charges, all as determined on a consolidated
basis with respect to the Borrower and the Restricted Subsidiaries in
accordance with GAAP, (d) the aggregate amount of management fees paid to
Affiliates of the Borrower in such period pursuant to Section 6.09, (e)
payments made by the Borrower and its Restricted Subsidiaries in such period
pursuant to profit sharing plans; PROVIDED that such payments are discretionary
under the terms of such plans, (f) the aggregate amount, not to exceed
$5,000,000, of nonrecurring charges resulting from severance, restructuring,
corporate relocation expenses and other adjustments made as a result of or in
connection with the Transactions and recognized on or prior to the date that is
18 months subsequent to the Effective Date and (g) any nonrecurring cash
expenses or charges (not exceeding $3,000,000 in the aggregate for such period)
related to any initial public offering, investment, Permitted Acquisition or
Indebtedness, and MINUS the amount of any Restricted Payments made to Holdings
by the Borrower pursuant to Section 6.08(a)(iv) (as such amount may be
supplemented in accordance with Section 6.08(a)(viii)) during such period to
the extent of any losses, charges or expenses that reduced Holdings' net income
(or increased its net loss) during such period. For purposes of calculating
Consolidated EBITDA for any period (each, a "Reference Period") in connection
with a determination of the Leverage Ratio or the Senior Leverage Ratio for
such period, if during such Reference Period (or, in the case of PRO FORMA
calculations, during the period from the last day of such Reference Period to
<PAGE> 13
8
and including the date as of which such calculation is made) the Borrower or
any Restricted Subsidiary shall have made a Material Disposition or Material
Acquisition, Consolidated EBITDA for such Reference Period shall be calculated
after giving PRO FORMA effect thereto as if such Material Disposition or
Material Acquisition occurred on the first day of such Reference Period (with
the Reference Period for the purposes of PRO FORMA calculations being the most
recent period of four consecutive fiscal quarters for which the relevant
financial information is available); PROVIDED that such PRO FORMA calculations
shall give effect to operating expense reductions and other cost savings only
to the extent that such reductions and savings are approved by the
Administrative Agent and realization thereof is reasonably expected by the
Borrower to be achieved within six months after such Material Acquisition or
Material Disposition. As used in this definition, "Material Acquisition" means
any Permitted Acquisition or series of related Permitted Acquisitions that
involves consideration (including any noncash consideration) with a fair market
value in excess of $5,000,000; and "Material Disposition" means any disposition
of property or series of related dispositions of property that involves assets
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the Equity Interests of a Subsidiary.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum
of (a) Consolidated Interest Expense for such period, (b) the aggregate amount
of scheduled principal payments of Long-Term Indebtedness made during such
period by the Borrower or any Restricted Subsidiary to any Person other than
the Borrower or any wholly owned Restricted Subsidiary and (c) the aggregate
amount of scheduled principal payments of Long-Term Indebtedness that would
have been required to be made during such period by the Borrower or any
Restricted Subsidiary to the extent any such scheduled payment is not required
to be made by reason of any optional prepayment (other than an optional
prepayment to the extent financed with the proceeds of an incurrence of
Long-Term Indebtedness) made within one year prior to the date such scheduled
principal payment would have been due.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the
sum of (a) interest expense (including the interest component in respect of
Capital Lease Obligations but excluding the amortization of debt discounts,
deferred financing charges and other non-cash interest expenses) of the
Borrower and the Restricted Subsidiaries during such period, determined on a
consolidated basis in accordance with GAAP, and (b) the amount of any
Restricted Payments made by the Borrower to Holdings pursuant to Section
6.08(a)(vii)(B) during such period.
"CONSOLIDATED NET INCOME" means, for any period, net income
or loss of the Borrower and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; PROVIDED that there
shall be excluded (a) the income of any Person in which any other Person (other
<PAGE> 14
9
than the Borrower or any of the Restricted Subsidiaries or any director holding
qualifying shares in compliance with applicable law) has an ownership interest,
except to the extent of the amount of dividends or other distributions actually
paid to the Borrower or any of the Restricted Subsidiaries by such Person
during such period, and (b) the income (or loss) of any Person accrued prior to
the date it becomes a Restricted Subsidiary or is merged into or consolidated
with the Borrower or any of the Restricted Subsidiaries or the date that
Person's assets are acquired by the Borrower or any of the Restricted
Subsidiaries.
"CONTROL" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"DEBT TENDER OFFER" means the tender offer and consent
solicitation made by the Borrower for all the outstanding Existing Notes
pursuant to the Debt Tender Offer Materials and the provisions of the Merger
Agreement.
"DEBT TENDER OFFER MATERIALS" means the offer to purchase
distributed by the Borrower to holders of the Existing Notes with respect to
the Debt Tender Offer, and all related materials similarly distributed in
accordance with this Agreement.
"DEFAULT" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"DISCLOSED MATTERS" means the actions, suits and proceedings
and the environmental matters disclosed in Schedule 3.06.
"DISQUALIFIED STOCK" means, with respect to any Person, any
Equity Interest which by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable or exercisable) or upon the
happening of any event:
(a) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise;
<PAGE> 15
10
(b) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding Equity Interests convertible or
exchangeable solely at the option of Holdings, the Borrower or a
Restricted Subsidiary; PROVIDED that any such conversion or exchange
shall be deemed an issuance of Disqualified Stock, as applicable); or
(c) is redeemable, or subject to mandatory purchase by
Holdings, the Borrower or any Subsidiary, at the option of the holder
thereof, in whole or in part.
"DOLLARS" or "$" refers to lawful money of the United States
of America.
"EFFECTIVE DATE" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"ENVIRONMENTAL LAWS" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources or the management, release or threatened release of any Hazardous
Material.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of Holdings, the Borrower or any
Subsidiary directly or indirectly resulting from or based upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"EQUITY CONTRIBUTION" means the cash equity contribution to
be made by EMP Group L.L.C. to Merger Sub prior to the Merger in an aggregate
amount of not less than $235,000,000.
"EQUITY INTERESTS" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.
<PAGE> 16
11
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"EURODOLLAR", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are bearing interest at a rate determined by reference to the Adjusted LIBO
Rate.
"EVENT OF DEFAULT" has the meaning assigned to such term in
Article VII.
"EVERCORE" means Evercore Partners Inc. and any investment
fund Controlled by Evercore Partners Inc.
"EXCESS CASH FLOW" means, for any fiscal year, the sum
(without duplication) of:
<PAGE> 17
12
(a) Consolidated Net Income for such fiscal year, adjusted to
exclude any gains or losses attributable to Prepayment Events; PLUS
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining such Consolidated Net Income for such
fiscal year; PLUS
(c) the sum of (i) the amount, if any, by which Net Working
Capital decreased during such fiscal year plus (ii) the net amount, if
any, by which the long-term consolidated deferred revenues of the
Borrower and its Restricted Subsidiaries increased during such fiscal
year; MINUS
(d) the sum of (i) any noncash gains included in determining
such Consolidated Net Income for such fiscal year plus (ii) the
amount, if any, by which Net Working Capital increased during such
fiscal year plus (iii) the net amount, if any, by which the long-term
consolidated deferred revenues of the Borrower and its Restricted
Subsidiaries decreased during such fiscal year; MINUS
(e) the sum of (i) Capital Expenditures for such fiscal year
(except to the extent attributable to the incurrence of Capital Lease
Obligations or otherwise financed by incurring Long-Term Indebtedness
or attributable to the reinvestment of Net Proceeds of a Prepayment
Event) plus (ii) cash consideration paid during such fiscal year to
make acquisitions or other capital investments (except to the extent
financed by incurring Long-Term Indebtedness or attributable to the
reinvestment of Net Proceeds of a Prepayment Event); MINUS
(f) the aggregate principal amount of Long-Term Indebtedness
repaid or prepaid by the Borrower and its Restricted Subsidiaries
during such fiscal year, excluding (i) Indebtedness in respect of
Swingline Loans, Revolving Loans and Letters of Credit, (ii) Term
Loans prepaid pursuant to Section 2.11(c) or (d) and (iii) repayments
or prepayments of Long-Term Indebtedness financed by incurring other
Long-Term Indebtedness.
"EXCLUDED TAXES" means, with respect to the Administrative
Agent, any Lender, the Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income
or franchise taxes imposed on (or measured by) its net income by the United
<PAGE> 18
13
States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction described in clause (a) above and (c) in the
case of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)), any withholding tax that (i) is in effect and
would apply to amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment),
to receive additional amounts from the Borrower with respect to any withholding
tax pursuant to Section 2.17(a), or (ii) is attributable to such Foreign
Lender's failure to comply with Section 2.17(e).
"EXISTING CREDIT AGREEMENT" means the Fourth Amended and
Restated Credit Agreement dated as of June 5, 1998, among the Borrower, certain
of its subsidiaries, certain banks from time to time parties thereto and The
Chase Manhattan Bank, as agent.
"EXISTING NOTES" means the 11 5/8% Senior Subordinated Notes
due 2004 of the Borrower.
"EXISTING NOTES INDENTURE" means the Indenture dated as of
November 1, 1994, between the Borrower (f/k/a Enquirer/Star, Inc.) and United
States Trust Company of New York, as trustee, as amended pursuant to the Debt
Tender Offer.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or controller of the Borrower.
<PAGE> 19
14
"FINANCING TRANSACTIONS" means (a) the execution, delivery
and performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder and (b) the execution, delivery and performance
by each Loan Party of the Subordinated Debt Documents to which it is to be a
party, the issuance of the Subordinated Debt and the use of the proceeds
thereof.
"FOREIGN LENDER" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"FOREIGN SUBSIDIARY" means any Subsidiary that is organized
under the laws of a jurisdiction other than the United States of America or any
State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the
United States of America.
"GOVERNMENTAL AUTHORITY" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
<PAGE> 20
15
Indebtedness or obligation; PROVIDED that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"GUARANTEE AGREEMENT" means the Guarantee Agreement,
substantially in the form of Exhibit C, among Holdings, the Subsidiary Loan
Parties and the Collateral Agent for the benefit of the Secured Parties.
"HAZARDOUS MATERIALS" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"HEDGING AGREEMENT" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price
hedging arrangement.
"HOLDINGS" means American Media, Inc., a Delaware
corporation.
"HOLDINGS DISCOUNT NOTES" means discount notes of Holdings
(a) that are issued on a single date that is after the Effective Date, (b) with
an initial aggregate accreted value of up to $25,000,000, (c) with respect to
which no cash interest shall be payable until the fifth anniversary of issuance
and cash interest shall be payable semi-annually after such fifth anniversary,
(d) that mature no earlier than the tenth anniversary of issuance and do not
require any amortization or other required redemption or repayment prior to
maturity (other than redemption on the fifth anniversary of issuance of a
portion of such discount notes not exceeding the Holdings Discount Notes
Redemption Amount at a redemption price of 100% of the principal amount so
redeemed), (e) that are not Guaranteed by the Borrower or any Subsidiary, (f)
the Net Proceeds of the issuance of which are contributed as common equity to
the Borrower and (g) that have such other terms and conditions (including with
respect to covenants and events of default) that (i) are customary for
high-yield discount notes issued by holding companies and (ii) are approved by
the Administrative Agent.
"HOLDINGS DISCOUNT NOTES DOCUMENTS" means the indenture under
which the Holdings Discount Notes are issued and all other instruments,
agreements and other documents evidencing or governing the Holdings Discount
Notes or providing for any other right in respect thereof.
<PAGE> 21
16
"HOLDINGS DISCOUNT NOTES REDEMPTION AMOUNT" means the amount
equal to (a)(i) the excess of the aggregate accreted value of Holdings Discount
Notes on the fifth anniversary of the date of their issuance over (ii) the
aggregate accreted value of the Holdings Discount Notes on the date of their
issuance, less (b) an amount equal to simple interest for one year on the
aggregate accreted value of the Holdings Discount Notes on the date of their
issuance at a per annum rate equal to the yield to maturity of such Holdings
Discount Notes.
"INDEBTEDNESS" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent.
<PAGE> 22
17
"INFORMATION MEMORANDUM" means the Confidential Information
Memorandum dated April 1999 relating to the Borrower and the Transactions.
"INTEREST ELECTION REQUEST" means a request by the Borrower
to convert or continue a Revolving Borrowing or Term Borrowing in accordance
with Section 2.07.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR
Loan (other than a Swingline Loan), the last day of each March, June, September
and December, (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and,
in the case of a Eurodollar Borrowing with an Interest Period of more than
three months' duration, each day prior to the last day of such Interest Period
that occurs at intervals of three months' duration after the first day of such
Interest Period, and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.
"INTEREST PERIOD" means, with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day in the calendar month that is one, two, three
or six months thereafter (or nine or twelve months thereafter if, at the time
of the relevant Borrowing, all Lenders participating therein agree to make
interest periods of such duration available), as the Borrower may elect;
PROVIDED that (a) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (b) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
"ISSUING BANK" means The Chase Manhattan Bank, in its
capacity as the issuer of Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.05(i). The Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.
<PAGE> 23
18
"LC DISBURSEMENT" means a payment made by the Issuing Bank
pursuant to a Letter of Credit.
"LC EXPOSURE" means, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the aggregate amount of all LC Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any
Revolving Lender at any time shall be its Applicable Percentage of the total LC
Exposure at such time.
"LENDERS" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment
and Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance. Unless the context otherwise
requires, the term "Lenders" includes the Swingline Lender.
"LETTER OF CREDIT" means any letter of credit issued pursuant
to this Agreement.
"LEVERAGE RATIO" means, on any date, the ratio of (a) Total
Debt as of such date to (b) Consolidated EBITDA for the period of four
consecutive fiscal quarters ended on such date (or, solely for purposes of
determining the Applicable Rate, two times Consolidated EBITDA for the period
of two consecutive fiscal quarters ended on such date), all determined on a
consolidated basis in accordance with GAAP.
"LIBO RATE" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO RATE"
with respect to such Eurodollar Borrowing for such Interest Period shall be the
<PAGE> 24
19
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LIEN" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.
"LLC AGREEMENT" means the Amended and Restated Limited
Liability Company Agreement and Investors Rights Agreement of EMP Group L.L.C.
dated as of February 16, 1999.
"LOAN DOCUMENTS" means this Agreement, the Guarantee
Agreement, the Indemnity, Subrogation and Contribution Agreement and the
Security Documents.
"LOAN PARTIES" means Holdings, the Borrower and the
Subsidiary Loan Parties.
"LOANS" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.
"LONG-TERM INDEBTEDNESS" means any Indebtedness that, in
accordance with GAAP, constitutes (or, when incurred, constituted) a long-term
liability.
"MANAGEMENT AGREEMENT" means the Side Letter dated February
16, 1999 among the members of EMP Group L.L.C.
"MARGIN STOCK" shall have the meaning assigned to such term
in Regulation U of the Board.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, assets, operations or condition, financial or otherwise, of
Holdings, the Borrower and the Restricted Subsidiaries taken as a whole, (b)
the ability of any Loan Party to perform any of its obligations under any Loan
Document or (c) the rights of or benefits available to the Lenders under any
Loan Document.
<PAGE> 25
20
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the
Loans and Letters of Credit), or obligations in respect of one or more Hedging
Agreements, of any one or more of Holdings, the Borrower and its Restricted
Subsidiaries in an aggregate principal amount exceeding $5,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of Holdings, the Borrower or any Restricted Subsidiary in respect
of any Hedging Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that Holdings, the Borrower or such
Restricted Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.
"MERGER" means the merger of Merger Sub with and into
Holdings, with Holdings as the surviving corporation, pursuant to the Merger
Agreement.
"MERGER AGREEMENT" means the Agreement and Plan of Merger,
dated as of February 16, 1999, by and between Holdings and Merger Sub.
"MERGER SUB" means EMP Acquisition Corp., a Delaware
corporation.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means a mortgage, deed of trust, assignment of
leases and rents, leasehold mortgage or other security document granting a Lien
on any Mortgaged Property to secure the Obligations. Each Mortgage shall be
satisfactory in form and substance to the Collateral Agent.
"MORTGAGED PROPERTY" means, initially, each parcel of real
property and the improvements thereto owned by a Loan Party and identified on
Schedule 1.01(a), and includes each other parcel of real property and
improvements thereto with respect to which a Mortgage is granted pursuant to
Section 5.12 or 5.13.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET PROCEEDS" means, with respect to any event (a) the cash
proceeds received in respect of such event including (i) any cash received in
respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty, insurance proceeds, and (iii) in the case of a condemnation
or similar event, condemnation awards and similar payments, net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses paid by Holdings, the
<PAGE> 26
21
Borrower and the Restricted Subsidiaries to third parties (other than
Affiliates) in connection with such event, (ii) in the case of a sale, transfer
or other disposition of an asset (including pursuant to a sale and leaseback
transaction or a casualty or a condemnation or similar proceeding), the amount
of all payments required to be made by Holdings, the Borrower and the
Restricted Subsidiaries as a result of such event to repay Indebtedness (other
than Loans) secured by such asset or otherwise subject to mandatory prepayment
as a result of such event, and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) by Holdings, the Borrower and the
Restricted Subsidiaries, and the amount of any reserves established by
Holdings, the Borrower and the Restricted Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, in each case during the year
that such event occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good faith by the
chief financial officer of the Borrower).
"NET WORKING CAPITAL" means, at any date, (a) the
consolidated current assets of the Borrower and its consolidated Restricted
Subsidiaries as of such date (excluding cash and Permitted Investments) minus
(b) the consolidated current liabilities of the Borrower and its consolidated
Restricted Subsidiaries as of such date (excluding current liabilities in
respect of Indebtedness). Net Working Capital at any date may be a positive or
negative number. Net Working Capital increases when it becomes more positive or
less negative and decreases when it becomes less positive or more negative.
"OBLIGATIONS" has the meaning assigned to such term in the
Security Agreement.
"OTHER TAXES" means any and all present or future recording,
stamp, documentary, excise, transfer, sales, property or similar taxes, charges
or levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA and any successor entity performing similar
functions.
"PERFECTION CERTIFICATE" means a certificate in the form of
Annex II to the Security Agreement or any other form approved by the Collateral
Agent.
<PAGE> 27
22
"PERMITTED ACQUISITION" means any acquisition by the Borrower
or any Restricted Subsidiary of all or substantially all the assets of, or all
the Equity Interests in, a Person or division or line of business of a Person
if, immediately after giving effect thereto, (a) no Default has occurred and is
continuing or would result therefrom, (b) the principal business of such Person
shall be reasonably related, ancillary or complementary, to a business in which
the Borrower and its Restricted Subsidiaries were engaged on the Effective
Date, (c) each Subsidiary formed for the purpose of or resulting from such
acquisition shall be a Restricted Subsidiary and all of the Equity Interests of
each such Subsidiary shall be owned directly by the Borrower or a Restricted
Subsidiary of the Borrower and all actions required to be taken with respect to
such acquired or newly formed Subsidiary under Sections 5.12 and 5.13 have been
taken, (d) the Borrower and its Restricted Subsidiaries are in compliance, on a
PRO FORMA basis after giving effect to such acquisition (and any operating
expense reductions related thereto that would be permitted to be deducted in
any calculation of Consolidated EBITDA in accordance with the definition of
such term contained herein), with the covenants contained in Sections 6.12,
6.13, 6.14 and 6.15 (based on the required compliance level for September 27,
1999, in the case of an acquisition made prior to such date) recomputed as at
the last day of the most recently ended fiscal quarter of the Borrower for
which financial statements are available, as if such acquisition had occurred
on the first day of each relevant period for testing such compliance and (e)
the Borrower has delivered to the Administrative Agent an officers' certificate
to the effect set forth in clauses (a), (b), (c) and (d) above, together with
all relevant financial information for the Person or assets to be acquired and
reasonably detailed calculations demonstrating satisfaction of the requirement
set forth in clause (d) above.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or
are being contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with
Section 5.05;
<PAGE> 28
23
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business
of the Borrower or any Subsidiary;
PROVIDED that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"PERMITTED INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the
date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date
of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital
and surplus and undivided profits of not less than $500,000,000; and
<PAGE> 29
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(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
described in clause (c) above.
"PERSON" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"PLEDGE AGREEMENT" means the Pledge Agreement among the Loan
Parties and the Collateral Agent for the benefit of the Secured Parties,
substantially in the form of Exhibit E.
"PREPAYMENT EVENT" means:
(a) any sale, transfer or other disposition (including
pursuant to a sale and leaseback transaction) of any property or asset
of the Borrower or any Restricted Subsidiary, other than (i)
dispositions described in clauses (a) and (b) of Section 6.05 and (ii)
any other disposition (or series of related dispositions) as to which
the Net Proceeds do not exceed $100,000; or
(b) any casualty or other insured damage to, or any taking
under power of eminent domain or by condemnation or similar proceeding
of, any property or asset of the Borrower or any Restricted
Subsidiary, but only to the extent that the Net Proceeds therefrom
have not been applied to repair, restore or replace such property or
asset within 360 days after such event; or
(c) the issuance by Holdings, the Borrower or any Restricted
Subsidiary of any Equity Interests, or the receipt by Holdings, the
Borrower or any Restricted Subsidiary of any capital contribution,
other than (i) any such issuance of Equity Interests to, or receipt of
any such capital contribution from, Holdings, the Borrower or a
Restricted Subsidiary or (ii) any such issuance of Equity Interests by
Holdings in a private placement; or
<PAGE> 30
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(d) the incurrence by Holdings, the Borrower or any
Restricted Subsidiary of any Indebtedness, other than Indebtedness
permitted by Section 6.01.
"PRIME RATE" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly
announced as being effective.
"REGISTER" has the meaning set forth in Section 9.04.
"RELATED FUND" means, with respect to any Lender that is a
fund that invests in bank loans in the ordinary course of business, any other
fund that invests in bank loans in the ordinary course of business and is
advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"RELATED PARTIES" means, with respect to any specified
Person, such Person's Affiliates and the respective directors, officers,
employees, trustees, agents and advisors of such Person and such Person's
Affiliates.
"REQUIRED LENDERS" means, at any time, Lenders having
Revolving Exposures, Term Loans and unused Commitments representing more than
50% of the sum of the total Revolving Exposures, outstanding Term Loans and
unused Commitments at such time.
"RESTRICTED PAYMENT" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in Holdings, the Borrower or any Restricted Subsidiary, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of any Subordinated Debt or any Equity
Interests in Holdings, the Borrower or any Restricted Subsidiary or any option,
warrant or other right to acquire any such Equity Interests in Holdings, the
Borrower or any Restricted Subsidiary.
"RESTRICTED SUBSIDIARY" means any Subsidiary that is not an
Unrestricted Subsidiary.
<PAGE> 31
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"REVOLVING AVAILABILITY PERIOD" means the period from and
including the Effective Date to but excluding the earlier of the Revolving
Maturity Date and the date of termination of the Revolving Commitments.
"REVOLVING COMMITMENT" means, with respect to each Lender,
the commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender's Revolving Commitment is set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Revolving Commitment, as applicable. The initial aggregate
amount of the Lenders' Revolving Commitments is $60,000,000.
"REVOLVING EXPOSURE" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its LC Exposure and Swingline Exposure at such time.
"REVOLVING LENDER" means a Lender with a Revolving Commitment
or, if the Revolving Commitments have terminated or expired, a Lender with
Revolving Exposure.
"REVOLVING LOAN" means a Loan made pursuant to clause (c) of
Section 2.01.
"REVOLVING MATURITY DATE" means April 1, 2006.
"S&P" means Standard & Poor's.
"SECURED PARTIES" has the meaning assigned to such term in
the Security Agreement.
"SECURITY AGREEMENT" means the Security Agreement,
substantially in the form of Exhibit F, among the Borrower, Holdings, the
Subsidiary Loan Parties and the Collateral Agent for the benefit of the Secured
Parties.
"SECURITY DOCUMENTS" means the Security Agreement, the Pledge
Agreement, the Mortgages and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.12 or 5.13 to secure
any of the Obligations.
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27
"SENIOR LEVERAGE RATIO" means, on any date, the ratio of (a)
Total Senior Debt as of such date to (b) Consolidated EBITDA for the period of
four consecutive fiscal quarters ended on such date, all determined on a
consolidated basis in accordance with GAAP.
"STATUTORY RESERVE RATE" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Administrative Agent is
subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal
time deposits in dollars of over $100,000 with maturities approximately equal
to three months and (b) with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"SUBORDINATED DEBT" means the Senior Subordinated Notes due
2009 to be issued by the Borrower on or prior to the Effective Date in the
aggregate principal amount of $250,000,000 and the Indebtedness represented
thereby.
"SUBORDINATED DEBT DOCUMENTS" means the indenture under which
the Subordinated Debt is issued and all other instruments, agreements and other
documents evidencing or governing the Subordinated Debt or providing for any
Guarantee or other right in respect thereof.
"SUBSIDIARY" means, with respect to any Person (the "PARENT")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
<PAGE> 33
28
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent.
"SUBSIDIARY" means any subsidiary of the Borrower.
"SUBSIDIARY LOAN PARTY" means any Restricted Subsidiary that
is not a Foreign Subsidiary.
"SWINGLINE EXPOSURE" means, at any time, the aggregate
principal amount of all Swingline Loans outstanding at such time. The Swingline
Exposure of any Lender at any time shall be its Applicable Percentage of the
total Swingline Exposure at such time.
"SWINGLINE LENDER" means The Chase Manhattan Bank, in its
capacity as lender of Swingline Loans hereunder.
"SWINGLINE LOAN" means a Loan made pursuant to Section 2.04.
"TAXES" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"TERM LOANS" means Tranche A Term Loans and Tranche B Term
Loans.
"THREE-MONTH SECONDARY CD RATE" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day) or, if such rate is not
so reported on such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m., New
York City time, on such day (or, if such day is not a Business Day, on the next
preceding Business Day) by the Administrative Agent from three negotiable
certificate of deposit dealers of recognized standing selected by it.
"TOTAL ASSETS" means, as of any date of determination, the
total consolidated assets of the Borrower and the Restricted Subsidiaries as of
the end of the most recent fiscal quarter for which financial statements have
been delivered pursuant to clause (a) or (b) of Section 5.01, determined on a
consolidated basis in accordance with GAAP.
<PAGE> 34
29
"TOTAL DEBT" means, as of any date of determination, the
aggregate principal amount of Indebtedness (excluding Indebtedness consisting
of contingent liabilities in respect of undrawn letters of credit) of the
Borrower and the Restricted Subsidiaries outstanding as of such date,
determined on a consolidated basis in accordance with GAAP.
"TOTAL SENIOR DEBT" means, as of any date of determination,
(a) Total Debt as of such date minus (b) the portion of Total Debt as of such
date represented by the Subordinated Debt and Existing Notes.
"TRANCHE A COMMITMENT" means, with respect to each Lender,
the commitment, if any, of such Lender to make a Tranche A Term Loan hereunder
on the Effective Date, expressed as an amount representing the maximum
principal amount of the Tranche A Term Loan to be made by such Lender
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Tranche A Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche A Commitment, as applicable. The initial aggregate amount of the
Lenders' Tranche A Commitments is $100,000,000.
"TRANCHE A LENDER" means a Lender with a Tranche A Commitment
or an outstanding Tranche A Term Loan.
"TRANCHE A MATURITY DATE" means April 1, 2006.
"TRANCHE A TERM LOAN" means a Loan made pursuant to clause
(a) of Section 2.01.
"TRANCHE B COMMITMENT" means, with respect to each Lender,
the commitment, if any, of such Lender to make a Tranche B Term Loan hereunder
on the Effective Date, expressed as an amount representing the maximum
principal amount of the Tranche B Term Loan to be made by such Lender
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Tranche B Commitment is set forth on Schedule 2.01, or in the
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30
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche A Commitment, as applicable. The initial aggregate amount of the
Lenders' Tranche B Commitments is $240,000,000.
"TRANCHE B LENDER" means a Lender with a Tranche B Commitment
or an outstanding Tranche B Term Loan.
"TRANCHE B MATURITY DATE" means April 1, 2007.
"TRANCHE B TERM LOAN" means a Loan made pursuant to clause
(b) of Section 2.01.
"TRANSACTION COSTS" means any amounts paid or payable by
Holdings or the Borrower in respect of financing fees, investment banking and
consulting fees, accounting and legal fees, printing costs and any similar fees
and expenses, in each case incurred in connection with the Transactions.
"TRANSACTIONS" means the Acquisition, the Debt Tender Offer
and the Financing Transactions.
"TYPE", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary of the
Borrower that shall have been designated an Unrestricted Subsidiary by the
Borrower in the manner provided below and (b) any Subsidiary of an Unrestricted
Subsidiary. The Borrower may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary if (i)
neither such Subsidiary nor any of its Subsidiaries owns any Equity Interests
or Indebtedness of, or holds any Lien on any property of, Holdings, the
Borrower or any other Restricted Subsidiary, (ii) after giving effect to such
designation, the Borrower shall be in compliance with clause (d) of Section
6.04 (it being understood that, for purposes of determining such compliance,
all investments made by Loan Parties in, loans or advances made by Loan Parties
to and Guarantees made by Loan Parties of Indebtedness of any Subsidiary so
designated, shall be deemed to be investments, loans, advances and Guarantees
in, to or on behalf of an Unrestricted Subsidiary), (iii) after giving effect
to such designation, the Borrower and the Restricted Subsidiaries shall be in
compliance on a PRO FORMA basis with the covenants contained in Sections 6.12,
6.13, 6.14, 6.15 and 6.16 recomputed as at the last day of the most recently
<PAGE> 36
31
completed fiscal quarter of the Borrower for which financial statements are
available, as if such designation had occurred on the first day of each
relevant period for testing such compliance and (iv) no Default shall have
occurred and be continuing or would result therefrom. The Borrower may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary if (i) no
Default shall have occurred and be continuing or would result therefrom and
(ii) after giving effect to such designation, the Borrower and the Restricted
Subsidiaries are in compliance on a PRO FORMA basis with the covenants
contained in Sections 6.12, 6.13, 6.14, 6.15 and 6.16 recomputed as at the last
day of the most recently completed fiscal quarter of the Borrower for which
financial statements are available, as if such designation had occurred on the
first day of each relevant period for testing such compliance. The Borrower
shall promptly notify the Administrative Agent in writing of any such
designation (and the Administrative Agent shall notify the Lenders) and shall
deliver to the Administrative Agent a certificate signed by a Financial Officer
of the Borrower certifying that such designation complied with the foregoing
provisions together with reasonably detailed calculations demonstrating
satisfaction of the requirement set forth in clause (iii) of the second
sentence of this definition or in clause (ii) of the third sentence of this
definition, as applicable.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For
purposes of this Agreement, Loans may be classified and referred to by Class
(E.G., a "Revolving Loan") or by Type (E.G., a "Eurodollar Loan") or by Class
and Type (E.G., a "Eurodollar Revolving Loan"). Borrowings also may be
classified and referred to by Class (E.G., a "Revolving Borrowing") or by Type
(E.G., a "Eurodollar Borrowing") or by Class and Type (E.G., a "Eurodollar
Revolving Borrowing").
