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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
_x_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-20394
COACTIVE MARKETING GROUP, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1340408
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
415 Northern Boulevard
Great Neck, New York 11021
- --------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 622-2800
-------------
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _x_ No ___
On November 13, 1999, 4,515,356 shares of the Registrant's Common Stock, par
value $.001 a share, were outstanding.
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<PAGE>
INDEX
COACTIVE MARKETING GROUP, INC. AND SUBSIDIARIES
<TABLE>
<S> <C> <C>
PART I - FINANCIAL INFORMATION Page
- ------------------------------ ----
Item 1. Consolidated Financial Statements of CoActive Marketing Group, Inc. (Unaudited)
Consolidated Balance Sheets - September 30, 1999 and March 31, 1999 3
Consolidated Statements of Operations - Three month and six month periods
ended September 30, 1999 and September 30, 1998 4
Consolidated Statement of Stockholders' Equity - Six month period ended
September 30, 1999 5
Consolidated Statements of Cash Flows - Six month periods ended
September 30, 1999 and September 30, 1998 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II - OTHER INFORMATION 13
Item 1. Legal Proceedings
Items 2, 3 and 5. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No. Description of Exhibit
3.1 Certificate of Incorporation, as amended, of the Registrant
3.2 By-Laws, as amended, of the Registrant
27 Financial Data Schedule
(b) Reports on Form 8-K. None
SIGNATURES 15
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
COACTIVE MARKETING GROUP, INC.
Consolidated Balance Sheets
September 30, 1999 and March 31, 1999
<TABLE>
<S> <C> <C>
September 30, 1999 March 31, 1999*
-------------------- -----------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 676,163 2,687,575
Accounts receivable 9,520,673 7,042,640
Unbilled contracts in progress 3,465,458 9,537,540
Prepaid taxes 1,152,091 1,502,431
Prepaid expenses and other current assets 856,880 376,593
----------------- -----------------
Total current assets 15,671,265 21,146,779
----------------- -----------------
Furniture, fixtures and equipment, net 2,121,337 1,820,479
Less accumulated depreciation 654,095 453,341
----------------- -----------------
1,467,242 1,367,138
----------------- -----------------
Notes receivable from officer 225,000 225,000
Goodwill, net 19,038,109 19,548,929
Deferred financing costs 87,150 99,600
Other assets 66,822 64,997
----------------- -----------------
Total assets $ 36,555,588 42,452,443
================= =================
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $ 3,275,123 3,499,388
Deferred revenue 4,030,131 3,096,698
Accrued job costs 4,725,991 8,841,958
Accrued compensation 245,431 320,273
Other accrued liabilities 509,426 991,137
Deferred taxes payable 625,884 625,884
Notes payable bank - current 625,000 -
Subordinated notes payable - current 625,000 625,000
----------------- -----------------
Total current liabilities 14,661,986 18,000,338
Notes payable bank - long term 8,035,000 10,000,000
Subordinated notes payable - long term 1,875,000 1,875,000
----------------- -----------------
Total liabilities 24,571,986 29,875,338
----------------- -----------------
Stockholders' equity:
Class A convertible preferred stock, par value
$.001; authorized 650,000 shares; none issued and outstanding - -
Class B convertible preferred stock, par value
$.001; authorized 700,000 shares; none issued and outstanding - -
Preferred stock, undesignated; authorized
3,650,000 shares; none issued and outstanding - -
Common stock, par value $.001; authorized
25,000,000 shares; issued and outstanding 4,515,356 shares at
September 30, 1999 and 4,513,481 shares at March 31, 1999 4,515 4,513
Additional paid-in capital 5,699,631 5,697,458
Retained earnings 6,279,456 6,875,134
----------------- -----------------
Total stockholders' equity 11,983,602 12,577,105
----------------- -----------------
Total liabilities and stockholders' equity $ 36,555,588 42,452,443
================= =================
</TABLE>
* The consolidated balance sheet as of March 31, 1999 has been summarized from
the Company's audited balance sheet as of that date. See accompanying notes to
unaudited consolidated financial statements.
3
<PAGE>
COACTIVE MARKETING GROUP, INC.
Consolidated Statements of Operations
Three Month and Six Month Periods Ended September 30, 1999
and September 30, 1998
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
----------------- --------------- --------------- ----------------
Sales $ 9,159,310 10,151,232 $ 17,942,740 22,403,002
Direct expenses 6,299,500 6,702,499 12,495,276 14,995,703
--------------- --------------- --------------- ---------------
Gross Profit 2,859,810 3,448,733 5,447,464 7,407,299
--------------- --------------- --------------- ---------------
Salaries 1,547,166 1,097,900 3,033,478 2,171,322
Selling, general and administrative expense 1,583,709 1,112,631 3,013,340 2,218,594
--------------- --------------- --------------- ---------------
Total operating expenses 3,130,875 2,210,531 6,046,818 4,389,916
--------------- --------------- --------------- ---------------
Operating income (loss) (271,065) 1,238,202 (599,354) 3,017,383
Interest expense, net 183,540 127,917 393,442 298,553
--------------- --------------- --------------- ---------------
Income (loss) before income taxes (454,605) 1,110,285 (992,796) 2,718,830
Provision (benefit) for income taxes (181,842) 445,000 (397,118) 1,088,000
--------------- --------------- --------------- ---------------
Net income (loss) $ (272,763) 665,285 $ (595,678) 1,630,830
=============== =============== =============== ===============
Net income (loss) per common and common
equivalent share:**
Basic $ (.06) $ .15 $ (.13) $ .36
================ =============== =============== ============
Diluted $ (.06) $ .12 $ (.13) $ .29
================ =============== =============== ============
Weighted average number of common and
common equivalent shares outstanding:**
Basic 4,515,064 4,479,891 4,514,268 4,477,621
=============== =============== =============== ============
Diluted 4,515,064 5,593,517 4,514,268 5,675,847
=============== =============== =============== ============
Reconciliation of weighted average shares used for basic and diluted computation
is as follows:
Weighted average shares - Basic 4,515,064 4,479,891 4,514,268 4,477,621
Dilutive effect of options and - 1,113,626 - 1,198,226
warrants
--------------- --------------- --------------- --------------
Weighted average shares - Diluted 4,515,064 5,593,517 4,514,268 5,675,847
=============== =============== =============== ==============
</TABLE>
** Adjusted for the five-for-four stock split paid in the form of a stock
dividend to shareholders of record May 14, 1998.
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
COACTIVE MARKETING GROUP, INC.
Consolidated Statement of Stockholders' Equity
Six months ended September 30, 1999
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional Total
Common Stock Paid-in Retained Stockholders'
par value $.001 Capital Earnings Equity
-------------------------------- ------------- ------------ -------------
Shares Amount
------------- ------------
Balance, March 31, 1999 4,513,481 $ 4,513 $ 5,697,458 $ 6,875,134 $ 12,577,105
Exercise of stock options 1,875 2 2,173 - 2,175
Net loss - - - (595,678) (595,678)
------------ ------------ ------------ ----------- ------------
Balance, September 30, 1999 4,515,356 $ 4,515 $ 5,699,631 $ 6,279,456 $ 11,983,602
============ ============ ============ =========== ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
COACTIVE MARKETING GROUP, INC.
Consolidated Statements of Cash Flows
Six Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<S> <C> <C>
1999 1998
--------------- ----------------
Cash flows from operating activities:
Net income (loss) $ (595,678) 1,630,830
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 724,024 531,428
Changes in operating assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable (2,478,033) (224,222)
Decrease (increase) in unbilled contracts in progress 6,072,082 (5,382,443)
Increase in prepaid expenses and other assets (482,113) (412,084)
Decrease in prepaid taxes 350,340 205,022
Decrease in accounts payable (224,265) (845,929)
Increase in deferred revenue 933,433 -
(Decrease) increase in accrued job costs (4,115,967) 4,826,722
Decrease in other accrued liabilities (481,710) (137,976)
Decrease in accrued taxes payable - (94,260)
Decrease in accrued compensation (74,842) (66,408)
--------------- ----------------
Net cash provided by (used in) operating activities (372,729) 30,680
--------------- ----------------
Cash flows from investing activities:
Purchases of fixed assets (300,858) (189,012)
Costs related to purchase of Optimum Group, Inc. - (18,126)
--------------- ----------------
Net cash used in investing activities (300,858) (207,138)
--------------- ----------------
Cash flows from financing activities:
Repayments of bank borrowings - long term, net (1,340,000) -
Proceeds from exercise of stock options 2,175 5,600
--------------- ----------------
Net cash provided (used in) by financing activities (1,337,825) 5,600
--------------- ----------------
Net decrease in cash (2,011,412) (170,858)
Cash and cash equivalents at beginning of period 2,687,575 1,459,909
--------------- ----------------
Cash and cash equivalents at end of period $ 676,163 1,289,051
=============== ================
Supplemental disclosure:
Interest paid during the period $ 482,358 335,864
=============== ================
Income tax paid during the period $ 46,570 952,536
=============== ================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE>
CoActive Marketing Group, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
September 30, 1999 and 1998
(1) Basis of Presentation
---------------------
The interim financial statements of CoActive Marketing Group, Inc. (the
"Company") for the three and six month periods ended September 30, 1999
and 1998 have been prepared without audit. In the opinion of
management, such financial statements reflect all adjustments,
consisting of normal recurring accruals, necessary to present fairly
the Company's results for the interim periods presented. The results of
operations for the three and six month periods ended September 30, 1999
are not necessarily indicative of the results for a full year.