SECTION 1.03. TERMS GENERALLY. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
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document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
SECTION 1.04. ACCOUNTING TERMS; GAAP; TREATMENT OF
UNRESTRICTED SUBSIDIARIES. (a) Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time; PROVIDED that, if the Borrower
notifies the Administrative Agent that the Borrower requests an amendment to
any provision hereof to eliminate the effect of any change occurring after the
date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Borrower that the
Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
(b) Except as otherwise expressly provided herein, all
accounting and financial calculations and determinations hereunder shall be
made without consolidating the accounts of Unrestricted Subsidiaries with those
of the Borrower or any Restricted Subsidiary, notwithstanding that such
treatment is inconsistent with GAAP.
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ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and
conditions set forth herein, each Lender agrees (a) to make a Tranche A Term
Loan to the Borrower on the Effective Date in a principal amount not exceeding
its Tranche A Commitment, (b) to make a Tranche B Term Loan to the Borrower on
the Effective Date in a principal amount not exceeding its Tranche B Commitment
and (c) to make Revolving Loans to the Borrower from time to time during the
Revolving Availability Period in an aggregate principal amount that will not
result in such Lender's Revolving Exposure exceeding such Lender's Revolving
Commitment. Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
Amounts repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. LOANS AND BORROWINGS. (a) Each Loan (other than
a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of
the same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; PROVIDED that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing and
Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as
the Borrower may request in accordance herewith; PROVIDED that all Borrowings
made on the Effective Date must be made as ABR Borrowings. Each Swingline Loan
shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; PROVIDED that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $10,000,000. At the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $100,000 and not less than $1,000,000;
PROVIDED that an ABR Revolving Borrowing may be in an aggregate amount that is
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34
equal to the entire unused balance of the total Revolving Commitments or that
is required to finance the reimbursement of an LC Disbursement as contemplated
by Section 2.05(e). Each Swingline Loan shall be in an amount that is not less
than $100,000. Borrowings of more than one Type and Class may be outstanding at
the same time; PROVIDED that there shall not at any time be more than a total
of ten Eurodollar Borrowings of any Class outstanding.
(d) Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Revolving Maturity Date, Tranche A Maturity Date or Tranche
B Maturity Date, as applicable.
SECTION 2.03. REQUESTS FOR BORROWINGS. To request a Revolving
Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later
than 11:00 a.m., New York City time, one Business Day before the date of the
proposed Borrowing; PROVIDED that any such notice of an ABR Revolving Borrowing
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving
Borrowing, Tranche A Term Borrowing or Tranche B Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business
Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
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35
(vi) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the
requirements of Section 2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. SWINGLINE LOANS. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline
Loans to the Borrower from time to time during the Revolving Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline Loans
exceeding $5,000,000 or (ii) the sum of the total Revolving Exposures exceeding
the total Revolving Commitments; PROVIDED that the Swingline Lender shall not
be required to make a Swingline Loan to refinance an outstanding Swingline
Loan. Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify
the Administrative Agent of such request by telephone (confirmed by telecopy),
not later than 12:00 noon, New York City time, on the day of a proposed
Swingline Loan. Each such notice shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. The Administrative Agent will promptly advise the Swingline
Lender of any such notice received from the Borrower. The Swingline Lender
shall make each Swingline Loan available to the Borrower by means of a credit
to the general deposit account of the Borrower with the Swingline Lender (or,
in the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank)
by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.
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(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 12:00 noon, New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such
notice shall specify the aggregate amount of Swingline Loans in which Revolving
Lenders will participate. Promptly upon receipt of such notice, the
Administrative Agent will give notice thereof to each Revolving Lender,
specifying in such notice such Lender's Applicable Percentage of such Swingline
Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above, to pay to the Administrative
Agent, for the account of the Swingline Lender, such Lender's Applicable
Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges
and agrees that its obligation to acquire participations in Swingline Loans
pursuant to this paragraph is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Revolving Lender shall comply with its obligation
under this paragraph by wire transfer of immediately available funds, in the
same manner as provided in Section 2.06 with respect to Loans made by such
Lender (and Section 2.06 shall apply, MUTATIS MUTANDIS, to the payment
obligations of the Revolving Lenders), and the Administrative Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the
Revolving Lenders. The Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this paragraph, and
thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrower (or other party on behalf of the
Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Revolving
Lenders that shall have made their payments pursuant to this paragraph and to
the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof. Notwithstanding the
foregoing, a Revolving Lender shall not have any obligation to acquire a
participation in a Swingline Loan pursuant to this paragraph if an Event of
Default shall have occurred and be continuing at the time such Swingline Loan
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37
was made and such Lender shall have notified the Swingline Lender in writing,
at least one Business Day prior to the time such Swingline Loan was made, that
such Event of Default has occurred and that such Lender will not acquire
participations in Swingline Loans made while such Event of Default is
continuing.
SECTION 2.05. LETTERS OF CREDIT. (a) GENERAL. Subject to the
terms and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION;
CERTAIN CONDITIONS. To request the issuance of a Letter of Credit (or the
amendment, renewal or extension of an outstanding Letter of Credit), the
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the Borrower also shall submit a letter of credit application on
the Issuing Bank's standard form in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only
if (and upon issuance, amendment, renewal or extension of each Letter of Credit
the Borrower shall be deemed to represent and warrant that), after giving
effect to such issuance, amendment, renewal or extension (i) the LC Exposure
shall not exceed $5,000,000 and (ii) the total Revolving Exposures shall not
exceed the total Revolving Commitments.
<PAGE> 43
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(c) EXPIRATION DATE. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after
the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five Business Days prior to the Revolving Maturity Date.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees
to pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or
reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
(e) REIMBURSEMENT. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Borrower shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time, on such date,
or, if such notice has not been received by the Borrower prior to such time on
such date, then not later than 12:00 noon, New York City time, on the Business
Day immediately following the day that the Borrower receives such notice;
PROVIDED that the Borrower may, subject to the conditions to borrowing set
forth herein, request in accordance with Section 2.03 or 2.04 that such payment
be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent
<PAGE> 44
39
amount and, to the extent so financed, the Borrower's obligation to make such
payment shall be discharged and replaced by the resulting ABR Revolving
Borrowing or Swingline Loan. If the Borrower fails to make such payment when
due, the Administrative Agent shall notify each Revolving Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender's Applicable Percentage thereof. Promptly following
receipt of such notice, each Revolving Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.06 with respect to Loans made by such
Lender (and Section 2.06 shall apply, MUTATIS mutandis, to the payment
obligations of the Revolving Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders. Promptly following receipt by the Administrative Agent of
any payment from the Borrower pursuant to this paragraph, the Administrative
Agent shall distribute such payment to the Issuing Bank or, to the extent that
Revolving Lenders have made payments pursuant to this paragraph to reimburse
the Issuing Bank, then to such Lenders and the Issuing Bank as their interests
may appear. Any payment made by a Revolving Lender pursuant to this paragraph
to reimburse the Issuing Bank for any LC Disbursement (other than the funding
of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.
(f) OBLIGATIONS ABSOLUTE. The Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of
any Letter of Credit or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank,
nor any of their Related Parties, shall have any liability or responsibility by
<PAGE> 45
40
reason of or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder (irrespective
of any of the circumstances referred to in the preceding sentence), or any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; PROVIDED that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised
care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; PROVIDED that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such
LC Disbursement.
(h) INTERIM INTEREST. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
<PAGE> 46
41
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
PROVIDED that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) REPLACEMENT OF THE ISSUING BANK. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.
The Administrative Agent shall notify the Lenders of any such replacement of
the Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the
term "Issuing Bank" shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to
have all the rights and obligations of an Issuing Bank under this Agreement
with respect to Letters of Credit issued by it prior to such replacement, but
shall not be required to issue additional Letters of Credit.
(j) CASH COLLATERALIZATION. If any Event of Default shall
occur and be continuing, on the Business Day that the Borrower receives notice
from the Administrative Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, the Borrower shall deposit in an account
with the Administrative Agent, in the name of the Administrative Agent and for
the benefit of the Lenders, an amount in cash equal to the LC Exposure as of
such date plus any accrued and unpaid interest thereon; PROVIDED that the
<PAGE> 47
42
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. Each
such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrower under this
Agreement. The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Administrative Agent and at the
Borrower's risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent
of Revolving Lenders with LC Exposure representing greater than 50% of the
total LC Exposure), be applied to satisfy other obligations of the Borrower
under this Agreement. If the Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.
SECTION 2.06. FUNDING OF BORROWINGS. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders; PROVIDED that Swingline Loans shall be made
as provided in Section 2.04. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower maintained with the Administrative
Agent in New York City and designated by the Borrower in the applicable
Borrowing Request; PROVIDED that ABR Revolving Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be
remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's share
<PAGE> 48
43
of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.07. INTEREST ELECTIONS. (a) Each Revolving
Borrowing and Term Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall
have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower may elect to convert such Borrowing to a different
Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing,
may elect Interest Periods therefor, all as provided in this Section. The
Borrower may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably
among the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing. This
Section shall not apply to Swingline Borrowings, which may not be converted or
continued.
(b) To make an election pursuant to this Section, the
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of
a written Interest Election Request in a form approved by the Administrative
Agent and signed by the Borrower.
<PAGE> 49
44
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing,
the Interest Period to be applicable thereto after giving effect to
such election, which shall be a period contemplated by the definition
of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so notifies the Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Borrowing may
be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid,
each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of
the Interest Period applicable thereto.
<PAGE> 50
45
SECTION 2.08. TERMINATION AND REDUCTION OF COMMITMENTS. (a)
Unless previously terminated, (i) the Tranche A Commitments and Tranche B
Commitments shall terminate at 5:00 p.m., New York City time, on the Effective
Date and (ii) the Revolving Commitments shall terminate on the Revolving
Maturity Date.
(b) The Borrower may at any time terminate, or from time to
time reduce, the Commitments of any Class; PROVIDED that (i) each reduction of
the Commitments of any Class shall be in an amount that is an integral multiple
of $1,000,000 and not less than $10,000,000 and (ii) the Borrower shall not
terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with Section 2.11,
the sum of the Revolving Exposures would exceed the total Revolving
Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; PROVIDED that a notice
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if
such condition is not satisfied. Any termination or reduction of the
Commitments of any Class shall be permanent. Each reduction of the Commitments
of any Class shall be made ratably among the Lenders in accordance with their
respective Commitments of such Class.
SECTION 2.09. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Term Loan of such Lender as provided in Section 2.10 and (iii)
to the Swingline Lender the then unpaid principal amount of each Swingline Loan
<PAGE> 51
46
on the Revolving Maturity Date; PROVIDED that on each date that a Revolving
Borrowing is made, the Borrower shall repay all Swingline Loans that were
outstanding on the date such Borrowing was requested.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be PRIMA FACIE evidence of the
existence and amounts of the obligations recorded therein; PROVIDED that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it
be evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and
its registered assigns).
SECTION 2.10. AMORTIZATION OF TERM LOANS. (a) Subject to
adjustment pursuant to paragraph (d) of this Section, the Borrower shall repay
Tranche A Term Borrowings on each date set forth below in the aggregate
principal amount set forth opposite such date:
<PAGE> 52
47
DATE AMOUNT
---- ------
July 1, 2001 $ 2,500,000
October 1, 2001 $ 2,500,000
January 2, 2002 $ 2,500,000
April 1, 2002 $ 2,500,000
July 1, 2002 $ 3,750,000
October 1, 2002 $ 3,750,000
January 2, 2003 $ 3,750,000
April 1, 2003 $ 3,750,000
July 1, 2003 $ 5,000,000
October 1, 2003 $ 5,000,000
January 2, 2004 $ 5,000,000
April 1, 2004 $ 5,000,000
July 1, 2004 $6,250,000
October 1, 2004 $6,250,000
January 2, 2005 $6,250,000
April 1, 2005 $6,250,000
July 1, 2005 $7,500,000
October 1, 2005 $7,500,000
January 2, 2006 $7,500,000
April 1, 2006 $7,500,000
(b) Subject to adjustment pursuant to paragraph (d) of this
Section, the Borrower shall repay Tranche B Term Borrowings on each date set
forth below in the aggregate principal amount set forth opposite such date:
DATE AMOUNT
---- ------
July 1, 2001 $ 600,000
October 1, 2001 $ 600,000
January 2, 2002 $ 600,000
April 1, 2002 $ 600,000
July 1, 2002 $ 600,000
October 1, 2002 $ 600,000
January 2, 2003 $ 600,000
April 1, 2003 $ 600,000
July 1, 2003 $ 600,000
October 1, 2003 $ 600,000
<PAGE> 53
48
January 2, 2004 $ 600,000
April 1, 2004 $ 600,000
July 1, 2004 $ 600,000
October 1, 2004 $ 600,000
January 2, 2005 $ 600,000
April 1, 2005 $ 600,000
July 1, 2005 $ 600,000
October 1, 2005 $ 600,000
January 2, 2006 $ 600,000
April 1, 2006 $ 600,000
July 1, 2006 $57,000,000
October 1, 2006 $57,000,000
January 2, 2007 $57,000,000
April 1, 2007 $57,000,000
(c) To the extent not previously paid, (i) all Tranche A Term
Loans shall be due and payable on the Tranche A Maturity Date and (ii) all
Tranche B Term Loans shall be due and payable on the Tranche B Maturity Date.
(d) Any prepayment of a Term Borrowing of either Class shall
be applied to reduce the subsequent scheduled repayments of the Term Borrowings
of such Class to be made pursuant to this Section ratably. If the initial
aggregate amount of the Lenders' Term Commitments of either Class exceeds the
aggregate principal amount of Term Loans of such Class that are made on the
Effective Date, then the scheduled repayments of Term Borrowings of such Class
to be made pursuant to this Section shall be reduced ratably by an aggregate
amount equal to such excess.
(e) Prior to any repayment of any Term Borrowings of either
Class hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment. Each repayment of a Borrowing shall be applied ratably to the Loans
included in the repaid Borrowing. Repayments of Term Borrowings shall be
accompanied by accrued interest on the amount repaid.
SECTION 2.11. PREPAYMENT OF LOANS. (a) The Borrower shall
have the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to the requirements of this Section.
(b) In the event and on such occasion that the sum of the
Revolving Exposures exceeds the total Revolving Commitments, the Borrower shall
prepay Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings
are outstanding, deposit cash collateral in an account with the Administrative
Agent pursuant to Section 2.05(j)) in an aggregate amount equal to such excess.
<PAGE> 54
49
(c) In the event and on each occasion that any Net Proceeds
are received by or on behalf of Holdings, the Borrower or any Restricted
Subsidiary in respect of any Prepayment Event, the Borrower shall, within five
Business Days after such Net Proceeds are received, prepay Term Borrowings in
an aggregate amount equal to such Net Proceeds (or, in the case of an event
described in clause (c) of the definition of the term Prepayment Event, 50% of
such Net Proceeds); PROVIDED that, in the case of any event described in clause
(a) of the definition of the term Prepayment Event, if the Borrower shall
deliver to the Administrative Agent a certificate of a Financial Officer to the
effect that the Borrower and the Restricted Subsidiaries intend to apply the
Net Proceeds from such event (or a portion thereof specified in such
certificate), within 360 days after receipt of such Net Proceeds, (i) to
acquire assets (including by making a Permitted Acquisition) productive in the
Borrower's line of business as conducted on the Effective Date, or ancillary or
complementary thereto, or (ii) to the extent such Prepayment Event arises from
the sale, transfer or disposition of any investment in an Unrestricted
Subsidiary, to make investments in one or more other Unrestricted Subsidiaries,
and, in each case, certifying that no Default has occurred and is continuing,
then no prepayment shall be required pursuant to this paragraph in respect of
the Net Proceeds in respect of such event (or the portion of such Net Proceeds
specified in such certificate, if applicable) except to the extent of any such
Net Proceeds therefrom that have not been so applied by the end of such 360-day
period, at which time a prepayment shall be required in an amount equal to such
Net Proceeds that have not been so applied.
(d) Following the end of each fiscal year of the Borrower,
commencing with the fiscal year ending March 26, 2001, the Borrower shall
prepay Term Borrowings in an aggregate amount equal to 50% of Excess Cash Flow
for such fiscal year. Each prepayment pursuant to this paragraph shall be made
on or before the date on which financial statements are delivered pursuant to
Section 5.01 with respect to the fiscal year for which Excess Cash Flow is
being calculated (and in any event within 90 days after the end of such fiscal
year).
(e) Prior to any optional or mandatory prepayment of
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be prepaid and shall specify such selection in the notice of such prepayment
pursuant to paragraph (f) of this Section. In the event of any optional or
<PAGE> 55
50
mandatory prepayment of Term Borrowings made at a time when Term Borrowings of
both Classes remain outstanding, the Borrower shall select Term Borrowings to
be prepaid so that the aggregate amount of such prepayment is allocated between
the Tranche A Term Borrowings and Tranche B Term Borrowings pro rata based on
the aggregate principal amount of outstanding Borrowings of each such Class;
PROVIDED that any Tranche B Lender may elect, by notice to the Administrative
Agent by telephone (confirmed by telecopy) by 12:00 noon, New York City time,
at least two Business Days prior to the prepayment date, to decline all or any
portion of any mandatory prepayment of its Tranche B Term Loans pursuant to
this Section, in which case the aggregate amount of the prepayment that would
have been applied to prepay Tranche B Term Loans but was so declined shall be
applied to prepay Tranche A Term Borrowings.
(f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of any Borrowing (other than a Swingline Loan or an optional
prepayment of an ABR Borrowing), not later than 11:00 a.m., New York City time,
three Business Days before the date of prepayment, (ii) in the case of an
optional prepayment of an ABR Borrowing, not later than 11:00 a.m., New York
City time, one Business Day before the date of prepayment or (iii) in the case
of prepayment of a Swingline Loan, not later than 12:00 noon, New York City
time, on the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of each Borrowing or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment; PROVIDED
that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Revolving Commitments as contemplated
by Section 2.08, then such notice of prepayment may be revoked if such notice
of termination is revoked in accordance with Section 2.08. Promptly following
receipt of any such notice (other than a notice relating solely to Swingline
Loans), the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required
amount of a mandatory prepayment. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section
2.13.
<PAGE> 56
51
SECTION 2.12. FEES. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a commitment fee,
which shall accrue at the Applicable Rate on the average daily unused amount of
the Revolving Commitment of such Lender during the period from and including
the Effective Date to but excluding the date on which such Revolving Commitment
terminates. Accrued commitment fees shall be payable in arrears on the last day
of March, June, September and December of each year and on the date on which
the Revolving Commitments terminate, commencing on the first such date to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment
of a Lender shall be deemed to be used to the extent of the outstanding
Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of
such Lender shall be disregarded for such purpose).
(b) The Borrower agrees to pay (i) to the Administrative
Agent for the account of each Revolving Lender a participation fee with respect
to its participations in Letters of Credit, which shall accrue at the same
Applicable Rate as interest on Eurodollar Revolving Loans on the average daily
amount of such Lender's LC Exposure (excluding any portion thereof attributable
to unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall
accrue at the rate of 0.25% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Revolving Commitments and
the date on which there ceases to be any LC Exposure, as well as the Issuing
Bank's standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including the last day
of March, June, September and December of each year shall be payable on the
third Business Day following such last day, commencing on the first such date
to occur after the Effective Date; PROVIDED that all such fees shall be payable
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on the date on which the Revolving Commitments terminate and any such fees
accruing after the date on which the Revolving Commitments terminate shall be
payable on demand. Any other fees payable to the Issuing Bank pursuant to this
paragraph shall be payable within 10 days after demand. All participation fees
and fronting fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates
due, in immediately available funds, to the Administrative Agent (or to the
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of commitment fees and participation fees, to the Lenders entitled thereto.
Fees paid shall not be refundable under any circumstances.
SECTION 2.13. INTEREST. (a) The Loans comprising each ABR
Borrowing (including each Swingline Loan) shall bear interest at the Alternate
Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration
or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount,
2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a)
of this Section.
(d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving
Loans, upon termination of the Revolving Commitments; PROVIDED that (i)
interest accrued pursuant to paragraph (c) of this Section shall be payable on
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demand, (ii) in the event of any repayment or prepayment of any Loan (other
than a prepayment of an ABR Revolving Loan prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (iii)
in the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of
a year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate
for such Interest Period; or
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
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SECTION 2.15. INCREASED COSTS. (a) If any Change in Law
shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or the
Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.
(b) If any Lender or the Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or the Issuing Bank's capital or
on the capital of such Lender's or the Issuing Bank's holding company, if any,
as a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender's or the Issuing Bank's holding company for any such reduction
suffered.
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(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing
Bank to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such
compensation; PROVIDED that the Borrower shall not be required to compensate a
Lender or the Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender or
the Issuing Bank, as the case may be, notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender's or
the Issuing Bank's intention to claim compensation therefor; PROVIDED FURTHER
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.
SECTION 2.16. BREAK FUNDING PAYMENTS. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of
an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.11(f) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.19, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
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in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement
of such period, for dollar deposits of a comparable amount and period from
other banks in the Eurodollar market. A certificate of any Lender setting forth
any amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.17. TAXES. (a) Any and all payments by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; PROVIDED that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent, Lender or Issuing Bank
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within 30 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
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(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate, provided that
such Foreign Lender has received written notice from the Borrower advising it
of the availability of such exemption or reduction and containing all
applicable documentation.
(f) If the Administrative Agent or a Lender determines, in
its sole discretion, that it has received a refund of any Taxes or Other Taxes
as to which it has been indemnified by the Borrower or with respect to which
the Borrower has paid additional amounts pursuant to this Section 2.17, it
shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
2.17 with respect to the Taxes or Other Taxes giving rise to such refund), net
of all out-of-pocket expenses of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); PROVIDED, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
refunded to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent or such
Lender in the event the Administrative Agent or such Lender is required to
repay such refund to such Governmental Authority. This Section shall not be
construed to require the Administrative Agent or any Lender (i) to make
available its tax returns (or any other information relating to its taxes which
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it deems confidential) to the Borrower or any other Person or (ii) to determine
whether it is entitled to apply for, or to apply for, a refund of any Taxes or
Other Taxes.
SECTION 2.18. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING
OF SETOFFS. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest,
fees or reimbursement of LC Disbursements, or of amounts payable under Section
2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required
hereunder or under such other Loan Document for such payment (or, if no such
time is expressly required, prior to 12:00 noon, New York City time), on the
date when due, in immediately available funds, without setoff or counterclaim.
Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue,
New York, New York, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
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Disbursements or Swingline Loans resulting in such Lender receiving payment of
a greater proportion of the aggregate amount of its Revolving Loans, Term Loans
and participations in LC Disbursements and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans; PROVIDED that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the Issuing Bank, as the case may be, the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders or the Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
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the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or
9.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are
fully paid.
SECTION 2.19. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.
(a) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender
in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
2.17, or if any Lender defaults in its obligation to fund Loans hereunder, then
the Borrower may, at its sole expense and effort, upon notice to such Lender
and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); PROVIDED that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Commitment is being assigned, the Issuing Bank and
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Swingline Lender), which consent shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements and Swingline
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim
for compensation under Section 2.15 or payments required to be made pursuant to
Section 2.17, such assignment will result in a material reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of Holdings and the Borrower represents and warrants to
the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of Holdings, the
Borrower and its Restricted Subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
has all requisite power and authority to carry on its business as now conducted
and, except where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, is qualified
to do business in, and is in good standing in, every jurisdiction where such
qualification is required.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions
to be entered into by each Loan Party are within such Loan Party's corporate
powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. This Agreement has been duly executed and
delivered by each of Holdings and the Borrower and constitutes, and each other
Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of Holdings, the Borrower or such Loan Party (as the case may be),
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
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SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of Holdings, the Borrower or any of its Subsidiaries
or any order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument (other than any
indenture, agreement or other instrument in respect of Indebtedness that will
be repaid on the Effective Date) binding upon Holdings, the Borrower or any of
its Restricted Subsidiaries or its assets, or give rise to a right thereunder
to require any payment to be made by Holdings, the Borrower or any of its
Restricted Subsidiaries, and (d) will not result in the creation or imposition
of any Lien on any asset of Holdings, the Borrower or any of its Restricted
Subsidiaries, except Liens created under the Loan Documents.
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE
CHANGE. (a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders' equity and
cash flows (i) as of and for the fiscal year ended March 30, 1998, reported on
by Arthur Andersen LLP, independent public accountants, and (ii) as of and for
the fiscal quarter and the portion of the fiscal year ended December 28, 1998,
certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
(b) The Borrower has heretofore furnished to the Lenders its
pro forma consolidated balance sheet as of December 28, 1998, prepared giving
effect to the Transactions as if the Transactions had occurred on such date.
Such pro forma consolidated balance sheet (i) has been prepared in good faith
based on the same assumptions used to prepare the pro forma financial
statements included in the Information Memorandum (which assumptions are
believed by Holdings and the Borrower to be reasonable), (ii) is based on the
best information available to Holdings and the Borrower after due inquiry,
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(iii) accurately reflects all adjustments necessary to give effect to the
Transactions and (iv) presents fairly, in all material respects, the pro forma
financial position of the Borrower and its consolidated Subsidiaries as of
December 28, 1998 as if the Transactions had occurred on such date.
(c) Except as disclosed in the financial statements referred
to above or the notes thereto or in the Information Memorandum and except for
the Disclosed Matters, after giving effect to the Transactions, none of
Holdings, the Borrower or its Subsidiaries has, as of the Effective Date, any
material contingent liabilities, unusual long-term commitments or unrealized
losses.
(d) Since March 30, 1998, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial
or otherwise, of Holdings, the Borrower and its Restricted Subsidiaries, taken
as a whole.
SECTION 3.05. PROPERTIES. (a) Each of Holdings, the Borrower
and its Restricted Subsidiaries has good title to, or valid leasehold interests
in, all its real and personal property material to its business (including its
Mortgaged Properties), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes.
(b) Each of Holdings, the Borrower and its Restricted
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property material to its business,
and the use thereof by Holdings, the Borrower and its Restricted Subsidiaries
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. Schedule 3.05(b) sets forth a
complete list of all trademarks, tradenames, copyrights, patents and other
intellectual property owned by the Borrower and its Restricted Subsidiaries as
of the Effective Date that has been duly registered in, filed in or issued by
the United States Patent and Trademark Office or the United States Copyright
Office or any other appropriate office.
(c) Schedule 3.05(c) sets forth the address of each real
property that is owned or leased by the Borrower or any of its Subsidiaries as
of the Effective Date after giving effect to the Transactions.
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(d) As of the Effective Date, neither Holdings, the Borrower
nor any of its Subsidiaries has received notice of, or has knowledge of, any
pending or contemplated condemnation proceeding affecting any Mortgaged
Property or any sale or disposition thereof in lieu of condemnation. Neither
any Mortgaged Property nor any interest therein is subject to any right of
first refusal, option or other contractual right to purchase such Mortgaged
Property or interest therein.
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) There
are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of Holdings or the
Borrower, threatened against or affecting Holdings, the Borrower or any of its
Subsidiaries (i) that could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters), (ii) that involve any of the Loan Documents or (iii) that involve the
Transactions, are not frivolous and, if adversely determined, could reasonably
be expected, individually or in the aggregate, to be adverse to the interests
of the Lenders.
(b) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, neither
Holdings, the Borrower nor any of its Subsidiaries (i) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received notice of any claim
asserting that Holdings, the Borrower or any of its Subsidiaries is obligated
to redress any Environmental Liability or (iv) knows of any basis for any
Environmental Liability that Holdings, the Borrower or any of its Subsidiaries
is reasonably likely to become obligated to redress.
(c) Since the date of this Agreement, there has been no
change in the status of the Disclosed Matters that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of
Holdings, the Borrower and its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it
or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
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SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS. Neither
Holdings, the Borrower nor any of its Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.09. TAXES. Each of Holdings, the Borrower and its
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except (a) any Taxes that are being contested
in good faith by appropriate proceedings and for which Holdings, the Borrower
or such Subsidiary, as applicable, has set aside on its books adequate reserves
or (b) to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $15,000,000 the fair market value
of the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts,
exceed by more than $15,000,000 the fair market value of the assets of all such
underfunded Plans.
SECTION 3.11. DISCLOSURE. The Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to
which Holdings, the Borrower or any of its Subsidiaries is subject, and all
other matters known to any of them, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. Neither
the Information Memorandum nor any of the other reports, financial statements,
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certificates or other information furnished by or on behalf of any Loan Party
to the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or thereunder
(as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED that, with respect to projected financial
information, Holdings and the Borrower represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.
SECTION 3.12. SUBSIDIARIES. Holdings does not have any
subsidiaries other than the Borrower and the Borrower's Subsidiaries. Schedule
3.12 sets forth the name of, and the ownership interest of the Borrower in,
each Subsidiary of the Borrower and identifies each Subsidiary that is a
Subsidiary Loan Party, in each case as of the Effective Date. As of the
Effective Date, all Subsidiaries are Restricted Subsidiaries.