On December 29, 1998, U.S. Concepts, Inc, a wholly-owned subsidiary of the
Company, acquired the business of Murphy Liquidating Corporation,
formerly known as U.S. Concepts, Inc. The acquisition has been
accounted for as a purchase by the Company as at December 29, 1998.
Accordingly, the results of operations of the Company for the three and
six month periods ended September 30, 1999 reflect the consolidated
operations of the Company including U.S. Concepts, Inc. whereas the
operations for the three and six month periods ended September 30, 1998
are that of the Company excluding U.S. Concepts, Inc.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These
consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended March 31, 1999.
(2) Earnings Per Share
------------------
Earnings per share of common stock for the three and six month periods
ended September 30, 1999 and 1998 have been calculated according to the
guidelines of Statement No. 128 "Earnings per Share". All earnings per
share calculations have been adjusted for the five-for-four stock split
paid in the form of a stock dividend June 15, 1998 to shareholders of
record May 14, 1998.
Basic earnings per share for the three and six month periods have been
computed by dividing net income for each of the respective periods by
the weighted average number of shares of common stock outstanding for
each such period. Diluted earnings per share for the three and six
month periods have been computed by dividing net income for each of the
periods by the weighted average number of shares of common stock and
common stock equivalents outstanding for each such period, plus the
assumed exercise of stock options and warrants, less the number of
treasury shares assumed to be purchased from the proceeds of such
exercises using the average market price of the Company's common stock
during the respective period. Stock options and warrants have been
excluded from the calculation of diluted earnings per share in any
period in which they would be antidilutive.
7
<PAGE>
(3) Unbilled Contracts in Progress
------------------------------
Unbilled contracts in progress represents revenue recognized in advance
of billings rendered based on work performed to date on certain
contracts. Accrued job costs are also recorded for such contracts to
properly match costs and revenue.
(4) Deferred Revenue
----------------
Represents contract amounts billed and client advances in excess of
costs incurred and estimated profit earned.
(5) Notes Payable, Bank
-------------------
At September 30, 1999, the Company was not in compliance with three of
the financial covenants of its bank loan agreement; namely the minimum
EBITDA, the defined maximum senior debt leverage ratio and fixed charge
ratio. On November 19, 1999, the Company and the bank executed an
amendment to the loan agreement pursuant to which the bank waived the
Company's non-compliance with respect to such financial covenants as of
September 30, 1999 and the financial covenants were modified to be
consistent with the Company's business plan.
(6) Income Taxes
------------
The provision for income taxes for the three and six month periods
ended September 30, 1999 and 1998 is based upon the Company's estimated
effective tax rate for the respective year.
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations.
--------------------------
On December 29, 1998, U.S. Concepts, Inc. ("U.S. Concepts", a
wholly-owned subsidiary of the Company, acquired the business of Murphy
Liquidating Corporation, formerly known as U.S. Concepts, Inc. (the "U.S.
Concepts Acquisition"). The U.S. Concepts Acquisition has been accounted for as
a purchase by the Company as at December 29, 1998. Accordingly, the results of
operations discussed below for the three and six month periods ended September
30, 1999 reflect the consolidated operations of the Company including U.S.
Concepts, whereas the operations for the three and six month periods ended
September 30, 1998 are that of the Company excluding U.S. Concepts. The
information herein should be read together with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended March 31, 1999.
8
<PAGE>
Results of Operations
The following table presents operating data of the Company, expressed
as a percentage of sales for each of the three and six month periods ended
September 30, 1999 and 1998:
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
September 30, September 30,
---------------------------------- -----------------------------------
1999 1998 1999 1998
--------------- -------------- --------------- ----------------
Statement of Operations Data:
Sales 100.0% 100.0% 100.0% 100.0%
Direct expenses 68.8% 66.0% 69.6% 66.9%
Gross profit 31.2% 34.0% 30.4% 33.1%
Salaries 16.9% 10.8% 16.9% 9.7%
Selling, general and administrative expense 17.3% 11.0% 16.8% 9.9%
Total operating expense 34.2% 21.8% 33.7% 19.6%
Operating income (loss) (3.0%) 12.2% (3.3%) 13.5%
Interest expense, net 2.0% 1.3% 2.2% 1.3%
Income (loss) before provision for taxes (5.0%) 10.9% (5.5%) 12.1%
Provision (benefit) for income taxes (2.0%) 4.4% (2.2%) 4.9%
Net income (loss) (3.0%) 6.6% (3.3%) 7.3%
Other Data:
EBITDA 1.1% 14.8% 0.7% 15.8%
</TABLE>
The following table presents operating data of the Company, expressed
as a comparative percentage of change for the three and six month periods ended
September 30, 1999 compared to the three and six month periods ended September
30, 1998 and the three and six month periods ended September 30, 1998 compared
to the three and six month periods ended September 30, 1997:
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
September 30, September 30,
---------------------------------- -----------------------------------
1999 1998 1999 1998
--------------- -------------- --------------- ----------------
Statement of Operations Data:
Sales (9.8%) 106.1% (19.9%) 106.6%
Direct expenses (6.0%) 105.7% (16.7%) 105.6%
Gross profit (17.1%) 106.9% (26.5%) 108.6%
Salaries 40.9% 57.9% 39.7% 57.1%
Selling, general and administrative expense 42.3% 151.8% 35.8% 142.0%
Total operating expense 41.6% 94.4% 37.7% 91.0%
Operating income (loss) (121.9%) 133.8% (119.9%) 141.0%
Interest expense, net 43.5% (617.2%) 31.8% 362.7%
Income (loss) before provision for taxes (140.9%) 100.3% (136.5%) 106.5%
Provision (benefit) for income taxes (140.9%) 239.7% (136.5%) 228.4%
Net income (loss) (141.0%) 57.1% (136.5%) 65.5%
Other Data:
EBITDA (93.3%) 139.7% (96.5%) 147.7%
</TABLE>
9
<PAGE>
Sales. Sales for the quarter ended September 30, 1999 were
$9,159,000, inclusive of $3,888,000 of sales of U.S. Concepts, compared to sales
of $10,151,000 for the prior year quarter ended September 30, 1998, a decrease
of $992,000. Sales for the six months ended September 30, 1999 were $17,943,000,
inclusive of $7,058,000 of sales of U.S. Concepts, compared to sales of
$22,403,000 for the six months ended September 30, 1998, a decrease of
$4,460,000. The decrease in sales for the quarter and six month periods were
primarily attributable to a lesser than anticipated amount of contracted sales
materializing during the respective periods. At September 30, 1999, the
Company's sales backlog, inclusive of approximately $3,363,000 attributable to
U.S. Concepts, amounted to approximately $9,160,000 compared to a sales backlog
of approximately $9,355,000 at September 30, 1998.
Direct Expenses. Direct expenses for the quarter ended
September 30, 1999 were $6,299,000, inclusive of $3,075,000 of direct expenses
of U.S. Concepts, compared to $6,702,000 for the comparable prior year quarter,
a decrease of $403,000. Direct expenses for the six months ended September 30,
1999 were $12,495,000, inclusive of $5,465,000 direct expenses of U.S. Concepts,
compared to $14,996,000 for the comparable prior year six month period, a
decrease of $2,500,000. The decrease in direct expenses for the quarter and six
month period ended September 30, 1999 was primarily attributable to the decrease
in sales for the respective periods. The increase in direct expenses as a
percentage of sales for both the quarter and six month period ended September
30, 1999 was primarily the result of the aggregate added mix of client programs
of U.S. Concepts having a lower gross profit margin than the mix of the
Company's projects in both the respective comparable prior year quarter and six
month period.
As a result of these changes in sales and direct expenses,
gross profit for the quarter and six month periods ended September 30, 1999
decreased to $2,860,000 and $5,447,000, respectively, from $3,449,000 and
$7,407,000 for the prior year respective periods.
Operating Expenses. Operating expenses for the quarter ended
September 30, 1999 increased by $920,000 to $3,131,000 compared to $2,211,000
for the quarter ended September 30, 1998. Operating expenses for the six months
ended September 30, 1999 increased by $1,657,000 to $6,047,000 compared to
$4,390,000 for the comparable prior year six month period. The increase in
operating expenses for the quarter ended September 30, 1999 was primarily the
result of (A) the inclusion of $577,000 of operating expenses of U.S. Concepts
and (B) increases, primarily related to supporting and maintaining an
anticipated increase in the level of operations, of $146,000 in salaries,
accrued bonuses and related employee payroll expenses and $197,000 in selling,
general and administrative expenses. The increase in operating expenses for the
six months ended September 30, 1999 was primarily the result of (A) the
inclusion of $1,022,000 of operating expenses of U.S. Concepts and (B)
increases, primarily related to supporting and maintaining an anticipated
increase in the level of operations, of $296,000 in salaries, accrued bonuses
and related employee payroll expenses and $339,000 in selling, general and
administrative expenses.
Interest Expense. Interest expense for the quarter and six
month period ended September 30, 1999 increased by $56,000 and $95,000
respectively, compared to interest expense of $128,000 and $299,000 respectively
for the quarter and six month period ended September 30, 1998. The increase in
interest expense for the quarter and six month period ended September 30, 1999
was primarily related to the Company's increased bank borrowings in conjunction
with the U.S. Concepts Acquisition.
Benefit/Provision For Income Taxes. Both the respective
benefit and provision for federal, state and local income taxes for the
respective quarters and six month periods ended September 30, 1999 and 1998 were
based upon the Company's estimated effective tax rate for the respective fiscal
year.
Net Income (Loss). As a result of the items discussed above,
net loss for the quarter ended September 30, 1999 was $(273,000) compared to net
income of $665,000 for the comparable prior year
10
<PAGE>
quarter and net loss for the six months ended September 30, 1999 was $(596,000)
compared to net income of $1,631,000 for the comparable prior year six month
period.
Liquidity and Capital Resources.
The Company has an outstanding bank credit facility (the "Loan
Agreement") consisting of a $3,660,000 term loan (the "Term Loan") and a
$5,000,000 revolving credit facility (the "Revolving Credit Facility"). At
September 30, 1999, the aggregate of the Company's Term Loan and Revolving
Credit Facility notes payable amounted to $8,660,000 and, at that date, the
Company was not in compliance with three of the financial covenants of the Loan
Agreement; namely the minimum EBITDA, the defined maximum senior debt leverage
ratio and fixed charge coverage ratio. On November 19, 1999, the Loan Agreement
was amended pursuant to which the bank waived the Company's non-compliance with
such financial covenants as of September 30, 1999 and the financial covenants
were modified to be consistent with the Company's business plan. There can be no
assurance that the Company will be able to satisfy, on an ongoing basis, the
modified financial covenants of the Loan Agreement.
For the six months ended September 30, 1999, the Company's activities were
funded with existing working capital and amounts available under its revolving
credit bank line. At September 30, 1999, the Company had cash and cash
equivalents totaling $676,000 and working capital of $1,009,000 compared to cash
and cash equivalents of $2,688,000 and working capital of $3,146,000 at March
31, 1999. The decrease in working capital at September 30, 1999 compared to
March 31, 1999 was primarily the result of the Company's repayment of $1,340,000
of long term bank notes payable and the re-classification of $625,000 of the
remaining bank notes payable as a current payable. Stockholders' equity
decreased to $11,984,000 as a result of the Company's net loss for the six
months ended September 30, 1999.
For the six months ended September 30, 1999, (i) cash used in
operating activities amounted to $373,000, primarily as a result of an increase
in accounts receivable and accrued job costs which were offset by a decrease in
unbilled contracts in progress and deferred revenue; (ii) cash used in investing
activities to purchase fixed assets amounted to $301,000; and net cash used in
financing activities primarily to repay bank borrowings amounted to $ 1,338,000.
As a result of the net effect of the aforementioned, the Company's cash and cash
equivalents at September 30, 1999 decreased by $2,011,000.
The Company believes that its current working capital position
is sufficient to support its existing and anticipated levels of operation. To
the extent that the Company should be required to seek external equity or
additional debt financing, there can be no assurance that the Company will be
able to obtain any such additional funding.
Other Matters.
Year 2000 issues relate to the potential for system and
processing failures of date related data as a result of computer controlled
systems using two digits rather than four to define the applicable year. The
result could be system failure or miscalculations which could cause disruptions
to operations of the Company, its customers and suppliers. The Company relies on
computer, voice and telecommunication systems and applications for most of its
operations. The Company has evaluated its systems and has determined that they
require software upgrades to make them Year 2000 compliant. Where applicable,
the Company has purchased Year 2000 vendor software upgrades to make existing
systems compliant and has purchased and is in the process of purchasing and
installing newer systems which have been tested as being Year 2000 compliant.
The Company believes that, based on its testings to date, its systems currently
in use are Year 2000 compliant. The Company does not anticipate incurring any
significant incremental costs related to Year 2000 compliance. The
11
<PAGE>
Company's computer systems are not interdependent with the computer systems of
its vendors and others with which the Company transacts business. The Company
has initiated formal communications with its significant vendors and service
suppliers to determine the extent to which the Company is vulnerable to those
third parties' failures to remediate their systems, business processes and
supply chains. The most reasonably likely risk confronting the Company would
relate to a third party failure beyond the control of the Company such as
telecommunications and related electrical failures. Upon further analysis of
responses of Year 2000 readiness surveys received from vendors and suppliers,
the Company intends to prepare contingency plans before calendar year end to
minimize the potential impact of operational disruptions.
Forward-Looking Statements.
This report contains or incorporates by reference
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, that are based on beliefs of the Company's management as well as
assumptions made by and information currently available to the Company's
management. When used in this report, the words "estimate," "project,"
"believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should,"
"will," the negative thereof or other variations thereon or comparable
terminology are intended to identify forward- looking statements. Such
statements reflect the current views of the Company with respect to future
events based on currently available information and are subject to risks and
uncertainties that could cause actual results to differ materially from those
contemplated in those forward-looking statements. Factors that could cause
actual results to differ materially from the Company's expectations are set
forth in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1999 under "Risk Factors", including but not limited to "Dependence on
Key Personnel," "Customers," " Unpredictable Revenue Patterns,""Competition,"
"Risk Associated with Acquisitions," "Expansion Risk," "Control by Executive
Officers and Directors," "Outstanding Indebtedness; Security Interest," and
"Shares Eligible for Future Sale." Other factors may be described from time to
time in the Company's public filings with the Securities and Exchange
Commission, news releases and other communications. The forward-looking
statements contained in this report speak only as of the date hereof. The
Company does not undertake any obligation to release publicly any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Company's earnings and cash flows are subject to
fluctuations due to changes in interest rates primarily from its investment of
available cash balances in money market funds with portfolios of investment
grade corporate and U.S. government securities and, secondarily, from its
long-term debt arrangements. Under its current policies, the Company does not
use interest rate derivative instruments to manage exposure to interest rate
changes.
12
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
On April 30, 1999, the Registrant's wholly-owned subsidiary
U.S. Concepts, Inc. ("U.S. Concepts"), was sued in the Superior Court of the
State of California, County of San Francisco, by Ms. Star Norman for damages in
excess of $25,000 plus unspecified punitive and other damages. The complaint
arises out of Plaintiff's claim of sex discrimination in violation of California
Fair Employment and Housing Act and the California constitution and wrongful
discharge in violation of public policy. On September 24, 1999, the suit was
amended to include the Company as an additional Defendant and Ms. Erica Smith as
an additional Plaintiff alleging race discrimination in addition to the
aforementioned claims of Ms. Norman.
With the exception of certain acts complained of by Ms. Smith,
all of the acts complained of took place prior to the date of incorporation of
U.S. Concepts in Delaware and at a time when the subject business was being
conducted by a New York corporation, then named U.S. Concepts, Inc. and now
named Murphy Liquidating Corporation ("Murphy Liquidating"). The subject
business was acquired by U.S. Concepts from Murphy Liquidating on December 28,
1998. The Registrant intends to defend this case vigorously on the grounds that
(i) U.S. Concepts has no liability for the acts complained of since all of such
acts with respect to Ms. Norman and to a significant extent those of Ms. Smith
are alleged to have taken place prior to the existence of U.S. Concepts as an
entity and (ii) the claims are without merit. Further, the Registrant has
notified Murphy Liquidating and its shareholder that it claims indemnification
from them for any loss arising from this matter pursuant to indemnification
agreements entered into in connection with the acquisition.
Items 2, 3 and 5. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on
September 14, 1999 at the Company's offices at 415 Northern Boulevard, Great
Neck, New York 11021 at 10:a.m. A majority of the Company's voting shares were
present at the meeting, either in person or by proxy.
At such meeting, the stockholders:
1. elected Paul A. Amershadian, John P. Benfield,
Donald A. Bernard, Herbert M. Gardner, Joseph S. Hellman, Thomas E. Lachenman
and Brian Murphy to the Board of Directors. All of these individuals will serve
on the Board of Directors until the next annual meeting of stockholders and
until their successors are duly elected and qualified.
Directors Votes For Votes Against
--------- --------- -------------
Paul A. Amershadian 4,171,683 30,839
John P. Benfield 4,171,683 30,839
Donald A. Bernard 4,171,683 30,839
Herbert M. Gardner 4,171,683 30,839
Joseph S. Hellman 4,171,683 30,839
Thomas E. Lachenman 4,171,683 30,839
2. approved an amendment to the Company's Certificate
of Incorporation changing the Company's name to CoActive Marketing Group, Inc.