SECTION 3.13. INSURANCE. Schedule 3.13 sets forth a
description of all insurance maintained by or on behalf of the Borrower and its
Subsidiaries as of the Effective Date. As of the Effective Date, all premiums
in respect of such insurance have been paid. Holdings and the Borrower believe
that the insurance maintained by or on behalf of the Borrower and its
Subsidiaries is adequate.
SECTION 3.14. LABOR MATTERS. As of the Effective Date, there
are no strikes, lockouts or slowdowns against Holdings, the Borrower or any
Subsidiary pending or, to the knowledge of Holdings or the Borrower,
threatened. The hours worked by and payments made to employees of Holdings, the
Borrower and the Restricted Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable Federal, state, local or foreign
law dealing with such matters. All payments due from Holdings, the Borrower or
any Restricted Subsidiary, or for which any claim may be made against Holdings,
the Borrower or any Restricted Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of Holdings, the Borrower or such Restricted Subsidiary.
The consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Holdings, the Borrower or any
Subsidiary is bound.
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SECTION 3.15. SOLVENCY. Immediately after the consummation of
the Transactions to occur on the Effective Date and immediately following the
making of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
SECTION 3.16. SENIOR INDEBTEDNESS. The Obligations constitute
"Senior Indebtedness" under and as defined in the Subordinated Debt Documents.
SECTION 3.17. YEAR 2000. Any reprogramming required to permit
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000), in and
following the year 2000, of the computer systems of the Borrower and its
Subsidiaries and the testing of all such systems as so reprogrammed, will be
completed by July 1, 1999, except to the extent that the failure to do so would
not have any reasonable likelihood of having a Material Adverse Effect. The
cost to the Borrower and its Subsidiaries of such reprogramming and testing and
of the reasonably foreseeable consequences of year 2000 to the Borrower and its
Subsidiaries (including reprogramming errors and the failure of others' systems
or equipment) will not result in a Material Adverse Effect.
SECTION 3.18. SECURITY DOCUMENTS. (a) The Pledge Agreement
is effective to create in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral (as defined in the Pledge Agreement) and, when the
portion of the Collateral constituting certificated securities (as defined in
the Uniform Commercial Code) is delivered to the Collateral Agent, the Pledge
Agreement shall constitute a fully perfected first priority Lien on, and
security interest in, all right, title and interest of the pledgor thereunder
in such Collateral, in each case prior and superior in right to any other
Person.
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(b) The Security Agreement is effective to create in favor of
the Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are
filed in the offices specified on Schedule 6 to the Perfection Certificate, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in such
Collateral (other than the Intellectual Property (as defined in the Security
Agreement)), in each case prior and superior in right to any other Person,
other than with respect to Liens expressly permitted by the Security Agreement.
(c) When the Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the
security interest created thereunder shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Loan Parties
in the Intellectual Property (as defined in the Security Agreement) in which a
security interest may be perfected by filing, recording or registering a
security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Liens expressly
permitted by the Security Agreement (it being understood that subsequent
recordings in the United States Patent and Trademark Office and the United
States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the Loan Parties
after the date hereof).
(d) Each Mortgage is effective to create, subject to the
exceptions listed in each title insurance policy covering such Mortgage, in
favor of the Collateral Agent, for the ratable benefit of the Secured Parties,
a legal, valid and enforceable Lien on all of the Loan Parties' right, title
and interest in and to the Mortgaged Property thereunder and the proceeds
thereof, and when such Mortgage is filed in the offices specified on Schedule
3.18(d), such Mortgage shall constitute a Lien on, and security interest in,
all right, title and interest of the Loan Parties in such Mortgaged Property
and the proceeds thereof, in each case prior and superior in right to any other
Person, other than with respect to the rights of Persons pursuant to Liens
expressly permitted by such Mortgage.
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SECTION 3.19. MERGER. The Merger Agreement has been duly
authorized, executed and delivered by each of the parties thereto and
constitutes a legal, valid and binding obligation of each such party,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law. A true, correct and
complete copy of the Merger Agreement has been furnished to the Administrative
Agent.
SECTION 3.20. CAPITALIZATION OF HOLDINGS. As of the date of
this Agreement, the authorized capital stock of Holdings consists of
100,000,000 shares of Class A Common Stock, par value $.01 per share, of which
22,786,536 shares are issued and outstanding, 20,000,000 shares of Class B
Common Stock, par value $.01 per share, of which no shares are outstanding, and
25,000,000 shares of Class C Common Stock, par value $.01 per share, of which
20,702,005 shares are outstanding. All such outstanding shares of stock are
fully paid and nonassessable.
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders
to make Loans and of the Issuing Bank to issue Letters of Credit hereunder
shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders
and dated the Effective Date) of each of (i) Simpson Thacher &
Bartlett, counsel for the Borrower, substantially in the form of
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Exhibit B-1, and (ii) local counsel in each jurisdiction where a
Mortgaged Property is located, substantially in the form of Exhibit
B-2, and, in the case of each such opinion required by this paragraph,
covering such other matters relating to the Loan Parties, the Loan
Documents or the Transactions as the Required Lenders shall reasonably
request. The Borrower hereby requests such counsel to deliver such
opinions.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and
good standing of each Loan Party, the authorization of the
Transactions and any other legal matters relating to the Loan Parties,
the Loan Documents or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the President, a
Vice President or a Financial Officer of the Borrower, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02.
(e) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses (including fees, charges and disbursements of
counsel) required to be reimbursed or paid by any Loan Party hereunder
or under any other Loan Document.
(f) The Collateral Agent shall have received counterparts of
the Pledge Agreement signed on behalf of Holdings, the Borrower and
each Subsidiary Loan Party, together with stock certificates
representing all the outstanding shares of capital stock of the
Borrower and each Subsidiary owned by or on behalf of any Loan Party
as of the Effective Date after giving effect to the Transactions
(except that stock certificates representing shares of common stock of
a Foreign Subsidiary may be limited to 65% of the outstanding shares
of common stock of such Foreign Subsidiary), promissory notes
evidencing all intercompany Indebtedness owed to any Loan Party by
Holdings, the Borrower or any Subsidiary as of the Effective Date
after giving effect to the Transactions and stock powers and
instruments of transfer, endorsed in blank, with respect to such stock
certificates and promissory notes.
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(g) The Collateral Agent shall have received counterparts of
the Security Agreement signed on behalf of Holdings, the Borrower and
each Subsidiary Loan Party, together with the following:
(i) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or
reasonably requested by the Collateral Agent to be filed,
registered or recorded to create or perfect the Liens
intended to be created under the Security Agreement; and
(ii) a completed Perfection Certificate dated the
Effective Date and signed by an executive officer or
Financial Officer of the Borrower, together with all
attachments contemplated thereby, including the results of a
search of the Uniform Commercial Code (or equivalent) filings
made with respect to the Loan Parties in the jurisdictions
contemplated by the Perfection Certificate and copies of the
financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Collateral
Agent that the Liens indicated by such financing statements
(or similar documents) are permitted by the Security
Agreement or have been released.
(h) The Collateral Agent shall have received (i) counterparts
of a Mortgage with respect to each Mortgaged Property signed on behalf
of the record owner of such Mortgaged Property, (ii) a policy or
policies of title insurance issued by a nationally recognized title
insurance company, insuring the Lien of each such Mortgage as a valid
first Lien on the Mortgaged Property described therein, free of any
other Liens except as permitted by the Security Agreement, together
with such endorsements, coinsurance and reinsurance as the Collateral
Agent or the Required Lenders may reasonably request, and (iii) such
surveys, abstracts and appraisals as may be required pursuant to such
Mortgages or as the Collateral Agent or the Required Lenders may
reasonably request.
(i) The Administrative Agent shall have received counterparts
of (i) the Guarantee Agreement signed on behalf of Holdings and each
Subsidiary Loan Party and (ii) counterparts of the Indemnity,
Subrogation and Contribution Agreement signed on behalf of Holdings,
the Borrower and each Subsidiary Loan Party.
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(j) The Administrative Agent shall have received evidence
that the insurance required by Section 5.07 and the Security Documents
is in effect.
(k) All consents and approvals required to be obtained from
any Governmental Authority or other Person in connection with the
Acquisition shall have been obtained, and all applicable waiting
periods and appeal periods shall have expired, in each case without
the imposition of any burdensome conditions. The Acquisition shall
have been, or substantially simultaneously with the initial funding of
Loans on the Effective Date shall be, consummated in accordance with
the Acquisition Documents and applicable law, without any amendment to
or waiver of any material terms or conditions of the Acquisition
Documents not approved by the Required Lenders. The Administrative
Agent shall have received copies of the Acquisition Documents and all
certificates, opinions and other documents delivered thereunder,
certified by a Financial Officer as complete and correct.
(l) EMP Group L.L.C. shall have made the Equity Contribution
(with an amount satisfactory to the Administrative Agent to have been
provided by Evercore).
(m) The Borrower shall have received gross cash proceeds of
not less than $250,000,000 from the issuance of the Subordinated Debt.
Any terms and conditions of the Subordinated Debt and provisions of
the Subordinated Debt Documents that are inconsistent with those set
forth in the preliminary offering memorandum with respect to the
Subordinated Debt dated April 13, 1999, shall be satisfactory in all
respects to the Lenders. The Administrative Agent shall have received
copies of the Subordinated Debt Documents, certified by a Financial
Officer as complete and correct.
(n) All material conditions to the purchase of the Existing
Notes in the Debt Tender Offer shall have been satisfied without
giving effect to any waiver or amendment thereof not approved by the
Administrative Agent. The Borrower shall have repurchased not less
than a majority in principal amount of the Existing Notes in
accordance with the Debt Tender Offer Materials. The Supplemental
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Indenture to the Existing Notes Indenture contemplated by the Debt
Tender Offer, in the form previously approved by the Administrative
Agent, shall have been executed and delivered and be in full force and
effect.
(o) The consummation of the Debt Tender Offer and the other
transactions contemplated hereby shall not (i) violate any applicable
law, statute, rule or regulation or (ii) conflict with, or result in a
default or event of default under, any agreement of Merger Sub,
Holdings, the Borrower or any of the Subsidiaries that will be in
effect following the consummation of the Acquisition.
(p) All loans outstanding, interest thereon and other amounts
due and payable under the Existing Credit Agreement and under each
other agreement related thereto shall have been repaid in full, and
the Administrative Agent shall have received duly executed
documentation, in form and substance satisfactory to it, evidencing or
necessary for (i) the termination of the Existing Credit Agreement and
(ii) the cancelation of all related agreements, guarantees and
security interests granted by Holdings, the Borrower, its subsidiaries
or any other person in connection therewith and the discharge of all
obligations or interests thereunder.
(q) The Lenders shall have received (i) audited consolidated
and consolidating balance sheets and related statements of income,
stockholders' equity and cash flows of Holdings for the three fiscal
years ended prior to the Effective Date and (ii) unaudited
consolidated and consolidating balance sheets and related statements
of income, stockholders' equity and cash flows for Holdings for the
1999 fiscal quarters preceding the Effective Date (and, to the extent
available, for each month preceding the Effective Date since the last
such quarter), which audited and unaudited financial statements shall
be in form and scope satisfactory to the Lenders.
(r) The Lenders shall have received a pro forma consolidated
balance sheet of each of Holdings and the Borrower as of the end of
the most recent fiscal quarter ended prior to the Effective Date for
which balance sheets are available, reflecting all pro forma
adjustments as if the Transactions had been consummated on such date,
and such pro forma consolidated balance sheet shall be consistent in
all material respects with the forecasts and other information
previously provided to the Lenders. After giving effect to the
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Transactions, none of Holdings, the Borrower or any of the
Subsidiaries shall have outstanding any shares of preferred stock or
any Indebtedness, other than (i) Indebtedness incurred under the Loan
Documents, (ii) the Subordinated Debt, (iii) any Existing Notes not
purchased in the Debt Tender Offer and (iv) the Indebtedness
identified in Schedule 6.01. The aggregate amount of Transaction Costs
(including underwriting discounts and commissions) payable or
otherwise borne by Holdings, the Borrower and its Subsidiaries in
connection with the Transactions shall not exceed $60,600,000.
(s) The Administrative Agent shall have received a solvency
letter, in form and substance satisfactory to the Lenders, from
Valuation Research Corporation, with respect to the solvency of the
Loan Parties after giving effect to the Transactions.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, on July
6, 1999 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
SECTION 4.02. EACH CREDIT EVENT. The obligation of each
Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank
to issue, amend, renew or extend any Letter of Credit, is subject to receipt of
the request therefor in accordance herewith and to the satisfaction of the
following conditions:
(a) The representations and warranties of each Loan Party set
forth in the Loan Documents shall be true and correct (or, in the case
of such representations and warranties that are not qualified as to
materiality, true and correct in all material respects) on and as of
the date of such Borrowing or the date of issuance, amendment, renewal
or extension of such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to
such Borrowing or the issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, no Default shall have occurred
and be continuing.
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Each Borrowing and each issuance, amendment, renewal or extension of a Letter
of Credit shall be deemed to constitute a representation and warranty by
Holdings and the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full and all Letters of Credit shall have expired or
terminated and all LC Disbursements shall have been reimbursed, each of
Holdings and the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION.
Holdings and the Borrower will furnish to the Administrative Agent (which shall
furnish a copy thereof to each Lender):
(a) within 90 days after the end of each fiscal year of the
Borrower, the audited consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows of the
Borrower and its Restricted Subsidiaries as of the end of and for such
year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by Arthur Andersen LLP or
other independent public accountants of recognized national standing
(without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit)
to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of the Borrower and its Restricted Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, (i) the
consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows of the Borrower and its Restricted
Subsidiaries and (ii) statements of operations and stockholders'
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equity of (A) National Enquirer, Inc., (B) Weekly World News, Inc.,
(C) the weekly magazine known as STAR, (D) Country Weekly, Inc. and
(E) each Restricted Subsidiary formed or acquired after the Effective
Date, in each case as of the end of and for such fiscal quarter and
the then elapsed portion of the fiscal year, setting forth in each
case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its Restricted
Subsidiaries, in each case on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of
the Borrower (i) certifying as to whether a Default has occurred and,
if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii)
setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.01, 6.04, 6.05, 6.08, 6.12, 6.13, 6.14,
6.15 and 6.16, (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the Borrower's
audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate and (iv) if any
Unrestricted Subsidiary exists (or existed at any time during the
period covered by such financial statements), attaching consolidating
balance sheets and income statements for such Unrestricted Subsidiary
as of the same dates and covering the same periods, certified as true,
correct and complete;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the
extent required by accounting rules or guidelines);
(e) prior to the commencement of each fiscal year of the
Borrower, a detailed consolidated quarterly budget for such fiscal
year (including a projected consolidated balance sheet and related
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statements of projected operations and cash flow as of the end of and
for such fiscal year and setting forth the assumptions used for
purposes of preparing such budget) and, promptly when available, any
significant revisions of such budget;
(f) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other
materials filed by Holdings, the Borrower or any Subsidiary with the
Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed by Holdings to its
shareholders generally, as the case may be; and
(g) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of Holdings, the Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, as the Administrative Agent or
any Lender may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. Holdings and the
Borrower will furnish to the Administrative Agent and each Lender prompt
written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting Holdings, the Borrower or any Affiliate thereof
that, if adversely determined, could reasonably be expected to result
in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of Holdings, the Borrower and its
Subsidiaries in an aggregate amount exceeding $5,000,000; and
(d) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
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Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
SECTION 5.03. INFORMATION REGARDING COLLATERAL. (a) The
Borrower will furnish to the Administrative Agent prompt written notice of any
change (i) in any Loan Party's corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any Loan Party's chief executive office,
its principal place of business, any office in which it maintains books or
records relating to Collateral owned by it or any office or facility at which
Collateral owned by it is located (including the establishment of any such new
office or facility), (iii) in any Loan Party's identity or corporate structure
or (iv) in any Loan Party's Federal Taxpayer Identification Number. The
Borrower agrees not to effect or permit any change referred to in the preceding
sentence unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order for the Administrative Agent to continue
at all times following such change to have a valid, legal and perfected
security interest in all the Collateral. The Borrower also agrees promptly to
notify the Administrative Agent if any material portion of the Collateral is
damaged or destroyed.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.01, the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer and the chief legal officer of the Borrower
setting forth the information required pursuant to Section 2 of the Perfection
Certificate or confirming that there has been no change in such information
since the date of the Perfection Certificate delivered on the Effective Date or
the date of the most recent certificate delivered pursuant to this Section.
Each certificate delivered pursuant to this Section 5.03(b) shall identify in
the format of Schedule II, III, IV or V, as applicable, of the Security
Agreement all Intellectual Property (as defined in the Security Agreement) of
any Loan Party in existence on the date thereof and not then listed on such
Schedules as previously so identified to the Collateral Agent.
SECTION 5.04. EXISTENCE; CONDUCT OF BUSINESS. Each of
Holdings and the Borrower will, and will cause each of the Restricted
Subsidiaries to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence and the rights, licenses,
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permits, privileges, franchises, patents, copyrights, trademarks and trade
names material to the conduct of its business; PROVIDED that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.03.
SECTION 5.05. PAYMENT OF OBLIGATIONS. Each of Holdings and
the Borrower will, and will cause each of the Restricted Subsidiaries to, pay
its Indebtedness and other obligations, including Tax liabilities, before the
same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
Holdings, the Borrower or such Restricted Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 5.06. MAINTENANCE OF PROPERTIES. Each of Holdings and
the Borrower will, and will cause each of the Restricted Subsidiaries to, keep
and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
SECTION 5.07. INSURANCE. Each of Holdings and the Borrower
will, and will cause each of its Restricted Subsidiaries to, maintain, with
financially sound and reputable insurance companies (a) insurance in such
amounts (with no greater risk retention) and against such risks as are
customarily maintained by companies of established repute engaged in the same
or similar businesses operating in the same or similar locations, including
insurance against libel actions, and (b) all insurance required to be
maintained pursuant to the Security Documents. The Borrower will furnish to the
Lenders, upon request of the Administrative Agent, information in reasonable
detail as to the insurance so maintained.
SECTION 5.08. CASUALTY AND CONDEMNATION. The Borrower (a)
will furnish to the Administrative Agent and the Lenders prompt written notice
of any casualty or other insured damage to any material portion of any
Collateral or the commencement of any action or proceeding for the taking of
any Collateral or any part thereof or interest therein under power of eminent
domain or by condemnation or similar proceeding and (b) will ensure that the
Net Proceeds of any such event (whether in the form of insurance proceeds,
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condemnation awards or otherwise) are collected and applied in accordance with
the applicable provisions of the Security Documents.
SECTION 5.09. BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS.
Each of Holdings and the Borrower will, and will cause each of its Subsidiaries
to, keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to its business
and activities. Each of Holdings and the Borrower will, and will cause each of
its Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.
SECTION 5.10. COMPLIANCE WITH LAWS. Each of Holdings and the
Borrower will, and will cause each of its Subsidiaries to, comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.11. USE OF PROCEEDS AND LETTERS OF CREDIT. The
proceeds of the Term Loans will be used only (a) to repay amounts outstanding
under the Existing Credit Agreement on the Effective Date and (b) to purchase
Existing Notes accepted for payment pursuant to the Debt Tender Offer. The
proceeds of the Revolving Loans and Swingline Loans will be used only for
general corporate purposes. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations T, U and X. Letters of
Credit will be issued only for general corporate purposes.
SECTION 5.12. ADDITIONAL SUBSIDIARIES. If any additional
Subsidiary is formed or acquired after the Effective Date or if any
Unrestricted Subsidiary is designated as a Restricted Subsidiary, the Borrower
will notify the Administrative Agent and the Lenders thereof and (a) if such
Subsidiary is a Subsidiary Loan Party, the Borrower will cause such Subsidiary
to become a party to each of the Guarantee Agreement, the Pledge Agreement, the
Security Agreement and the Indemnity, Subrogation and Contribution Agreement
within three Business Days after such Subsidiary is formed or acquired and
promptly take such actions to create and perfect Liens on such Subsidiary's
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assets to secure the Obligations as the Administrative Agent or the Required
Lenders shall reasonably request and (b) if any Equity Interest in or
Indebtedness of such Subsidiary is owned by or on behalf of any Loan Party, the
Borrower will cause such Equity Interests and promissory notes evidencing such
Indebtedness to be pledged pursuant to the Pledge Agreement within three
Business Days after such Subsidiary is formed or acquired (except that, if such
Subsidiary is a Foreign Subsidiary, shares of common stock of such Subsidiary
to be pledged pursuant to the Pledge Agreement may be limited to 65% of the
outstanding shares of common stock of such Subsidiary).
SECTION 5.13. FURTHER ASSURANCES. (a) Each of Holdings and
the Borrower will, and will cause each Subsidiary Loan Party to, execute any
and all further documents, financing statements, agreements and instruments,
and take all such further actions (including the filing and recording of
financing statements, fixture filings, mortgages, deeds of trust and other
documents), which may be required under any applicable law, or which the
Administrative Agent or the Required Lenders may reasonably request, to
effectuate the transactions contemplated by the Loan Documents or to grant,
preserve, protect or perfect the Liens created or intended to be created by the
Security Documents or the validity or priority of any such Lien, all at the
expense of the Loan Parties. Holdings and the Borrower also agree to provide to
the Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents.
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Subsidiary Loan Party after the Effective Date (other than assets
constituting Collateral under the Security Agreement that become subject to the
Lien of the Security Agreement upon acquisition thereof), the Borrower will
notify the Administrative Agent and the Lenders thereof, and, if requested by
the Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations and will take, and
cause the Subsidiary Loan Parties to take, such actions as shall be necessary
or reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at the
expense of the Loan Parties.
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SECTION 5.14. INTEREST RATE PROTECTION. As promptly as
practicable, and in any event commencing no later than 60 days after the
Effective Date, the Borrower will enter into, and thereafter for a period of
not less than three years will maintain in effect, interest rate protection
agreements on such terms and with such parties as shall be reasonably
satisfactory to the Administrative Agent, such that the interest cost to the
Borrower with respect to at least 50% of the total Long-Term Indebtedness of
the Borrower and the Subsidiaries will either be hedged by such interest rate
protection agreements or bear interest at a fixed rate.
SECTION 5.15. REDEMPTION OF EXISTING NOTES. On November 15,
1999, if Existing Notes in an aggregate principal amount of $5,000,000 or more
remain outstanding, the Borrower shall redeem all Existing Notes then
outstanding in accordance with the redemption provisions contained in the
indenture governing such Existing Notes.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:
SECTION 6.01. INDEBTEDNESS; CERTAIN EQUITY SECURITIES. (a)
The Borrower will not, and will not permit any Restricted Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) the Subordinated Debt;
(iii) any Existing Notes that are not purchased pursuant to
the Debt Tender Offer;
(iv) Indebtedness existing on the date hereof and set forth
in Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted
average life thereof;
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(v) Indebtedness of the Borrower to any Restricted Subsidiary
and of any Restricted Subsidiary to the Borrower or any other
Restricted Subsidiary;
(vi) Guarantees by the Borrower of Indebtedness of any
Subsidiary and by any Restricted Subsidiary of Indebtedness of the
Borrower or any other Subsidiary; PROVIDED that Guarantees by the
Borrower or any Restricted Subsidiary of Indebtedness of any
Subsidiary that is not a Loan Party shall be subject to Section 6.04;
(vii) Indebtedness of the Borrower or any Restricted
Subsidiary incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof; PROVIDED that (A) such
Indebtedness is incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement and
(B) the aggregate principal amount of Indebtedness permitted by this
clause (vii) at any time outstanding shall not exceed $10,000,000;
(viii) Indebtedness of any Person that becomes a Restricted
Subsidiary after the date hereof and extensions, renewals and
replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof; PROVIDED that such Indebtedness
exists at the time such Person becomes a Subsidiary and is not created
in contemplation of or in connection with such Person becoming a
Subsidiary;
(ix) other unsecured Indebtedness in an aggregate principal
amount not exceeding $25,000,000 at any time outstanding; and
(x) other unsecured Indebtedness in an aggregate principal
amount not exceeding $25,000,000 at any time outstanding; PROVIDED
that, at the time of and after giving effect to the incurrence of any
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such Indebtedness permitted by this clause (x), the Leverage Ratio
(determined for this purpose based on Consolidated EBITDA for the
period of four consecutive fiscal quarters most recently ended for
which financial statements have been delivered pursuant to clause (a)
or (b) of Section 5.01) shall not exceed 5.0 to 1.0.
(b) Holdings will not create, incur, assume or permit to
exist any Indebtedness except (i) Indebtedness created under the Loan Documents
and (ii) the Holdings Discount Notes.
(c) Neither Holdings nor the Borrower will, nor will they
permit any Restricted Subsidiary to, (i) issue any preferred stock or other
preferred Equity Interests (other than preferred stock issued by Holdings that
is not Disqualified Stock) or (ii) designate any other Indebtedness as
"Designated Senior Indebtedness" under and as defined in the Subordinated Debt
Documents.
SECTION 6.02. LIENS. (a) The Borrower will not, and will not
permit any Restricted Subsidiary to, create, incur, assume or permit to exist
any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues (including accounts receivable) or rights
in respect of any thereof, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or
any Restricted Subsidiary existing on the date hereof and set forth in
Schedule 6.02; PROVIDED that (A) such Lien shall not apply to any
other property or asset of the Borrower or any Restricted Subsidiary
and (B) such Lien shall secure only those obligations which it secures
on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
(iv) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on
any property or asset of any Person that becomes a Subsidiary after
the date hereof prior to the time such Person becomes a Subsidiary;
PROVIDED that (A) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary,
as the case may be, (B) such Lien shall not apply to any other
property or assets of the Borrower or any Restricted Subsidiary and
(C) such Lien shall secure only those obligations which it secures on
the date of such acquisition or the date such Person becomes a
Subsidiary, as the case may be and extensions, renewals and
replacements thereof that do not increase the outstanding principal
amount thereof;
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(v) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Restricted Subsidiary; PROVIDED that
(A) such security interests secure Indebtedness permitted by clause
(vii) of Section 6.01(a), (B) such security interests and the
Indebtedness secured thereby are incurred prior to or within 90 days
after such acquisition or the completion of such construction or
improvement, (C) the Indebtedness secured thereby does not exceed 100%
of the cost of acquiring, constructing or improving such fixed or
capital assets and (D) such security interests shall not apply to any
other property or assets of the Borrower or any Restricted Subsidiary;
(vi) Liens arising by operation of law that secure obligations
in an aggregate amount not to exceed $5,000,000 at any time
outstanding, including Liens imposed pursuant to Environmental Laws
securing obligations not reasonably expected to exceed such amount; and
(vii) any sale or assignment of accounts receivable permitted
by clause (c) of Section 6.05.
(b) Holdings will not create, incur, assume or permit to
exist any Lien on any property or asset now owned or hereafter acquired by it,
or assign or sell any income or revenues (including accounts receivable) or
rights in respect thereof, except Liens created under the Security Documents
and Permitted Encumbrances.
SECTION 6.03. FUNDAMENTAL CHANGES. (a) Neither Holdings nor
the Borrower will, nor will they permit any Restricted Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Restricted Subsidiary in a transaction in which the
surviving entity is a Restricted Subsidiary and (if any party to such merger is
a Subsidiary Loan Party) is a Subsidiary Loan Party and (iii) any Restricted
Subsidiary (other than a Subsidiary Loan Party) may liquidate or dissolve if
the Borrower determines in good faith that such liquidation or dissolution is
in the best interests of the Borrower and is not materially disadvantageous to
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the Lenders; PROVIDED that (A) the foregoing shall not be construed to prohibit
the Merger and (B) any such merger involving a Person that is not a wholly
owned Restricted Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 6.04.
(b) The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, engage to any material extent in any business other
than businesses of the type conducted by the Borrower and its Restricted
Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto.
(c) Holdings will not engage in any business or activity
other than the ownership of shares of capital stock of the Borrower and
activities incidental thereto. Holdings will not own or acquire any assets
(other than shares of capital stock of the Borrower, cash and Permitted
Investments) or incur any liabilities (other than liabilities under the Loan
Documents, the Holdings Discount Notes Documents, liabilities imposed by law,
including tax liabilities, and other liabilities incidental to its existence
and permitted business and activities).
(d) Holdings shall not enter into any agreement relating to
the voting of any Equity Interests in the Borrower held by it except (i) with
respect to the election of directors of the Borrower; PROVIDED that Holdings
retains the direct or indirect power to appoint at least 80% of the directors
of the Borrower and (ii) to grant to any other holder of common stock of the
Borrower the right to approve the taking of any action by the Borrower that
would also require the approval in writing of the Lenders or the Required
Lenders, as applicable, under the terms and conditions of this Agreement or the
other Loan Documents.
(e) Holdings shall not sell or otherwise transfer any Equity
Interests of the Borrower to any Person unless (i) all the Equity Interests of
the Borrower sold or otherwise transferred to Persons other than Holdings
consist of common stock, (ii) either (A) all the common stock of the Borrower
consists of common stock of the same class and has the same rights (including
voting rights) and privileges or (B) the common stock of the Borrower that is
owned by Persons other than Holdings either does not entitle the holders
thereof to voting rights or, in the aggregate, entitles the holders thereof to
not more than 20% of the total voting power of all classes of voting common
stock of the Borrower, and (iii) all such Equity Interests are pledged to the
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Collateral Agent for the benefit of the Secured Parties pursuant to a pledge
agreement that is substantially the same as the Pledge Agreement so that, after
giving effect to all such sales or other transfers of Equity Interests of the
Borrower, 100% of the capital stock of the Borrower remains pledged to secure
the Obligations (as defined in the Pledge Agreement).