Votes For Votes Against Votes Abstained
--------- ------------- ----------------
4,150,960 44,325 7,237
13
<PAGE>
3. approved an amendment to the Company's 1992 Stock
Option Plan (the "1992 Plan") to increase the number of shares of the Company's
Common Stock (the "Shares") for which options may be granted pursuant to the
1992 Plan from 1,125,000 to 1,500,000 and limit the number of Shares with
respect to which options may be granted under the 1992 Plan to any single
participant in any single plan year to 150,000.
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
2,639,011 47,141 56,299
4. approved and ratified on a retroactive basis the
Company's 1997 Executive Officer Stock Option Plan.
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
2,603,636 78,766 60,049
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits.
<TABLE>
<S> <C>
Exhibit No. Description of Exhibits
----------- -----------------------
3.1 Certificate of Incorporation, as amended, of the Registrant
3.2 By-Laws, as amended, of the Registrant
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K. None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
COACTIVE MARKETING GROUP, INC.
Dated: November 19, 1999 By: /s/ John P. Benfield
---------------------------------------
John P. Benfield, President
(Principal Executive Officer)
and Director
Dated: November 19, 1999 By: /s/ Donald A. Bernard
----------------------------------------
Donald A. Bernard, Executive Vice
President and Chief Financial Officer
(Principal Accounting and Financial
Officer) and Director
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000886475
<NAME> COACTIVE MARKETING GROUP, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Mar-31-2000
<PERIOD-START> Apr-01-1999
<PERIOD-END> Sep-30-1999
<CASH> 676,163
<SECURITIES> 0
<RECEIVABLES> 12,986,131
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,671,265
<PP&E> 2,121,337
<DEPRECIATION> 654,095
<TOTAL-ASSETS> 36,555,588
<CURRENT-LIABILITIES> 14,661,986
<BONDS> 0
0
0
<COMMON> 4,515
<OTHER-SE> 11,979,087
<TOTAL-LIABILITY-AND-EQUITY> 36,555,588
<SALES> 17,942,740
<TOTAL-REVENUES> 17,942,740
<CGS> 12,495,276
<TOTAL-COSTS> 12,495,276
<OTHER-EXPENSES> 6,046,818
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 393,442
<INCOME-PRETAX> (992,796)
<INCOME-TAX> (397,118)
<INCOME-CONTINUING> (595,678)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (595,678)
<EPS-BASIC> (.13)
<EPS-DILUTED> (.13)
</TABLE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INMARK ENTERPRISES, INC.
----------------------------------------------
Under Section 242 of the Delaware General
Corporation Law
----------------------------------------------
Pursuant to the provisions of Section 242 of the General
Corporation Law of the State of Delaware, the undersigned, being the President,
Chief Executive Officer and Chairman of the Board of Inmark Enterprises, Inc.,
does hereby certify that:
FIRST: The name of the corporation is Inmark Enterprises, Inc.
(hereinafter referred to as the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation is
hereby amended to change the name of the Corporation from Inmark Enterprises,
Inc. to CoActive Marketing Group, Inc., so that Article FIRST of the Certificate
of Incorporation of the Corporation is amended to read as follows:
"FIRST: The name of the corporation is CoActive Marketing
Group, Inc."
THIRD: This amendment to the Certificate of Incorporation of
the Corporation was duly adopted by the Board of Directors and by a majority of
the stockholders of the Corporation entitled to vote thereon in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Amendment to the Certificate of Incorporation of the Corporation
this 15th day of September, 1999.
s/ JOHN P. BENFIELD
----------------------------
John P. Benfield, President,
Chief Executive Officer and
Chairman of the Board of
Inmark Enterprises, Inc.
<PAGE>
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF INCORPORATION
of
HEALTH IMAGE MEDIA, INC.
(Pursuant to Section 242 of the Delaware General Corporation Law)
HEALTH IMAGE MEDIA, INC., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of HEALTH
IMAGE MEDIA, INC. resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of said corporation declaring said
amendment to be advisable and directing that said proposed amendment be
considered by the stockholders of said corporation at the next annual meeting.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this
Corporation be amended by changing the Article thereof
numbered "ONE (1)" so that, as amended, said Article shall be
and read as follows:
"The name of the Corporation is INMARK ENTERPRISES, INC."
SECOND: That, pursuant to resolution of its Board of
Directors, the annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be
reduced under or by reason of said amendment.
IN WITNESS WHEREOF, said HEALTH IMAGE MEDIA, INC. has caused
this Certificate to be signed by JOHN P. BENFIELD, the President, and COURTLANDT
G. MILLER, its Secretary, this 29th day of September, 1995.
By: s/John P. Benfield
----------------------------------
John P. Benfield, President
By: s/Courtlandt G,. Miller
----------------------------------
Courtlandt G. Miller, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF INCORPORATION
HEALTH IMAGE MEDIA, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY that the Board of Directors and the
stockholders of the Corporation entitled to vote thereon, by a Joint Action by
Consent in Writing, adopted the following resolution amending the Corporation's
Certificate of Incorporation, and further certifies that said resolution was
duly adopted in accordance with the provisions of Section 141, 228 and 242 of
the General Corporation Law of the State of Delaware and written notice of such
action has been given to stockholders who have not consented in writing, as
provided in Section 228 of the General Corporation Law of the State of Delaware:
RESOLVED, that Section FOURTH of the Certificate of
Incorporation of the Corporation, be and it is hereby amended
by the addition of the following to Article Fourth:
FOURTH: On the effective date of the Certificate of
Amendment to the Certificate of
Incorporation of the Corporation containing
the provisions herein set forth (the
"Effective Date"), each share of Common
Stock, par value $.001 per share ("Common
Stock"), outstanding prior to the Effective
Date, each share of Class A Convertible
Preferred Stock, par value $.001 per share
("Class A Preferred Stock"), outstanding
prior to the Effective Date and each share
of Class B Convertible Preferred Stock, par
value $.001 per share ("Class B Preferred
Stock"), outstanding prior to the Effective
Date is hereby reclassified as and converted
into, without any further act by any person,
fifty-five one-hundredths (.55) of a share
of Common Stock, Class A Preferred Stock and
Class B Preferred Stock, respectively. From
and after the Effective Date, and until
exchanged for certificates representing
Common Stock, Class A Preferred Stock and
Class B Preferred Stock issued and delivered
after the Effective Date, certificates
representing each share of Common Stock,
Class A Preferred Stock and Class B
Preferred Stock prior to the Effective Date
shall be deemed to represent a number of
shares equal to the product of (x) .55 times
(y) the number of shares represented
thereby. Any fractions of
<PAGE>
shares resulting form this reclassification
and conversion shall not be issued, but
instead those who would be entitled to
receive a fraction of a share shall receive,
in lieu thereof, cash in an amount equal to
the product of such fraction times six
dollars ($6.00).
IN WITNESS WHEREOF, HEALTH IMAGE MEDIA, INC. has caused this
Certificate of Amendment to be signed by its President and attested to by its
Assistant Secretary this 2nd of July, 1992.
HEALTH IMAGE MEDIA, INC.
By: s/ KARAMJEET S. PAUL
-----------------------
Attest:
By: s/ LAURENCE WEILHEIMER
-------------------------
<PAGE>
CERTIFICATE OF INCORPORATION
of
HEALTH IMAGE MEDIA, INC.
FIRST: The name of the corporation is HEALTH IMAGE MEDIA, INC.
(the "Corporation").
SECOND: The address of the Corporation's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is the Corporation Trust Company.
THIRD: The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware and to possess and exercise all of
the powers and privileges granted by such law and any other law of Delaware.
FOURTH: A. The total number of shares that this
Corporation shall have authority to issue is
Thirty Million (30,000,000) shares, of which
Twenty-Five Million (25,000,000) shares
shall be designated as Common Stock with a
par value of $.001 per share, and of which
Five Million (5,000,000) shares shall be
Preferred Stock.
The Board of Directors may issue, in one or
more classes or series, shares of Preferred
Stock, with full, limited, multiple,
fractional or no voting rights, and with
such designations, preferences,
qualifications, privileges, limitations,
restrictions, options, conversion rights or
other special or relative rights as shall be
fixed from time to time by the Board of
Directors by resolution.
B. Of the Five Million (5,000,000) shares of
Preferred Stock authorized by this
Corporation, Six Hundred and Fifty Thousand
(650,000) shares shall be designated as
Class A Convertible Preferred Stock with a
par value of $.001 per share ("Class A
Preferred Stock") and Seven Hundred Thousand
(700,000) shares shall be designated as
Class B Convertible Preferred Stock with a
par value of $.001 per share ("Class B
Preferred Stock"), which shall have such
rights, preferences and characteristics in
relation to the Common Stock as set forth
below:
(1) Voting Rights. The holders of Common
Stock shall be entitled to one vote per
share of Common Stock on all matters on
which shareholders are entitled to vote
thereon. Except as expressly provided by
law, the holders of Class B Preferred Stock
1
<PAGE>
shall have full voting rights and powers;
they shall be entitled to vote on all
matters as to which holders of Common Stock
shall be entitled to vote, voting together
with the holders of Common Stock as one
class, and they shall be entitled to one
vote for each share of Common Stock into
which each share of Class B Preferred Stock
may be converted in accordance with
subsection 4 herein. Except as expressly
provided by law, the holders of Class A
Preferred Stock shall have no voting rights
and powers.
(2) Dividends. The holder of Common Stock,
the holders of Class A Preferred Stock and
the holders of Class B Preferred Stock shall
be entitled to receive, when and as declared
in the discretion of the Board of Directors,
such cash dividends as the Board of
Directors may from time to time determine
out of such funds that are legally available
therefor; provided, that no cash dividends
shall be declared or paid on one class of
capital stock unless parallel action shall
be taken simultaneously therewith with
respect to the other classes of capital
stock.
(3) Preemptive Rights; No Cumulative Voting.
Stockholders shall not have preemptive
rights to purchase additional shares of
capital stock and shall not have the right
to vote cumulatively in the election of
directors.
(4) Conversion Rights of Class A Preferred
Stock and Class B Preferred Stock.
(a) Conversion at the Option of
the Holder.
(i) Conversion Rate. Each
share of Class A Preferred
Stock shall be convertible
at the option of the holder
thereof into one fully paid
and non-assessable share of
Common Stock, subject to
adjustment as described
below. Each share of Class
B Preferred Stock shall be
convertible at the option
of the holder thereof into
one fully paid and
non-assessable share of
Common Stock, subject to
adjustment as described
below. The number of shares
of Common Stock into which
the Class A Preferred Stock
and Class B Preferred Stock
may be converted shall be
the "Conversion Rate."
Conversion of the Class A
Preferred Stock or Class B
Preferred Stock at the
option of the holder
thereof shall be the
"Optional Conversion."
2
<PAGE>
(ii) Adjustment to
Conversion Rate for Certain
Changes in the Company's
Capitalization. If there
shall be issued additional
shares of Common Stock
solely by reason of stock
dividends, stock splits,
combinations or exchanges
of shares, the Board of
Directors of this
Corporation shall adjust
the Conversion Rate to
reflect such issuance of
shares of Common Stock such
that immediately after any
of the foregoing events,
the Class A Preferred Stock
and the Class B Preferred
Stock shall be convertible
into the same proportion of
issued and outstanding
shares of Common Stock into
which the Class A Preferred
Stock and the Class B
Preferred Stock would have
been convertible prior to
such event; provided,
however, that in no event
shall fractional shares of
Common Stock be issuable in
respect of any conversion.
(b) Mandatory Conversion. The
Corporation shall have the right, at
its option, to cause the conversion
(the "Mandatory Conversion") of all,
but not less than all of the shares
of Class A Preferred Stock and Class
B Preferred Stock then issued and
outstanding into fully paid and
non-assessable shares of Common
Stock (other than fractional shares)
at the Conversion Rate then in
effect upon the occurrence of the
Corporation's public offering or
private offering of equity
securities of the Corporation which
yields to the Corporation not less
than Five Million Dollars
($5,000,000) in net proceeds (other
than an offering related to the
offer and sale of securities of the
Corporation to employees of, or
other persons providing services to,
the Corporation pursuant to an
employee benefit plan, stock option
plan, stock purchase plan, or
otherwise).
(c) Mergers, Consolidations, Etc. In
the event the Corporation shall
merge, consolidate or take any other
similar action in which the Common
Stock shall be exchanged for
securities or assets, whether of the
Corporation or of another entity,
the Class A Preferred Stock and the
Class B Preferred Stock shall be
convertible into such other
securities or assets as if the Class
A Preferred Stock and the Class B
Preferred Stock had been converted
into Common Stock immediately prior
to such merger, consolidation or
such other similar action.
3
<PAGE>
(d) Mechanics of Conversion.
(i) Mandatory Conversion.
If the Corporation
exercises its Mandatory
Conversion right pursuant
to subsection 4(b), all
holders of record of shares
of Class A Preferred Stock
and all holders or record
of shares of Class B
Preferred Stock shall be
given ten (10) days prior
written notice of the date
on which the Corporation
shall exercise its
Mandatory Conversion right
(the "Mandatory Conversion
Date"). Such notice also
shall specify the place
designated for exchanging
shares of Class A Preferred
Stock and Class B Preferred
Stock for shares of Common
Stock. On or before the
Mandatory Conversion Date,
each holder of Class A
Preferred Stock and each
holder of Class B Preferred
Stock shall surrender his
certificate or certificates
for all such shares to the
Corporation or the transfer
agent at the place
designated in such notice,
and thereafter shall
receive certificates for
the number of shares of
Common Stock to which such
holder is entitled at the
Conversion Date, all
certificates representing
shares of Class A Preferred
Stock and shares of Class B
Preferred Stock shall be
deemed canceled by the
Corporation, and any holder
of Class A Preferred Stock
or Class B Preferred Stock
who fails to deliver his
certificate or certificates
for Mandatory Conversion
shall be entitled only to
receive shares of Common
Stock to which such holder
would be entitled had
delivery of his certificate
or certificates been made
on or prior to the
Mandatory Conversion Date.
(ii) Optional Conversion.
If a holder of shares of
Class A Preferred Stock or
Class B Preferred Stock
desires to exercise his
right of Optional
Conversion pursuant to
subsection 4(a), such
holder shall give written
notice to the Corporation
of his election to convert
a stated number of shares
of Class A Preferred Stock
and/or Class B Preferred
Stock into shares of Common
Stock, at the Conversion
Rate then in effect, which
notice shall be accompanied
by the certificate or
certificates representing
such shares of Class A
Preferred Stock
4
<PAGE>
and/or Class B Preferred
Stock which shall be
converted into Common
Stock. The notice also
shall contain a statement
of the name or names in
which the certificate or
certificates for common
stock shall be issued.
Promptly after the receipt
of the aforesaid notice and
certificate or certificates
representing the Class A
Preferred Stock and/or
Class B Preferred Stock
surrendered for conversion,
the Corporation shall issue
and deliver to the holder
of the Class A Preferred
Stock and/or Class B
Preferred Stock surrendered
for conversion or to his
nominee or nominees, a
certificate or certificates
for the number of shares of
Common Stock issuable upon
conversion of such Class A
Preferred Stock and/or
Class B Preferred Stock and
the certificates
representing shares of
Class A Preferred Stock
an/or Class B Preferred
Stock surrendered for
conversion shall be
canceled by the
Corporation. If the number
of shares represented by
the certificate or
certificates surrendered
for conversion shall exceed
the number of shares to be
converted, the Corporation
shall issue and deliver to
the person entitled thereto
a certificate representing
the balance of any
unconverted shares.
(e) Reservation of Common Stock The
Corporation shall at all times
reserve and keep available out its
authorized but unissued Common
stock, solely for issuance upon
conversion of shares of Class A
Preferred Stock and Class B
Preferred Stock as herein provided,
such number of shares of Common
Stock as shall be issuable from time
to time upon the conversion of all
of the shares of Class A Preferred
Stock and Class B Preferred Stock at
that time issued and outstanding.
(f) Notices. Any notice required to
be given pursuant to this Section 4
shall be deemed to be given if
deposited in the United States mail,
first-class postage prepaid, and
addressed to the holder of record at
his address appearing on the books
of the Corporation.
(5) Liquidation Rights. In the event of any
liquidation, dissolution or winding up
(either voluntary or involuntary) of the
Corporation, the holders of Class A
Preferred Stock shall be entitled to
receive, after payment by the Corporation of
all sums
5
<PAGE>
due creditors, an amount equal to $1.75 per
share plus all declared but unpaid dividends
before any amount shall be paid to the
holders of Class B Preferred Stock or of
Common Stock. After such payment has been
made, the holders of Class B Preferred Stock
shall be entitled to receive $.72 per share
before any amounts are paid to the holders
of Common Stock or further amounts are paid
to holders of Class A Preferred Stock. After
such payments shall have been made in full
to the holders of Class A Preferred Stock
and to the holders of Class B Preferred
Stock, the holders of Common Stock, the
holders of Class A Preferred Stock and the
holders of Class B Preferred Stock shall be
entitled to receive the remaining assets and
funds of the Corporation in proportion to
the number of shares of Common Stock held by
holders of Common Stock, and the number of
shares of Common Stock held by holders of
Class A Preferred Stock and by holders of
Class B Preferred Stock assuming the Class A
Preferred Stock and Class B Preferred Stock
had been converted into Common Stock
immediately prior to the liquidation,
dissolution or winding up of the
Corporation.
FIFTH: The name and mailing address of the incorporator
is as follows:
Name Address
---- -------
Hedy Wheleer 12th Floor, Packard Building
15th and Chestnut Streets
Philadelphia, PA 19102
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The By-laws of the Corporation may be altered,
amended or repealed by the vote of a majority of all directors or by the vote of
holders of a majority of the outstanding stock entitled to vote.
EIGHTH: Election of directors need not be by written ballot
unless the By- laws of the Corporation shall so provide.
NINTH: The Corporation reserves the right to amend the
provisions in this Certificate of Incorporation and in any certificate
amendatory hereof in the manner now or hereafter prescribed by law, and all
rights conferred on stockholders or others hereunder or thereunder are granted
subject to such reservation.
TENTH: If any action is to be taken by stockholders without a
meeting, such action must be authorized by unanimous written consent signed by
all of the holders of outstanding voting stock.