(f) The Borrower shall not issue any Equity Interests to any
Person other than Holdings unless (i) all the Equity Interests of the Borrower
issued to Persons other than Holdings consist of common stock, (ii) either (A)
all the common stock of the Borrower consists of common stock of the same class
and has the same rights (including voting rights) and privileges or (B) the
common stock of the Borrower that is owned by Persons other than Holdings
either does not entitle the holders thereof to voting rights or, in the
aggregate, entitles the holders thereof to not more than 20% of the total
voting power of all classes of voting common stock of the Borrower, and (iii)
all such Equity Interests are pledged to the Collateral Agent for the benefit
of the Secured Parties pursuant to a pledge agreement that is substantially the
same as the Pledge Agreement so that, after giving effect to all such issuances
of Equity Interests of the Borrower, 100% of the capital stock of the Borrower
remains pledged to secure the Obligations (as defined in the Pledge Agreement).
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Restricted Subsidiary prior to such
merger) any Equity Interests in or evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:
(a) the Acquisition;
(b) Permitted Investments;
(c) investments existing on the date hereof and set forth on
Schedule 6.04;
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(d) investments by the Borrower and its Restricted
Subsidiaries in Equity Interests in their respective Subsidiaries;
PROVIDED that (i) any such Equity Interests in a Subsidiary held by a
Loan Party shall be pledged pursuant to the Pledge Agreement (subject
to the limitations applicable to the pledge of Equity Interests in
Foreign Subsidiaries set forth in Section 5.12), (ii) the aggregate
amount of investments by Loan Parties in, and loans and advances by
Loan Parties to, and Guarantees by Loan Parties of Indebtedness of,
Unrestricted Subsidiaries (including all such investments, loans,
advances and Guarantees existing on the Effective Date) shall not
exceed $25,000,000 at any time outstanding (it being understood that,
for purposes of determining outstanding investments in Unrestricted
Subsidiaries, the sale or disposition by a Loan Party of an investment
in an Unrestricted Subsidiary shall be deemed to reduce investments in
Unrestricted Subsidiaries by an amount equal to the Net Proceeds of
such sale or disposition) and (iii) the aggregate amount of
investments by Loan Parties in, and loans and advances by Loan Parties
to, and Guarantees by Loan Parties of Indebtedness of, Restricted
Subsidiaries that are Foreign Subsidiaries (including all such
investments, loans, advances and Guarantees existing on the Effective
Date) shall not exceed 5% of Total Assets at any time outstanding (it
being understood that, for purposes of determining outstanding
investments in Restricted Subsidiaries that are Foreign Subsidiaries,
the sale or disposition by a Loan Party of an investment in a
Restricted Subsidiary that is a Foreign Subsidiary shall be deemed to
reduce investments in Restricted Subsidiaries that are Foreign
Subsidiaries by an amount equal to the Net Proceeds of such sale or
disposition);
(e) loans or advances made by the Borrower to any Subsidiary
and made by any Restricted Subsidiary to the Borrower or any other
Subsidiary; PROVIDED that the amount of such loans and advances made
by Loan Parties to Unrestricted Subsidiaries, or to Restricted
Subsidiaries that are Foreign Subsidiaries, shall be subject to the
limitations set forth in clause (d) above;
(f) Guarantees constituting Indebtedness permitted by Section
6.01; PROVIDED that (i) a Restricted Subsidiary shall not Guarantee
the Subordinated Debt unless (A) such Restricted Subsidiary also has
Guaranteed the Obligations pursuant to the Guarantee Agreement, (B)
such Guarantee of the Subordinated Debt is subordinated to such
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Guarantee of the Obligations on terms no less favorable to the Lenders
than the subordination provisions of the Subordinated Debt and (C)
such Guarantee of the Subordinated Debt provides for the release and
termination thereof, without action by any party, upon the sale or
transfer of the Equity Interests of such Restricted Subsidiary as a
result of a foreclosure of the Lien on such Equity Interests that
secures the Obligations, where (1) after such sale or transfer, such
Restricted Subsidiary is no longer a Subsidiary and (2) the Net
Proceeds resulting from such sale or transfer are applied in
accordance with the terms of the Subordinated Debt Documents that
would apply to a sale of such Equity Interests by the Borrower, and
(ii) the aggregate principal amount of Indebtedness of Unrestricted
Subsidiaries, or of Restricted Subsidiaries that are Foreign
Subsidiaries, that is Guaranteed by any Loan Party shall be subject to
the limitations set forth in clause (d) above;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
(h) Permitted Acquisitions; PROVIDED that the sum of all
consideration (other than common Equity Interests of Holdings) paid or
otherwise delivered in connection with Permitted Acquisitions
(including the principal amount of any Indebtedness issued as deferred
purchase price and the fair market value of any other non-cash
consideration but excluding the amount of Net Proceeds from Prepayment
Events described in clause (a) of the definition of the term
Prepayment Event that are applied, in accordance with Section 2.11(c),
to make such Permitted Acquisitions) plus the aggregate principal
amount of all Indebtedness otherwise incurred or assumed in connection
with, or resulting from, Permitted Acquisitions (including
Indebtedness of any acquired Persons outstanding at the time of the
applicable Permitted Acquisition) shall not exceed, on a cumulative
basis during the term of this Agreement, $50,000,000;
(i) any investments in or loans to any other Person received
as noncash consideration for sales, transfers, leases and other
dispositions permitted by Section 6.05; and
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(j) any other investments in, advances or loans to or
Guarantees of Indebtedness of, any Person in an aggregate amount not
to exceed $25,000,000 at any time outstanding.
SECTION 6.05. ASSET SALES. The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, sell, transfer, lease or
otherwise dispose of any asset, including any Equity Interest owned by it, nor
will the Borrower permit any of its Restricted Subsidiaries to issue any
additional Equity Interest in such Restricted Subsidiary, except:
(a) sales of inventory, used or surplus equipment and
Permitted Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a
Restricted Subsidiary;
(c) sales of accounts receivable (i) that are delinquent or
the amount of which is in dispute, in each case in connection with the
compromise or collection thereof in the ordinary course of business,
or (ii) of any account debtor in connection with the termination,
wind-down or restructuring of the relationship with such account
debtor in the ordinary course of business;
(d) sales, transfers and dispositions of any Equity Interests
of, loans or advances to, or other investments in, any Unrestricted
Subsidiary; and
(e) sales, transfers and other dispositions of assets (other
than Equity Interests in a Subsidiary) that are not permitted by any
other clause of this Section; PROVIDED that the aggregate fair market
value of all assets sold, transferred or otherwise disposed of in
reliance upon this clause (e) shall not exceed $30,000,000 in the
aggregate during the term of this Agreement;
PROVIDED that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made for fair
value and for at least 80% cash consideration and PROVIDED, FURTHER, that the
aggregate non-cash consideration received for all sales, transfers, leases and
other dispositions permitted hereby shall not exceed $10,000,000.
SECTION 6.06. SALE AND LEASEBACK TRANSACTIONS. The Borrower
will not, and will not permit any of its Restricted Subsidiaries to, enter into
any arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned
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or hereinafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred, except for any such sale of any fixed or
capital assets that is made for cash consideration in an amount not less than
the cost of such fixed or capital asset and is consummated within 90 days after
the Borrower or such Subsidiary acquires or completes the construction of such
fixed or capital asset.
SECTION 6.07. HEDGING AGREEMENTS. The Borrower will not, and
will not permit any of its Restricted Subsidiaries to, enter into any Hedging
Agreement, other than (a) Hedging Agreements required by Section 5.14 and (b)
Hedging Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any Restricted Subsidiary is exposed in
the conduct of its business or the management of its liabilities.
SECTION 6.08. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF
INDEBTEDNESS. (a) Other than the payment of amounts payable under the
Acquisition Documents as consideration for the Acquisition (or paying a
dividend to Holdings to enable Holdings to make any such payment), neither
Holdings nor the Borrower will, nor will they permit any Restricted Subsidiary
to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except (i) Holdings may declare and pay dividends with respect to its capital
stock payable solely in additional shares of its common stock, (ii)
Subsidiaries may declare and pay dividends ratably with respect to their
capital stock, (iii) Holdings may make Restricted Payments (and the Borrower
may make Restricted Payments to Holdings to enable Holdings to make such
Restricted Payments), not exceeding $2,000,000 during any fiscal year, pursuant
to and in accordance with stock option plans or other benefit plans for
management or employees of the Borrower and its Subsidiaries, (iv) the Borrower
may pay dividends to Holdings at such times and in such amounts, not exceeding
$2,000,000 during any fiscal year, as shall be necessary to permit Holdings to
pay reasonable administrative expenses incurred in the ordinary course of its
business, (v) Holdings may make Restricted Payments (and the Borrower may make
Restricted Payments to Holdings to enable Holdings to make such Restricted
Payments), not exceeding $5,000,000 in any fiscal year and not exceeding
$10,000,000 in the aggregate during the term of this Agreement, to repurchase
Equity Interests in Holdings owned by employees or former employees of the
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Borrower or the Subsidiaries pursuant to the terms of agreements (including
employment agreements) with such employees, (vi) the Borrower may make
Restricted Payments to Holdings to enable Holdings to pay management fees
pursuant to the Management Agreement that are permitted to be paid pursuant to
clause (c) of Section 6.09, (vii) the Borrower may make Restricted Payments to
Holdings at such times and in such amounts (but not prior to the fifth
anniversary of the date of issuance of the Holdings Discount Notes) as shall be
necessary to enable Holdings (A) on the fifth anniversary of the date of
issuance of the Holdings Discount Notes, to redeem the amount of Holdings
Discount Notes equal to the Holdings Discount Notes Redemption Amount and (B)
after such fifth anniversary, to make interest payments in cash on such
Holdings Discount Notes as and when due; PROVIDED, that at the time of and
after giving effect to each Restricted Payment made in reliance upon this
clause (vii), the Borrower and its Restricted Subsidiaries are in compliance
with the covenants contained in Sections 6.12 and 6.13 as of the end of the
most recent fiscal quarter for which financial statements are available
assuming that Total Debt or Total Senior Debt, as applicable, as of the last
day of such quarter had been equal to the Total Debt or Total Senior Debt, as
applicable, as of the date of such Restricted Payment after giving effect to
such Restricted Payment, and (viii) Holdings and the Borrower may make
additional Restricted Payments for the purposes contemplated by clauses (iii)
through (v) of this Section 6.08(a) in an aggregate amount not to exceed
$5,000,000 during the term of this Agreement; PROVIDED that any Restricted
Payment otherwise permitted by clause (iii) and clauses (v) through (viii)
above shall not be permitted if at the time thereof and after giving effect
thereto a Default shall have occurred and be continuing; PROVIDED FURTHER, that
the provisions of clauses (iii) through (viii) above that permit certain
dividends or other Restricted Payments to Holdings shall not be construed to
permit the payment of dividends or other Restricted Payments to any other
holder of Equity Interests of the Borrower.
(b) Neither Holdings nor the Borrower will, nor will they
permit any Restricted Subsidiary to, make or agree to pay or make, directly or
indirectly, any payment or other distribution (whether in cash, securities or
other property) of or in respect of principal of or interest on any
Indebtedness, or any payment or other distribution (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account
of the purchase, redemption, retirement, acquisition, cancelation or
termination of any Indebtedness, except:
<PAGE> 98
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(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness, other than
payments in respect of the Subordinated Debt or Existing Notes
prohibited by the subordination provisions thereof;
(iii) refinancings of Indebtedness to the extent permitted by
Section 6.01;
(iv) payment of secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;
(v) repayment of all amounts outstanding under the Existing
Credit Agreement and purchase of the Existing Notes accepted for
payment pursuant to the Debt Tender Offer, in each case on the
Effective Date; and
(vi) redemption of any Existing Notes that remain outstanding
after consummation of the Debt Tender Offer.
SECTION 6.09. TRANSACTIONS WITH AFFILIATES. Neither Holdings
nor the Borrower will, nor will they permit any Restricted Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions that do not
involve Holdings and are at prices and on terms and conditions not less
favorable to the Borrower or such Restricted Subsidiary than could be obtained
on an arm's-length basis from unrelated third parties, (b) transactions between
or among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) to pay management fees in accordance with the Management
Agreement in an aggregate amount not to exceed $750,000 in any fiscal year and
(d) any Restricted Payment permitted by Section 6.08.
SECTION 6.10. RESTRICTIVE AGREEMENTS. Neither Holdings nor
the Borrower will, nor will they permit any Restricted Subsidiary to, directly
or indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of Holdings, the Borrower or any Restricted Subsidiary to create, incur
or permit to exist any Lien upon any of its property or assets, or (b) the
<PAGE> 99
94
ability of any Restricted Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the Borrower or any other Restricted Subsidiary or to Guarantee
Indebtedness of the Borrower or any other Restricted Subsidiary; PROVIDED that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document or Subordinated Debt Document, (ii) the foregoing shall
not apply to restrictions and conditions existing on the date hereof identified
on Schedule 6.10 (but shall apply to any amendment or modification expanding
the scope of any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases
restricting the assignment thereof.
SECTION 6.11. AMENDMENT OF MATERIAL DOCUMENTS. Neither
Holdings nor the Borrower will, nor will they permit any Subsidiary to, amend,
modify or waive any of its rights under (a) any Subordinated Debt Document, (b)
its certificate of incorporation, by-laws or other organizational documents,
(c) the Existing Notes Indenture other than as contemplated by the Debt Tender
Offer, (d) the LLC Agreement, (e) the Management Agreement and (f) the Holdings
Discount Notes Documents, in each case in any manner that is adverse to the
interests of the Lenders or the Loan Parties.
SECTION 6.12. LEVERAGE RATIO. The Borrower will not permit
the Leverage Ratio as of the last day of any fiscal quarter ending on any date
during any period set forth below to exceed the ratio set forth below opposite
such period:
<PAGE> 100
95
PERIOD RATIO
------ -----
September 27, 1999 to and
including March 31, 2000 6.50 to 1.00
April 1, 2000 to and including
September 30, 2000 6.25 to 1.00
October 1, 2000 to and including
March 31, 2001 5.75 to 1.00
April 1, 2001 to and including
March 31, 2002 5.25 to 1.00
April 1, 2002 to and including
March 31, 2003 4.75 to 1.00
April 1, 2003 to and including
March 31, 2004 4.25 to 1.00
Thereafter 4.00 to 1.00
SECTION 6.13. SENIOR LEVERAGE RATIO. The Borrower will not
permit the Senior Leverage Ratio as of the last day of any fiscal quarter
ending on any date during any period set forth below to exceed the ratio set
forth below opposite such period:
PERIOD RATIO
------ -----
September 27, 1999 to and
including September 30, 2000 4.25 to 1.00
October 1, 2000 to and including
March 31, 2002 4.00 to 1.00
April 1, 2002 to and including
March 31, 2003 3.75 to 1.00
April 1, 2003 to and including
March 31, 2004 3.50 to 1.00
Thereafter 3.00 to 1.00
SECTION 6.14. CONSOLIDATED INTEREST EXPENSE COVERAGE RATIO.
The Borrower will not permit the ratio of (a) Consolidated EBITDA to (b)
Consolidated Interest Expense for any period of four consecutive fiscal
<PAGE> 101
96
quarters ending on any date during any period set forth below to be less than
the ratio set forth below opposite such period:
PERIOD RATIO
------ -----
September 27, 1999 to and
including December 31, 1999 1.50 to 1.00
January 1, 2000 to and including
June 30, 2000 1.55 to 1.00
July 1, 2000 to and including
December 31, 2000 1.65 to 1.00
January 1, 2001 to and including
June 30, 2001 1.90 to 1.00
July 1, 2001 to and including
March 31, 2002 2.00 to 1.00
April 1, 2002 to and including
March 31, 2003 2.25 to 1.00
Thereafter 2.50 to 1.00
For purposes of determining compliance with this Section 6.14, Consolidated
Interest Expense for the period of four consecutive fiscal quarters ended (i)
September 27, 1999, shall be deemed to be equal to the product of Consolidated
Interest Expense for the fiscal quarter then ended multiplied by four, (ii)
December 27, 1999, shall be deemed to be equal to the product of Consolidated
Interest Expense for the two consecutive fiscal quarters then ended multiplied
by two and (iii) March 27, 2000, shall be deemed to be equal to the product of
Consolidated Interest Expense for the three consecutive fiscal quarters then
ended multiplied by four-thirds.
SECTION 6.15. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The
Borrower will not permit the ratio of (a) Consolidated EBITDA minus Taxes paid
in cash by Holdings, the Borrower and its Restricted Subsidiaries to (b)
Consolidated Fixed Charges for any period of four consecutive fiscal quarters
ending on any date on or after September 27, 1999, to be less than 1.10 to
1.00. For purposes of determining compliance with this Section 6.15,
Consolidated Fixed Charges for the period of four consecutive fiscal quarters
ended (i) September 27, 1999, shall be deemed to be equal to the product of
Consolidated Fixed Charges for the fiscal quarter then ended multiplied by
<PAGE> 102
97
four, (ii) December 27, 1999, shall be deemed to be equal to the product of
Consolidated Fixed Charges for the two consecutive fiscal quarters then ended
multiplied by two and (iii) March 27, 2000, shall be deemed to be equal to the
product of Consolidated Fixed Charges for the three consecutive fiscal quarters
then ended multiplied by four-thirds.
SECTION 6.16. CAPITAL EXPENDITURES. The Borrower and its
Restricted Subsidiaries shall not incur or make Capital Expenditures during any
fiscal year ending on a date set forth below in excess of the amount set forth
below opposite such date:
Fiscal Year Ending Amount
------------------ ------
March 27, 2000 $17,500,000
March 26, 2001 $18,500,000
March 25, 2002 $19,000,000
March 27, 2003 and thereafter $20,000,000
PROVIDED that 50% of the unused amount of any Capital Expenditures permitted to
be made during each fiscal year and not made during such fiscal year may be
carried over and expended during the next succeeding fiscal year (and any
amount so carried over shall be deemed the first amount applied and expended
for Capital Expenditures during such next succeeding fiscal year).
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan
or any fee or any other amount (other than an amount referred to in
clause (a) of this Article) payable under this Agreement or any other
Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of three Business
Days;
<PAGE> 103
98
(c) any representation or warranty made or deemed made by or
on behalf of Holdings, the Borrower or any Subsidiary in or in
connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, or in any report, certificate, financial
statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect (or, in the case
of any such representation or warranty that is not qualified as to
materiality, incorrect in any material respect) when made or deemed
made;
(d) Holdings or the Borrower shall fail to observe or perform
any covenant, condition or agreement contained in Section 5.02, 5.04
(with respect to the existence of Holdings or the Borrower) or 5.11 or
in Article VI;
(e) any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other
than those specified in clause (a), (b) or (d) of this Article), and
such failure shall continue unremedied for a period of 30 days after
notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);
(f) Holdings, the Borrower or any Restricted Subsidiary shall
fail to make any payment of principal or interest (regardless of
amount) in respect of any Material Indebtedness, when and as the same
shall become due and payable (after giving effect to any applicable
period of grace, in the case of interest);
(g) any event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled maturity or
that enables or permits the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; PROVIDED that this clause (g) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
<PAGE> 104
99
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of Holdings, the Borrower or
any Restricted Subsidiary or its debts, or of a substantial part of
its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings, the Borrower or any
Restricted Subsidiary or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
(i) Holdings, the Borrower or any Restricted Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings, the Borrower or any
Restricted Subsidiary or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for
the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(j) Holdings, the Borrower or any Restricted Subsidiary shall
become unable, admit in writing its inability or fail generally to pay
its debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against
Holdings, the Borrower, any Restricted Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
attach or levy upon any assets of Holdings, the Borrower or any
Restricted Subsidiary to enforce any such judgment;
<PAGE> 105
100
(l) an ERISA Event shall have occurred that, when taken
together with all other ERISA Events that have occurred, could
reasonably be expected to result in a Material Adverse Effect;
(m) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not
to be, a valid and perfected Lien on any Collateral, with the priority
required by the applicable Security Document, except (i) as a result
of the sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents or (ii) as a result of
the Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it
under the Collateral Agreement; or
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either
or both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
and in case of any event with respect to the Borrower described in clause (h)
or (i) of this Article, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
<PAGE> 106
101
ARTICLE VIII
THE AGENTS
Each of the Lenders and the Issuing Bank hereby irrevocably
appoints The Chase Manhattan Bank as Administrative Agent and Collateral Agent
(for purposes of this Article VIII, collectively, the "AGENT") and authorizes
the Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with Holdings, the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Agent hereunder.
The Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the Agent
is required to exercise in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as expressly set
forth in the Loan Documents, the Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to
Holdings, the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Agent or any of its Affiliates in any capacity.
The Agent shall not be liable for any action taken or not taken by it with the
consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
wilful misconduct. The Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to the Agent by
Holdings, the Borrower or a Lender, and the Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
<PAGE> 107
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representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered thereunder or
in connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
any Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Agent.
The Agent shall be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. The Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
The Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Agent. The Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of each Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor
Agent as provided in this paragraph, the Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with
the Borrower, to appoint a successor. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint
a successor Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
<PAGE> 108
103
Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Agent's resignation
hereunder, the provisions of this Article and Section 9.03 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Agent.
Each Lender acknowledges that it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Holdings or the Borrower, to it at American Media
Operations, Inc., 600 East Coast Avenue, Lantana, Florida 33464-0002,
Attention of Richard W. Pickert and Peter A. Nelson (Telecopy No.
(561) 540-1018), with a copy to EMP Group L.L.C., 65 East 55th Street,
New York, New York 10022, Attention of Austin M. Beutner (Telecopy No.
(212) 857-3122);
(b) if to the Administrative Agent, to The Chase Manhattan
Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th
Floor, New York, New York 10081, Attention of Janet Belden (Telecopy
No. (212) 552-5658), with a copy to The Chase Manhattan Bank, 270 Park
Avenue, New York, New York 10017, Attention of Ed deForest (Telecopy
No. (212) 270-5120);
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(c) if to the Issuing Bank, to it at The Chase Manhattan
Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th
Floor, New York, New York 10081, Attention of Janet Belden (Telecopy
No. (212) 552-5658);
(d) if to the Swingline Lender, to it at The Chase Manhattan
Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th
Floor, New York, New York 10081, Attention of Janet Belden (Telecopy
No. (212) 552-5658); and
(e) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. WAIVERS; AMENDMENTS. (a) No failure or delay by
the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
in exercising any right or power hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of any Loan Document or consent to any departure by any Loan
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan
<PAGE> 110
105
or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, the Collateral Agent,
any Lender or the Issuing Bank may have had notice or knowledge of such Default
at the time.
(b) Neither this Agreement nor any other Loan Document nor
any provision hereof or thereof may be waived, amended or modified except, in
the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders;
PROVIDED that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the maturity of any Loan, or any scheduled date of
payment of the principal amount of any Term Loan under Section 2.10, or the
required date of reimbursement of any LC Disbursement, or any date for the
payment of any interest or fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender, (v) change any of the provisions of this Section or the percentage set
forth in the definition of "Required Lenders" or any other provision of any
Loan Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release
all or any substantial part of the Guarantees made by Holdings and the
Subsidiary Loan Parties under the Guarantee Agreement (except as expressly
provided in the Guarantee Agreement), or limit their liability in respect of
all or any substantial part of such Guarantees, without the written consent of
each Lender, (vii) release all or any substantial part of the Collateral from
the Liens of the Security Documents, without the written consent of each
Lender, (viii) change any provisions of any Loan Document in a manner that by
its terms adversely affects the rights in respect of payments due to Lenders
holding Loans of any Class differently than those holding Loans of any other
Class, without the written consent of Lenders holding a majority in interest of
the outstanding Loans and unused Commitments of each adversely affected Class
or (ix) change the rights of the Tranche B Lenders to decline mandatory
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prepayments as provided in Section 2.11, without the written consent of Tranche
B Lenders holding a majority of the outstanding Tranche B Loans; PROVIDED
FURTHER that (A) no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Collateral Agent, the Issuing
Bank or the Swingline Lender without the prior written consent of the
Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline
Lender, as the case may be, and (B) any waiver, amendment or modification of
this Agreement that by its terms affects the rights or duties under this
Agreement of the Revolving Lenders (but not the Tranche A Lenders and Tranche B
Lenders), the Tranche A Lenders (but not the Revolving Lenders and Tranche B
Lenders) or the Tranche B Lenders (but not the Revolving Lenders and Tranche A
Lenders) may be effected by an agreement or agreements in writing entered into
by Holdings, the Borrower and requisite percentage in interest of the affected
Class of Lenders. Notwithstanding the foregoing, any provision of this
Agreement may be amended by an agreement in writing entered into by the
Borrower, the Required Lenders and the Administrative Agent (and, if their
rights or obligations are affected thereby, the Issuing Bank and the Swingline
Lender) if (i) by the terms of such agreement the Commitment of each Lender not
consenting to the amendment provided for therein shall terminate upon the
effectiveness of such amendment and (ii) at the time such amendment becomes
effective, each Lender not consenting thereto receives payment in full of the
principal of and interest accrued on each Loan made by it and all other amounts
owing to it or accrued for its account under this Agreement.
SECTION 9.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent and their Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent and the Collateral Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration of
the Loan Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all out-of-pocket expenses incurred by the Administrative
Agent, the Collateral Agent, the Issuing Bank or any Lender, including the
fees, charges and disbursements of any counsel for the Administrative Agent,
<PAGE> 112
107
the Collateral Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made
or Letters of Credit issued hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent,
the Collateral Agent, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "INDEMNITEE")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of
(i) the execution or delivery of any Loan Document or any other agreement or
instrument contemplated hereby, the performance by the parties to the Loan
Documents of their respective obligations thereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan or
Letter of Credit or the use of the proceeds therefrom (including any refusal by
the Issuing Bank to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Materials on or from any Mortgaged Property or any other
property currently or formerly owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses resulted from the gross negligence or
wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent, the Collateral Agent,
the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Swingline Lender, as the case may be,
<PAGE> 113
108
such Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
PROVIDED that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Collateral Agent, the Issuing Bank or the
Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro
rata share" shall be determined based upon its share of the sum of the total
Revolving Exposures, outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, neither
Holdings nor the Borrower shall assert, and each hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any Affiliate of the Issuing Bank that issues any Letter of Credit), except
that the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); PROVIDED that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender
or a Related Fund of a Lender, each of the Borrower and the Administrative
<PAGE> 114
109
Agent (and, in the case of an assignment of all or a portion of a Revolving
Commitment or any Lender's obligations in respect of its LC Exposure or
Swingline Exposure, the Issuing Bank and the Swingline Lender) must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender or
an Affiliate of a Lender or a Related Fund of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitment or Loans, the
amount of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, except that this clause (iii) shall not be
construed to prohibit the assignment of a proportionate part of all the
assigning Lender's rights and obligations in respect of one Class of
Commitments or Loans, (iv) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $3,500, and (v) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and PROVIDED FURTHER that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default
under clause (h) or (i) of Article VII has occurred and is continuing. Subject
to acceptance and recording thereof pursuant to paragraph (d) of this Section,
from and after the effective date specified in each Assignment and Acceptance
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections
2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e)
of this Section.
<PAGE> 115
110
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in the City of New
York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the "Register").
The entries in the Register shall be conclusive, and Holdings, the Borrower,
the Administrative Agent, the Issuing Bank and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower,
the Issuing Bank and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
PROVIDED that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) Holdings, the
Borrower, the Administrative Agent, the Issuing Bank and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce the Loan Documents and
to approve any amendment, modification or waiver of any provision of the Loan
Documents; PROVIDED that such agreement or instrument may provide that such
<PAGE> 116
111
Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.18(c) as though it were a
Lender.
(f) A Participant shall not be entitled to receive any
greater payment under Section 2.15 or 2.17 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.17 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; PROVIDED that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
SECTION 9.05. SURVIVAL. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Administrative
Agent, the Collateral Agent, the Issuing Bank or any Lender may have had notice
or knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect
<PAGE> 117
112
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to
fees payable to the Administrative Agent and Collateral Agent constitute the
entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 9.07. SEVERABILITY. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.
SECTION 9.08. RIGHT OF SETOFF. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
<PAGE> 118
113
special, time or demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE
OF PROCESS. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document
shall affect any right that the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Holdings, the
Borrower or its properties in the courts of any jurisdiction.
(c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
<PAGE> 119
114
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement or any other Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. HEADINGS. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. CONFIDENTIALITY. Each of the Administrative
Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates' and its Related Funds' directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), or to any direct or indirect contractual
counterparty in swap agreements or such contractual counterparty's professional
advisor (so long as such contractual counterparty or professional advisor
agrees to be bound by the provisions of this Section 9.12), (b) to the extent
requested by any regulatory authority, (c) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process, (d) to any
other party to this Agreement, (e) in connection with the exercise of any
<PAGE> 120
115
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis from a source other
than Holdings or the Borrower. For the purposes of this Section, "INFORMATION"
means all information received from Holdings or the Borrower relating to
Holdings or the Borrower or its business, other than any such information that
is available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by Holdings or the Borrower. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. INTEREST RATE LIMITATION. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated
as interest on such Loan under applicable law (collectively the "CHARGES"),
shall exceed the maximum lawful rate (the "MAXIMUM RATE") which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
<PAGE> 121
116
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
AMERICAN MEDIA, INC.,
By: /s/ Peter A. Nelson
-----------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Financial Officer
AMERICAN MEDIA OPERATIONS, INC.,
By: /s/ Peter A. Nelson
-----------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
By: /s/ Marian Schulman
-----------------------------------
Name: Marian Schulman
Title: Vice President
<PAGE> 122
117
CAISSE DE DEPOT ET PLACEMENT
DU QUEBEC,
By: /s/ Normand Provost
-----------------------------------
Name: Normand Provost
Title: Coordinating Vice President
By: /s/ Ginette Depelteau
-----------------------------------
Name: Ginette Depelteau
Title: Director and Corporate
Secretary
THE BANK OF NEW YORK,
By: /s/ Edward F. Ryan, Jr.
-----------------------------------
Name: Edward F. Ryan, Jr.
Title: Senior Vice President
SUMMIT BANK,
By: /s/ Henry G. Kush, Jr.
-----------------------------------
Name: Henry G. Kush, Jr.