6
<PAGE>
ELEVENTH: Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them and/or between
the Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of the Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as the case may
be, to be summoned in such a 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 the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
corporation, as the case may be, and also on the Corporation.
TWELFTH: The directors of the Corporation shall be entitled to
the benefits of all limitations on the liability of directors generally that are
now or hereafter become available under the General Corporation Law of Delaware.
Without limiting the generality of the foregoing, no director of the Corporation
shall be liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. Any repeal or modification of this Article 12 shall
be prospective only, and shall not affect, to the detriment of any director, any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
11th day of March, 1992.
S/ HEDY WHEELER
---------------
Hedy Wheeler (SEAL)
7
<PAGE>
AMENDED AND RESTATED BY-LAWS OF
COACTIVE MARKETING GROUP, INC.
ARTICLE I - OFFICES
Section 1.1 Registered Office and Registered Agent. The
Corporation shall maintain a registered office and registered agent within the
State of Delaware, which may be changed by the Board of Directors (hereinafter
referred to as the "Board of Directors" or the "Board") from time to time.
Section 1.2. Other Offices. The Corporation may also have
offices at such other places, within or without the State of Delaware, as the
Board of Directors may from time to time determine.
ARTICLE II - STOCKHOLDERS' MEETINGS
Section 2.1. Place of Stockholders' Meetings. Meetings of
stockholders may be held at such place, either within or without the State of
Delaware, as may be designated by the Board of Directors from time to time. If
no such place is designated by the Board of Directors, meetings of the
stockholders shall be held at the registered office of the Corporation in the
State of Delaware.
Section 2.2. Annual Meeting.
(a) Time. A meeting of the stockholders of the Corporation
shall be held in each calendar year, commencing with the year 1995, at a date
and time fixed by the Board of Directors, or if the Board falls to set a date
and time, on the second Tuesday of September at 10:00 a.m., if not a holiday on
which national banks are or may elect to be closed ("Holiday"), and if such day
is a Holiday, then such meeting shall be held on the next business day.
(b) Election of Directors. At each annual meeting of
stockholders there shall be held an election of directors to succeed the class
of directors whose term expires at that meeting.
Section 2.3. Special Meetings of Stockholders. Except as
otherwise specifically provided by law, special meetings of the stockholders may
be called at any time only by the Chief Executive Officer of the Corporation or
the Board of Directors. Upon the written request of any person entitled to call
a special
-1-
<PAGE>
meeting under these By-laws or applicable law, which request specifies the
purpose for which the meeting is desired, it shall be the duty of the Secretary
to give prompt written notice of such meeting to be held at such time as the
Secretary may fix, subject to the provisions of Section 2-4 hereof. If the
Secretary shall fail to fix such date and give notice within 10 days after
receipt of such request, the person or persons calling the meeting may do so.
Section 2.4. Notice of Meetings and Adjourned Meetings.
Written notice, complying with Article VI of these By-laws and stating the
place, date and hour of any meeting and in the case of special meetings, the
purpose or purposes for which the meeting is called, shall be given not less
than 10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting, except as provided in Section 230 of the
Delaware General Corporation Law, as amended from time to time (the "Delaware
Code"). Such notice may be given by or at the direction of the person or persons
authorized to call the meeting. 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. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting
Section 2.5. Business at Meetings of Stockholders. Except as
otherwise provided by law (including but not limited to Rule 14a-8 of the
Securities and Exchange Act of 1934, as amended, or any successor provision
thereto) or in these By-laws, the business which shall be conducted at any
meeting of the stockholders shall (a) have been specified in the written notice
of the meeting (or any supplement thereto) given by the Corporation, (b) be
brought before the meeting at the direction of the Board of Directors or the
presiding officer of the meeting, or (c) have been specified in a written notice
given to the Secretary of the Corporation, by or on behalf of any stockholder
who shall have been a stockholder of record on the record date for such meeting
and who shall continue to be entitled to vote thereat (the "Stockholder
Notice"), in accordance with all of the following requirements:
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(1) Each Stockholder Notice must be delivered to, or mailed
and received at, the principal executive offices of the Corporation (i) in the
case of an annual meeting that is called for a date that is within 30 days
before or after the anniversary date of the immediately preceding annual meeting
of stockholders, not less than 60 days nor more than 90 days prior to such
anniversary date, and (ii) in the case of an annual meeting that is called for a
date that is not within 30 days before or after the anniversary date of the
immediately preceding annual meeting, not later than the close of business on
the tenth day following the day on which notice of the date of the meeting was
mailed or public disclosure of the date of the meeting was made, whichever
occurs first; an
(2) Each such Stockholder Notice must set forth: (i) the name
and address of the stockholder who intends to bring the business before the
meeting; (ii) the general nature of the business which he or she seeks to bring
before the meeting; and (iii) a representation that the stockholder is a holder
of record of the stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to bring the business
specified in the notice before the meeting. The presiding officer of the meeting
may, in his or her sole discretion, refuse to acknowledge any business proposed
by a stockholder not made in compliance with the foregoing procedure
Section 2.6. Quorum of and Action by Stockholders.
(a) General Rule. Unless otherwise provided in the Certificate
of Incorporation of the Corporation (the "Certificate"), the presence, in person
or by proxy, of stockholders entitled to cast at least a majority of the votes
that all stockholders are entitled to cast on a particular matter to be acted
upon at the meeting shall constitute a quorum. However, in no event shall a
quorum consist of less than one-third of the shares entitled to vote at a
meeting. If a meeting cannot be organized because of the absence of a quorum,
those present may, except as otherwise provided by law, adjourn the meeting to
such time and place as they may determine.
(b) Action by Stockholders. Whenever any corporate action is
to be taken by vote of the stockholders of the Corporation at a duly organized
meeting, unless otherwise provided in the Certificate
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or the Delaware Code, such corporate action shall be authorized by a majority of
the votes cast at the meeting by the holders of shares entitled to vote thereon.
(c) Withdrawal. The stockholders present at a duly organized
meeting can continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
(d) Election of Directors at Adjourned Meeting. In the case of
any meeting for the election of directors, those stockholders who attend a
meeting called for the election of directors that has been previously adjourned
for lack of a quorum, although less than a quorum as fixed in this Section,
shall nevertheless constitute a quorum for the purpose of electing directors.
Section 2.7. Voting List: Proxies: Voting.
(a) Voting List. The officer who has charge of the stock
ledger of the Corporation shall prepare, at least 10 days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Upon the willful neglect or refusal of the directors to produce
such a list at any meeting for the election of directors, they shall be
ineligible for election to any office at such meeting.
(b) Proxies. Each 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 or her
by proxy. All proxies shall be executed in writing by the stockholder or such
stockholder's duly authorized attorney-in-fact and filed with the Secretary of
the Corporation not later than
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the day on which it is intended to be exercised. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the Corporation
generally. No unrevoked proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period.
(c) Voting. Except as otherwise specifically provided by law,
all matters coming before the meeting shall be determined by a vote by shares.
All elections of directors shall be by written ballot unless otherwise provided
in the Certificate. Except as otherwise specifically provided by law, all other
votes may be taken by voice unless a stockholder demands that it be taken by
ballot, in which latter event the vote shall be taken by written ballot.
(d) Inspector of Elections. The Corporation shall, in advance
of any meeting of stockholders, appoint one or more inspectors who shall have
such duties as, provided in Section 231 of the Delaware Code to act at the
meeting and make a written report thereof. The Corporation may designate one or
more persons as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting shall appoint one or more inspectors to act at
the meeting. Each inspector, before and during the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability.
Section 2.8. Action by Unanimous Consent of Stockholders.
Unless otherwise provided in the Certificate, any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by all of the
stockholders who would be entitled to vote at a meeting for such purpose and
shall be delivered to the Secretary of the Corporation for insertion in the
Corporation's minute book.
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ARTICLE III - BOARD OF DIRECTORS
Section 3.1. Directors.
(a) General Powers. The Board of Directors shall have all
powers necessary or appropriate to the management of the business and affairs of
the Corporation and, in addition to the power and authority conferred by these
By-laws, may exercise all powers of the Corporation and do all such lawful acts
and things as are not by statute, these By-laws or the Certificate directed or
required to be exercised or done by the stockholders.
(b) Number. The Board of Directors shall consist of not less
than two and not more than twelve members, the precise number to be fixed from
time to time by the Board of Directors by resolution.
Section 3.2. Place of Meeting. Meetings of the Board of
Directors may be held at such place either within or without the State of
Delaware, as a majority of the directors may from time to time designate or as
may be designated in the notice calling the meeting.
Section 3.3. Regular Meetings. A regular meeting of the Board of
Directors shall be held annually, immediately following the annual meeting of
stockholders, at the place where such meeting of the stockholders is held or at
such other place, date and hour as a majority of the directors in office after
the annual meeting of stockholders may designate. At such meeting the Board of
Directors shall elect officers of the Corporation. In addition to such regular
meeting, the Board of Directors shall have the power to fix, by resolution, the
place, date and hour of other regular meetings of the Board.
Section 3.4. Special Meetings. Special meetings of the Board
of Directors shall be held whenever ordered by the Chief Executive Officer, by a
majority of the members of the executive committee, if any, or by a majority of
the directors in office.
Section 3.5. Notices of Meetings of Board of Directors.
(a) Regular Meetings. No notice shall be required to be given
of any regular meeting, unless the same be held at other than the time or place
for holding such meetings as fixed in accordance with Section 3.3 of these
By-laws, in which event two days notice shall be given of
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the time and place of such meeting.
(b) Special Meetings. At least two days notice shall be given
of the time, place and purpose for which any special meeting of the Board of
Directors is to be held.
Section 3.6. Quorum. A majority of the total number of
directors shall constitute a quorum for the transaction of business, and the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. If there be less than a
quorum present, a majority of those present may adjourn the meeting from time to
time and place to place and shall cause notice of each such adjourned meeting to
be given to all absent directors.
Section 3.7. Informal Action by the Board of Directors. Any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
Section 3.8. Compensation of Directors. Compensation of
directors and reimbursement of their expenses incurred in connection with the
business of the Corporation, if any, shall be as determined from time to time by
resolution of the Board of Directors.
Section 3.9. Removal of Directors by Stockholders. The entire
Board of Directors or any individual director may be removed from office, only
for cause, by a vote of the stockholders entitled to elect directors. In case
the entire Board of Directors be so removed, new directors may be elected at
such time. In the event that less than the entire Board of Directors be so
removed, new directors shall be elected by a majority of the directors then in
office, although less than a quorum.
Section 3.10. Resignations. Any director may resign at any
time by submitting his written resignation to the Corporation. Such resignation
shall take effect at the time of its receipt by the Corporation unless another
time be fixed in the resignation, in which case it shall become effective at the
time so fixed.
The acceptance of a resignation shall not be required to make it effective.
Section 3.11. Vacancies. Except as otherwise set forth in
the Certificate, any vacancies on
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the Board of Directors, including vacancies resulting from the removal of
directors under Section 3.9 and from newly created directorships resulting from
any increase in the authorized number of directors, shall be filled by a
majority vote of the remaining directors then in office, although less than a
quorum, or by a sole remaining director, and each person so elected shall be a
director until the next election of directors, and until his or her successor is
duly elected and qualified or until his or her earlier resignation or removal.
Section 3.12. Participation by Conference Telephone. Directors
may participate in regular or special meetings of the Board or committee
meetings by means of conference telephone or similar communications equipment
whereby all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at the meeting.
Section 3.13. Nominations. Notwithstanding the provisions of
Section 2.5 of these By-laws (dealing with business at meetings of
stockholders), nominations for the election of directors may be made by the
Board of Directors, a committee appointed by the Board of Directors or by any
stockholder of record entitled to vote on the election of directors who is a
stockholder at the record date of the meeting and also on the date of the
meeting at which directors are to be elected, provided such stockholder provides
timely written notice to the Secretary of the Corporation in accordance with the
following requirements:
(1) To be timely, a stockholder's notice must be delivered to,
or mailed and received at, the principal executive offices of the Corporation
(i) in the case of an annual meeting that is called for a date that is within 30
days before or after the anniversary date of the immediately preceding annual
meeting of stockholders, not less than 60 days nor more than 90 days prior to
such anniversary date, and (ii) in the case of an annual meeting that is called
for a date that is not within 30 days before or after the anniversary date of
the immediately preceding annual meeting, or in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth day following the day on which notice of the date
of the meeting was mailed or public disclosure of the date of the meeting was
made, whichever occurs first; and
(2) Each such written notice must set forth: (i) the name
and address of the stockholder
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who intends to make the nomination; (ii) the name and address of the person or
persons to be nominated; (iii) a representation that the stockholder is a holder
of record of the stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (iv) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (v) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or intended
to be nominated, by the Board of Directors; and (vi) the consent of each nominee
to serve as a director of the Corporation if so elected. The presiding officer
of the meeting may refuse, in his or her sole discretion, to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
ARTICLE IV - OFFICERS
Section 4.1. Election and Office. The Corporation shall have a
President, a Secretary and a Treasurer who shall be elected by the Board of
Directors. The Board of Directors may elect such additional officers as it may
deem proper, including a Chairman and a Vice Chairman of the Board of Directors,
one or more Vice Presidents, and one or more assistant or honorary officers.
Officers may, but need not, be directors. Any number of offices may be held by
the same person.
Section 4.2. Term. The President, Secretary and Treasurer
shall each serve for a term of one year and until their respective successors
are elected and qualified, unless removed from office by the Board of Directors
during their respective tenures. The term of office of any other officer shall
be as specified by the Board of Directors.
Section 4.3. Powers and Duties of the President. Unless
otherwise determined by the Board of Directors, the President shall have the
usual duties of an executive officer with general supervision over and direction
of the affairs of the Corporation. In the exercise of these duties and subject
to the limitations
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set forth in the Delaware Code, these By-laws, and the actions of the Board of
Directors, the President may appoint, suspend and discharge employees, agents
and assistant officers, fix the compensation of all employees others than
executive officers, shall preside at all meetings of the stockholders at which
he or she shall be present and shall, unless there is a Chairman of the Board of
Directors, preside at all meetings of the Board of Directors. The President
shall also do and perform such other duties as from time to time may be assigned
to him or her by the Board of Directors. Unless otherwise designated by the
Board of Directors, the President shall be the Chief Executive Officer of the
Corporation.
Unless otherwise determined by the Board of Directors, the
President shall have the full power and authority on behalf of the Corporation
to attend and to act and to vote at any meeting of the stockholders of any
corporation in which the Corporation may hold stock, and, at any such meeting,
shall possess and may exercise any and all of the rights and powers incident to
the ownership of such stock and which, as the owner thereof, the Corporation
might have possessed and exercised. The President shall also have the right to
delegate such power.
Section 4.4. Powers and Duties of the Secretary. Unless
otherwise determined by the Board of Directors, the Secretary shall record all
proceedings of the meetings of the Corporation, the Board of Directors and all
committees, in books to be kept for that purpose, and shall attend to the giving
and serving of all notices for the Corporation. The Secretary shall have charge
of the corporate seal, the certificate books, transfer books and stock ledgers,
and such other books and papers as the Board of Directors may direct. The
Secretary shall perform all other duties ordinarily incident to the office of
Secretary and shall have such other powers and perform such other duties as may
be assigned to him or her by the Board of Directors.
Section 4.5. Powers and Duties of the Treasurer. Unless
otherwise determined by the Board of Directors, the Treasurer shall have charge
of all the funds and securities of the Corporation which may come into his or
her hands. When necessary or proper, unless otherwise ordered by the Board of
Directors, the Treasurer shall endorse for collection on behalf of the
Corporation checks, notes and other obligations,
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and shall deposit the same to the credit of the Corporation in such banks or
depositories as the Board of Directors may designate and shall sign all receipts
and vouchers for payments made to the Corporation. The Treasurer shall enter
regularly, in books of the Corporation to be kept by him or her for that
purpose, a full and accurate account of all moneys received and paid by him or
her on account of the Corporation. Whenever required by the Board of Directors,
the Treasurer shall render a statement of the financial condition of the
Corporation. The Treasurer shall at all reasonable times exhibit the
Corporation's books and accounts to any director of the Corporation, upon
application at the office of the Corporation during business hours. The
Treasurer shall have such other powers and shall perform such other duties as
may be assigned to him or her from time to time by the Board of Directors.
Section 4.6. Powers and Duties of the Chairman of the Board of
Directors. Unless otherwise determined by the Board of Directors, the Chairman
of the Board, if any, shall preside at all meetings of directors. The Chairman
of the Board shall have such other powers and perform such further duties as may
be assigned to such officer by the Board of Directors, including, without
limitation, acting as Chief Executive Officer of the Corporation. To be eligible
to serve, the Chairman of the Board must be a director of the Corporation.
Section 4.7. Powers and Duties of Vice Presidents and
Assistant Officers. Unless otherwise determined by the Board of Directors, each
Vice President and each assistant officer shall have the powers and perform the
duties as shall be designated by the Board of Directors. Vice Presidents and
assistant officers shall have such rank as shall be designated by the Board of
Directors and each, in the order of rank, shall act for such superior officer in
his or her absence or disability or when so directed by such superior officer or
by the Board of Directors. Vice Presidents may be designated as having
responsibility for a specific aspect of the Corporation's affairs, in which
event each such Vice President shall be superior to the other Vice Presidents in
relation to matters within his or her area. The President shall be the superior
officer of the Vice Presidents.
The Treasurer and the Secretary shall be the superior officers
of the Assistant Treasurers and
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Assistant Secretaries, respectively.
Section 4.8. Delegation of Office. The Board of Directors may
delegate the powers or duties of any officer of the Corporation to any other
officer or to any director from time to time.
Section 4.9. Vacancies. The Board of Directors shall have the
power to fill any vacancies in any office occurring for any reason.