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION,
By: /s/ Robert M. Kadlick
-----------------------------------
Name: Robert M. Kadlick
Title: Duly Authorized Signatory
HELLER FINANCIAL, INC.,
By: /s/ Robert M. Reeg
-----------------------------------
Name: Robert M. Reeg
Title: Assistant Vice President
<PAGE> 123
118
CREDIT AGRICOLE INDOSUEZ,
By: /s/ Craig Welch
-----------------------------------
Name: Craig Welch
Title: First Vice President
By: /s/ Sarah McClintock
-----------------------------------
Name: Sarah McClintock
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK AS TRUSTEE FOR A
COMINGLED TRUST (MGT HIGH
YIELD FUND),
By: /s/ David T. Ellis
-----------------------------------
Name: David T. Ellis
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK AS TRUSTEE FOR A
COMINGLED TRUST (SPECIAL
SITUATION FUND),
By: /s/ David T. Ellis
-----------------------------------
Name: David T. Ellis
Title: Vice President
DLJ CAPITAL FUNDING, INC.,
By: /s/ Stephen P. Hickey
-----------------------------------
Name: Stephen P. Hickey
Title: Managing Director
<PAGE> 124
119
CYPRESSTREE SENIOR FLOATING
RATE FUND
BY: CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC. AS
PORTFOLIO MANAGER,
By: /s/ Peter K. Merrill
-----------------------------------
Name: Peter K. Merrill
Title: Managing Director
NORTH AMERICAN SENIOR FLOATING
RATE FUND,
BY: CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC. AS
PORTFOLIO MANAGER,
By: /s/ Peter K. Merrill
-----------------------------------
Name: Peter K. Merrill
Title: Managing Director
CYPRESSTREE INVESTMENT FUND,
LLC,
BY: CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.,
ITS MANAGING MEMBER,
By: /s/ Peter K. Merrill
-----------------------------------
Name: Peter K. Merrill
Title: Managing Director
<PAGE> 125
120
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
AS: ATTORNEY-IN-FACT AND ON
BEHALF OF FIRST ALLMERICA
FINANCIAL LIFE INSURANCE
COMPANY AS PORTFOLIO
MANAGER,
By: /s/ Peter K. Merrill
-----------------------------------
Name: Peter K. Merrill
Title: Managing Director
KZH SHENKMAN LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH IV LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH SHOSHONE LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH APALOOSA LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE> 126
121
KZH SOLEIL-2 LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH WATERSIDE LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH STERLING LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH RIVERSIDE LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH CYPRESSTREE-1 LLC,
By: /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE> 127
122
TRAVELERS CORPORATE LOAN FUND, INC.,
BY: TRAVELERS ASSET
MANAGEMENT INTERNATIONAL
CORPORATION
By: /s/ John W. Petchler
-----------------------------------
Name: John W. Petchler
Title: Second Vice President
THE TRAVELERS INSURANCE COMPANY,
By: /s/ John W. Petchler
-----------------------------------
Name: John W. Petchler
Title: Second Vice President
SEQUILS I, LTD.
BY: TCW ADVISORS, INC. AS ITS
COLLATERAL MANAGER,
By: /s/ Justin L. Driscoll
-----------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
By: /s/ Jonathan R. Insull
-----------------------------------
Name: Jonathan R. Insull
Title: Vice President
FRANKLIN FLOATING RATE TRUST,
By: /s/ Chauncey Lufkin
-----------------------------------
Name: Chauncey Lufkin
Title: Vice President
<PAGE> 128
123
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST,
By: /s/ Sheila A. Finnerty
-----------------------------------
Name: Sheila A. Finnerty
Title: Vice President
NATIONSBANK, N.A.,
By: /s/ Sean P. Bonner
-----------------------------------
Name: Sean P. Bonner
Title: Vice President
SRF TRADING, INC.,
By: /s/ Kelly C. Walker
-----------------------------------
Name: Kelly C. Walker
Title: Vice President
STEIN ROE FLOATING RATE
LIMITED LIABILITY COMPANY,
By: /s/ Brian W. Good
-----------------------------------
Name: Brian W. Good
Title: Vice President
JACKSON NATIONAL LIFE
INSURANCE COMPANY
BY: PPM AMERICA, INC., AS
ATTORNEY IN FACT, ON BEHALF OF
JACKSON NATIONAL LIFE
INSURANCE COMPANY
By: /s/ Michael King
-----------------------------------
Name: Michael King
Title: Vice President
<PAGE> 129
124
MONUMENTAL LIFE INSURANCE
COMPANY,
By: /s/ Mary T. Pech
-----------------------------------
Name: Mary T. Pech
Title: Vice President
FLOATING RATE PORTFOLIO
BY: INVESCO SENIOR SECURED
MANAGEMENT, INC. AS
ATTORNEY IN FACT,
By: /s/ Joseph Rotondo
-----------------------------------
Name: Joseph Rotondo
Title: Authorized Signatory
<PAGE> 1
EXHIBIT 4.4
EXECUTION COPY
GUARANTEE AGREEMENT dated as of May
7, 1999, among AMERICAN MEDIA, INC.
("HOLDINGS"), a Delaware corporation, each
of the subsidiaries listed on Schedule I
hereto (each such subsidiary individually,
a "SUBSIDIARY" and, collectively, the
"SUBSIDIARIES"; and each such Subsidiary
and Holdings, individually, a "GUARANTOR"
and, collectively, the "GUARANTORS") and
THE CHASE MANHATTAN BANK, a New York
banking corporation, as collateral agent
(the "COLLATERAL AGENT") for the Secured
Parties (as defined in the Security
Agreement).
Reference is made to the Credit Agreement dated as of May 7, 1999 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among American Media Operations, Inc., a Delaware corporation (the
"BORROWER"), Holdings, the lenders from time to time party thereto (the
"LENDERS") and The Chase Manhattan Bank, as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT"). Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiaries is a direct or indirect subsidiary
of the Borrower and acknowledges that it will derive substantial benefit from
the making of the Loans by the Lenders and the issuance of Letters of Credit by
the Issuing Bank. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned on, among other things,
the execution and delivery by the Guarantors of a Guarantee Agreement in the
form hereof. As consideration therefor and in order to induce the Lenders to
make Loans and the Issuing Bank to issue Letters of Credit, the Guarantors are
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. GUARANTEE. Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, (a) the due and punctual payment of (i) the principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Loan Parties to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due
and punctual performance of all covenants, agreements, obligations and
liabilities of the Loan Parties under or pursuant to the Credit Agreement and
the other Loan Documents, (c) the due and punctual payment and performance of
all obligations of the Borrower or any other Loan Party, monetary or otherwise,
under each Hedging Agreement entered into with a counterparty that was a Lender
(or an Affiliate of a Lender) at the time such Hedging Agreement was entered
into and (d) the due and punctual payment and performance of all obligations in
respect of overdrafts and related liabilities owed to the Administrative Agent
or any of its Affiliates and arising from treasury, depositary and cash
management services in connection with any automated clearing house transfers
of funds (all the monetary and other obligations referred to in the preceding
clauses (a) through (d) being collectively called the "OBLIGATIONS"). Each
Guarantor further agrees that the Obligations may be
<PAGE> 2
2
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Obligation.
SECTION 2. OBLIGATIONS NOT WAIVED. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from
and protest to the Borrower of any of the Obligations, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. To the
fullest extent permitted by applicable law, the obligations of each Guarantor
hereunder shall not be affected by (a) the failure of the Collateral Agent or
any other Secured Party to assert any claim or demand or to enforce or exercise
any right or remedy against the Borrower or any Guarantor under the provisions
of the Credit Agreement, any other Loan Document or otherwise; (b) any
recision, waiver, amendment or modification of, or any release from any terms
or provisions of this Agreement, any other Loan Document, any Guarantee or any
other agreement, including with respect to any other Guarantor under this
Agreement or (c) the failure to perfect any security interest in, or release
of, any of the security held by or on behalf of the Collateral Agent or any
other Secured Party.
SECTION 3. SECURITY. Each of the Guarantors authorizes the Collateral
Agent and each of the other Secured Parties to (a) take and hold security for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other guarantors or other
obligors.
SECTION 4. GUARANTEE OF PAYMENT. Each Guarantor further agrees that
its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit
on the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other Person.
SECTION 5. NO DISCHARGE OR DIMINISHMENT OF GUARANTEE. The obligations
of each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment
in full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or the failure to
perfect any security interest in, or the release of, any of the security held
by or on behalf of the Collateral Agent or any other Secured Party, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any Guarantor or that would otherwise operate as a discharge of each
Guarantor as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations).
SECTION 6. DEFENSES OF BORROWER WAIVED. To the fullest extent
permitted by applicable law, each of the Guarantors waives any defense based on
or arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the final and indefeasible payment
in full in cash of the Obligations. The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more
of them by one or more judicial or nonjudicial sales, accept an assignment of
any such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly
<PAGE> 3
3
paid in cash. Pursuant to applicable law, each of the Guarantors waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
the Borrower or any other Guarantor or guarantor, as the case may be, or any
security.
SECTION 7. AGREEMENT TO PAY; SUBORDINATION. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral
Agent or such other Secured Party as designated thereby in cash the amount of
such unpaid Obligations. Upon payment by any Guarantor of any sums to the
Collateral Agent or any Secured Party as provided above, all rights of such
Guarantor against the Borrower arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations. In addition, any
indebtedness of any Loan Party now or hereafter held by any Guarantor is hereby
subordinated in right of payment to the prior payment in full of the
Obligations, PROVIDED that so long as no Default exists or is continuing, any
Loan Party may repay indebtedness of such Loan Party held by any other Loan
Party without regard to such subordination. If any amount shall erroneously be
paid to any Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of any
Loan Party, such amount shall be held in trust for the benefit of the Secured
Parties and shall forthwith be paid to the Collateral Agent to be credited
against the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Documents.
SECTION 8. INFORMATION. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and the nature, scope and extent of the
risks that such Guarantor assumes and incurs hereunder, and agrees that none of
the Collateral Agent or the other Secured Parties will have any duty to advise
any of the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. REPRESENTATIONS AND WARRANTIES. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct.
SECTION 10. TERMINATION. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the L/C
Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Secured Party or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.
SECTION 11. BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS. Whenever
in this Agreement any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Guarantors that are
contained in this Agreement shall bind and inure to the benefit of each party
hereto and their respective successors and assigns. This Agreement shall become
effective as to any Guarantor when a counterpart hereof executed on behalf of
such Guarantor shall have been delivered to the Collateral Agent, and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Guarantor and the Collateral Agent
and their respective successors and assigns, and shall inure to the benefit of
such Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the
right to assign its rights or obligations hereunder or any interest herein (and
any such attempted assignment shall be void). In the event that a
<PAGE> 4
4
Guarantor (a) is designated as an Unrestricted Subsidiary in accordance with
the terms of the Credit Agreement or (b) ceases to be a Subsidiary pursuant to
a transaction permitted under the Loan Documents, such Guarantor shall be
released from its obligations under this Agreement without further action. This
Agreement shall be construed as a separate agreement with respect to each
Guarantor and may be amended, modified, supplemented, waived or released with
respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder.
SECTION 12. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantors with respect to which such waiver, amendment or modification
relates and the Collateral Agent, subject to any consent required in accordance
with Section 9.02 of the Credit Agreement.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. NOTICES. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Guarantor shall be given to it in
care of the Borrower at the address set forth in the Credit Agreement.
SECTION 15. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All covenants,
agreements, representations and warranties made by the Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid and as long as the Commitments have not been terminated
or the L/C Exposure does not equal zero.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single
<PAGE> 5
5
contract, and shall become effective as provided in Section 11. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 17. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
the Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Guarantor or its properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. ADDITIONAL GUARANTORS. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary Loan Party of the Borrower that was not in
existence or not a Subsidiary Loan Party on the date of the Credit Agreement
and each Unrestricted Subsidiary that is designated as a Restricted Subsidiary
is required to enter into this Agreement as a Guarantor upon becoming a
Subsidiary Loan Party. Upon execution and delivery after the date hereof by the
Collateral Agent and such a Subsidiary of an instrument in the form of Annex 1,
such Subsidiary shall become a Guarantor hereunder with the same force and
effect as if originally named as a Guarantor herein. The execution and delivery
of any instrument adding an additional Guarantor as a party to this Agreement
shall not require the consent of any other Guarantor hereunder. The rights and
obligations of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.
<PAGE> 6
6
SECTION 21. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Secured Party is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by such
Secured Party to or for the credit or the account of any Guarantor against any
or all the obligations of such Guarantor now or hereafter existing under this
Agreement and the other Loan Documents held by such Secured Party, irrespective
of whether or not such Secured Party shall have made any demand under this
Agreement or any other Loan Document and although such obligations may be
unmatured. The rights of each Secured Party under this Section 21 are in
<PAGE> 7
7
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AMERICAN MEDIA, INC.,
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Financial Officer
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO,
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK, as
Collateral Agent,
By: /s/ Marian Schulman
------------------------------------
Name: Marian Schulman
Title: Vice President
<PAGE> 8
8
Schedule I to the
Guarantee Agreement
GUARANTORS
American Media Marketing, Inc.
Biocide, Inc.
Country Weekly, Inc.
Distribution Services, Inc.
Fairview Printing, Inc.
Frontline Marketing, Inc.
Health Xtrak, Inc.
Marketing Services, Inc.
NDSI, Inc.
National Enquirer, Inc.
Retail Marketing Network Inc.
SOM Publishing, Inc.
Star Editorial, Inc.
Weekly World News, Inc.
<PAGE> 9
Annex 1 to the
Guarantee Agreement
SUPPLEMENT NO. [ ] dated as of , to the
Guarantee Agreement dated as of May 7, 1999, among AMERICAN
MEDIA, INC., a Delaware corporation ("HOLDINGS"), each of the
subsidiaries listed on Schedule I thereto (each such subsidiary
individually, a "SUBSIDIARY" and, collectively, the
"SUBSIDIARIES"; and each such Subsidiary and Holdings,
individually, a "GUARANTOR" and, collectively, the "GUARANTORS"),
and THE CHASE MANHATTAN BANK, a New York banking corporation, as
collateral agent (the "COLLATERAL AGENT") for the Secured Parties
(as defined in the Security Agreement).
A. Reference is made to the Credit Agreement dated as of May 7, 1999 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among AMERICAN MEDIA OPERATIONS, INC., a Delaware corporation (the
"BORROWER"), Holdings, the lenders from time to time party thereto (the
"LENDERS") and The Chase Manhattan Bank, as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Guarantee Agreement and the
Credit Agreement.
C. The Guarantors have entered into the Guarantee Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan
Party of the Borrower that was not in existence or not a Subsidiary Loan Party
on the date of the Credit Agreement and each Unrestricted Subsidiary that is
designated as a Restricted Subsidiary is required to enter into the Guarantee
Agreement as a Guarantor upon becoming a Subsidiary Loan Party. Section 20 of
the Guarantee Agreement provides that additional Subsidiaries of the Borrower
may become Guarantors under the Guarantee Agreement by execution and delivery
of an instrument in the form of this Supplement. The undersigned Subsidiary of
the Borrower (the "NEW GUARANTOR") is executing this Supplement in accordance
with the requirements of the Credit Agreement to become a Guarantor under the
Guarantee Agreement in order to induce the Lenders to make additional Loans and
the Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 20 of the Guarantee Agreement, the
New Guarantor by its signature below becomes a Guarantor under the Guarantee
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Guarantee Agreement applicable to it as a Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Guarantor thereunder are true and correct on and as
of the date hereof except to the extent a representation and warranty expressly
relates solely to a specific date in which case such representation and
warranty shall be true and correct on such date. Each reference to a
"Guarantor" in the Guarantee Agreement shall be deemed to include the New
Guarantor. The Guarantee Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
<PAGE> 10
2
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Guarantee Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction). The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the
Borrower.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent for
its out-of-pocket expenses in connection with this Supplement, including the
fees, disbursements and other charges of counsel for the Collateral Agent.
<PAGE> 11
3
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Guarantee Agreement as of the day and year
first above written.
[NAME OF NEW GUARANTOR],
By:
------------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
By:
------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.5
EXECUTION COPY
INDEMNITY, SUBROGATION and
CONTRIBUTION AGREEMENT dated as of May 7,
1999, among AMERICAN MEDIA OPERATIONS,
INC., a Delaware corporation (the
"BORROWER"), each subsidiary of American
Media, Inc. listed on Schedule I hereto
(each a "SUBSIDIARY" or a "GUARANTOR") and
THE CHASE MANHATTAN BANK, a New York
banking corporation ("CHASE"), as
collateral agent (in such capacity, the
"COLLATERAL AGENT") for the Secured Parties
(as defined in the Security Agreement).
Reference is made to (a) the Credit Agreement dated as of May 7, 1999
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrower, American Media, Inc., the lenders from time to
time party thereto (the "LENDERS") and Chase, as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), and (b) the Guarantee
Agreement dated as of May 7, 1999, among the Guarantors and the Collateral
Agent (the "GUARANTEE AGREEMENT"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have guaranteed the Obligations (as defined in
the Guarantee Agreement) pursuant to the Guarantee Agreement; the Guarantors
have granted Liens on and security interests in certain of their assets to
secure such guarantees. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned on, among other things,
the execution and delivery by the Borrower and the Guarantors of an agreement
in the form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral Agent
agree as follows:
SECTION 1. INDEMNITY AND SUBROGATION. In addition to all such rights
of indemnity and subrogation as the Guarantors may have under applicable law
(but subject to Section 3), the Borrower agrees that (a) in the event a payment
shall be made by any Guarantor under the Guarantee Agreement, the Borrower
shall indemnify such Guarantor for the full amount of such payment and such
Guarantor shall be subrogated to the rights of the Person to whom such payment
shall have been made to the extent of such payment and (b) in the event any
assets of any Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party, the Borrower shall indemnify such
Guarantor in an amount equal to the greater of the book value or the fair
market value of the assets so sold.
SECTION 2. CONTRIBUTION AND SUBROGATION. Each Guarantor (a
"CONTRIBUTING GUARANTOR") agrees (subject to Section 3) that, in the event a
payment shall be made by any other Guarantor under the Guarantee Agreement or
assets of any other Guarantor shall be sold pursuant to any Security Document
to satisfy a claim of any Secured Party and such other Guarantor (the "CLAIMING
GUARANTOR") shall not have been fully indemnified by the Borrower as provided
in Section 1, the Contributing Guarantor shall indemnify the Claiming
Guarantor in an amount equal to the amount of such payment or the greater of
the book value or the fair market value of such assets, as the case may be, in
each case multiplied by a fraction of which the numerator shall be the net
worth of the Contributing Guarantor on the date hereof and the denominator
shall be the aggregate net worth of all the Guarantors on the date hereof (or,
in the case of any Guarantor becoming a party hereto pursuant to Section 12,
the date of the Supplement hereto executed and delivered by such Guarantor).
Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant
to this Section 2 shall be subrogated to the rights of such Claiming Guarantor
under Section 1 to the extent of such payment.
<PAGE> 2
2
SECTION 3. SUBORDINATION. Notwithstanding any provision of this
Agreement to the contrary, all rights of each of the Guarantors under Sections
1 and 2 and all other rights of each of the Guarantors in respect of indemnity,
contribution or subrogation from any other Loan Party under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full in
cash of all Obligations which are then due and payable whether at maturity, by
acceleration or otherwise. No failure on the part of the Borrower or any
Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor with respect to its
obligations hereunder, and each Guarantor shall remain liable for the full
amount of the obligations of such Guarantor hereunder.
SECTION 4. TERMINATION. This Agreement shall survive and be in full
force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the L/C Exposure has not been
reduced to zero, the Issuing Bank is still obligated to issue Letters of Credit
under the Credit Agreement and any of the Commitments under the Credit
Agreement have not been terminated, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Secured Party
or any Guarantor upon the bankruptcy or reorganization of the Borrower, any
Guarantor or otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. NO WAIVER; AMENDMENT. (a) No failure on the part of the
Collateral Agent or any Guarantor to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided
by law. None of the Collateral Agent and the Guarantors shall be deemed to have
waived any rights hereunder unless such waiver shall be in writing and signed
by such parties.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Borrower, the Guarantors and the Collateral Agent, subject to any consent
required in accordance with Section 9.02 of the Credit Agreement.
SECTION 7. NOTICES. All communications and notices hereunder shall be
in writing and given as provided in the Guarantee Agreement and addressed as
specified therein.
SECTION 8. BINDING AGREEMENT; ASSIGNMENTS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the parties that are contained in this
Agreement shall bind and inure to the benefit of their respective successors
and assigns. Neither the Borrower nor any Guarantor may assign or transfer any
of its rights or obligations hereunder (and any such attempted assignment or
transfer shall be void) without the consent required in accordance with Section
9.02 of the Credit Agreement. Notwithstanding the foregoing, at the time any
Guarantor is released from its obligations under the Guarantee Agreement in
accordance with such Guarantee Agreement and the Credit Agreement, such
Guarantor will cease to have any rights or obligations under this Agreement.
SECTION 9. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All covenants and
agreements made by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with
this Agreement or the other Loan Documents shall be considered to have been
relied upon by the Collateral Agent, the other Secured Parties and each
Guarantor and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Issuing Bank and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loans or any other fee or amount payable under the
<PAGE> 3
3
Credit Agreement or this Agreement or under any of the other Loan Documents is
outstanding and unpaid and as long as the Commitments have not been terminated
or the L/C Exposure does not equal zero.
(b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, no
party hereto shall be required to comply with such provision for so long as
such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 10. COUNTERPARTS. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.
SECTION 11. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 12. ADDITIONAL GUARANTORS. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary Loan Party of the Borrower that was not in
existence or not a Subsidiary Loan Party on the date of the Credit Agreement
and each Unrestricted Subsidiary that is designated as a Restricted Subsidiary
is required to enter into the Guarantee Agreement as a Guarantor upon becoming
a Subsidiary Loan Party. Upon execution and delivery, after the date hereof, by
the Collateral Agent and such a Subsidiary of an instrument in the form of
Annex 1 hereto, such Subsidiary shall become a Guarantor hereunder with the
same force and effect as if originally named as a Guarantor hereunder. The
execution and delivery of any instrument adding an additional Guarantor as a
party to this Agreement shall not require the consent of any Guarantor
hereunder.
<PAGE> 4
4
The rights and obligations of each Guarantor hereunder shall remain in full
force and effect notwithstanding the addition of any new Guarantor as a party
to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first appearing
above.
AMERICAN MEDIA OPERATIONS, INC.,
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President
and Chief Financial Officer
EACH OF THE OTHER SUBSIDIARIES
LISTED ON SCHEDULE I HERETO, as a
Guarantor,
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executivie Vice President
and Chief Financial Officer
THE CHASE MANHATTAN BANK, as
Collateral Agent,
By: /s/ Marian Schulman
------------------------------------
Name: Marian Schulman
Title: Vice President
<PAGE> 5
5
Schedule I to the
Indemnity, Subrogation and
Contribution Agreement
SUBSIDIARY OBLIGORS
American Media Marketing, Inc.
Biocide, Inc.
Country Weekly, Inc.
Distribution Services, Inc.
Fairview Printing, Inc.
Frontline Marketing, Inc.
Health Xtra, Inc.
Marketing Services, Inc.
NDSI, Inc.
National Enquirer, Inc.
Retail Marketing Newwork Inc.
SOM Publishing, Inc.
Star Editorial, Inc.
Weekly World News, Inc.
<PAGE> 6
Annex 1 to the
Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. [ ] dated as of [ ], to the
Indemnity, Subrogation and Contribution Agreement dated as of
May 7, 1999 (as the same may be amended, supplemented or
otherwise modified from time to time, the "INDEMNITY,
SUBROGATION AND CONTRIBUTION AGREEMENT"), among AMERICAN MEDIA
OPERATIONS, INC., a Delaware corporation (the "BORROWER"), each
subsidiary of American Media, Inc. listed on Schedule I thereto
(each, a "SUBSIDIARY" or a "GUARANTOR"), and THE CHASE MANHATTAN
BANK, a New York banking corporation ("CHASE"), as collateral
agent (the "COLLATERAL AGENT") for the Secured Parties (as
defined in the Security Agreement).
A. Reference is made to (a) the Credit Agreement dated as of May 7, 1999
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrower, American Media, Inc., the lenders from time to
time party thereto (the "LENDERS") and Chase, as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), and (b) the Guarantee
Agreement dated as of May 7, 1999, among the Guarantors and the Collateral
Agent (the "GUARANTEE AGREEMENT").
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indemnity, Subrogation and
Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section 5.12
of the Credit Agreement, each Subsidiary Loan Party of the Borrower that was
not in existence or not a Subsidiary Loan Party on the date of the Credit
Agreement and each Unrestricted Subsidiary that is designated as a Restricted
Subsidiary is required to enter into the Indemnity, Subrogation and
Contribution Agreement as a Guarantor upon becoming a Subsidiary Loan Party.
Section 12 of the Indemnity, Subrogation and Contribution Agreement provides
that additional Subsidiaries of the Borrower may become Guarantors under the
Indemnity, Subrogation and Contribution Agreement by execution and delivery of
an instrument in the form of this Supplement. The undersigned Subsidiary (the
"NEW GUARANTOR") is executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Guarantor under the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
additional Loans and the Issuing Bank to issue additional Letters of Credit and
as consideration for Loans previously made and Letters of Credit previously
issued.
Accordingly, the Collateral Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation
and Contribution Agreement, the New Guarantor by its signature below becomes a
Guarantor under the Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Contribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the Indemnity, Subrogation and
Contribution Agreement shall be deemed to include the New Guarantor. The
Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when
<PAGE> 7
2
taken together shall constitute a single contract. This Supplement shall become
effective when the Collateral Agent shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New Guarantor
and the Collateral Agent. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so
long as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Indemnity, Subrogation and Contribution Agreement shall not
in any way be affected or impaired. The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[NAME OF NEW GUARANTOR],
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
By:
------------------------------------
Name:
Title:
<PAGE> 8
3
Schedule I to Supplement No. [ ]
to the Indemnity, Subrogation and
Contribution Agreement
GUARANTOR
Name Address
<PAGE> 1
EXHIBIT 4.6
EXECUTION COPY
PLEDGE AGREEMENT dated as of
[DATE], 1999, among AMERICAN MEDIA
OPERATIONS, INC., a Delaware corporation
(the "BORROWER"), AMERICAN MEDIA, INC., a
Delaware corporation ("HOLDINGS"), each
subsidiary of Holdings listed on Schedule I
hereto (each such subsidiary individually a
"SUBSIDIARY PLEDGOR" and collectively, the
"SUBSIDIARY PLEDGORS"; the Borrower,
Holdings and the Subsidiary Pledgors are
referred to herein individually as a
"PLEDGOR" and collectively as the
"PLEDGORS") and THE CHASE MANHATTAN BANK, a
New York banking corporation ("CHASE"), as
collateral agent (in such capacity, the
"COLLATERAL AGENT ") for the Secured
Parties (as defined in the Security
Agreement).
Reference is made to (a) the Credit Agreement dated as of [DATE], 1999
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrower, Holdings, the lenders from time to time party
thereto (the "LENDERS") and Chase, as administrative agent for the Lenders (in
such capacity, the "ADMINISTRATIVE AGENT"), and (b) the Guarantee Agreement
dated as of [DATE], 1999 (as amended, supplemented or otherwise modified from
time to time, the "GUARANTEE AGREEMENT") among Holdings, the Subsidiary
Pledgors and the Collateral Agent. Capitalized terms used herein and not
defined herein shall have meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have agreed to guarantee, among other things,
all the obligations of the Borrower under the Credit Agreement. The obligations
of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
are conditioned upon, among other things, the execution and delivery by the
Pledgors of a Pledge Agreement in the form hereof to secure (a) the due and
punctual payment by the Borrower of (i) the principal of and premium, if any,
and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all obligations
of the Borrower or any other Loan Party, monetary or otherwise, under each
Hedging Agreement entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Hedging Agreement was entered into and
(d) the due and punctual payment and performance of all obligations in respect
of overdrafts and related liabilities owed to the Administrative Agent or any
of its Affiliates and arising from treasury, depositary and cash management
services in connection with any automated clearing house transfers of funds
(all the monetary and other obligations referred to in the preceding clauses
(a) through (d) being referred to collectively as the "OBLIGATIONS").
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
SECTION 1. PLEDGE. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto
the Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
<PAGE> 2
2
Secured Parties, a security interest in all of such Pledgor's right, title and
interest in, to and under (a) the Equity Interests owned by it which are listed
on Schedule II hereto and any Equity Interests obtained in the future by such
Pledgor and the certificates representing all such Equity Interests (the
"PLEDGED INTERESTS"); PROVIDED that the Pledged Interests shall not include
more than 65% of the issued and outstanding common stock of any Foreign
Subsidiary; (b)(i) the debt securities owned by it which are listed opposite
the name of such Pledgor on Schedule II hereto, (ii) any debt securities in the
future issued to such Pledgor and (iii) the promissory notes and any other
instruments evidencing such debt securities (the "PLEDGED DEBT SECURITIES");
(c) all other property that may be delivered to and held by the Collateral
Agent pursuant to the terms hereof; (d) subject to Section 5, all payments of
principal or interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed, in respect of, in
exchange for or upon the conversion of the securities referred to in clauses
(a) and (b) above; (e) subject to Section 5, all rights and privileges of such
Pledgor with respect to the securities and other property referred to in
clauses (a), (b), (c) and (d) above; and (f) all proceeds of any of the
foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "COLLATERAL"). Upon delivery to the Collateral
Agent, (a) any stock certificates, notes or other securities now or hereafter
included in the Collateral (the "PLEDGED SECURITIES") shall be accompanied by
stock powers duly executed in blank or other instruments of transfer
satisfactory to the Collateral Agent and by such other instruments and
documents as the Collateral Agent may reasonably request and (b) all other
property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable Pledgor and such
other instruments or documents as the Collateral Agent may reasonably request.
Each delivery of Pledged Securities shall be accompanied by a schedule
describing the securities theretofore and then being pledged hereunder, which
schedule shall be attached hereto as Schedule II and made a part hereof. Each
schedule so delivered shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; SUBJECT, HOWEVER, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. DELIVERY OF THE COLLATERAL. (a) Each Pledgor agrees promptly
to deliver or cause to be delivered to the Collateral Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed money owed to
the Pledgor by any Person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent pursuant to the terms
thereof.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Pledgor hereby
represents, warrants and covenants, as to itself and the Collateral pledged by
it hereunder, to and with the Collateral Agent that:
(a) the Pledged Interests represent that percentage as set forth on
Schedule II of the issued and outstanding shares of each class of the
Equity Interests of the issuer with respect thereto;
(b) except for the security interest granted hereunder, such Pledgor
(i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens, (iii) will
make no assignment, pledge, hypothecation or transfer of, or create or
permit to exist any security interest in or other Lien on, the
Collateral, other than pursuant hereto, and (iv) subject to Section 5,
will cause any and all Collateral, whether for value paid by such Pledgor
or otherwise, to be forthwith deposited with the Collateral Agent and
pledged or assigned hereunder;
<PAGE> 3
3
(c) such Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will defend
its title or interest thereto or therein against any and all Liens (other
than the Lien created by this Agreement), however arising, of all Persons
whomsoever;
(d) no consent of any other Person (including stockholders or
creditors of any Pledgor) and no consent or approval of any Governmental
Authority or any securities exchange was or is necessary to the validity
of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of this
Agreement, when the Pledged Securities, certificates or other documents
representing or evidencing the Collateral are delivered to the Collateral
Agent in accordance with this Agreement, the Collateral Agent will have a
valid and perfected first lien upon and security interest in such Pledged
Securities as security for the payment and performance of the
Obligations;
(f) the pledge effected hereby is effective to vest in the Collateral
Agent, on behalf of the Secured Parties, the rights of the Collateral
Agent in the Collateral as set forth herein;
(g) all of the Pledged Interests have been duly authorized and validly
issued and are fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged Interests
is accurate and complete in all material respects as of the date hereof;
and
(i) the pledge of the Pledged Interests pursuant to this Agreement
does not violate Regulation T, U or X of the Federal Reserve Board or any
successor thereto as of the date hereof.
SECTION 4. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of any notices
or other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. The Collateral Agent shall at all times
have the right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
SECTION 5. VOTING RIGHTS; DIVIDENDS AND INTEREST, ETC. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms
of this Agreement, the Credit Agreement and the other Loan Documents;
PROVIDED, HOWEVER, that such Pledgor will not be entitled to exercise any
such right if the result thereof could materially and adversely affect
the rights inuring to a holder of the Pledged Securities or the rights
and remedies of any of the Secured Parties under this Agreement or the
Credit Agreement or any other Loan Document or the ability of the Secured
Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each Pledgor,
or cause to be executed and delivered to each Pledgor, all such proxies,
powers of attorney and other instruments as such Pledgor may reasonably
request for the purpose of enabling such Pledgor to exercise the voting
and/or consensual rights and powers it is entitled to exercise pursuant
to subparagraph (i) above and to receive the cash dividends it is
entitled to receive pursuant to subparagraph (iii) below.
<PAGE> 4
4
(iii) Each Pledgor shall be entitled to receive and retain any and all
cash dividends, interest and principal paid on the Pledged Securities to
the extent and only to the extent that such cash dividends, interest and
principal are permitted by, and otherwise paid in accordance with, the
terms and conditions of the Credit Agreement, the other Loan Documents
and applicable laws. All noncash dividends, interest and principal, and
all dividends, interest and principal paid or payable in cash or
otherwise in connection with a partial or total liquidation or
dissolution, return of capital, capital surplus or paid-in surplus, and
all other distributions (other than distributions referred to in the
preceding sentence) made on or in respect of the Pledged Securities,
whether paid or payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the outstanding capital
stock of the issuer of any Pledged Securities or received in exchange for
Pledged Securities or any part thereof, or in redemption thereof, or as a
result of any merger, consolidation, acquisition or other exchange of
assets to which such issuer may be a party or otherwise, shall be and
become part of the Collateral, and, if received by any Pledgor, shall not
be commingled by such Pledgor with any of its other funds or property but
shall be held separate and apart therefrom, shall be held in trust for
the benefit of the Collateral Agent and shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any necessary
endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to dividends, interest or principal that
such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above
shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority
to receive and retain such dividends, interest or principal. All dividends,
interest or principal received by the Pledgor contrary to the provisions of
this Section 5 shall be held in trust for the benefit of the Collateral Agent,
shall be segregated from other property or funds of such Pledgor and shall be
forthwith delivered to the Collateral Agent upon demand in the same form as so
received (with any necessary endorsement). Any and all money and other property
paid over to or received by the Collateral Agent pursuant to the provisions of
this paragraph (b) shall be retained by the Collateral Agent in an account to
be established by the Collateral Agent upon receipt of such money or other
property and shall be applied in accordance with the provisions of Section 7.
After all Events of Default have been cured or waived, the Collateral Agent
shall, within five Business Days after all such Events of Default have been
cured or waived, repay to each Pledgor all cash dividends, interest or
principal (without interest), that such Pledgor would otherwise be permitted to
retain pursuant to the terms of paragraph (a)(iii) above and which remain in
such account.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 5, and the obligations of the Collateral Agent under paragraph (a)(ii)
of this Section 5, shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers,
PROVIDED THAT, unless otherwise directed by the Required Lenders, the
Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived, each Pledgor
will have the right to exercise the voting and consensual rights and powers
that it would otherwise be entitled to exercise pursuant to the terms of
paragraph (a)(i) above.
SECTION 6. REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent may sell the
Collateral, or any part thereof, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. The Collateral Agent
shall be authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
<PAGE> 5
5
Pledgor, and, to the extent permitted by applicable law, the Pledgors hereby
waive all rights of redemption, stay, valuation and appraisal any Pledgor now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York
or its equivalent in other jurisdictions) of the Collateral Agent's intention
to make any sale of such Pledgor's Collateral. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case of a
sale at a broker's board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until the sale price
is paid in full by the purchaser or purchasers thereof, but the Collateral
Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may be sold again upon like notice. At any public
(or, to the extent permitted by applicable law, private) sale made pursuant to
this Section 6, any Secured Party may bid for or purchase, free from any right
of redemption, stay or appraisal on the part of any Pledgor (all said rights
being also hereby waived and released), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any
Obligation then due and payable to it from such Pledgor as a credit against the
purchase price, and it may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to such
Pledgor therefor. For purposes hereof, (a) a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof, (b) the
Collateral Agent shall be free to carry out such sale pursuant to such
agreement and (c) such Pledgor shall not be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations paid in full. As
an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose upon the Collateral and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any
sale pursuant to the provisions of this Section 6 shall be deemed to conform to
the commercially reasonable standards as provided in Section 9-504(3) of the
Uniform Commercial Code as in effect in the State of New York or its equivalent
in other jurisdictions.
SECTION 7. APPLICATION OF PROCEEDS OF SALE. The Collateral agent shall
apply the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Administrative Agent or the Collateral Agent (in its capacity as such
hereunder or under any other Loan Document) in connection with such
collection or sale or otherwise in connection with this Agreement or any
of the Obligations, including all court costs and the fees and expenses
of its agents and legal counsel, the repayment of all advances made by
the Collateral Agent hereunder or under any other Loan Document on behalf
of any Pledgor and any other costs or expenses incurred in connection
with the exercise of any right or remedy hereunder or under any other
Loan Document;
<PAGE> 6
6
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. REIMBURSEMENT OF COLLATERAL AGENT. (a) Each Pledgor agrees to
pay upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees, other charges and disbursements of its
counsel and of any experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any of the Collateral, (iii) the exercise or enforcement of any of the rights
of the Collateral Agent hereunder or (iv) the failure by such Pledgor to
perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and the
Indemnitees (as defined in Section 9.03 of the Credit Agreement) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto of their respective obligations thereunder or the consummation of the
other transactions contemplated thereby or (ii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not
any Indemnitee is a party thereto, PROVIDED that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document or any investigation made by or on behalf of the
Collateral Agent or any other Secured Party. All amounts due under this Section
8 shall be payable on written demand therefor and shall bear interest at the
rate specified in Section 2.13(c) of the Credit Agreement.
SECTION 9. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of such
Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for
any and all moneys due or to become due under and by virtue of any Collateral,
<PAGE> 7
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to endorse checks, drafts, orders and other instruments for the payment of
money payable to the Pledgor representing any interest or dividend or other
distribution payable in respect of the Collateral or any part thereof or on
account thereof and to give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with respect thereto, and
to sell, assign, endorse, pledge, transfer and to make any agreement
respecting, or otherwise deal with, the same; PROVIDED, HOWEVER, that nothing
herein contained shall be construed as requiring or obligating the Collateral
Agent to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or
any property covered thereby. The Collateral Agent and the other Secured
Parties shall be accountable only for amounts actually received as a result of
the exercise of the powers granted to them herein, and neither they nor their
officers, directors, employees or agents shall be responsible to any Pledgor
for any act or failure to act hereunder, except for their own gross negligence
or wilful misconduct.
SECTION 10. WAIVERS; AMENDMENT. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and
of the other Secured Parties under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Collateral Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.02 of the Credit Agreement.
SECTION 11. SECURITIES ACT, ETC. In view of the position of the Pledgors
in relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "FEDERAL SECURITIES LAWS") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Collateral Agent if the Collateral
Agent were to attempt to dispose of all or any part of the Pledged Securities,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Securities could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Securities under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Each Pledgor recognizes that in light of such restrictions
and limitations the Collateral Agent may, with respect to any sale of the
Pledged Securities, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Securities for their own account, for
investment, and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion, (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Securities or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a single potential purchaser to effect such sale. Each Pledgor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions.
In the event of any such sale, the Collateral Agent shall incur no
responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Collateral Agent, in its sole and absolute
<PAGE> 8
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discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid
or if more than a single purchaser were approached. The provisions of this
Section 11 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
SECTION 12. REGISTRATION, ETC. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Securities at a public
sale, it will, at any time and from time to time, upon the written request of
the Collateral Agent, use its best efforts to take or to cause the issuer of
such Pledged Securities to take such action and prepare, distribute and/or file
such documents, as are required or advisable in the reasonable opinion of
counsel for the Collateral Agent to permit the public sale of such Pledged
Securities. Each Pledgor further agrees to indemnify, defend and hold harmless
the Collateral Agent, each other Secured Party, any underwriter and their
respective officers, directors, affiliates and controlling Persons from and
against all loss, liability, expenses, costs of counsel (including, without
limitation, reasonable fees and expenses to the Collateral Agent of legal
counsel), and claims (including the costs of investigation) that they may incur
insofar as such loss, liability, expense or claim arises out of or is based
upon any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information
furnished in writing to such Pledgor or the issuer of such Pledged Securities
by the Collateral Agent or any other Secured Party expressly for use therein.
Each Pledgor further agrees, upon such written request referred to above, to
use its best efforts to qualify, file or register, or cause the issuer of such
Pledged Securities to qualify, file or register, any of the Pledged Securities
under the Blue Sky or other securities laws of such states as may be requested
by the Collateral Agent and keep effective, or cause to be kept effective, all
such qualifications, filings or registrations. Each Pledgor will bear all costs
and expenses of carrying out its obligations under this Section 12. Each
Pledgor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section 12 and that such failure would
not be adequately compensable in damages, and therefore agrees that its
agreements contained in this Section 12 may be specifically enforced.
SECTION 13. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 14. TERMINATION OR RELEASE. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full and the Lenders have no further commitment to lend
under the Credit Agreement, the L/C Exposure has been reduced to zero and the
Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral that
is permitted under the Credit Agreement to any Person that is not a Pledgor,
or, upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 9.02 of
the Credit Agreement, the security interest in such Collateral shall be
automatically released.
<PAGE> 9
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(c) In connection with any termination or release pursuant to paragraph
(a) or (b), the Collateral Agent shall execute and deliver to any Pledgor, at
such Pledgor's expense, all documents that such Pledgor shall reasonably
request to evidence such termination or release. Any execution and delivery of
documents pursuant to this Section 14 shall be without recourse to or warranty
by the Collateral Agent.
SECTION 15. NOTICES. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given
to it in care of the Borrower at the address set forth in the Credit Agreement.
SECTION 16. FURTHER ASSURANCES. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any
time reasonably request in connection with the administration and enforcement
of this Agreement or with respect to the Collateral or any part thereof or in
order better to assure and confirm unto the Collateral Agent its rights and
remedies hereunder.
SECTION 17. BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any Pledgor that are
contained in this Agreement shall bind and inure to the benefit of its
successors and assigns. This Agreement shall become effective as to any Pledgor
when a counterpart hereof executed on behalf of such Pledgor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding
upon such Pledgor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of such Pledgor, the Collateral Agent
and the other Secured Parties, and their respective successors and assigns,
except that no Pledgor shall have the right to assign its rights hereunder or
any interest herein or in the Collateral (and any such attempted assignment
shall be void), except as expressly contemplated by this Agreement or the other
Loan Documents. In the event that a Pledgor (a) is designated as an
Unrestricted Subsidiary in accordance with the terms of the Credit Agreement or
(b) ceases to be a Subsidiary pursuant to a transaction permitted under the
Loan Documents, such Pledgor shall be released from its obligations under this
Agreement without further action. This Agreement shall be construed as a
separate agreement with respect to each Pledgor and may be amended, modified,
supplemented, waived or released with respect to any Pledgor without the
approval of any other Pledgor and without affecting the obligations of any
other Pledgor hereunder.
SECTION 18. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of
Letters of Credit by the Issuing Bank, regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as any Obligation remains unpaid and as long as the Commitments
have not been terminated or the L/C Exposure does not equal zero.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision
in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
<PAGE> 10
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SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute a single contract, and shall become
effective as provided in Section 17. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 21. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 22. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each Pledgor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement or the other Loan Documents, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 23. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 24. ADDITIONAL PLEDGORS. Pursuant to Section 5.12 of the Credit
Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Credit Agreement and each Unrestricted
Subsidiary that is designated as a Restricted Subsidiary is required to enter
in to this Agreement as a Subsidiary Pledgor upon becoming a Subsidiary Loan
Party. Upon execution and delivery by the Collateral Agent and a Subsidiary of
an instrument in the form of Annex 1, such Subsidiary shall become a Subsidiary
Pledgor hereunder with the same force and effect as if originally named as a
Subsidiary Pledgor herein. The execution and delivery of such instrument shall
not require the consent of any Pledgor hereunder. The rights and obligations of
each Pledgor hereunder shall remain in full force and effect notwithstanding
the addition of any new Subsidiary Pledgor as a party to this Agreement.
<PAGE> 11
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SECTION 25. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402
of the Uniform Commercial Code as in effect in the State of New York, each
Pledgor authorizes the Collateral Agent to file financing statements with
respect to the Collateral owned by it without the signature of such Pledgor in
such form and in such filing offices as the Collateral Agent reasonably
determines appropriate to perfect the security interests of the Collateral
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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AMERICAN MEDIA OPERATIONS, INC.
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Executive Officer
AMERICAN MEDIA, INC.,
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Executive Officer
EACH OF THE OTHER SUBSIDIARIES LISTED ON
SCHEDULE I HERETO,
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Executive Officer
THE CHASE MANHATTAN BANK, as Collateral
Agent,
By: /s/ Marian Schulman
------------------------------------
Name: Marian Schulman
Title: Vice President
<PAGE> 13
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
American Media Marketing, Inc.
Biocide, Inc.
Country Weekly, Inc.
Distribution Services, Inc.
Fairview Printing, Inc.
Frontline Markerting, Inc.
Health Xtra, Inc.
Marketing Services, Inc.
NDSI, Inc.
National Enquirer, Inc.
Retail Marketing Network, Inc.
SOM Publishing, Inc.
Star Editorial, Inc.
Weekly World News, Inc.
<PAGE> 14
Schedule II to the
Pledge Agreement
CAPITAL STOCK OR OTHER EQUITY INTERESTS
<TABLE>
<CAPTION>
Stock
Outstanding % Certificate
Issuer Owner Stock Category Owned Number
------ ----- ----------- -------- ----- -----------
<S> <C> <C> <C> <C> <C>
American Media American Media 7,507.58 Common Stock 100% 3
Operations, Inc. Inc.
American Media American Media 100 Common Stock 100% 1
Marketing, Inc. Operations,Inc.
Biocide, Inc. American Media 80 Common Stock 80% 1
Operations, Inc.
Country Weekly, American Media 100 Common Stock 100% 2
Inc. Operations, Inc.
Distribution American Media 5 Common Stock 100% 3
Services, Inc. Operations, Inc.
Fairview Printing, American Media 150 Common Stock 100% 3
Inc. Operations, Inc.
Frontline Marketing American Media 800 Series A 80% A-1
Inc. Operations, Inc. Preferred Stock
Health Xtra, Inc. American Media 100 Common Stock 100% 1
Inc. Operations, Inc.
Marketing Distribution 100 Common Stock 100% 2
Services, Inc. Services, Inc.
NDSI, Inc. American Media 150 Common Stock 100% 3
Inc. Operations, Inc.
National Enquirer, American Media 958,911 Common Stock 100% 16
Inc. Operations, Inc.
Retail Marketing Distribution 801 Common Stock 100% 1
Network, Inc. Services, Inc.
SOM Publishing American Media 50,000 Common Stock 100% 1
Inc. Operations, Inc.
Star Editorial, Inc. American Media 10 Common Stock 100% 2
Operations, Inc.
Weekly World American Media 8 Common Stock 100% 5
News, Inc. Operations, Inc.
</TABLE>
Debt Securities
$ 98,000 Note due from Lili Mahlab to FrontLine Marketing, Inc. at 11.25%
due September 18, 1999.
$147,000 Note due from Jefferson Myers to FrontLine Marketing at 11.25%
due September 18, 1999.
<PAGE> 15
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the PLEDGE
AGREEMENT dated as of [DATE], 1999, among AMERICAN MEDIA
OPERATIONS, INC., a Delaware corporation (the "BORROWER"),
AMERICAN MEDIA, INC., a Delaware corporation ("HOLDINGS") and
each subsidiary listed on Schedule I thereto (each such
subsidiary individually a "SUBSIDIARY PLEDGOR" and collectively,
the "SUBSIDIARY PLEDGORS"; the Borrower, Holdings and the
Subsidiary Pledgors are referred to herein individually as a
"PLEDGOR" and collectively as the "PLEDGORS") and THE CHASE
MANHATTAN BANK, a New York banking corporation ("CHASE"), as
collateral agent (in such capacity, the "COLLATERAL AGENT") for
the Secured Parties (as defined in the Security Agreement )
A. Reference is made to (a) the Credit Agreement dated as of [DATE],
1999 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among the Borrower, Holdings, the lenders from time to
time party thereto (the "LENDERS") and Chase, as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), and (b) the Guarantee
Agreement dated as of [DATE], 1999 (as amended, supplemented or otherwise
modified from time to time, the "GUARANTEE AGREEMENT") among Holdings, the
Subsidiary Pledgors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Pledge Agreement and the
Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan
Party that was not in existence or not a Subsidiary Loan Party on the date of
the Credit Agreement and each Unrestricted Subsidiary that is designated as a
Restricted Subsidiary is required to enter into the Pledge Agreement as a
Subsidiary Pledgor upon becoming a Subsidiary Loan Party. Section 24 of the
Pledge Agreement provides that such Subsidiaries may become Subsidiary Pledgors
under the Pledge Agreement by execution and delivery of an instrument in the
form of this Supplement. The undersigned Subsidiary (the "NEW PLEDGOR") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Subsidiary Pledgor under the Pledge Agreement in order to
induce the Lenders to make additional Loans and the Issuing Bank to issue
additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as
follows:
SECTION 1. In accordance with Section 24 of the Pledge Agreement, the
New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement
with the same force and effect as if originally named therein as a Pledgor and
the New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Pledgor
thereunder are true and correct on and as of the date hereof except to the
extent a representation and warranty expressly relates solely to a specific
date in which case such representation and warranty shall be true and correct
on such date. In furtherance of the foregoing, the New Pledgor, as security for
the payment and performance in full of the Obligations (as defined in the
Pledge Agreement), does hereby create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Pledgor's right, title and interest in and to the Collateral (as defined in the
Pledge Agreement) of the New Pledgor. Each reference to a "Subsidiary Pledgor"
or a "Pledgor" in the Pledge Agreement shall be deemed to include the New
Pledgor. The Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
<PAGE> 16
2
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that set
forth on Schedule I attached hereto is a true and correct schedule of all its
Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so
long as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 15 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it in
care of the Borrower as set forth in the Credit Agreement.
SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent
for its reasonable
<PAGE> 17
3
out-of-pocket expenses in connection with this Supplement, including the
reasonable fees, other charges and disbursements of counsel for the Collateral
Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.
[NAME OF NEW PLEDGOR],
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
By:
------------------------------------
Name:
Title:
<PAGE> 18
Schedule I to
Supplement No. [ ]
to the Pledge Agreement
PLEDGED SECURITIES OF THE NEW PLEDGOR
CAPITAL STOCK OR OTHER EQUITY INTERESTS
Number and Percentage
Class of Class of
Shares Shares
or Other or Other
Number of Registered Equity Equity
Issuer Certificate Owner Interests Interests
- ------ ----------- ---------- ----------- ----------
DEBT SECURITIES
Principal
Issuer Amount Date of Note Maturity Date
- ------ --------- ------------ -------------
<PAGE> 1
EXHIBIT 4.7
SECURITY AGREEMENT dated as of
May 7, 1999, among AMERICAN MEDIA
OPERATIONS, INC., a Delaware corporation
(the "BORROWER"), AMERICAN MEDIA, INC., a
Delaware corporation ("HOLDINGS"), each
subsidiary of Holdings listed on Schedule I
hereto (each such subsidiary individually a
"SUBSIDIARY" or a "GUARANTOR" and,
collectively, the "SUBSIDIARIES" or, with
Holdings, the "GUARANTORS"; the Guarantors
and the Borrower are referred to
collectively herein as the "GRANTORS") and
THE CHASE MANHATTAN BANK, a New York banking
corporation ("CHASE"), as collateral agent
(in such capacity, the "COLLATERAL AGENT")
for the Secured Parties (as defined herein).
Reference is made to (a) the Credit Agreement dated as of May 7, 1999
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrower, Holdings, the lenders from time to time party
thereto (the "LENDERS") and Chase, as administrative agent for the Lenders (in
such capacity, the "ADMINISTRATIVE AGENT") and (b) the Guarantee Agreement
dated as of May 7, 1999 (as amended, supplemented or otherwise modified from
time to time, the "GUARANTEE AGREEMENT"), among the Guarantors and the
Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Guarantors has agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit Agreement. The
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit are conditioned upon, among other things, the execution and
delivery by the Grantors of an agreement in the form hereof to secure (a) the
due and punctual payment by the Borrower of (i) the principal of and premium,
if any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all obligations
of the Borrower or any other Loan Party, monetary or otherwise, under each
Hedging Agreement entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Hedging Agreement was entered into and
(d) the due and punctual payment and performance of all obligations in respect
of overdrafts and related liabilities owed to the Administrative Agent or any
of its Affiliates and arising from treasury, depositary and cash management
services in connection with any automated clearing house transfers of funds
(all the monetary and other obligations described in the preceding clauses (a)
through (d) being collectively called the "OBLIGATIONS").
Accordingly, the Grantors and the Collateral Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
<PAGE> 2
2
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITION OF TERMS USED HEREIN. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall
have the meanings set forth in the Credit Agreement.
SECTION 1.02. DEFINITION OF CERTAIN TERMS USED HEREIN. As used herein,
the following terms shall have the following meanings:
"ACCOUNT DEBTOR" shall mean any Person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"ACCOUNTS" shall mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"ACCOUNTS RECEIVABLE" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities
and guarantees with respect thereto, including any rights to stoppage in
transit, replevin, reclamation and resales, and all related security interests,
liens and pledges, whether voluntary or involuntary, in each case whether now
existing or owned or hereafter arising or acquired.
"COLLATERAL" shall mean all (a) Accounts Receivable, (b) Documents,
(c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash
accounts, (g) Investment Property and (h) Proceeds.
"COMMODITY ACCOUNT" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"COMMODITY CONTRACT" shall mean a commodity futures contract, an
option on a commodity futures contract, a commodity option or any other
contract that, in each case, is (a) traded on or subject to the rules of a
board of trade that has been designated as a contract market for such a
contract pursuant to the federal commodities laws or (b) traded on a foreign
commodity board of trade, exchange or market, and is carried on the books of a
Commodity Intermediary for a Commodity Customer.
"COMMODITY CUSTOMER" shall mean a Person for whom a Commodity
Intermediary carries a Commodity Contract on its books.
"COMMODITY INTERMEDIARY" shall mean (a) a Person who is registered as
a futures commission merchant under the federal commodities laws or (b) a
Person who in the ordinary course of its business provides clearance or
settlement services for a board of trade that has been designated as a contract
market pursuant to federal commodities laws.
"COPYRIGHT LICENSE" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"COPYRIGHTS" shall mean all of the following: (a) all copyright rights
in any work subject to the copyright laws of the United States or any other
country, whether as author, assignee, transferee or otherwise, and (b) all
registrations and applications for registration of any such copyright in the
United States or any other country, including registrations, recordings,
supplemental registrations and pending applications for registration in the
United States Copyright Office, including those listed on Schedule II.
<PAGE> 3
3
"CREDIT AGREEMENT" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"DOCUMENTS" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
"ENTITLEMENT HOLDER" shall mean a Person identified in the records of
a Securities Intermediary as the Person having a Security Entitlement against
the Securities Intermediary. If a Person acquires a Security Entitlement by
virtue of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such
Person is the Entitlement Holder.
"EQUIPMENT" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including
tools, parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
"FINANCIAL ASSET" shall mean (a) a Security, (b) an obligation of a
Person or a share, participation or other interest in a Person or in property
or an enterprise of a Person, which is, or is of a type, dealt with in or
traded on financial markets, or which is recognized in any area in which it is
issued or dealt in as a medium for investment or (c) any property that is held
by a Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a Person's claim to it is
evidenced, including a certificated or uncertificated Security, a certificate
representing a Security or a Security Entitlement.
"FIXTURES" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"GENERAL INTANGIBLES" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, Hedging Agreements and other agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to any Grantor to secure payment by an Account Debtor of any
of the Accounts Receivable.
"INTELLECTUAL PROPERTY" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements
and accessions to, and books and records describing or used in connection with,
any of the foregoing.
"INVENTORY" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing
supplies and spare parts, and all such goods that have been returned to or
repossessed by or on behalf of any Grantor.
<PAGE> 4
4
"INVESTMENT PROPERTY" shall mean all Securities (whether certificated
or uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts and Commodity Accounts of any Grantor, whether now owned or hereafter
acquired by any Grantor.
"LICENSE" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof or entered into after the date hereof, which by
their terms prohibit assignment or a grant of a security interest by such
Grantor as licensee thereunder).
"OBLIGATIONS" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"PATENT LICENSE" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any
invention on which a Patent, now or hereafter owned by any Grantor or which any
Grantor otherwise has the right to license, is in existence, or granting to any
Grantor any right to make, use or sell any invention on which a Patent, now or
hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.
"PATENTS" shall mean all of the following: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including registrations, recordings and pending applications in
the United States Patent and Trademark Office or any similar offices in any
other country, including those listed on Schedule IV, and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions
thereof, and the inventions disclosed or claimed therein, including the right
to make, use and/or sell the inventions disclosed or claimed therein.
"PERFECTION CERTIFICATE" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
"PROCEEDS" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession
of any Collateral and any payment received from any insurer or other Person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include, (a) any claim of any Grantor against any third
party for (and the right to sue and recover for and the rights to damages or
profits due or accrued arising out of or in connection with) (i) past, present
or future infringement of any Patent now or hereafter owned by any Grantor, or
licensed under a Patent License, (ii) past, present or future infringement or
dilution of any Trademark now or hereafter owned by any Grantor or licensed
under a Trademark License or injury to the goodwill associated with or
symbolized by any Trademark now or hereafter owned by any Grantor, (iii) past,
present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (b) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Issuing Bank,
(c) the Administrative Agent, (d) the Collateral Agent, (e) each counterparty
to a Hedging Agreement entered into with the Borrower or any Loan Party if such
counterparty was a Lender (or an Affiliate of a Lender) at the time the Hedging
Agreement was entered into, (f) the beneficiaries of each indemnification
obligation undertaken by any Grantor under any Loan Document and (g) the
successors and assigns of each of the foregoing.
"SECURITIES" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
<PAGE> 5
5
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of
shares, participations, interests or obligations and (c)(i) are, or are of a
type, dealt with or traded on securities exchanges or securities markets or
(ii) are a medium for investment and by their terms expressly provide that they
are a security governed by Article 8 of the Uniform Commercial Code.
"SECURITIES ACCOUNT" shall mean an account to which a Financial Asset
is or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"SECURITY ENTITLEMENTS" shall mean the rights and property interests
of an Entitlement Holder with respect to a Financial Asset.
"SECURITY INTEREST" shall have the meaning assigned to such term in
Section 2.01.
"SECURITY INTERMEDIARY" shall mean (a) a clearing corporation or (b) a
Person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"TRADEMARK LICENSE" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
"TRADEMARKS" shall mean all of the following: (a) all trademarks,
service marks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, trade dress, logos, other source or
business identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office, any State of the United States or any
similar offices in any other country or any political subdivision thereof, and
all extensions or renewals thereof, including those listed on Schedule V, (b)
all goodwill associated therewith or symbolized thereby and (c) all other
assets, rights and interests that uniquely reflect or embody such goodwill.