Section 4.10. Resignations. Any officer may resign at any time
by submitting his or her written resignation to the Corporation. Such
resignation shall take effect at the time of its receipt by the Corporation,
unless another time be fixed in the resignation, in which case it shall become
effective at the time so fixed. The acceptance of a resignation shall not be
required to make it effective.
ARTICLE V - CAPITAL STOCK
Section 5.1. Stock Certificates.
(a) Execution. Shares of the Corporation shall be represented by
certificates signed by or in the name of the Corporation by (i) the Chairman or
Vice Chairman of the Board of Directors, the President or a Vice President, and
(ii) the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, representing the number of shares registered in certificate form, and
may be countersigned by a transfer agent or registrar other than the Corporation
or its employee. Any or all of the signatures on the share certificates may be
facsimiles. 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 or she
were such officer, transfer agent or registrar at the date of issue.
(b) Fractional Shares. Except as otherwise determined by the
Board of Directors, shares or certificates thereof may be issued as fractional
shares.
Section 5.2. Fixing Date for Determination of Stockholders of
Record
(a) General Rules. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, the Board of
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Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than 60 nor less than 10 days
before the date of such meeting.
If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; providing, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) Actions in Lieu of Meeting. In order that the Corporation
may determine the stockholders entitled to consent to corporate action in
writing without a meeting, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which date shall not be
more than 10 days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. If no record date has been fixed by
the Board of Directors, the record for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required by the Delaware Code, shall be the first
date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by the Delaware Code, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts a resolution taking such prior action.
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(c) Dividends and Other Related Matters. In order that the
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purpose of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than 60 days prior to such action.
If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 5.3. Transfer of Shares. Except as provided in Section
5.4, transfer of shares shall be made on the books of the Corporation only upon
surrender of the share certificate, duly endorsed and otherwise in proper form
for transfer, which certificate shall be canceled at the time of the transfer;
no transfer of shares shall be made on the books of this Corporation if such
transfer is in violation of a lawful restriction noted conspicuously on the
certificate.
Section 5.4. Lost, Stolen or Destroyed Share Certificates. The
Corporation may issue a new certificate of stock or uncertified shares in place
of any certificate therefore issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen, or
destroyed certificate, or his legal representative to give the Corporation a
bond sufficient to indemnify it against claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertified shares.
ARTICLE VI - NOTICES - COMPUTING TIME PERIODS
Section 6.1. Contents of Notice. Whenever any notice of a
meeting is required to be given pursuant to these By-laws, the Certificate or
otherwise, the notice shall specify the place, day and hour of the meeting; in
the case of a special meeting or where otherwise required by law, the general
nature of the business to be transacted at such meeting; and any other
information required by the Delaware Code.
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Section 6.2. Method of Notice. All notices shall be given to
each person entitled thereto, either personally or by sending a copy thereof by
first class or express mail, postage prepaid, or by telegram (with messenger
service specified), telex or TWX (with answer back received) or courier service,
charges prepaid, or by telecopier, with confirmation of receipt, to such
person's address (or their telex, TWX, telecopier or telephone number), as it
appears on the records of the Corporation, or supplied by such person to the
Corporation for the purpose of notice. If notice is sent by mail, telegraph or
courier service, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States Mail, with the telegraph office or
with the courier service, as the case may be, for delivery to that person or, in
the case of telex, TWX or telecopier, when dispatched. If no address for a
stockholder appears on the books of the Corporation and such stockholder has not
supplied the Corporation with an address for the purpose of notice, notice
deposited in the United States Mail addressed to such stockholder care of
General Delivery in the city in which the principal office of the Corporation is
located shall be sufficient
Section 6.3. Waiver of Notice. Whenever notice is required to be
given under any provision of the Delaware Code, the Certificate or these
By-laws, a written waiver, 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.
Section 6.4. Computing Time Periods.
(a) Days to be Counted. In computing the number of days for
purposes of these Bylaws, all days shall be counted, including Saturdays,
Sundays or Holidays; provided, however, that if the final day of any time period
fails on a Saturday, Sunday or Holiday, then the final day shall be deemed to be
the next day which is not a Saturday, Sunday or Holiday. In computing the number
of days for the
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purpose of giving notice of any meeting, the date upon which the notice is given
shall be counted but the day set for the meeting shall not be counted.
(b) Two Day Notice. In any case where only two days notice is
being given, notice must be given at least 48 hours in advance by delivery in
person, telephone, telex, TWX, telecopler or similar means of communication.
ARTICLE VII - INDEMNIFICATION OF DIRECTORS AND
OFFICERS AND OTHER PERSONS
Section 7.1. Indemnification. The Corporation shall have the
power to indemnify any director, officer, employee or agent of the Corporation
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement, actually and reasonably incurred by him or her, to the fullest
extent now or hereafter permitted by law in connection with and including, but
not limited to, those instances in which such indemnification, although greater
in scope or degree than that expressly provided by Section 145 of the Delaware
Code, as deemed by a majority of a quorum of directors who were not parties to
such action, suit or proceeding (which may consist of only one director if there
is only one such disinterested director) or by independent legal counsel, after
due investigation, to be in the best interests of the Corporation, with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, brought or threatened to be brought
against him or her by reason of his or her performance as a director, officer,
employee or agent of the Corporation, its parent or any of its subsidiaries, or
in any other capacity on behalf of the Corporation, its parent or any of its
subsidiaries. The Board of Directors by resolution adopted in each specific
instance may similarly indemnify any person other than a director, officer,
employee or agent of the Corporation for liabilities incurred by him or her in
connection with services rendered by him or her for or at the request of the
Corporation, its parent or any of its subsidiaries.
The provisions of this Section shall be applicable to all
actions, suits or proceedings commenced after its adoption, whether such arise
out of acts or omissions which occurred prior or
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subsequent to such adoption and shall continue as to a person who has ceased to
be a director, officer, employee or agent or to render services for or at the
request of the Corporation or as the case may be, its parent, or subsidiaries
and shall inure to the benefit of the heirs, executors and administrators of
such a person. The rights of indemnification provided for herein shall not be
deemed exclusive of any other rights to which any director, officer, employee or
agent of the Corporation may be entitled under these By-laws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 7.2. Advances. Expenses (including attorney's fees)
incurred by any officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding, whether threatened,
pending or completed, may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board of
Directors in the specific case upon receipt of an undertaking, by or on behalf
of such director or officer, to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Corporation
as authorized by law. Such expenses (including attorney's fees) incurred by
other employees and agents may be paid upon such terms and conditions, if any,
as the Board of Directors deems appropriate.
Section 7.3. Amendment. The provisions of this Article VII
relating to indemnification and to the advancement of expenses shall constitute
a contract between the Corporation and each of its directors and officers which
may be modified as to any director or officer only with that person's consent or
as specifically provided in this Section. Notwithstanding any other provision of
these By-laws relating to their amendment generally, any repeal or amendment of
this Article VII which is adverse to any director or officer shall apply to such
director or officer only on a prospective basis, and shall not limit the rights
of persons covered by this Article VII to indemnification or to the advancement
of expenses with respect to any action or failure to act occurring prior to the
time of such repeal or amendment. Notwithstanding any other
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provision of these By-laws, no repeal or amendment of these By-laws shall affect
any or all of this Article VII so as to limit indemnification or the advancement
of expenses in any manner unless adopted by (a) the unanimous vote of the
directors of the Corporation then serving, or (b) the affirmative vote of
shareholders entitled to cast not less than a majority of the votes that all
shareholders are entitled to cast in the election of directors; provided that no
such amendment shall have retroactive effect inconsistent with the preceding
sentence.
Section 7.4. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Corporation would
have the power to indemnify him or her against such liability under law.
ARTICLE VIII - SEAL
The form of the seal of the Corporation, [Form of Seal] called
the corporate seal of the Corporation, shall be as impressed adjacent hereto.
ARTICLE IX - FISCAL YEAR
The Board of Directors shall have the power by resolution to fix
the fiscal year of the Corporation. If the Board of Directors shall fail to do
so, the President shall fix the fiscal year.
ARTICLE X - AMENDMENTS
(a) Stockholders. The affirmative vote of the holders of a
majority of the combined voting power of the outstanding shares of stock
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend or repeal these By-laws or to
adopt any provision inconsistent therewith.
(b) Board of Directors. If the Certificate so provides, the
Board shall have the power
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to alter, amend or repeal these By-laws, however, the Board may not alter, amend
or repeal any provision or subject of these By-laws which is expressly committed
to the stockholders by the Delaware Code or otherwise. Notwithstanding that such
power may be granted to the Board, it shall not divest the stockholders of the
power, nor limit their power to adopt, amend or repeal these By-laws.
ARTICLE XI - INTERPRETATION OF BY-LAWS - - SEPARABILITY
Section 11.1. Interpretation. All words, terms and provisions
of these By-laws shall be interpreted and defined by and in accordance with the
Delaware Code, as amended, and as amended from time to time hereafter.
Section 11.2. Separability. The provisions of these By-laws
are independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
ARTICLE XII - DETERMINATION BY THE BOARD
Section 12.1. Effect of Board Determinations. Any determination
involving interpretation or application of these By-laws made in good faith by
the Board of Directors shall be final, binding and conclusive on all parties in
interest.
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