SECTION 1.03. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
SECURITY INTEREST
SECTION 2.01. SECURITY INTEREST. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in, all of such Grantor's right, title and
interest in, to and under the Collateral (the "SECURITY INTEREST"). Without
limiting the foregoing, the Collateral Agent is hereby authorized to file one
or more financing statements (including fixture filings), continuation
statements, filings with the United States Patent and Trademark Office or
United States Copyright Office (or any successor office or any similar office
in any other country) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted
by each Grantor, without the signature of any Grantors, and naming any Grantor
or the Grantors as debtors and the Collateral Agent as secured party.
<PAGE> 6
6
SECTION 2.02. NO ASSUMPTION OF LIABILITY. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any
other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. TITLE AND AUTHORITY. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant
to the Collateral Agent the Security Interest in such Collateral pursuant
hereto and to execute, deliver and perform its obligations in accordance with
the terms of this Agreement, without the consent or approval of any other
Person other than any consent or approval which has been obtained.
SECTION 3.02. FILINGS. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection
Certificate, which are all the filings, recordings and registrations (other
than filings required to be made in the United States Patent and Trademark
Office and the United States Copyright Office in order to perfect the Security
Interest in Collateral consisting of United States Patents, Trademarks and
Copyrights) that are necessary to publish notice of and protect the validity of
and to establish a legal, valid and perfected security interest in favor of the
Collateral Agent (for the ratable benefit of the Secured Parties) in respect of
all Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law
with respect to the filing of continuation statements.
(b) Each Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property with respect to United States Patents and
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered Copyrights
have been delivered to the Collateral Agent for recording by the United States
Patent and Trademark Office and the United States Copyright Office pursuant to
35 U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C. Section 205 and the
regulations thereunder, as applicable, and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction, to protect the validity of and
to establish a legal, valid and perfected security interest in favor of the
Collateral Agent (for the ratable benefit of the Secured Parties) in respect of
all Collateral consisting of Patents, Trademarks and Copyrights in which a
security interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction (other than such actions as
are necessary to perfect the Security Interest with respect to any Collateral
consisting of Patents, Trademarks and Copyrights (or registration or application
for registration thereof) acquired or developed after the date hereof).
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SECTION 3.03. VALIDITY OF SECURITY INTEREST. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording
or registering a financing statement or analogous document in the United States
(or any political subdivision thereof) and its territories and possessions
pursuant to the Uniform Commercial Code or other applicable law in such
jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected upon the receipt and
recording of this Agreement with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable. The Security Interest is
and shall be prior to any other Lien on any of the Collateral, other than
Permitted Encumbrances that have priority over the Security Interest by
operation of law.
SECTION 3.04. ABSENCE OF OTHER LIENS. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office
or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant
to Section 6.02 of the Credit Agreement.
ARTICLE IV
COVENANTS
SECTION 4.01. CHANGE OF NAME; LOCATION OF COLLATERAL; RECORDS; PLACE
OF BUSINESS. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating
to Collateral owned by it or any office or facility at which Collateral owned
by it is located (including the establishment of any such new office or
facility), (iii) in its identity or corporate structure or (iv) in its Federal
Taxpayer Identification Number. Each Grantor agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Collateral Agent to continue at all times following such change to have a
valid, legal and perfected first priority security interest in all the
Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by such Grantor is damaged or
destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect
to any part of the Collateral, and, at such time or times as the Collateral
Agent may reasonably request, promptly to prepare and deliver to the Collateral
Agent a duly certified schedule or schedules in form and detail satisfactory to
the Collateral Agent showing the identity, amount and location of any and all
Collateral.
SECTION 4.02. PROTECTION OF SECURITY. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien
not expressly permitted pursuant to Section 6.02 of the Credit Agreement.
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SECTION 4.03. FURTHER ASSURANCES. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; PROVIDED,
HOWEVER, that any Grantor shall have the right, exercisable within 10 days
after it has been notified by the Collateral Agent of the specific
identification of such Collateral, to advise the Collateral Agent in writing of
any inaccuracy of the representations and warranties made by such Grantor
hereunder with respect to such Collateral. Each Grantor agrees that it will use
its best efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Collateral Agent of the specific identification of such Collateral.
SECTION 4.04. INSPECTION AND VERIFICATION. The Collateral Agent and
such Persons as the Collateral Agent may reasonably designate shall have the
right, at the Grantors' own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantors' affairs with the officers of the Grantors and to verify under
reasonable procedures the validity, amount, quality, quantity, value, condition
and status of, or any other matter relating to, the Collateral, including, in
the case of Accounts or Collateral in the possession of any third person, by
contacting Account Debtors or the third person possessing such Collateral for
the purpose of making such a verification. The Collateral Agent shall have the
absolute right to share any information it gains from such inspection or
verification with any Secured Party.
SECTION 4.05. TAXES; ENCUMBRANCES. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted pursuant to Section 6.02 of the Credit Agreement, and may pay
for the maintenance and preservation of the Collateral, in each case to the
extent any Grantor fails to do so as required by the Credit Agreement or this
Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; PROVIDED, HOWEVER,
that nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or
any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.
SECTION 4.06. ASSIGNMENT OF SECURITY INTEREST. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other Person to secure payment and performance of an Account, such Grantor
shall promptly assign such security interest to the Collateral Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other Person granting the security interest.
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SECTION 4.07. CONTINUING OBLIGATIONS OF THE GRANTORS. Each Grantor
shall remain liable to observe and perform all the conditions and obligations
to be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.08. USE AND DISPOSITION OF COLLATERAL. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except
as expressly permitted by Section 6.02 of the Credit Agreement. None of the
Grantors shall make or permit to be made any transfer of the Collateral and
each Grantor shall remain at all times in possession of the Collateral owned by
it, except that (a) Inventory may be sold in the ordinary course of business
and (b) unless and until the Collateral Agent shall notify the Grantors that an
Event of Default shall have occurred and be continuing and that during the
continuance thereof the Grantors shall not sell, convey, lease, assign,
transfer or otherwise dispose of any Collateral (which notice may be given by
telephone if promptly confirmed in writing), the Grantors may use and dispose
of the Collateral in any lawful manner not inconsistent with the provisions of
this Agreement, the Credit Agreement or any other Loan Document. Without
limiting the generality of the foregoing, each Grantor agrees that it shall not
permit any Inventory to be in the possession or control of any warehouseman,
bailee, agent or processor at any time unless such warehouseman, bailee, agent
or processor shall have been notified of the Security Interest and shall have
agreed in writing to hold the Inventory subject to the Security Interest and
the instructions of the Collateral Agent and to waive and release any Lien held
by it with respect to such Inventory, whether arising by operation of law or
otherwise.
SECTION 4.09. LIMITATION ON MODIFICATION OF ACCOUNTS. None of the
Grantors will, without the Collateral Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts Receivable, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any Person liable for the payment thereof or allow any credit
or discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged.
SECTION 4.10. INSURANCE. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage
to the Inventory and Equipment in accordance with Section 5.07 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
In the event that any Grantor at any time or times shall fail to obtain or
maintain any of the policies of insurance required hereby or to pay any premium
in whole or part relating thereto, the Collateral Agent may, without waiving or
releasing any obligation or liability of the Grantors hereunder or any Event of
Default, in its sole discretion, obtain and maintain such policies of insurance
and pay such premium and take any other actions with respect thereto as the
Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in
connection with this Section 4.11, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby.
<PAGE> 10
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SECTION 4.11. LEGEND. Upon the request of the Collateral Agent, each
Grantor shall legend, in form and manner satisfactory to the Collateral Agent,
its Accounts Receivable and its books, records and documents evidencing or
pertaining thereto with an appropriate reference to the fact that such Accounts
Receivable have been assigned to the Collateral Agent for the benefit of the
Secured Parties and that the Collateral Agent has a security interest therein.
SECTION 4.12. COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT
COLLATERAL. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which
is material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such
Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary
and sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office
or any court or similar office of any country) regarding such Grantor's
ownership of any Patent, Trademark or Copyright, its right to register the
same, or to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark
or Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or
any office or agency in any political subdivision of the United States or in
any other country or any political subdivision thereof, unless it promptly
informs the Collateral Agent, and, upon request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may request to evidence and perfect the Collateral
Agent's security interest in such Patent, Trademark or Copyright, and each
Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute
and file such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct
of any Grantor's business, including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third parties.
<PAGE> 11
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(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or
approvals from the licensor of each Copyright License, Patent License or
Trademark License to effect the assignment of all of such Grantor's right,
title and interest thereunder to the Collateral Agent or its designee.
ARTICLE V
POWER OF ATTORNEY
Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent and attorney-in-fact,
and in such capacity the Collateral Agent shall have the right, with power of
substitution for each Grantor and in each Grantor's name or otherwise, for the
use and benefit of the Collateral Agent and the Secured Parties, upon the
occurrence and during the continuance of an Event of Default (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof; (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (c) to sign the
name of any Grantor on any invoice or bill of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to any Account
Debtor; (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (f) to settle, compromise, compound, adjust or
defend any actions, suits or proceedings relating to all or any of the
Collateral; (g) to notify, or to require any Grantor to notify, Account Debtors
to make payment directly to the Collateral Agent; and (h) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Collateral, and to do all other acts and things necessary to
carry out the purposes of this Agreement, as fully and completely as though the
Collateral Agent were the absolute owner of the Collateral for all purposes;
PROVIDED, HOWEVER, that nothing herein contained shall be construed as
requiring or obligating the Collateral Agent or any Secured Party to make any
commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent or any Secured Party, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or
any property covered thereby, and no action taken or omitted to be taken by the
Collateral Agent or any Secured Party with respect to the Collateral or any
part thereof shall give rise to any defense, counterclaim or offset in favor of
any Grantor or to any claim or action against the Collateral Agent or any
Secured Party. It is understood and agreed that the appointment of the
Collateral Agent as the agent and attorney-in-fact of the Grantors for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Section shall in no event relieve any Grantor of any of its
obligations hereunder or under any other Loan Document with respect to the
Collateral or any part thereof or impose any obligation on the Collateral Agent
or any Secured Party to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further right which it
may have on the date of this Agreement or hereafter, whether hereunder, under
any other Loan Document, by law or otherwise.
<PAGE> 12
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ARTICLE VI
REMEDIES
SECTION 6.01. REMEDIES UPON DEFAULT. Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each
item of Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine
(other than in violation of any then-existing licensing arrangements to the
extent that waivers cannot be obtained), and (b) with or without legal process
and with or without prior notice or demand for performance, to take possession
of the Collateral and without liability for trespass to enter any premises
where the Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights afforded
to a secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each
such purchaser at any such sale shall hold the property sold absolutely, free
from any claim or right on the part of any Grantor, and each Grantor hereby
waives (to the extent permitted by law) all rights of redemption, stay and
appraisal which such Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York
or its equivalent in other jurisdictions) of the Collateral Agent's intention
to make any sale of Collateral. Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or
portion thereof, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix and state in
the notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until the sale price
is paid by the purchaser or purchasers thereof, but the Collateral Agent shall
not incur any liability in case any such purchaser or purchasers shall fail to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may be sold again upon like notice. At any public (or, to the
extent permitted by law, private) sale made pursuant to this Section, any
Secured Party may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of any
<PAGE> 13
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Grantor (all said rights being also hereby waived and released to the extent
permitted by law), the Collateral or any part thereof offered for sale and may
make payment on account thereof by using any Obligation then due and payable to
such Secured Party from any Grantor as a credit against the purchase price, and
such Secured Party may, upon compliance with the terms of sale, hold, retain
and dispose of such property without further accountability to any Grantor
therefor. For purposes hereof a written agreement to purchase the Collateral or
any portion thereof shall be treated as a sale thereof; the Collateral Agent
shall be free to carry out such sale pursuant to such agreement and no Grantor
shall be entitled to the return of the Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court
or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
SECTION 6.02. APPLICATION OF PROCEEDS. The Collateral Agent shall
apply the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all
advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the
amounts so applied to be distributed among the Secured Parties pro
rata in accordance with the amounts of the Obligations owed to them on
the date of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or
hereafter acquired by such Grantor, and wherever the same may be located, and
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 software and
programs used for the compilation or printout thereof. The use of such license
by the Collateral Agent shall be exercised, at the option of the Collateral
Agent, upon the occurrence and during the continuation of an Event of Default;
PROVIDED that any license, sub-license or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to any Guarantor shall be given to it at its address or
telecopy number set forth on Schedule I, with a copy to the Borrower.
SECTION 7.02. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans and
the issuance of Letters of Credit by the Issuing Bank, and the execution and
delivery to the Lenders of any notes evidencing such Loans, regardless of any
investigation made by the Lenders or on their behalf, and shall continue in
full force and effect until this Agreement shall terminate.
SECTION 7.04. BINDING EFFECT; SEVERAL AGREEMENT. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their
respective successors and assigns, except that no Grantor shall have the right
to assign or transfer its rights or obligations hereunder or any interest
herein or in the Collateral (and any such assignment or transfer shall be void)
except as expressly contemplated by this Agreement or the Credit Agreement.
This Agreement shall be construed as a separate agreement with respect to each
Grantor and may be amended, modified, supplemented, waived or released with
respect to any Grantor without the approval of any other Grantor and without
affecting the obligations of any other Grantor hereunder.
SECTION 7.05. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Grantor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 7.06. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which the Collateral Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from or other realization upon any of the Collateral,
<PAGE> 15
15
(iii) the exercise, enforcement or protection of any of the rights of the
Collateral Agent hereunder or (iv) the failure of any Grantor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor jointly and severally agrees to indemnify
the Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
hereto or to the Collateral, whether or not any Indemnitee is a party thereto;
PROVIDED that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Collateral Agent or any Lender. All amounts due under this Section 7.06
shall be payable on written demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Administrative Agent and the Lenders under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Loan Document or consent to any departure by any Grantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on any Grantor in any case shall entitle such Grantor or any other
Grantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect
to which such waiver, amendment or modification is to apply, subject to any
consent required in accordance with Section 9.02 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.09.
<PAGE> 16
16
SECTION 7.10. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section
7.04), and shall become effective as provided in Section 7.04. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
SECTION 7.12. HEADINGS. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 7.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
the Collateral Agent, the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Agreement or the other Loan
Documents against any Grantor or its properties in the courts of any
jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affected the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 7.14. TERMINATION. This Agreement and the Security Interest
shall terminate when all the Obligations have been indefeasibly paid in full
and the Lenders have no further commitment to lend under the Credit Agreement,
the L/C Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement, at which time
the Collateral Agent shall execute and deliver to the Grantors, at the
Grantors' expense, all Uniform Commercial Code termination statements and
similar documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
<PAGE> 17
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pursuant to this Section 7.14 shall be without recourse to or warranty by the
Collateral Agent. A Grantor shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Grantor shall be automatically released in the event that (a) such Grantor is
designated as an Unrestricted Subsidiary in accordance with the terms of the
Credit Agreement or (b) such Grantor ceases to be a Subsidiary pursuant to a
transaction permitted under the Loan Documents.
SECTION 7.15. ADDITIONAL GRANTORS. Pursuant to Section 5.12 of the
Security Agreement, each Subsidiary Loan Party that was not in existence or not
a Subsidiary Loan Party on the date of the Credit Agreement and each
Unrestricted Subsidiary that is designated as a Restricted Subsidiary is
required to enter in to this Agreement as a Grantor upon becoming a Subsidiary
Loan Party. Upon execution and delivery by the Collateral Agent and a
Subsidiary of an instrument in the form of Annex 3 hereto, such Subsidiary
shall become a Grantor hereunder with the same force and effect as if
originally named as a Grantor herein. The execution and delivery of any such
instrument shall not require the consent of any Grantor hereunder. The rights
<PAGE> 18
18
and obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AMERICAN MEDIA OPERATIONS, INC.
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Financial Officer
AMERICAN MEDIA, INC.,
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Financial Officer
EACH OF THE OTHER GUARANTORS LISTED ON
SCHEDULE I HERETO,
By: /s/ Peter A. Nelson
------------------------------------
Name: Peter A. Nelson
Title: Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK, as Collateral
Agent,
By: /s/ Marian Schulman
------------------------------------
Name: Marian Schulman
Title: Vice President
<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
(DAVID J. PECKER)
EMPLOYMENT AGREEMENT (the "Agreement") dated February 16, 1999
by and between EMP Acquisition Corp., a Delaware corporation ("Newco") and David
J. Pecker (the "Executive").
WHEREAS, Newco and America Media, Inc. ("AMI") are entering
into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
Newco will merge with and into AMI (the "Merger"), with AMI constituting the
surviving corporation (such surviving corporation is hereinafter referred to as
the "Company");
WHEREAS, Newco desires that, upon the consummation of the
Merger, the Company employ Executive and to enter into an agreement embodying
the terms of such employment and Executive desires to accept such employment
with the Company and enter into such an agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein and for other good and valuable consideration, the parties
agree as follows:
1. EFFECTIVENESS/TERM OF EMPLOYMENT.
a. EFFECTIVENESS. Notwithstanding any other provision
of this Agreement, this Agreement shall become effective only upon the
consummation of the Merger and the occurrence of the Effective Time (as defined
in the Merger Agreement) (such date being hereinafter referred to as the
"Effective Date"), at which time, this Agreement shall constitute a binding
obligation of the Company as the surviving corporation in the Merger and all
references to Holding Company in the operative provisions of this Agreement
shall be deemed to be references to the Company. In the event the Merger
Agreement is terminated for any reason without the Effective Time having
occurred, this Agreement shall be terminated without further obligation or
liability of either party; PROVIDED that the obligations of EMP Group L.L.C., a
Delaware limited liability company ("Holding Company") under Section 4 shall
survive any such termination.
b. EMPLOYMENT TERM. Subject to the provisions of
Section 8 of this Agreement, Executive shall be employed by the Company for a
period commencing on the Effective Date and ending on the fifth anniversary of
the Effective Date (the "Employment Term") on the terms and subject to the
conditions set forth in this Agreement. Notwithstanding the preceding sentence,
commencing with the first day after the fifth anniversary of the Effective Date
and on each one year anniversary of such date thereafter (each an "Extension
Date"), the Employment Term shall be automatically extended for an additional
one-year period, unless the Company or Executive provides the other party hereto
60 days' prior written notice before the next Extension Date that the Employment
Term shall not be so extended. For the avoidance of doubt, the term "Employment
Term" shall include any extension that becomes applicable pursuant to the
preceding sentence.
<PAGE> 2
2
2. POSITION.
a. During the Employment Term, Executive shall serve
as the Company's Chairman, Chief Executive Officer and President. In such
position, Executive shall report to the Board of Directors of the Company (the
"Board") and shall have duties, responsibilities and authority commensurate with
his position as Chairman, Chief Executive Officer and President of the Company,
subject to reasonable and customary oversight and review by the Board; PROVIDED
that it is understood that:
(i) Executive will be responsible for the supervision of, and
the setting of compensation and employment and termination decisions
with respect to, employees of the Company; PROVIDED that, except as
otherwise expressly provided in this Section 2(a), any compensation and
employment and termination decisions with respect to the senior
executives identified on Schedule I hereto and with respect to any
other senior executives of the Company with reasonably comparable
positions, status or responsibilities (the "Senior Management Group")
shall be subject to the unanimous approval of the Compensation
Committee which shall be comprised of Executive and Austin Beutner (or
in the event of Mr. Beutner's death or incapacity, another
representative of Evercore Partners, Inc.); and
(ii) while the day-to-day ordinary course operations of the
Company will be managed by Executive without the requirement for
approval of the Board (x) the Board (in consultation with Executive)
shall establish the Company's overall strategic direction, business
plan and annual budget and (y) Board approval shall be required prior
to Executive's (A) changing the cover price of any magazine, (B) making
material changes to discounts or other pricing terms with wholesalers
or other distributors and (C) entering into of any contracts which are
material and out of the ordinary course of business.
Notwithstanding the provisions of clause (i) of this Section
2(a), Executive shall be permitted, in Executive's sole discretion and without
seeking approval of the Compensation Committee, to award any member(s) of the
Senior Management Group special bonuses not exceeding $100,000 in the aggregate
in any calendar year for all such members of the Senior Management Group;
PROVIDED, HOWEVER, that no more than $25,000 may be awarded to any single member
of the Senior Management Group in any calendar year (the "Special Bonuses");
PROVIDED, FURTHER, that the aggregate amount of any such Special Bonuses shall
reduce the Management Bonus Pool (as defined in Section 5(c)) with respect to
such calendar year.
b. During the Employment Term, Executive will devote
his full business time and best efforts to the performance of his duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would materially conflict with the rendition
of such services either directly or indirectly, without the prior written
consent of the Board; PROVIDED that nothing herein shall preclude Executive from
continuing to serve on the board of directors or trustees of any business
corporation or any
<PAGE> 3
3
charitable organization on which he currently serves and which is identified on
Exhibit A hereto or, subject to the prior approval of the Board (which approval
shall not be unreasonably withheld), from accepting appointment to any
additional directorships or trusteeships, provided in each case, and in the
aggregate, that such activities do not materially interfere with the performance
of Executive's duties hereunder or conflict with Section 9.
3. BASE SALARY. During the Employment Term, the Company shall
pay Executive a base salary (the "Base Salary") at the annual rate of
$1,500,000, payable in regular installments in accordance with the Company's
usual payment practices. Executive shall be entitled to such increases in his
Base Salary, if any, as may be determined from time to time in the sole
discretion of the Board.
4. MAKE-WHOLE BONUS PAYMENTS.
a. Subject to the provisions of this Section 4,
Executive shall be entitled to receive from Holding Company payments in the
amounts set forth on Schedule II hereto (the "Make-Whole Payments"). The
Make-Whole Payments will become payable only following the occurrence of
Executive's termination of employment with his current employer and only to the
extent not already paid by his current employer and will be made as follows: (i)
upon Executive's termination of employment with his current employer, an amount
sufficient on an after-tax basis to repay Executive's Advance (as defined on
Schedule II) and (ii) on April 15, 2000, the remaining portion of the Make-Whole
Payments (the "Remaining Portion"); PROVIDED that in the event the Merger
Agreement is terminated without the Effective Time having occurred and in
connection therewith (x) Holding Company or any members of Holding Company (or
any of their affiliates) receives payment of a break-up fee from AMI or (y)
Holding Company realizes any net profits prior to April 15, 2000 available for
distribution to its members from the purchase of stock pursuant to the Voting
Agreement dated February 15, 1999 between Newco and the Stockholders named
therein and the subsequent sale of such stock (the "Net Profits"), then in lieu
of payment of the Remaining Portion on April 15, 2000, Holding Company shall pay
Executive, out of the proceeds of such break-up fee or Net Profits, as
applicable, the discounted present value of the Remaining Portion (calculated as
of the date of such payment using a discount rate equal to the Reference Rate as
announced from time to time by the New York City branch of The Chase Manhattan
Bank or any successor thereto as of such date of payment).
b. Notwithstanding the provisions of Section 4(a):
(I) If (x) Executive's employment hereunder is
terminated prior to April 15, 2000 due to Executive's voluntarily resignation
without Good Reason pursuant to Section 8(a) or the Company's termination of
Executive's employment for Cause pursuant to Section 8(a), or (y) if Executive
fails to commence employment with the Company on the Effective Date, other than
due to his death or his physical or mental incapacity rising to the level of a
"Disability" as hereinafter defined, then any unpaid portion of the Make-Whole
Payments will be forfeited and Executive will promptly, but in any event within
30 days of such termination, repay to
<PAGE> 4
4
Holding Company any portion of the Make-Whole Payments previously paid pursuant
to Section 4(a) above; and
(II) If all or any portion of the Make-Whole Payments
become payable and the Merger Agreement is terminated for any reason without the
Effective Time having occurred, then Executive shall be required to make a good
faith effort to obtain employment commensurate with his skills and background
and Executive's entitlement to the Make-Whole Payments paid or payable pursuant
to Section 4(a) above will be mitigated, and reduced dollar for dollar, by the
present value of any compensation in excess of $1,500,000 per year earned by
Executive through December 31, 1999 (regardless of when actually paid and
whether paid in cash or other property) from any alternative employment or
consulting arrangement. Executive shall provide documentation satisfactory to
the Company of any such compensation. To the extent any portion of the
Make-Whole Payments is paid to Executive and is subsequently determined to have
been subject to mitigation, Executive shall promptly, but in any event within 30
days of such determination, refund such portion of the Make-Whole Payment to
Holding Company. For purposes of the calculation described in this clause (II),
the following amounts paid or provided in consideration of Executive's providing
employment or consulting services to another person or entity shall be deemed
earned through December 31, 1999:
(A) with respect to any options granted to Executive that vest
through December 31, 1999, the pro-rata portion of the Black-Scholes
value of such options, based on the portion of 1999 Executive is
actually employed or retained to provide such consulting services;
(B) with respect to any options granted to Executive in 1999
(or granted in subsequent years pursuant to an enforceable agreement
entered into in 1999, except to the extent such agreed upon future
grants are consistent with the new employer's or service recipient's
ordinary course option grants to other senior executives or consultants
for services rendered over a commensurate future period of service
after calendar year 1999) which vest after December 31, 1999, a
pro-rata portion of the Black-Scholes value of such options, based upon
the percentage of the period from the date of Executive's commencement
of such employment or provision of such consulting services to the
vesting date of such options that occurs during calendar year 1999
(e.g., if Executive commenced such employment on June 30, 1999 and
received options which vested on December 31, 2000, 33.3% of the
Black-Scholes value of the options would be taken into account).
(C) the pro-rata portion (as determined above) of any long
term bonus ultimately paid to Executive that is attributable to
employment or consulting services performed in 1999;
(D) any short term bonus that is attributable to employment in
1999; and
<PAGE> 5
5
(E) base salary earned through December 31, 1999. In no event
shall bona fide pension, welfare or fringe benefits be taken into
account for purposes of this calculation.
5. OTHER BONUS ARRANGEMENTS.
a. DEFERRED SALARY BONUS. Within 30 days following
the occurrence of the Effective Date, the Company shall pay Executive a one-time
deferred salary bonus in the amount equal to the PRODUCT obtained by multiplying
(x) $1,500,000 TIMES (y) the QUOTIENT obtained by dividing (A) the number of
days that occur between the effective date of Executive's termination of
employment with Hachette Filipacchi Magazines, Inc. and its affiliates and the
Effective Date BY (B) 365.
b. ONE-TIME SIGNING BONUS. No later than June 30,
1999, the Company shall pay Executive a special one time signing bonus in the
amount of $250,000.
c. BONUS POOL FOR OTHER EXECUTIVES. The Company shall
establish an annual bonus pool for Company employees (excluding Executive) of
$1,500,000 for 1999 and 1.5% of EBITDA for years thereafter (the "Management
Bonus Pool"), subject in each case, to reduction by the amount of any Special
Bonuses awarded with respect to the applicable year pursuant to Section 2(a).
Payment of any bonuses shall be contingent upon satisfaction of reasonable
performance goals established by the Board in consultation with Executive.
6. EMPLOYEE BENEFITS. During the Employment Term, Executive
shall be provided, in accordance with the terms of the Company's employee
benefit plans as in effect from time to time, customary health insurance and
short term and long term disability insurance, retirement benefits and fringe
benefits (collectively "Employee Benefits") on the same basis as those benefits
are generally made available to other senior executives of the Company,
including a customary long-term disability plan for senior executives. Executive
shall be provided with six weeks of paid vacation per year.
7. BUSINESS EXPENSES.
a. EXPENSES. During the Employment Term, reasonable
business expenses incurred by Executive in the performance of his duties
hereunder (including, without limitation, those expenses set forth on Schedule
III hereto) shall be reimbursed by the Company in accordance with Company
policies to be established by Executive, subject to approval by the Board.
b. SPECIFIC AGREEMENTS REGARDING EXPENSES. Without
limiting the generality of Section 7(a), Executive shall be entitled to (i)
reimbursement for business travel expenses (including first class travel), (ii)
reimbursement for the cost of cellular and home
<PAGE> 6
6
business telecommunication lines, (iii) use of a leased luxury car, including a
driver, (iv) reasonable tax and investment management services up to an annual
maximum of $30,000 for such services and (v) a tax gross-up payment with respect
to items in clauses (i) through (iv) above (and the items set forth on Schedule
III) to the extent necessary to offset any income taxes incurred by Executive
with respect to such items.
c. RELOCATION EXPENSES. If the Company and Executive
mutually agree that Executive relocate to Florida, the Company shall reimburse
Executive for all reasonable costs incurred in connection with the moving of his
household goods and possessions from Executive's existing home in Connecticut to
Florida, up to a maximum of $20,000.
8. TERMINATION. Notwithstanding any other provision of this
Agreement, Executive's entitlement to compensation and benefits following the
termination of Executive's employment with the Company for any reason shall be
limited to that set forth in this Section 8 as follows:
a. BY THE COMPANY FOR CAUSE OR BY EXECUTIVE
RESIGNATION WITHOUT GOOD REASON.
(i) The Employment Term and Executive's employment
hereunder may be terminated by the Company for Cause (as defined below) or by
Executive's resignation without Good Reason (as defined in Section 8(c));
PROVIDED that Executive will be required to give the Company at least 30 days
advance written notice of a resignation without Good Reason.
(ii) For purposes of this Agreement, "Cause" shall
mean (i) Executive's conviction of, or plea of guilty or NOLO CONTENDERE to, any
felony which materially adversely affects the Company, (ii) Executive's wilful
or gross misconduct in the performance of duties owed to the Company that is
intended to materially adversely affect the Company or that Executive knew or
should have known would have such effect or (iii) Executive's wilful refusal or
wilful failure to substantially perform Executive's essential duties to the
Company (other than due to Executive's illness); PROVIDED that prior to any
termination pursuant to this clause (iii), (A) the Company must provide
Executive with written notice specifically identifying the reasons the Company
believes this clause (iii) is applicable and (B) Executive must have continued
to wilfully refuse or wilfully fail to perform such essential duties for a 30
day period following receipt of such notice; and PROVIDED further that it is
understood this clause (iii) shall not permit the Company to terminate
Executive's employment for Cause because of dissatisfaction with the quality of
services provided by, or disagreement with the actions taken by, Executive in
the good faith performance of Executive's duties to the Company. Any act or
inaction believed in good faith by Executive to be in the best interests of the
Company shall not be considered "wilful" for purposes of this Agreement.
(iii) If Executive's employment is terminated by the
Company for Cause,
<PAGE> 7
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or if Executive resigns without Good Reason, Executive shall be entitled to
receive (x) the Base Salary through the date of termination and (y) such
Employee Benefits, if any, as to which Executive may be entitled under the
employee benefit plans of the Company. Following such termination of Executive's
employment by the Company for Cause or resignation by Executive without Good
Reason, except as set forth in this Section 8(a), Executive shall have no
further rights to any compensation or any other benefits under this Agreement.
b. DISABILITY OR DEATH.
(i) The Employment Term and Executive's employment
hereunder shall terminate upon his death and if Executive becomes physically or
mentally incapacitated and is therefore unable for a period of 180 consecutive
days or for an aggregate of 270 days in any 720 consecutive days period to
perform his duties (such incapacity is hereinafter referred to as "Disability").
Any question as to the existence of the Disability of Executive as to which
Executive and the Company cannot agree shall be determined in writing by a
qualified independent physician mutually acceptable to Executive and the
Company. If Executive and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination
of Disability made in writing to the Company and Executive shall be final and
conclusive for all purposes of the Agreement.
(ii) Upon termination of Executive's employment
hereunder for either Disability or death, Executive or his estate (as the case
may be) shall be entitled to receive (x) the Base Salary through the date of
termination, (y) any unpaid portion of the Make-Whole Payments to the extent
expressly provided pursuant to Section 4 and (z) such Employee Benefits, if any,
as to which he may be entitled under the employee benefit plans and arrangements
of the Company. Following such termination of Executive's employment due to
death or Disability, except as set forth in this Section 8(b), Executive shall
have no further rights to any compensation or any other benefits under this
Agreement.
c. BY THE COMPANY WITHOUT CAUSE OR RESIGNATION BY
EXECUTIVE FOR GOOD REASON.
(i) The Employment Term and Executive's employment
hereunder may be terminated by the Company without Cause or by Executive's
resignation for Good Reason.
(ii) For purposes of this Agreement, "Good Reason"
shall mean any of the following actions that is not cured within 30 days of
written notice by Executive to the Company that specifies the grounds for Good
Reason:
(A) the assignment of any duties materially
inconsistent with Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by this Agreement or any other action by the Company which
<PAGE> 8
8
results in a substantial diminution in such position, authority, duties or
responsibilities;
(B) any reduction in the Base Salary or the Employee
Benefits guaranteed pursuant to Section 6;
(C) the Company's requiring Executive to be based at
any office or location other than one in South Florida, Fairfield County,
Connecticut or the New York metropolitan area;
(D) any failure by the Company to have any successor
to the Company assume this Agreement by operation of law or otherwise; or
(E) the Company's failure to make available the
minimum amount of the Management Bonus Pool as set forth in Section 5, subject
to meeting the applicable performance goals associated therewith.
(iii) If Executive's employment is terminated by the
Company without Cause (other than by reason of death or Disability) or if
Executive resigns for Good Reason, Executive shall be entitled to receive:
(A) Until the later of (x) twelve (12) months
following such termination and (y) the scheduled expiration of the Employment
Term (determined without regard to Executive's termination of employment but
excluding any further extensions of the Employment Term) (I) continued payment
of the Base Salary; and (II) continued health, life insurance and disability
benefits;
(B) Immediate vesting of all nonvested plan benefits
(or a cash payment in lieu thereof), including immediate vesting/exercisability
of any stock options and other equity-based compensation of the Company;
(C) Outplacement services for twelve (12) months
following such termination; and
(D) In the event of a Change of Control (as defined
below), a golden parachute excise tax gross-up payment (the "Parachute
Gross-Up"), if applicable (i.e, the payment of an amount, on an after-tax basis,
necessary to make Executive whole for any excise taxes incurred by Executive
pursuant to Section 4999 of the Internal Revenue Code in connection with such
Change of Control), up to a maximum of $4,800,000, it being agreed that the
calculation and payment of the Parachute Gross-Up shall be subject to the
provisions of Exhibit B hereto;
<PAGE> 9
9
(E) Any unpaid portion of the Make-Whole Payments to
the extent expressly provided pursuant to Section 4; and
(F) such Employee Benefits, if any, as to which
Executive may be entitled under the employee benefit plans and arrangements of
the Company.
Upon termination of Executive's employment by the
Company without Cause (other than by reason of Executive's death or Disability)
or by Executive's resignation for Good Reason, except as set forth in this
Section 8(c), Executive shall have no further rights to any compensation or any
other benefits under this Agreement.
(iv) "Change of Control" shall mean any transaction
or series of transactions described in Section 280G(b)(2)(A)(i) of the Code or
any successor provision thereto, or the applicable final, temporary or proposed
regulations thereunder.
d. EXPIRATION OF EMPLOYMENT TERM.
(i) ELECTION NOT TO EXTEND THE EMPLOYMENT TERM. In
the event either party elects not to extend the Employment Term pursuant to
Section 1, unless Executive's employment is earlier terminated pursuant to
paragraphs (a), (b) or (c) of this Section 8, Executive's termination of
employment hereunder (whether or not Executive continues as an employee of the
Company thereafter) shall be deemed to occur on the close of business on the day
immediately preceding the next scheduled Extension Date and Executive shall be
entitled to receive (x) the Base Salary through the date of such termination
hereunder and (y) such Employee Benefits, if any, as to which he may be entitled
under the employee benefit plans and arrangements of the Company. Following such
termination of Executive's employment hereunder as a result of either party's
election not to extend the Employment Term, except as set forth in this Section
8(d)(i), Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
(ii) CONTINUED EMPLOYMENT BEYOND THE EXPIRATION OF
THE EMPLOYMENT TERM. Unless the parties otherwise agree in writing, continuation
of Executive's employment with the Company beyond the expiration of the
Employment Term shall be deemed an employment at will and shall not be deemed to
extend any of the provisions of this Agreement and Executive's employment may
thereafter be terminated at will by either Executive or the Company; PROVIDED
that the provisions of Sections 9, 10 and 11 of this Agreement shall survive any
termination of this Agreement or Executive's termination of employment
hereunder.
e. NOTICE OF TERMINATION. Any purported termination
of employment by the Company or by Executive (other than due to Executive's
death) shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 12(h) hereof. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall
<PAGE> 10
10
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provision so indicated.
9. NON-COMPETITION; NON-SOLICITATION. Executive acknowledges
and recognizes the highly competitive nature of the businesses of the Company
and its affiliates and accordingly agrees as follows:
a. During the Employment Term and for a period of
twelve (12) months following Executive's termination of employment with the
Company for any reason or, if Executive fails to commence employment with the
Company on the Effective Date, other than due to his death or physical or mental
incapacity rising to the level of a Disability, for a period of twelve (12)
months following the Effective Time, Executive will not directly or indirectly
(i) engage in any publishing venture that directly competes with the DSI
business of the Company or one or more of the properties or magazines of the
Company, (ii) enter into the employ of, or render any services to, any person
engaged in any publishing venture that directly competes with the DSI business
of the Company or one or more of the properties or magazines of the Company,
(iii) acquire a financial or equity interest, or otherwise become actively
involved with, any person engaged in any publishing venture that directly
competes with the DSI business of the Company or one or more of the properties
or magazines of the Company directly, or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant, (iv)
interfere with business relationships between the Company and customers or
suppliers of the Company or solicit, induce or entice any customers or suppliers
of the Company to do business with any entity that competes with the DSI
business of the Company or one or more of the properties or magazines of the
Company; or (v) solicit, induce or entice any employee of the Company to leave
his or her employment or hire any such employee who has left the employment of
the Company within twelve (12) months after the date of his or her termination
of employment.
b. Notwithstanding anything to the contrary in this
Agreement, the Executive may, directly or indirectly own, solely as an
investment, securities of any person engaged in the business of the Company or
its affiliates which are publicly traded on a national or regional stock
exchange or on the over-the-counter market if the Executive (i) is not a
controlling person of, or a member of a group which controls, such person and
(ii) does not, directly or indirectly, own 5% or more of any class of securities
of such person.
c. It is expressly understood and agreed that
although Executive and the Company consider the restrictions contained in this
Section 9 to be reasonable, if a final judicial determination is made by a court
of competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against Executive,
the provisions of this Agreement shall not be rendered void but shall be deemed
<PAGE> 11
11
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction cannot be
amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained herein.
10. CONFIDENTIALITY. Except as required by law, Executive will
not at any time (whether during or after his employment with the Company)
disclose or use for his own benefit or purposes or the benefit or purposes of
any other person, firm, partnership, joint venture, association, corporation or
other business organization, entity or enterprise other than the Company and any
of its subsidiaries or affiliates, any trade secrets, information, data, or
other confidential information relating to customers, development programs,
costs, marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans, or the
business and affairs of the Company generally, or of any subsidiary or affiliate
of the Company, PROVIDED that the foregoing shall not apply to information which
is not unique to the Company or which is generally known to the industry or the
public other than as a result of Executive's breach of this covenant. Executive
agrees that upon termination of his employment with the Company for any reason,
he will return to the Company immediately all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof or therefrom, in any
way relating to the business of the Company and its affiliates, except that he
may retain personal notes, notebooks and diaries that do not contain
confidential information of the type described in the preceding sentence.
Executive further agrees that he will not retain or use for his account at any
time any trade names, trademark or other proprietary business designation used
or owned in connection with the business of the Company or its affiliates.
11. SPECIFIC PERFORMANCE. Executive acknowledges and agrees
that the Company's remedies at law for a breach or threatened breach of any of
the provisions of Section 9 or Section 10 would be inadequate and, in
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach (other than any immaterial breach or immaterial threatened
breach of Section 10), in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to cease making any payments or providing
any benefit otherwise required by this Agreement and obtain equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.
12. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to conflicts of laws principles thereof.
b. ENTIRE AGREEMENT/AMENDMENTS. This Agreement
contains
<PAGE> 12
12
the entire understanding of the parties with respect to the employment of
Executive by the Company. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.
c. NO WAIVER. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
d. SEVERABILITY. In the event that any one or more
of the provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
e. ASSIGNMENT. This Agreement shall not be assignable
by Executive. This Agreement shall be assigned by Holding Company to the Company
as contemplated by Section 1 and may be assigned by the Company to a company
which is a successor in interest to substantially all of the business operations
of the Company. Any assignment by the Company shall become effective when the
Company notifies the Executive of such assignment or at such later date as may
be specified in such notice. Upon such assignment, the rights and obligations of
the Company hereunder shall become the rights and obligations of such successor
company, PROVIDED that any assignee expressly assumes the obligations, rights
and privileges of this Agreement.
f. NO MITIGATION. Except as otherwise expressly
provided in this Agreement, Executive shall not be required to mitigate the
amount of any payment provided for pursuant to this Agreement by seeking other
employment or otherwise.
g. SUCCESSORS; BINDING AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devises and legatees.
h. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the execution page of this Agreement,
PROVIDED that all notices to the Company shall be directed to the attention of
its General Counsel, with a copy to Evercore Partners, Inc., 65 E. 55th Street,
New York, New York 10022; Attention: Austin Beutner, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
<PAGE> 13
13
i. WITHHOLDING TAXES. The Company may withhold from
any amounts payable under this Agreement such Federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.
j. LEGAL FEES. The Company shall reimburse Executive
for the reasonable fees of legal counsel in connection with the negotiation and
preparation of this Agreement, up to a maximum of $175,000. In addition, the
Company will reimburse Executive for all reasonable costs, including reasonable
attorneys' fees, incurred by Executive in any action to enforce Executive's
rights under this Agreement if Executive substantially prevails in such action.
<PAGE> 14
14
k. COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ David J. Pecker
---------------------------------
David J. Pecker
Address:
<PAGE> 15
15
EMP ACQUISITION CORP.
By: /s/ Austin Beutner
-----------------------------
Name: Austin Beutner
Title: President
Address:
<PAGE> 16
16
Confirming its obligations under Section 4
of the Agreement:
EMP GROUP L.L.C.
By: EVERCORE CAPITAL PARTNERS L.P.,
Authorized Person
By: EVERCORE PARTNERS L.L.C.,
member
By: /s/ Austin Beutner
-----------------------------------------------
Name: Austin Beutner
Title: Managing Member
<PAGE> 17
17
SCHEDULE I
(SENIOR EXECUTIVES)
1. Editor in Chief - National Enquirer
2. Editor in Chief - Star
3. VP Publisher - National Enquirer
4. VP Publisher - Star
5. Executive VP Finance and Administration
6. VP Marketing
7. CEO - Distribution Services Inc.
8. President/COO - Distribution Services Inc.
9. Executive VP CFO
10. SVP Manufacturing
<PAGE> 18
18
SCHEDULE II
(MAKE-WHOLE PAYMENT)
LTIP: $3,033,000
Advance: The amount required to be paid by Executive to Hachette Filipacchi
Magazines, Inc. pursuant to the Promissory Note dated July 18,
1996 in the principal amount of $1,500,000 by and between
Executive and Hachette Filipacchi Magazines, Inc. after taking
into account any bonuses payable pursuant to Section 4(m) of
Executive's current employment agreement, but not to exceed
$1,156,985.35, plus stated interest accruing thereafter
pursuant to the Promissory Note through the date of repayment.
<PAGE> 19
19
SCHEDULE III
(EXPENSES)
The following items shall be reimbursable under the expense
reimbursement policy of the Company:
11. Charter flights when suitable commercial flight arrangements are
impracticable or would materially impair Executive's ability to
accomplish the Company's business objectives, it being understood that
use of such charter flights, if any, will be out of the ordinary course
of business.
12. Reasonable gifts presented by Executive to clients and Company
employees.
13. Dues and membership fees for a country club of Executive's choosing in
the New York metropolitan area or Florida.
14. Business-related flights to London or Paris may be made on the
Concorde.
15. In the event Executive and the Company agree that Executive shall
permanently relocate to Florida, then:
(x) until the earlier of (i) 6 months following such
determination and (ii) Executive's moving into a new permanent
residence in Florida (whether purchased or rented) (the "New
Residence"), the Company shall pay Executive $10,000 per month
as a supplemental living allowance; and
(y) The Company shall reimburse Executive for (i)
reasonable costs incurred with the moving of his household
goods and possessions from Executive's existing home in
Florida to the New Residence, (ii) customary broker's fees
incurred in connection with the sale of Executive's existing
Florida residence and (iii) in the event Executive moves into
the New Residence prior to selling his existing Florida
residence, continued payment of (or recommencement of payment
of, as applicable) the supplemental living allowance described
in clause (x) until the earlier of (A) the sale of Executive's
existing residence in Florida and (B) 1 year from the date
Executive moves into the New Residence.
16. Up to 17 round trip flights per year for Executive's spouse between New
York and Florida and all other flights for Executive's spouse travel if
Executive reasonably determines that his spouse's presence on the trip
promotes a business interest of the Company.
<PAGE> 20
20
17. Until such time, if ever, that the Company and Executive agree that
Executive shall permanently relocate to Florida, to the extent
Executive travels to Florida to conduct the Company's business, for
each night that Executive is required to stay overnight in order to
conduct the Company's business and for which Executive elects to stay
in Executive's existing Florida residence rather than stay in a hotel,
the Company shall pay Executive a per diem allowance of $300.
<PAGE> 21
21
EXHIBIT A
(OTHER ACTIVITIES)
The French Institute
Candies, Inc. (Pending)
VF Corporation (Pending)
DEA Foundation
New York Benevolence Association
New York Police Museum
Madison Square Boys and Girls Club
Hachette Filipacchi, Inc.
<PAGE> 22
22
EXHIBIT B
(PARACHUTE GROSS-UP)
In the event the provisions of Section 8(c)(iii)(D) of the
employment agreement to which this Exhibit B is a part shall become applicable,
then the following provisions shall apply:
(a) If it shall be determined that any amount, right or
benefit paid, distributed or treated as paid or distributed by the Company or
any of its affiliates (including Evercore Capital Partners, L.P. and its
affiliates) to or for Executive's benefit (other than any amounts payable
pursuant to this Exhibit B) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986 (the "Code"), or
any interest or penalties are incurred by Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties,
collectively, the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount equal to the lesser of
(i) $4,800,000 and (ii) the amount necessary such that after payment by
Executive of all federal, state and local taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this Exhibit
B, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Company's independent auditors (the
"Auditor"). The Auditor shall provide detailed supporting calculations to both
the Company and Executive within 15 business days of the receipt of notice from
Executive or the Company that there has been a Payment, or such earlier time as
is requested by the Company. All fees and expenses of the Auditor shall be paid
by the Company. Any Gross-Up Payment, as determined pursuant to this Exhibit B,
shall be paid by the Company to Executive (or to the Internal Revenue Service or
other applicable taxing authority on Executive's behalf) within 5 days of the
receipt of the Auditor's determination. All determinations made by the Auditor
shall be binding upon the Company and Executive; PROVIDED that following any
payment of a Gross-Up Payment to Executive (or to the Internal Revenue Service
or other applicable taxing authority on Executive's behalf), the Company may
require Executive to sue for a refund of all or any portion of the Excise Taxes
paid on Executive's behalf, in which event the provisions of paragraph (c) below
shall apply. As a result of uncertainty regarding the application of Section
4999 of the Code hereunder, it is possible that the Internal Revenue Service may
assert that Excise Taxes are due that were not included in the Auditor's
calculation of the Gross-Up Payments (an "Underpayment"). In the event that the
Company exhausts its remedies pursuant to this Exhibit B and Executive
thereafter is required to make a payment of any Excise Tax, the Auditor shall
determine the amount of the Underpayment that has occurred
<PAGE> 23
23
and any additional Gross-Up Payments that are due as a result thereof shall be
promptly paid by the Company to Executive (or to the Internal Revenue Service or
other applicable taxing authority on Executive's behalf).
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after Executive receives
written notification of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the 30 day period
following the date on which it gives such notice to the Company )(or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall: (i) give the Company all information reasonably requested by the Company
relating to such claim; (ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company and ceasing all
efforts to contest such claim; (iii) cooperate with the Company in good faith in
order to effectively contest such claim; and (iv) permit the Company to
participate in any proceeding relating to such claim; PROVIDED, HOWEVER, that
the Company shall bear and pay directly all reasonable costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expense. Without limiting the foregoing provisions of this Exhibit B, the
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine and direct; PROVIDED, HOWEVER
that if the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the Executive,
on an interest-free basis, and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for Executive's taxable year with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to
<PAGE> 24
24
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the Executive's receipt of an amount advanced by
the Company pursuant to this Exhibit B, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the Executive's
receipt of an amount advanced by the Company pursuant to this Exhibit B, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after the Company's receipt of notice of such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
<PAGE> 1
EXHIBIT 10.3
EMP Group L.L.C.
April 13, 1999
Mr. David J. Pecker
c/o Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attn: Scott Price, Esq.
Dear David:
Reference is made to the employment agreement dated February
16, 1999 between EMP Acquisition Corp. (the "Holding Company") and you (the
"Employment Agreement"). Capitalized terms used herein without definition have
the meanings specified in the Employment Agreement.
Pursuant to Section 4(a)(i) of the Employment Agreement, on
March 31, 1999 (the "Scheduled Payment Date") EMP Group L.L.C. (the "Holding
Company") became obligated to pay you a portion of the Make-Whole Payments in
an amount sufficient on an after-tax basis to repay your loan from Hachette
Filipachhi Magazines, Inc. (the "Hachette Loan"), after taking into account
certain bonuses payable pursuant to your employment agreement with Hachette
Filipachhi Magazines, Inc. (the "Loan Make-Whole Payment Amount").
The parties hereby acknowledge that, as of the Scheduled
Payment Date, and as of the date hereof, the parties were and remain unable to
reach a mutually satisfactory agreement as to the calculation of the Loan
Make-Whole Payment Amount, relating principally to the proper calculation of
your potential tax liability. Nevertheless, in order to enable you to repay the
Hachette Loan when due, on March 31, 1999 the Holding Company loaned you, as an
advance (the "Advance") the aggregate amount of $1,217,524.63 (representing
your repayment obligation under the Hachette Loan of $1,177,292.59 plus your
capital contribution obligation to the Holding Company of $40,232.05 relating
to the ultimate funding of the Loan Make-Whole Payment Amount). The Advance
will be mandatorily repayable by you to the Holding Company, together with
accrued interest thereon, upon the earliest to occur of (a) the parties mutual
satisfactory agreement as to the calculation of the Loan Make-Whole Payment
Amount, (b) the Effective Date and (c) April 15, 2000 (the "Advance Repayment
Date"); PROVIDED THAT in the case of clauses (b) and (c), the Holding Company
will determine the Loan Make-Whole Payment Amount.
The Advance shall bear interest at the rate of 4.67% per
annum, compounded annually, from the Scheduled Payment Date to the Advance
Repayment Date.
<PAGE> 2
2
Upon, and subject to, your repayment to the Holding Company
of the Advance on the Advance Repayment Date, the Holding Company or the
Company will pay you the Loan Make-Whole Payment Amount as contemplated by, and
subject to the terms of, the Employment Agreement (specifically including any
refund obligations with respect thereto thereunder), together with interest
thereon from the Scheduled Payment Date to the Advance Repayment Date at the
rate of 4.67% per annum, less any applicable withholding taxes.
You agree that, except for the Holding Company's or the
Company's obligation to satisfy any applicable withholding requirements with
respect to the payment to you of the Loan Make-Whole Payment Amount upon your
repayment of the Advance on the Advance Repayment Date (and any withholding
requirements with respect to any future payment of any additional portion of
the Make-Whole Payments), you shall be solely responsible for the payment of
any federal, state or local income or payroll taxes (including any imputed
income taxes) associated with the payment of the Loan Payment Amount or the
Advance hereunder and the remaining Make-Whole Payments, generally, and shall
indemnify and hold the Holding Company, the Company and their affiliates, and
each of their respective officers, directors and employees harmless from any
liability (including, without limitation, interest and penalties) arising from
the failure to withhold from such amounts prior to the Advance Repayment Date
and for any failure resulting from the Holding Company's or the Company's
reliance on your representative's calculation of your tax liability relating
thereto.
You agree that the provisions of this letter agreement will
constitute complete satisfaction of the Holding Company's and the Company's
obligations to you with respect to the Loan Payment Amount but shall not affect
the Holding Company's or the Company's obligations, or rights, with respect to
the payment or refund of any other portion of the Make-Whole Payments.
This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles thereof and may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
<PAGE> 3
3
Please indicate your agreement to the foregoing by executing
a copy of this letter agreement where indicated below.
EMP GROUP L.L.C.
By: EVERCORE CAPITAL PARTNERS L.P.,
Authorized Person
By: EVERCORE PARTNERS L.L.C.,
its general partner
By: /s/ Austin M. Beutner
----------------------------------
Name: Austin M. Beutner
Title: Member
EMP ACQUISITION CORP.
By: /s/ Austin M. Beutner
----------------------------------
Name: Austin M. Beutner
Title: President
Agreed to and acknowledged as of the
date first above written:
/s/ David J. Pecker
- --------------------------
David J. Pecker
<PAGE> 4
Schedule 3.05(b)
to the
Credit Agreement
Intellectual Property
<PAGE> 5
Schedule 3.06
to the
Credit Agreement
Disclosed Matters
None.
<PAGE> 6
Schedule 3.13
to the
Credit Agreement
Insurance
<PAGE> 1
EXHIBIT 12
AMERICAN MEDIA OPERATIONS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-------------------------------------------------------------
MARCH 29, MARCH 30, MARCH 31, MARCH 25, MARCH 27,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) from continuing
operations before income taxes...... $21,455 $18,453 $29,182 $ 8,426 $47,604
Add fixed charges..................... 47,830 51,366 57,135 57,508 36,618
Less:
Interest capitalized................ 0 0 0 0 0
Subsidiary preferred stock dividend
not expensed..................... 0 0 0 0 0
------- ------- ------- ------- -------
Earnings.............................. $69,285 $69,819 $86,317 $65,934 $84,222
Fixed charges......................... $47,830 $51,366 $57,135 $57,508 $36,618
Ratio of earnings to fixed charges.... 1.4 1.4 1.5 1.1 2.3
</TABLE>
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF REGISTRANT
<TABLE>
<CAPTION>
Subsidiary Name State of Incorporation
------------------------------- -------------------------
<S> <C> <C>
(1) National Enquirer, Inc. Florida
(2) Weekly World News, Inc. Florida
(3) Distribution Services, Inc. Delaware
(4) SOM Publishing, Inc. Florida
(5) NDSI, Inc. Delaware
(6) Star Editorial, Inc. Delaware
(7) Country Weekly, Inc. Delaware
(8) FrontLine Marketing, Inc. Delaware
</TABLE>
50
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use
of our reports (and to all references to our Firm) included in or made a part of
this registration statement.
/s/ Arthur Andersen LLP
West Palm Beach, Florida,
July 21, 1999.
<PAGE> 1
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)
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
<TABLE>
<S> <C> <C>
DELAWARE AMERICAN MEDIA OPERATIONS, INC. 59-2094424
AND ITS GUARANTORS
FLORIDA AMERICAN MEDIA MARKETING, INC. 65-0757297
DELAWARE BIOCIDE, INC. 58-2286482
DELAWARE COUNTRY WEEKLY, INC. 65-0462019
DELAWARE DISTRIBUTION SERVICES, INC. 59-1641185
FLORIDA FAIRVIEW PRINTING, INC. 59-2521785
FLORIDA HEALTH XTRA, INC. 65-0886419
DELAWARE MARKETING SERVICES, INC. 65-0228937
FLORIDA NATIONAL ENQUIRER, INC. 59-2764097
DELAWARE NDSI, INC. 59-2632066
DELAWARE RETAIL MARKETING NETWORK, INC. 65-0503059
DELAWARE STAR EDITORIAL, INC. 59-2719288
FLORIDA SOM PUBLISHING, INC. 59-2429187
FLORIDA WEEKLY WORLD NEWS, INC. 59-1896614
</TABLE>
(Exact name of obligor as specified in its charter)
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
600 EAST COAST AVENUE
LANTANA, FLORIDA 33464-0002
(Address of principal executive offices) (Zip Code)
--------------------------------------------
10-1/4% SENIOR SUBORDINATED NOTES DUE 2009
(Title of the indenture securities)
--------------------------------------------
<PAGE> 2
GENERAL
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, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551.
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor and Guarantors.
If the obligor or any Guarantor is an affiliate of the trustee,
describe each such affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-76439 which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
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.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 21st day of July, 1999.
THE CHASE MANHATTAN BANK
By /s/ T.J. Foley
---------------------------
T.J. Foley
Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1999, in accordance with a
call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................... $ 15,364
Interest-bearing balances ........................... 3,811
Securities:
Held to maturity securities .............................. 1,084
Available for sale securities ............................ 49,894
Federal funds sold and securities purchased under
agreements to resell ................................ 27,638
Loans and lease financing receivables:
Loans and leases, net of unearned income ... 131,839
Less: Allowance for loan and lease losses .. 2,642
Less: Allocated transfer risk reserve ...... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .............................. 129,197
Trading Assets ........................................... 45,483
Premises and fixed assets (including capitalized
leases) ............................................. 3,124
Other real estate owned .................................. 242
Investments in unconsolidated subsidiaries and
associated companies ................................ 171
Customers' liability to this bank on acceptances
outstanding ......................................... 974
Intangible assets ........................................ 2,017
Other assets ............................................. 12,477
--------
TOTAL ASSETS ............................................. $291,476
========
</TABLE>
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits
In domestic offices ................................................. $ 102,273
Noninterest-bearing ....................................... $ 39,135
Interest-bearing .......................................... 63,138
---------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's .............................................. 74,586
Noninterest-bearing ............................................ $ 4,221
Interest-bearing .......................................... 70,365
Federal funds purchased and securities sold under agreements to
repurchase .......................................................... 41,039
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 32,929
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ....................... 4,353
With a remaining maturity of more than one year
through three years .......................................... 14
With a remaining maturity of more than three years ................ 92
Bank's liability on acceptances executed and outstanding ................. 974
Subordinated notes and debentures ........................................ 5,427
Other liabilities ........................................................ 9,684
-------
TOTAL LIABILITIES ........................................................ 272,371
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............................ 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock) ................ 11,016
Undivided profits and capital reserves ................................... 7,040
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (179)
Accumulated net gains (losses) on cash flow hedges ....................... 0
Cumulative foreign currency translation adjustments ...................... 17
TOTAL EQUITY CAPITAL ..................................................... 19,105
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ..................................... $ 291,476
=========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN MEDIA OPERATIONS, INC. FOR FISCAL YEAR ENDED
MARCH 29, 1999.
</LEGEND>
<CIK> 0000853927
<NAME> AMERICAN MEDIA OPERATIONS INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-29-1999
<PERIOD-START> MAR-31-1998
<PERIOD-END> MAR-29-1999
<CASH> 3,823
<SECURITIES> 0
<RECEIVABLES> 7,977
<ALLOWANCES> 269
<INVENTORY> 9,830
<CURRENT-ASSETS> 24,280
<PP&E> 45,622
<DEPRECIATION> 18,762
<TOTAL-ASSETS> 616,838
<CURRENT-LIABILITIES> 99,406
<BONDS> 446,134
0
0
<COMMON> 2
<OTHER-SE> 60,196
<TOTAL-LIABILITY-AND-EQUITY> 616,838
<SALES> 293,459
<TOTAL-REVENUES> 293,459
<CGS> 228,060
<TOTAL-COSTS> 228,060
<OTHER-EXPENSES> (2,943)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,897
<INCOME-PRETAX> 21,445
<INCOME-TAX> 13,559
<INCOME-CONTINUING> 7,886
<DISCONTINUED> 0
<EXTRAORDINARY> (2,161)
<CHANGES> 0
<NET-INCOME> 5,725
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
